Nio partners with Changan on battery swapping technology

Collaboration will help with formulation of product standards, according to business deal

Chinese electric vehicle startup Nio has partnered with State-owned Changan Automobile on developing battery-swapping technology, marking the first cooperation for Nio in its five years of investing in battery-swapping services.

According to terms of the deal, which was signed last week, the collaboration will assist the formulation of standards for swappable batteries, build and share the battery swapping network, develop swappable vehicles and establish a battery asset management mechanism.

The first swappable EV model with a shared battery pack is planned to be launched in 2025.

"Over the past five years, Nio has accumulated a lot of experience in research and development, construction and operation of battery swapping stations," Nio founder and CEO William Li said in a statement, adding that the company is ready to share its expertise with the entire industry.

Besides Changan, Nio is in negotiation with four or five other auto companies for potential collaborations, Li said.

The EV startup delivered 55,432 new vehicles in the third quarter of this year, representing a year-on-year increase of 75.4 percent.

Zhu Huarong, chairman of Changan, said as China is doubling down on new energy and smart connected vehicles, the implementation of Nio's battery swapping model marks a milestone for the industry. He noted the partnership won't be limited to battery swapping, and the company will strengthen cooperation in other areas, including energy, charging and vehicle development.

With 39 years of experience in vehicle production, Changan has 22 factories worldwide, with cumulative sales of 25.3 million units as of October.

Battery swapping involves switching dead batteries for ones that are fully charged, rather than simply recharging. Compared with charging facilities, battery swapping takes less time, helps to improve safety and lengthens battery life.

Nio owns the world's largest battery swapping network for EVs, with 2,113 swapping stations operating worldwide. As of Nov 21, it had provided more than 32 million battery swaps, and the stations can automatically navigate a vehicle into position for the procedure.

According to industry insiders, partnering with Nio allows Changan to benefit from Nio's proven battery-swapping technology and station network, thereby minimizing its development and construction costs. The partnership is also an attempt to reduce operational costs for Nio, as the battery-swap stations are expensive to build, operate and maintain.

In the first half of 2023, Nio's net profit attributable to the parent company was at a loss of 10.93 billion yuan ($1.53 billion), due mostly to construction of the service system.

According to Qin Lihong, co-founder and president of Nio, it costs around 3 million yuan to build a single power swap station equipped with batteries, and each station needs to maintain an average of over 50 swaps a day for eight years in order to break even.

Shared difficulty is another critical constraint for the widespread adoption and commercial success of swapping stations.

Auto manufacturers are reluctant to fully disclose battery details, and technological differences in vehicle models make battery swapping equipment incompatible. Lack of standardized battery swapping stations and packs limits compatibility and hampers the scalability due to lower usage frequency, industry insiders said.

However, as an option for EV's energy supplement, battery swapping still has huge market potential. Founder Securities forecast there will be more than 3 million battery-swap cars with more than 28,000 supporting facilities by 2025. And the market has garnered interest from other industry players.

Battery giant CATL stepped into battery swapping in 2022 with new service EVOGO available in Xiamen in Fujian province, Hefei in Anhui province and Guiyang in Guizhou province now.

SAIC Motor's subsidiary, Rising Auto, announced to accelerate its battery-swapping plan in July, with the goal of establishing more than 50 stations in several cities, including Beijing, Chengdu, Guangzhou and Hangzhou, by the end of this year. The stations are designed to complete the swapping procedure in 2.5 minutes.

The Chinese government has also introduced policies to support the development of the battery-swapping industry, which issued EV battery swapping safety requirements in 2021 as the first national standard for the sector.

Xing Guobin, vice-minister of the industry and information technology, said at the World Power Battery Conference in June that China is promoting standardization in battery swapping, including battery size, swapping interfaces, communication protocols and other aspects.