Nio Inc. Entered The EV Insurance Business Late Last Year
Nio has entered the insurance business alongside competing Chinese EV manufacturers, a company registration filing shows. The news was reported by Caixin, China's largest business daily.
Nio acquired Huiding Insurance Broker Company Limited last December using a part-owned subsidiary called Anhui Nio Data Technology Co Ltd., whose majority shareholder is Nio's founder and chairman Li Bin.
The news emerged as Huiding's name was just recently updated to Nio Insurance Broker Company Limited in the China business registry.
The complex ownership structure of Nio's insurance company deal mirrors a structure employed at Vietnamese EV maker VinFast Auto Ltd which is owned by a series of holding companies ultimately controlled by founder Pham Nat Vuong. This month, Pham injected a battery maker into VinFast to beef up its operations in a similar manner to how Li structured Nio's insurer deal.
The move into the insurance business by Nio puts the luxury EV maker on par with Li Auto, BYD and Xpeng, all of whom have their own insurance subsidiaries. Insurance sales and EV sales are closely correlated and often undertaken in the same purchase.
Insurance premiums of EVs are more complicated to assess than for standard vehicles, according to Deloitte Consulting, a financial services firm, since assessment of the insurance is closely tied to faults attributed to the various tech innovations applied by the vehicle maker to its units. This makes owning an insurance company a much easier bet for an EV maker than going through a third party for risk assessment costs.
In addition, insurance companies can provide a warchest of cash as conglomerate Berkshire Hathway Inc, which is a backer of BYD, has used to its advantage.
There is some evidence that insurance ownership acts as a sales catalyst for EV manufacturers.
Nio has been ramping up sales throughout 2023, delivering 50% more vehicles in September in China this year than it did there a year ago. The company delivered 15,641 EVs to the Chinese market in September, giving it a 2.1% share (number 10 position) of the Chinese EV market.
Around half of all Nio's sales in September came from its successful ES6 model, which have surged by over four times from sales made in the same period last year.
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