"The battery swapping business has now reached the time to open up to the entire industry." On November 20th, the internal speech of Li Bin, the founder of NIO, suddenly made headlines. The memory in the industry still lingers when this company finally "couldn't bear" to lay off employees. The next day, NIO released a "heavyweight bomb" - known as the most expensive battery swapping business, and welcomed the addition of the "national team".
On November 21st and 29th, Changan Automobile and NIO Automobile signed a battery swapping cooperation agreement in Chongqing, followed by Geely Automobile and NIO Automobile also signing a battery swapping cooperation agreement in Hangzhou. One is the "national team" with hardcore strength, and the other is the automotive giant with a trillion dollar "capital empire", which has led to NIO Automobile, which has been fighting alone in the battery swapping mode, being considered by the industry or facing opportunities for "monetization".
As 2023 draws to a close, the turning point for NIO Motors may have quietly arrived. The signing of these two collaborations also seems to be telling everyone that NIO has launched a brand new character dungeon. Just as Li Bin compares NIO's battery swapping network to "cloud services," NIO is becoming a "cloud service provider" for battery swapping models.
NIO Becomes the Leading Brother of the Battery Exchange Alliance?
NIO has been at the center of public opinion this year with a highly controversial role. On one hand, there is the expansion of battery swapping stations, the production of mobile phones, and the opening of new brands, while on the other hand, there is a new low gross profit margin, significant losses, and layoffs. Any topic can make everyone discuss it. As the "leading brother" in the "Weixiaoli" era, the public opinion on whether NIO Automobile can still "carry on" and how long it can "carry on" has attracted much attention. Qin Lihong, the founder of NIO, also took advantage of his speech at the 2023 Guangzhou Auto Show Forum to personally step down and "settle his mind": "NIO will not go bankrupt, nor can it go bankrupt. Please rest assured to purchase and experience NIO's cars, and believe in the products and services of all Chinese new energy brands."
From a market perspective, there are two important prerequisites to ensure that NIO Auto does not go bankrupt. The first is to maintain a stable delivery volume of new cars and overcome the bottleneck of 20000 units; The second is the battery swapping station, known as the largest cash cow in NIO's capital pool, which needs to have the ability to make money as soon as possible. Especially NIO's unique battery swapping business in the industry has been questioned, with excessive investment and long return cycles becoming the biggest negative burden on NIO's performance.
Li Bin's attitude towards investment in battery swapping was very firm from the beginning, stating that like internet cloud service infrastructure, NIO battery swapping network and NIO Energy Cloud have also taken a path of infrastructure first, internal closed-loop, full scenario verification, and opening up to the outside world. "Now the NIO battery swapping network and NIO Energy Cloud are ready to open up to the industry." It is reported that the members of the highly anticipated "battery swapping friend circle" this time are not only from Chang'an and Geely, but Li Bin revealed in an internal speech, "There are still 4-5 more to discuss."
Under the rapid development of automotive digitalization, industrial collaboration and ecological sharing are the trend. After 5 years of investing in battery swapping services, NIO's cooperation with Changan, Geely, and others is no longer just about simple service procurement, but will also be a deep collaboration. While promoting the establishment of industry standards for battery swapping, the construction and sharing of battery swapping networks, the research and development of battery swapping models, and the establishment of efficient battery asset management mechanisms, the partners will inevitably cover products, technology, and energy replenishment, with a high degree of interest binding between both parties. If progress goes smoothly, the "battery swapping alliance" led by NIO Automobile will open the door for multi-dimensional and deep cooperation between NIO Automobile and leading car companies.
In the future, a new market for B-end battery swapping services will be opened up
In fact, in China, NIO is not the only company that is doing battery swapping. There are 7 companies that are seriously doing it, but only NIO is doing it with great success (even though it is losing money). However, it is worth noting that from a policy perspective, the cooperation between the two leading car companies and NIO is actually in line with the national policy trend in recent years, guiding the battery swapping industry to become larger and stronger towards compliance. On September 1st, the Ministry of Industry and Information Technology and seven other departments issued a notice on the stable growth work plan for the automotive industry (2023-2024), which once again mentioned "encouraging the application of new energy vehicle battery swapping models and promoting the deep integration of new energy vehicles and energy development." According to NIO, as early as 2020, the National Energy Administration released NIO's battery swapping industry standards, with NIO leading the preparation of three standards: 10435, 10436, and 33025, Deeply involved in the preparation of standards 10434 and 33004. Meanwhile, after several years of development, NIO has obtained over 1600 patents related to battery swapping and has participated in the formulation of over 20 battery swapping standards. Regarding the construction and operation of the power exchange and replenishment network, NIO has established a complete and smooth operating architecture, both in terms of technical standards and scale.
Nowadays, NIO, Changan, and Geely have taken the lead in forming a "battery swapping alliance", marking the beginning of NIO's upgrading of battery swapping standards to industry standards and the popularization of battery swapping as a mainstream supplementary energy route. If more car companies join the "alliance" in the future, it will be beneficial to accelerate the expansion of the scale effect of battery swapping, and accelerate the promotion of battery swapping as an infrastructure similar to gas stations.
It is worth noting that NIO's battery swapping model has always served the C-end consumer market. After partnering with Geely, it will also open up a new market for B-end operational vehicles, which is expected to double the value of battery swapping. It is reported that the demand for battery swapping and energy replenishment in the B-end commercial market has always been very high, such as in urban ride hailing and logistics vehicles, which are very suitable for achieving efficient energy replenishment through battery swapping. Currently, Geely's Maple Leaf, Ruilan brands, as well as Cao Cao special cars, all require battery swapping services.
In this way, it will also bring a test to NIO's battery swapping network. For example, how to ensure the service experience of existing C-end NIO users and avoid the bad experience of "battery swapping queue" due to insufficient service capacity of the battery swapping station. In response, NIO Automobile has also released news that it will work with Geely to create two major battery swapping standard systems in China, namely "private cars" and "commercial cars", through a "joint investment, joint construction, sharing, and joint operation" model. Or it can be understood that the private car battery swapping system focuses on service and experience; The operational vehicle battery swapping system focuses on efficiency and cost.
There is another joke in the industry that goes, "Efficient infrastructure in the automotive industry still depends on NIO." It is reported that after two technological iterations, the newly invested NIO third-generation battery swapping station has been able to achieve 3-minute rapid energy replenishment, almost consistent with refueling, with a maximum daily service capacity of 408 times per station. As of November 30th this year, NIO has launched 2187 battery swapping stations, including 691 on highways. The high-speed battery swapping network in 9 major urban clusters, including 7 vertical and 4 horizontal, has been connected. The cumulative number of battery swapping by users has exceeded 32 million, with a daily average of 60000 times. On average, one car departs from the battery swapping station every 1.44 seconds. In order to ensure the smooth operation of this large-scale and high-frequency battery swapping service, NIO has also built a high-intensity "brain" - Power Cloud system.
Observation
From initial questioning, lack of understanding, to a reversal of reputation, now with the addition of two major car companies, NIO's battery swapping and energy replenishment has gone through the most difficult initial stage from a "no man's land" to a "friend circle". Nowadays, NIO's layout on the energy supplement network is not only providing convenience for NIO's own brand users, but also radiating the convenient energy supplement experience to new energy vehicle users throughout society.
Any openness needs to be built on the basis of having sufficient sustainable development capabilities. In his internal speeches, Li Bin also repeatedly stated, "We need to ensure long-term investment in core key technologies." NIO has been persistently accumulating core technologies in recent years, and now it has shown that relying on long-term investment can bring about technological returns. Moreover, NIO now has a comprehensive NIO technology stack that covers the entire intelligent electric vehicle business landscape. In terms of products, currently 8 second-generation technology platform models from NIO have been fully delivered, covering the main sales market of BBA, which accounts for 80% of sales. From January to October this year, NIO delivered a total of 126067 new cars, with an average transaction price of over 300000 yuan and a high-end pure electric market share of 60.6%.
As NIO's battery swapping mode enters a new stage of development with a "circle of friends", whether the "dungeon" of NIO's new character is easy to play also makes people look forward to the new development story of NIO Motors in 2024.