On December 6th, according to Reuters citing sources familiar with the situation, NIO plans to spin off its battery manufacturing department as part of its efforts to achieve profitability and reduce costs and increase efficiency.
According to insiders, NIO's battery division will be spun off as early as the end of the year and will seek external investors, with a valuation yet to be determined. According to the spin off plan, senior engineers from NIO's battery department will join the new company, and some employees will be merged into other departments of NIO.
As of the deadline for publication, NIO Motors has not responded to this matter at the moment.
In November this year, NIO announced an internal letter announcing a 10% reduction in job positions and adjustments to related businesses to achieve cost reduction and efficiency improvement, including delaying and reducing investment in projects that do not improve financial performance in the next three years.
NIO CEO Li Bin further stated in a recent third quarter financial report conference call that the battery business will continue to be developed internally, and production will be outsourced externally. Li Bin stated that the battery self-made project was evaluated as unable to improve gross profit margin within three years, and therefore adjustments were made.
NIO has invested heavily in the battery business in the past two years. Generally speaking, due to the high cost of power batteries, most car manufacturers control battery production through joint ventures or equity investments in battery companies. However, NIO's layout involves the entire battery industry chain from research and development to production.
In May 2022, NIO announced an investment of approximately 218 million yuan to lease an industrial plant in Jiading District, Shanghai for the construction of a battery cell research and development laboratory and trial production line. In October, NIO Battery Technology (Anhui) Co., Ltd. was subsequently registered and established. Li Bin also stated in June last year that NIO's subsidiary brand Alps will be equipped with self-developed batteries and will be put into production in the second half of 2024.
It is understood that the number of NIO's battery team has reached a thousand people before. According to the insiders mentioned above, senior engineers leading NIO's battery division have previously worked at Apple and Panasonic, some of whom have previously worked in quality and supplier management at Tesla's battery factory in Nevada.
In February this year, NIO's first phase of battery production base in Hefei began construction, with plans to produce cylindrical batteries similar to Tesla's planned 4680 model. However, due to various factors such as sales and research and development pace, this plan has also been postponed.
Interface News previously reported that in September this year, NIO is preparing to establish a joint venture with power battery company Honeycomb Energy to jointly develop large cylindrical batteries. Both parties will invest in a trial production line in Ma'anshan, with some R&D personnel merging, but their manufacturing and procurement will remain independent.
In addition, NIO maintains an optimistic attitude towards its battery swapping business. Li Bin mentioned during the third quarter financial report conference call that NIO Power's battery swapping business may independently raise funds. Li Bin stated that after more than 5 years of actual operation, NIO's battery swapping business has the ability to open up to the outside world, and in the long run, NIO's battery swapping business is a sustainable and profitable business sector.
Recently, NIO has reached cooperation with Changan and Geely in battery swapping business. Li Bin previously stated that several other automotive companies are also in discussion.