FAW and Nio Join Forces to Charge Up Battery-Swap Network

Chinese electric vehicle (EV) maker Nio Inc. has entered a strategic partnership with state-owned automaker FAW Group, further expanding its battery swapping alliance [para. 1]. The collaboration between Nio and FAW involves establishing battery standards, vehicle research and development (R&D), and constructing a network for battery charging and swapping, as detailed in the companies' social media posts [para. 2].

FAW is the latest company to join Nio's battery swapping alliance, which aims to make battery swapping stations compatible across different car manufacturers [para. 3]. Existing participants in the alliance include notable companies such as Guangzhou Automobile Group Co. Ltd., Chongqing Changan Automobile Co. Ltd., Zhejiang Geely Holding Group Co. Ltd., Anhui Jianghuai Automobile Group Corp. Ltd., Chery Automobile Co. Ltd., and Lotus Technology Inc. [para. 4].

Batteries are the most costly aspect of EV production, and access to charging infrastructure is a significant concern for potential buyers. Nio is distinctive among EV manufacturers in advocating battery swaps as a solution. This method allows drivers to exchange depleted batteries for fully charged ones swiftly, as opposed to waiting for their vehicle to charge at a station [para. 5][para. 6]. Although conventional charging remains more prevalent, battery swaps are gaining traction as a viable alternative. Nio's founder and CEO, William Li, projected in May that a shared battery swap network might take two to three years to become fully operational due to the necessity of collaborative product development [para. 6][para. 7]. Standardizing battery packs can lower R&D expenses, making the battery swapping partnership more appealing to automakers [para. 7].

However, constructing a battery swap network demands substantial investment. Each battery swap station costs Nio 3 million yuan ($420,000) to establish, according to Nio's president Qin Lihong, who added it requires more than 50 swaps per day for eight years to break even [para. 8]. Nio currently dominates China's battery-swapping station market with 2,416 stations as of April, accounting for 65% of the total market according to the China Electric Vehicle Charging Infrastructure Promotion Alliance [para. 9]. In 2023 alone, Nio built 1,000 new battery-swapping stations across China, with plans to add another 1,000 this year [para. 10].

Nio's ambition extends beyond network expansion as it continues to introduce new models. Recently, it launched an affordable brand, Onvo, aimed at gaining a stronger market presence in China. This new brand targets family users, with its first model set to compete with Tesla’s Model Y and Toyota Corp.'s RAV4 sport utility vehicles [para. 11]. Despite its innovations and expansions, Nio, founded in 2014, has yet to achieve profitability, reporting an annual loss of 20.7 billion yuan last year. Nonetheless, the company has seen a positive trajectory in deliveries, with 45,673 vehicles delivered by the end of April this year, marking a 21.2% year-on-year increase [para. 12].

For further inquiries, contact reporter Han Wei at weihan@caixin.com [para. 12].