Source: China Fund News NIO, which has recently been embroiled in public opinion controversies, has finally welcomed its first partner for “battery swapping”. On November 21, NIO announced that Changan Automobile has become its first partner for open battery swapping cooperation. It is reported that NIO and Changan will jointly develop electric vehicle models with swappable batteries, and the first model with a shared battery pack is planned to be launched in 2025. Looking at the entire new energy vehicle market, NIO is also the only car company that has massively invested in commercial use of battery swapping technology. NIO has always been proud of this model. However, the heavy asset investment has also backfired on NIO’s financial situation, one of the reasons for its significant losses over the years. Therefore, this model of NIO has also been heavily criticized. In fact, NIO’s founder and CEO, William Li, had already hinted at the battery swapping cooperation in an internal staff speech on the 20th. According to him, NIO is also in talks with 4-5 other car companies for cooperation. The plan is to launch the battery swapping electric vehicle in 2025. Among the various new energy vehicle companies, NIO’s biggest feature is its “battery swapping” model, and Changan Automobile has become NIO’s first partner in the battery swapping field. It is reported that Changan Automobile and NIO have signed a battery swapping business cooperation agreement, and the two parties will cooperate in promoting the establishment of battery swapping standards, the construction and sharing of battery swapping networks, the development of battery swapping vehicle models, and the establishment of an efficient battery asset management mechanism. Li Bin revealed in the official NIO community that the next generation of fast-swapping battery packs for the mass market will be shared externally. It is reported that the two parties will jointly develop electric vehicle models with swappable batteries, and the first model with a shared battery pack is planned to be launched in 2025.
NIO’s circle of friends for battery swapping achieves “zero breakthrough” with “spoilers” a day in advance. On the 20th, in an internal speech to all employees, Li Bin responded positively to the doubts raised by employees about the sustainability of the battery swapping business. Li Bin said that the road to battery swapping is very difficult, but it is the right thing to do. “Think of battery swapping as Amazon’s cloud service in 2003, like the cloud services of Alibaba, Tencent, Amazon, Microsoft, etc. They lost money for many years before finally achieving success.” He stated that battery swapping is NIO’s huge first-mover advantage, and it is now time to open it up to the entire industry. “Tomorrow we will announce NIO’s first partner.” At the same time, he also revealed that NIO is in talks with 4-5 car companies for cooperation. As early as the China Electric Vehicle Hundred People Forum held in April this year, Li Bin had stated that “the battery swapping service has reached a stage where it can be exported externally,” and hoped that other companies could share and build charging and swapping infrastructure with NIO, and revealed that some car companies are discussing this with NIO. Battery swapping model has been criticized NIO’s proud “battery swapping model” has also been criticized by the market. There have always been doubts from the outside world about NIO’s insistence on the battery swapping model, mainly concerning the investment cost of the swapping stations. A research report from China Post Securities once analyzed the investment cost of NIO’s battery swapping stations, mentioning that for its second-generation station, equipment investment is about 1.5 million yuan, battery investment is as high as 1 million yuan, and the total cost of electricity, rent, and labor is about 1 million yuan, making the total cost about 3.5 million yuan.
According to official sources, as of November 20th, NIO has a total of 2103 battery swapping stations nationwide, with 798 new stations added this year. According to the plan, NIO will have a total of 2300 battery swapping stations by the end of this year.
Based on a rough calculation, NIO has already deployed 2,103 battery swap stations with an initial investment of approximately 7.36 billion yuan, undoubtedly testing NIO’s financial situation. As of mid-year, NIO’s fixed asset balance reached 18.548 billion yuan, the highest among the three major electric vehicle manufacturers in China. The large fixed assets mean that high depreciation expenses will erode the company’s profits. In the first half of 2023, NIO’s net profit attributable to shareholders was still a loss of 10.926 billion yuan, with the construction of a service system centered on battery swapping also being considered as one of the important reasons for NIO’s losses. However, after the disclosure of the interim report, NIO has stated in a conference call that with the adjustment of user rights, the proportion of paid battery swaps is increasing. Currently, the company charges 30-50 yuan (10$) for each battery swap. The company revealed that a third-generation station can achieve breakeven with approximately 60 battery swaps per day, and about 20% of the swap stations have reached this level. As of November 20, NIO has provided users with over 32 million battery swap services. It is also understood that the main body of NIO’s battery swap station management has been transferred from the car manufacturer to the battery asset management company. As early as 2021, NIO partnered with CATL, Guotai Junan, and Hubei Technology Investment Group to establish a battery asset management company, which is responsible for the operation and management of the swap stations and the recycling of used batteries. Negative factors are being eliminated. In the past, there were certain doubts about battery swap stations in terms of capital and industry, and there have been no shortage of failed cases, such as Better Place. As early as 2007, Better Place was established in California, USA, becoming the world’s first battery swap operator. The company raised a total of 850 million US dollars in funding, with a valuation reaching 2.25 billion US dollars at one point. However, after years of operation, Better Place quietly faded from the public view through bankruptcy liquidation by May 26, 2013. In the market’s view, the main factors restricting the development of battery swapping stations include low standardization of power battery specifications, materials, and technology, which is not conducive to the circulation of battery swapping systems. The difficulty of interconnection agreements between original equipment manufacturers (OEMs) leads to battery swapping only being conducted within the brand. There are differences in the battery swapping methods, and the construction and operation costs of battery swapping stations are high. However, the institution believes that the above factors are gradually being eliminated. Firstly, car companies and battery suppliers are leading the standardization of batteries to reduce production costs, which will effectively promote the feasibility of battery swapping. Secondly, the pattern of new energy vehicles is gradually becoming concentrated, with CR3 manufacturers holding a 47.1% market share and CR10 manufacturers holding a 69.4% market share. For example, BYD is also promoting the standardization of power batteries internally, with blade battery size standardized at 960*13.5*90mm and the material unified as lithium iron phosphate, making the standardized battery more suitable for battery swapping. The institution also mentioned that battery swapping stations themselves are gradually developing. For example, the NIO third-generation battery swapping station is compatible with more vehicle models and sizes, and unmanned operation can significantly reduce the cost of a single station. At the 2023 World Power Battery Conference, Vice Minister of Industry and Information Technology, Xin Guobin, stated that they are studying the formulation of a battery swapping technology standard system to promote the standardization of battery swapping, including battery size, swapping interface, and communication protocols. It was previously reported that relevant departments have initiated the inspection process for national battery swapping station standards and have begun organizing the final review of industry standards for passenger car battery swapping. The electric vehicle ecosystem is expanding. The standard for battery swapping is expected to become more unified, injecting a strong stimulant into the industry. In addition to NIO, the main players in the electric vehicle swapping market include CATL, Geely, and SAIC, each with their own technological and strategic differences. CATL has proposed its ultimate solution for 80,000-120,000 RMB vehicle models, called “chocolate swapping.” This method uses CATL’s CTP technology, with a single battery providing a range of about 200 kilometers. CATL has also launched the swapping service brand EVOGO, with each standard station requiring only three parking spaces and capable of storing 48 battery packs, with a swapping time of about 1 minute per battery. Geely, on the other hand, integrated with LIFAN Technology in 2021 to establish the joint venture company Blue Geely, focusing on electric vehicle swapping models and services. Blue Geely initially targets the B-end market before expanding to the C-end. Their swapping stations occupy about 4 parking spaces, can store 27-39 battery packs, and provide service 278-400 times per day, with a swapping time of 1.5 minutes. As for SAIC, in August of this year, its subsidiary Fevan Auto launched the Fevan three-electric technology system and officially opened the first Fevan swapping station in Beijing. In addition to NIO, FAW Hongqi started operating the first batch of swapping vehicles E-QM5 in November 2021, and the new EH7, which offers various charging and swapping options, will soon go into production. It is foreseeable that with the increasing number of swapping vehicle models entering the market, the demand for swapping stations will greatly increase for FAW Hongqi. “Je suis désolé, je ne parle pas anglais.” translates to “I’m sorry, I don’t speak English.”