Chinese electric vehicle brand “NIO” is the only automotive manufacturer in the world that offers battery swapping, something that has been abandoned by Tesla, and the company has completed more than 500K times of battery swapping, with the figure on a continuous rising trend. How does NIO do it?
Tesla became the first automotive manufacturer in the world to announce the battery swapping service for electric vehicles in 2013, which also became the first automotive manufacturer in the world to abandon the battery swapping service due to exorbitant costs and low usage willingness. Tesla eventually placed all investment in the construction of super charging stations and bid farewell to battery swapping.
NIO, known as Tesla of China, established the company’s first battery swapping station in 2018, and has completed more than 500K times of battery swapping, expanded 123 battery swapping stations, as well as serviced roughly 20K units of vehicles over the past two years despite the waves of pessimistic opinions, which seemingly proves that the battery swapping model is not entirely impossible.
“Separating the vehicles with batteries can reduce the initial price and mitigate the depletion of battery lifespan at the same time”, commented William Li, who believes that battery accounts for a substantial cost ratio in the assembling of high-end electric vehicles, and even occupies half of the vehicle for some models. The prices of electric vehicles may be able to compete with that of fossil fuel vehicles if consumers are exempted from paying such significant ratio of battery cost.
Bearing this thought process in mind, NIO established the NIO Power system in 2017, and provides 3 energy solutions: battery swapping, battery charging, and battery replenishment. Let’s talk about how NIO swaps batteries for its electric vehicles.
The battery swapping station of NIO looks just like a large crate, and all the user has to do is to park the vehicle in front of the crate and initiate the battery swapping procedure, the vehicle will then complete all subsequent actions automatically.
After automatically parked at the spot of battery swapping, the vehicle will be lifted, before the chassis and the old battery are automatically dismounted and stowed below the surface, and the new battery below the surface will be swapped with the old one, then the platform will once again lift the chassis and the new battery up before locking them back to the vehicle. According to the official data of NIO, the entire automatic operation is completed within approximately 3 minutes, which is much faster than any charging stations in the existing market.
The battery swapping station used to cost RMB$180 (approx. TWD$760) per battery swapping, which is already considered a bargain, though the company had also decided to launch the lifetime free battery swapping solution for new owners since the debut of ES8 and ES6 in August 2019 in order to stimulate sales.
▲From left to right: NIO offers 3 service solutions of battery charging, battery swapping, and rechargeable vehicles.
NIO plans to expand 50 units of upgraded battery swapping stations this year, where the simplified process allows an easy and rapid battery swapping without needing the owner to step out of the vehicle. The incorporation of new batteries in the swapping cycle at the end of the year will be another incentive in battery swapping for the users.
Shen Fei, Vice President of NIO Power Management, pointed out that battery replenishment is a requirement no matter how far the driving range is, and that an expeditiously completed battery replenishment target is more important than elevating the driving range. Shen also pointed out the additional advantages of the battery swapping solution apart from its speed:
NIO Power has not decelerated on the establishment pace of its fast charging stations apart from expanding its battery swapping stations. As of the first quarter of 2020, NIO has a total of 25 fast charging stations, and 188 units of fast charging piles. Paired with NIO’s charging map APP, NIO owners are free to use 300K of charging piles in the entire country, without having to worry about the quantity and service range.
Some Tesla owners also use the charging service of NIO, which services more than 20 automotive brands, indicating that NIO Power has established a rather well advantage in infrastructure and energy service.
NIO’s Predicament: Time and Money
The biggest issue for NIO right now is whether the marking strategy of free battery swapping will stimulate enough sales to help the company to improve on its financial predicament from being on the verge of bankruptcy at the end of last year, where its funds were only enough to last for a year of operation.
Each battery swapping station requires roughly 43㎡ of “land”, and must be stationed with specialists 24/7, as well as requires an additional 380V of commercial power, with a rough estimation of approximately RMB$2 million for the cost of each unit. The additional 50 units of battery swapping stations would mean a minimum investment of RMB$100 million, and NIO had a whopping RMB$113 million of losses in 2019.
Marching into 2020, NIO currently has roughly RMB$1 billion of cash and assets, and how will this financial status help the company in completing the arrangement of energy infrastructure?
Perhaps the company is adopting the “Chinese enterprise management path” when resolving this issue. NIO received RMB$7 billion of subsidy from the Hefei Government in April this year, which reassured its survival at least for this year.
NIO has managed to not let the government down by gradually stabilizing its sales performance since first quarter of 2020, and its ES6, the only electric vehicle among competitors, was listed as one of the top 10 medium-sized SUV sales ranking in China for 7 consecutive months,
NIO performed relatively well in sales during the COVID-19 pandemic in the first quarter, and may possibly become an option besides Tesla as electric vehicles are progressively seizing the market of fossil fuel vehicles. A bright future may be waiting for the company if it is able to gain a foothold this year.
(Photo source: NIO)