China’s Nio will expand battery swapping services to provide infrastructure for electric vehicles

BEIJING – Chinese electric vehicle company Nio is expanding its battery-sharing partnership as it seeks to gain an advantage in the infrastructure portion of the EV ecosystem.

Since November, Nio has partnered with at least four Chinese automakers—Changan, Geely, Chery and JAC—to develop battery swapping standards and network expansion in China. Earlier this year, Nio also announced a collaboration agreement with two local battery companies to provide battery replacement services.

All of these efforts are aimed at reducing consumer anxiety about the driving range. While having a large network of battery charging stations helps solve these problems, changing batteries is a faster method as it only takes a few minutes.

“Right now the exchange is mostly done by Nio. Of course, Nio understood that this is an ecosystem,” Ding Luo, deputy head of research at CLSA, said in an interview. “If only one player is trying to build the entire ecosystem, it is impossible. [them]. So they are thinking about whether they can invite partners.”

Battery replacement is still not a common practice because car batteries need to be standardized, he added.

Although the charging station resembles a typical gas station, the battery swapping technology is housed in a canopy-like structure. It uses machines to automatically replace dead batteries with pre-charged ones in compatible vehicles.

In mid-March, Nio said it had completed 40 million battery changes, compared to nearly 37 million charges at its public stations—Nio consumers can also access third-party charging stations or install them at home.

“I think our view is very simple,” Shen Fei, senior vice president of Nio’s energy division, said in Chinese, as translated by CNBC. “The first priority is to serve Nio users, then provide convenience for charging and replacing batteries, making charging more convenient than refueling, and at the same time helping the company sell more cars.”

The company claims that with battery swapping, drivers will be able to get a new charge in three minutes if they choose a paid battery service plan.

Shen said more car models will be added to Nio’s battery replacement network, adding that the replacement could allow drivers to keep up with improvements in battery technology. It did not specify which automakers would likely be added to its network.

Energy services and other products make up about 10% of Nio’s total revenue. The company said that the “other sales” category for 2023 grew by 69% to 6.36 billion yuan ($895.9 million). Nio does not share revenue from exchange stations.

Battery swapping has been tried in the industry with varying degrees of success, especially in the US.

Tesla and startup Better Space attempted a swap more than 10 years ago, but the venture soon folded.

In 2021, another startup, Ample, opened its battery swap stations in the San Francisco area, targeting Uber drivers using a Nissan Leaf.

While it’s unclear how far Ample has progressed in the US, the company has since expanded its partnerships overseas. Last month the company announced that it would serve corporate fleets in Kyoto, JapanBye he teamed up with Stellantis carry out battery replacement this year in Madrid, Spain.

“For job-trading, this cannot be a niche,” said Tu Le, head of consultancy Sino Auto Insights. “The investment in battery inventory is huge, so it needs to be amortized through a large number of replacements.”

But he was cautious about whether Nio could sell enough of its own premium cars to make the economy work. “At this point, I still think the combination of sharing and charging creates a pretty compelling feature set, but sharing on its own probably won’t help them sell much more cars.”

“I think the push that the Chinese government has given to encourage others to join forces with Nio on a swap could create the necessary pool of vehicles to make the swap viable,” he added.

Nio is the first major electric vehicle company to introduce battery swapping stations in addition to charging stations, as well as its own vehicles in mainland China and Europe.

The company has installed more than 2,300 battery swap stations and plans to install 1,000 more this year.

Nio’s investment in battery swapping stations is about two years ahead of market demand, CEO William Lee said last month, adding that less than a fifth of the battery swapping stations Nio operates process 60 orders per day, which is likely the minimum order. required for the station. reach break-even level.

On the other hand, Nio charging stations achieved profitability last year, according to the company. There are plans to build another 20,000 this year.

According to Shay Natarajan, a partner at Mobility Impact Partners, a private equity fund that invests in transportation.

CLSA’s Luo said businesses also prefer to invest in regular charging stations rather than plug-in stations because they generate higher profits. But if businesses want to install faster charging stations, he said, they could face grid problems.

CLSA’s analysis found that the power required for five blowers in one location would be more than what 300 families would typically consume.

Tesla also partners with automakers on battery charging, with more than 50,000 superchargers worldwide that claim to restore about two-thirds of a battery’s charge in 15 minutes.

In February, Ford reached an agreement that allows its electric vehicles to use Tesla superchargers in North America. General Motors announced a similar agreement last year.

The rapid development of electric vehicles, ostensibly aimed at reducing carbon emissions, also raises questions about battery waste.

Nio noted that the recent rise in new energy vehicles, including hybrids, means nearly 20 million batteries will reach the end of the eight-year warranty period between 2025 and 2032.

Last month, the company announced a partnership with the battery giant. Modern Amperex technology develop batteries with a longer service life, especially for those used in replacement stations.

Nio claims that thanks to battery replacement and big data, it can retain 80% of battery capacity after 12 years of use. Nio also said last month that CATL would develop longer-lasting batteries for the company.

— CNBC’s Laura Kolodny and Michael Weiland contributed to this report.