Huiding, which was acquired by Nio, is one of the few insurance brokers in Anhui province that can conduct national operations.

(Image credit: CnEVPost)

Nio (NYSE: NIO) acquired a local insurance brokerage firm, after the company set up a similar firm of its own earlier this year.

Huiding Insurance Brokers, based in Hefei, Anhui province, recently saw a change in its registration information, with its original single shareholder, Anhui Shengda Blasting Engineering Technology withdrawing and Nio's Anhui Nio Data Technology becoming the new single shareholder, information from data provider Tianyancha shows.

Huiding was founded in May 2014 with a registered capital of RMB 50 million ($7.17 million) and its business scope includes developing insurance solutions for policyholders nationwide in China.

Following the latest change, the company's registered capital remains unchanged, and its legal representative has changed to Stanley Qu, vice president of finance at Nio.

William Li, founder, chairman and CEO of Nio, indirectly holds 80 percent of the company, according to Tianyancha.

Huiding is one of the few insurance brokers in Anhui province that can conduct nationwide business, the official Securities Times said in a report today, adding that the new energy vehicle (NEV) insurance market has high expectations as the traditional auto insurance market becomes saturated.

China is currently tightening regulations in the financial sector, with regulators having largely stopped approving local insurance brokerage licenses, while national insurance brokerage licenses are difficult to obtain, the report said, citing an industry source.

Against this backdrop, companies looking to enter the insurance industry have to take another approach, the industry source said.

It is worth noting that this is not Nio's first move in the insurance brokerage sector.

On January 19, Nio registered an insurance brokerage company in Hefei with a registered capital of RMB 50 million and the same legal representative, Qu.

The background of Nio's move is that NEV makers attach more importance to insurance services than traditional car companies, local media Cailian said at the time, citing an unnamed property insurance industry source.

NEV companies are able to integrate their sales models and car insurance service packages after obtaining their own licenses, the source said, adding that the deeper reason is that they can keep their users firmly in their hands through car insurance.

In addition to Nio, BYD (OTCMKTS: BYDDY) also set up an insurance brokerage in March, and an affiliate of Li Auto (NASDAQ: LI) acquired an insurance brokerage capable of conducting national business in June.

The rapid growth of the NEV insurance industry is perhaps the main driver for these companies to target the sector.

China's NEV insurance premiums are expected to reach RMB 70.8 billion for the full year 2022, which would represent more than 100 percent year-on-year growth, according to estimates from Essence Securities cited by the Securities Times.

China's all-electric vehicles will continue to rise in terms of new vehicle sales and ownership, and there will be a huge blue ocean market in the next five to 10 years, the report quoted Zhang Lei, founder and CEO of Cheche Group, a digital insurance transaction service platform, as saying.

Zhang also said that NEV insurance will become an entry point for car companies to serve car owners, allowing them to expand their ecosystem of services.