7 car companies have joined NIO's "battery swap alliance", and Li Bin has built a moat?

Times Finance

2024-05-24 20:42Posted on the official account of Guangdong Times Finance

Source of this article: Times Finance Author: He Qing

On the 23rd, Weilai's official Weibo said that the company has carried out all-round strategic cooperation with 7 car companies, including Changan Automobile, Geely Holding Group, Jiangqi Group, Chery Automobile, Lotus Automobile, Guangzhou Automobile Group, and China FAW, as well as a number of enterprises in the fields of transportation and energy, to accelerate the process of standardization of battery swap technology and large-scale battery swap network.

Who will be the next car company to join the battery swap alliance? On the 11th of this month, Yu Dongming, general manager of Anhui Weilai, issued a document saying that He Xiaopeng, chairman of Xiaopeng Motors, revealed that when there are more than 5,000 battery swap stations in Weilai, he will consider joining the battery swap mode.

For a long time, NIO's battery swap model has been controversial. However, founder Li Bin has said on many occasions, "Battery swapping is the moat of NIO." NIO has decided to open up since the first day of battery swapping", "Of course, battery swapping is NIO's moat, and this moat will only get deeper and deeper with the expansion of the network, with the increase of peers joining the battery swap network, as their cars are gradually listed, and as their cars are sold more and more." ”

Image source: NIO

At present, with the introduction of relevant policies and the entry of many car companies, the field of battery swapping continues to heat up. Kaiyuan Securities predicts that the market size of the battery swap industry chain in mainland China is expected to reach 133.4 billion yuan in 2025; Orient Securities believes that by 2025, the proportion of domestic battery swap models is expected to reach 30%.

"The gradual increase in the proportion of plug-in hybrids in the electric vehicle market in the past two years has reflected that the demand for pure electric vehicles may have been constrained by the convenience of energy replenishment, and car companies focusing on pure electric vehicles are strengthening the construction of energy replenishment networks," Yang Jing, director of China Corporate Research at Fitch Ratings, told Times Finance. ”

Expand the circle of friends for battery swapping

On March 22, NIO and FAW jointly announced that the two parties have signed a strategic cooperation framework agreement to carry out all-round and multi-level in-depth strategic cooperation in the field of battery charging and swapping.

According to reports, NIO and FAW will carry out all-round and multi-level in-depth strategic cooperation in the field of battery charging and swapping, and deepen long-term cooperation mechanisms in the fields including the establishment of battery technical standards, the research and development of rechargeable and swappable battery models, the management and operation of battery asset management, the construction and operation of the charging and swapping ecological service network, and the procurement and supporting of the battery industry, so as to establish a long-term and stable strategic partnership.

Up to now, NIO has reached strategic cooperation with seven car companies, including Changan Automobile, Geely Holding Group, Chery Automobile, Jiangqi Group, Lotus, GAC Group, and China FAW, to jointly promote the construction of a standardized and large-scale energy infrastructure network.

In addition to the participation of car companies, NIO has also carried out all-round battery swap cooperation with enterprises in the energy and power fields such as Sinopec, CNOOC, Shell, State Grid, and China Southern Power Grid.

Since the launch of the first NIO battery swap station in 2018, NIO has continued to invest in the field of battery swapping. As of May 21, NIO had built 2,420 battery swap stations and 800 high-speed battery swap stations across the country, providing users with more than 44.5 million battery swap services.

Image source: NIO

In addition to NIO, CATL, the company with the largest market share of power batteries in the world, is also actively laying out the battery swap track. On November 16, GAC Aion, a subsidiary of GAC Group, signed a cooperation framework agreement with CATL and Times Electric Service Co., Ltd. for battery swap projects.

According to the agreement, the three parties will carry out in-depth cooperation in the fields of battery swap model development, battery swap block development, production and circulation, vehicle and battery data management, vehicle warranty and after-sales service, etc., to jointly promote the sales of GAC Aion's battery swap models and bring users a more efficient and convenient battery swap and energy supplement experience.

"The underlying logic of battery replacement is to 'eat dry and squeeze clean' the battery, maximize the use of the cycle life of the battery, and at the same time, because the process end can greatly shorten the energy replenishment time, the user side and the operator of the operation demand can get higher returns." Hua Chuang Securities believes that compared with charging, the battery replacement time is short, which can greatly improve the efficiency of social energy replenishment. Secondly, the battery swap industry has good economy, with a market space of more than 200 billion yuan, and the government has promulgated construction and subsidy policies to promote the implementation of battery swapping in various provinces, cities and car companies.

In June this year, the Ministry of Finance, the State Administration of Taxation and the Ministry of Industry and Information Technology jointly issued the "Announcement on Extending and Optimizing the Vehicle Purchase Tax Reduction and Exemption Policy for New Energy Vehicles".

The "Announcement on Adjusting the Technical Requirements for New Energy Vehicle Products for Reduction and Exemption of Vehicle Purchase Tax" issued at the end of last year has been supplemented and refined, clarifying the relevant requirements for battery swap mode models.

NIO battery swap ushered in the harvest season?

In the fierce competition in the electric vehicle market, NIO has gained industry attention with its large-scale layout of battery swap ecology. But at the same time, due to the huge investment in the battery swap mode and the inconsistent battery swap standards, the controversy around the battery swap mode has never stopped. When NIO first launched the battery swap mode, there was a view in the industry that the cost of battery swap facilities was too high, and it was difficult for a single car company to effectively cover it, and in the end, only a few people could try it.

Regarding the cost of NIO's battery swap business and when it will be profitable, Times Finance sent an interview letter to NIO, but did not receive a reply as of press time.

According to the 21st Century Business Herald, the construction cost of NIO's first-generation battery swap station is about 3 million yuan, the second-generation battery swap station is about 2 million yuan, and the third-generation battery swap station is about 1.5 million yuan. Combined with labor costs, maintenance costs, etc., NIO's battery swap station costs a lot of money. At present, NIO has launched the fourth-generation battery swap station in December 2023.

At the 2023 Shanghai Auto Show, Qin Lihong, president of NIO, pointed out that if NIO's battery swap station is full of batteries, the cost of a single station is about 3 million yuan. Li Bin said in a recent interview, "With 15 billion yuan, (NIO) can deploy at least 6,000 battery swap stations, which can serve 6 million users." "If this is calculated, the cost of a single battery swap station is about 2.5 million yuan.

The high investment in the field of battery swapping has also affected NIO's financial situation to a certain extent. According to NIO's 2023 financial report, its net loss in 2023 reached 20.72 billion yuan.

Li Bin revealed: "There is an internal timetable for when NIO's battery swap will be profitable. He emphasized: "A battery swap station makes a profit with 60 orders a day, and it makes money." Don't be misled by the loss of money for free battery replacement, the compensation is for electricity, not for the battery replacement service. ”

However, NIO's free battery swap rights have also gone through several stages of gradual decline, from the first owner's unlimited free battery swaps for life, to the subsequent gradual reduction of the rights and interests in the number of free times per month according to stages and rhythms. "(Battery replacement) will definitely be charged in full in the future, this is a matter of time." Qin Lihong once said, "Free is to burn money and anyone will do it, so our focus is not on free, we must make the threshold for battery replacement high and the service good." ”

Behind NIO's change in the free battery swap strategy, there are also cost considerations. Li Bin believes that the battery swap service is gradually turning into a charge, and car companies can obtain long-term income, reducing the number of "redundant" battery swaps in exchange for more user coverage and better user service, which is an inevitability.

In NIO's 2023 financial report, the revenue of "providing energy service system" reached 1.67 billion yuan, accounting for 3% of the total revenue in 2023. The provision of energy service system includes the sale of charging piles, the provision of charging and swapping services, battery upgrade services, BaaS battery buyout services and other energy service system services.

For NIO, it has always regarded the energy service system, including battery swapping, as its moat, and the current trend of cooperation may achieve a win-win situation for all parties, but the current battery swap still faces many challenges.

Yang Jing said: "Due to the large upfront investment in the construction of energy charging networks, especially in battery swapping and other modes, and the large differences in the profitability of energy charging facilities in different geographical locations, the separate investment of multiple brands may result in a large number of duplicate investments and inefficient operation of projects. The current trend of cooperation is conducive to improving the efficiency and economy of the energy charging network, and forming a unified national energy charging infrastructure construction and service standards as soon as possible. ”

Times Finance sent an interview letter to NIO on how to standardize battery specifications and whether there are barriers to the opening of standards, but did not receive a reply as of press time.

Taking the cooperation between NIO and Changan Automobile in the field of battery swapping as an example, it is reported that its first model will not be launched until 2025. Li Bin once mentioned in an interview that it will take some time for Changan Automobile to develop from the first car based on battery swapping. "We are in close communication with these partners, and we have set up a special team to see which models are suitable for battery swapping."

At present, NIO's battery swap alliance covers almost half of China's mainstream car companies, and it may be further expanded in the future. "If 100 million cars in China are battery swapped, 60% of them use NIO's battery swap network, and I will wake up with a smile every night." Li Bin once said.

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