Pictured here is a Nio battery changing station in Haikou, Hainan Province, China, May 9, 2023.
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BEIJING – Chinese electric car manufacturer Nio has expanded its battery swap partnerships to gain a lead on the infrastructure side of the EV ecosystem.
Since November, Nio has been working with at least four Chinese automakers – Changan, Geely, Chery and JAC – to develop battery replacement standards and expand the network in China. Nio also announced agreements earlier this year to partner with two local battery companies on battery replacement services.
All of these efforts are aimed at easing consumers’ range concerns. While a large network of battery charging stations helps address these concerns, battery replacement is a quicker method as it only takes a few minutes.
“The exchange is currently primarily driven by Nio. Of course, Nio has figured out that it is an ecosystem,” Ding Luo, deputy director of research at CLSA, said in an interview. “If just one player tries to build the entire ecosystem, it’s impossible [them]. That’s why they’re thinking about inviting partners.”
Battery replacement is still not mainstream because car batteries need to be standardized, he added.
While a charging station resembles a typical gas station, the battery changing technology is housed in a shed-like structure. It uses machines to automatically swap empty batteries for pre-charged ones in compatible cars.
Nio announced in mid-March that it had completed 40 million battery changes, compared to nearly 37 million charging sessions at its public stations – Nio customers can also access third-party charging stations or install one at home.
“I think our outlook is very simple,” Shen Fei, senior vice president of Nio’s energy division, said in Chinese, translated by CNBC. “The first thing we need to do is to serve Nio users, and then provide a good charging and battery replacement experience, make charging more convenient than refueling, and at the same time help the company sell more cars .”
The company says that by changing the battery, drivers can 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 swap network, adding that the swap can allow drivers to stay abreast of improvements in battery technology. He did not provide details about which automakers are expected to join his network.
Energy services and other products account for nearly 10% of Nio’s total revenue. The company said the other sales category for 2023 grew 69% to 6.36 billion yuan ($895.9 million). Nio does not provide any information about the turnover of the swap stations.
Changing batteries has a checkered past
Battery replacement has been attempted by industry, particularly in the USA, with mixed success
Tesla and a startup called Better Space tried an exchange more than a decade ago, but the venture soon shut down.
In 2021, another startup, Ample, opened its battery swapping stations in the San Francisco area – for Uber drivers using the Nissan Leaf.
While it’s not clear what progress Ample has made in the U.S., the company has since expanded its partnerships abroad. Last month, the company announced it would serve company car fleets in Kyoto, Japan, while it partnered with Stellantis to introduce battery swaps in Madrid, Spain, this year.
“For the exchange to work, it can’t be niche,” said Tu Le, head of consulting firm Sino Auto Insights. “The investments in the battery stock are enormous and have to be amortized through frequent replacement.”
But he was cautious about whether Nio could sell enough of its own premium cars to ensure profitability. “Right now I still think the combination of swapping and charging is a pretty attractive feature set, but swapping alone probably won’t help them sell that many more cars.”
“I think the Chinese government’s push to encourage others to partner with Nio on the exchange could create the necessary pool of vehicles to make the exchange viable,” he added.
The business of the store
Nio is the first major electric car maker to introduce battery swapping stations in mainland China and Europe in addition to charging stations alongside its own vehicles.
The company has installed more than 2,300 battery swapping 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 Li said last month, adding that less than a fifth of the battery swapping stations Nio operates process 60 orders per day, likely the minimum orders required for a station to break even to reach.
Nio’s battery charging stations, on the other hand, reached profitability last year, according to the company. 20,000 more are expected to be built this year.
According to Shay Natarajan, a North America-based partner at Mobility Impact Partners, a private equity fund that invests in, car battery swap stations can cost about $500,000 to build, while a relatively simple two-port charging station costs about $200,000 Transportation costs $300,000.
According to CLSA’s Luo, companies also prefer to invest in regular charging stations rather than swap stations because they provide a higher return on investment. But if companies want to install faster charging stations, they could potentially face challenges to the power grid, he said.
The CLSA analysis found that the electricity demand for five Superchargers at one site would be more than 300 families would normally use.
Tesla also works with car manufacturers on battery charging. There are over 50,000 superchargers worldwide that are said to be able to restore about two-thirds of battery charge in 15 minutes.
In February, Ford reached an agreement to allow its electric cars to use Tesla’s superchargers in North America. General Motors announced a similar agreement last year.
Sustainability considerations
The rapid development of electric cars, ostensibly aimed at reducing CO2 emissions, also raises questions about battery waste.
Nio noted that the recent growth of new energy vehicles, which includes hybrid vehicles, means that nearly 20 million batteries will reach the end of their eight-year warranty period between 2025 and 2032.
Last month, the company announced a partnership with the battery giant Contemporary Amperex technology the development of batteries with a longer lifespan, especially for use in changing stations.
Nio claimed that by using battery swapping and big data, 80% of battery capacity could be retained after 12 years of use. Nio also said last month that CATL would develop longer-lasting batteries for the company.
—CNBC’s Lora Kolodny and Michael Wayland contributed to this report.
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2024-04-05 04:20:52
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