Shanghai (ZXZC)- Chinese NEV startup NIO recently set up a subsidiary working on insurance brokerage business, a move in response to China’s launch of NEV (new energy vehicle)-dedicated commercial insurance.

According to the corporate data platform Tianyancha, the new company, dubbed NIO Insurance Brokerage Co.,Ltd., was incorporated on Jan. 19, 2022 in Hefei, where NIO China is headquartered. Involving a registered capital of 50 million yuan ($7.9 million), the newborn firm is wholly held by NIO Holding Limited, the legal entity of NIO China.

Business scope of NIO Insurance Brokerage Co.,Ltd. extends to cover such businesses as insurance agent and assessor services as well as insurance brokerage.

The company's foundation came after the commercial insurance dedicated to NEVs was officially launched for sale in China on Dec. 27, 2021. In the meantime, Shanghai Insurance Exchange (SHIE) debuted a new trading platform for NEV insurance products. Twelve insurers including the People's Insurance Company of China, Ping An Property & Casualty Insurance Company of China, and China Pacific Property Insurance were trading on the platform.

A local media outlet reported then that NIO was evaluating the possibility of launching NEV insurance products, but no more information was disclosed then.

As NEV sales are rapidly rising in China, insurance products should be updated correspondingly.

Under the clauses issued by the Insurance Association of China (IAC) in mid-Dec. last year, the NEV-dedicated insurance will take into account the risks of batteries, energy storage system, electric motors and electric control system. Besides, it will also offer many services exclusive to NEVs, including the external power grid malfunction insurance, the self-use charging pile loss insurance, and the self-use charging pile liability insurance.

Chinese automakers like GAC Group, Geely Holding, SAIC Motor, and XPeng have become players of insurance businesses. Tesla also built its insurance brokerage subsidiary in Shanghai in Aug. 2020. The U.S. EV maker's CEO Elon Musk said in 2020 that the insurance arm could be as big as 30% to 40% of the company's car business.