With sales stabilizing and rebounding, the triumphant Li Bin intends to extend NIO's battery swapping business to all districts and counties across China. Recently, NIO held the Power UP 2024 NIO Charging Day, revealing several major announcements, including nationwide charging coverage, a charging partnership program, the establishment of an energy headquarters in Wuhan, and a series of new products and technologies related to battery safety.

In the next three years, NIO's charging and battery swapping network will expand to cover most county seats nationwide. Furthermore, NIO has launched a charging partnership program, which, with the involvement of other investors, will accelerate the rollout of this vast energy network.

Entering a New Stage of Development

As new energy vehicles (NEVs) increasingly enter third- and fourth-tier cities and broader county markets, the pressing issue is the insufficient and uneven distribution of charging facilities in these areas. The low penetration rate of NEVs, coupled with the scarcity of charging stations, creates a vicious cycle.

For counties and rural areas, the market for NEVs holds vast potential. In recent years, a series of policies have been implemented to promote the construction of charging and swapping networks in these regions. This is crucial for establishing a high-quality charging infrastructure system and supporting the more robust development of the NEV industry.

However, issues such as high construction costs, unstable power supply, and difficulties in maintaining charging facilities persist, hindering the development of charging and swapping facilities in counties and rural areas. In particular, the construction of charging and swapping stations in counties lags behind, with limited coverage.

The inadequacy of charging piles in county seats is a widely recognized issue, let alone battery swapping stations. As the name suggests, a battery swapping station directly exchanges the original battery for one from the station, which then charges the swapped battery slowly. This mode offers significantly faster charging times than even fast charging stations, comparable to refueling a conventional car. It also avoids battery degradation caused by fast charging, extending battery life. However, vehicles compatible with battery swapping remain a minority.

To address the charging challenges in counties, NIO's founder, chairman, and CEO Li Bin announced plans to achieve nationwide charging coverage in all county-level administrative regions by June 30, 2025 (excluding Taiwan and Hong Kong). By December 31, 2025, NIO aims to establish battery swapping stations in over 2,300 county-level administrative regions across 27 provincial-level regions. Starting in 2026, NIO will focus on expanding battery swapping stations to cover over 2,800 county-level administrative regions nationwide.

While many brands remain cautious about self-building energy replenishment facilities, NIO's charging and swapping infrastructure has entered a faster, larger-scale phase. Under the "Charging Everywhere" plan, every county in China will have NIO charging and swapping facilities by mid-2026. Moreover, NIO's charging facilities are open to all NEV users, ensuring convenient charging services comparable to refueling for all domestic NEV drivers.

NIO has been committed to making electric vehicles accessible wherever gasoline-powered cars can go. Since its inception in 2018, NIO has deployed charging and swapping facilities, establishing an "upgradable, swappable, and chargeable" energy service system. As of August 20, NIO has deployed 23,009 charging piles and 2,480 battery swapping stations nationwide, making it the Chinese automaker with the largest network of such facilities. After years of development, NIO's market presence has significantly grown. Li Bin's announcement to expand battery swapping stations to county seats marks NIO's entry into the next stage of energy development.

Winners May Not Be Automakers

NIO is not alone in the battery swapping business. State-owned automakers like FAW, Changan, and Dongfeng have also entered this field. Contemporary Amperex Technology Co., Limited (CATL) has established the Choco-Battery Alliance, compatible with over 80% of vehicle models. In the two-wheeler segment, companies like Didi, Hello Bike, Meituan, and various SMEs have performed well, posing a significant threat to NIO.

The complexity of battery swapping lies not in the process itself but in standardization, modularity, and network coverage. NIO's advantage lies in its early entry and significant investment in the battery swapping sector. However, standardized batteries limit its reach into the compact vehicle market, impacting profitability and expansion potential.

Different battery swapping methods exist, including underbody, side, and segmented battery swapping. Currently, underbody and segmented battery swapping dominate the passenger vehicle market. Adopting a uniform swapping method requires modifications to vehicle bodies and chassis structures, a non-trivial task.

Battery swapping stations are costly, involving fixed asset investments, site leasing, and operational and maintenance expenses. According to previous NIO disclosures, the cost of the first-generation battery swapping station was approximately 3 million yuan. While costs for the second and third generations are lower, the second-generation station still costs 2 million yuan, and rumors suggest the third-generation may cost around 1.5 million yuan. Such substantial investments pose challenges even for automakers like NIO.

However, battery swapping stations offer clear benefits, alleviating range anxiety and simplifying daily charging for NIO owners. No matter how fast charging stations become, they cannot match the speed of battery swapping. Yet, the winners in the battery swapping race may not be automakers but giants like Sinopec and PetroChina.

As early as September 2022, Sinopec and PetroChina joined forces with SAIC Motor and CATL to establish GenEnergy Smart Power, aiming to create a standardized platform and a comprehensive vehicle-battery separation ecosystem. Leveraging Sinopec and PetroChina's nationwide network of over 50,000 gas stations, they plan to upgrade them into integrated energy service stations.

Although traditional energy giants may have been slow to enter the battery swapping race, they will not miss out. Once the charging and swapping business reaches a certain scale and competitiveness, these giants can easily pivot and leverage their abundant resources to rapidly build a nationwide network of charging and swapping stations, overwhelming competitors in their strongholds.

The battery swapping game has just begun, with various intriguing possibilities ahead. The success of a business model depends on multiple factors, including technology, scale, profitability, industry collaboration, national policies, and industrial planning. Any of these variables can significantly impact outcomes.

Citizen Car Reviews

NIO's strategy of nationwide charging coverage is crucial for advancing the NEV industry. As NEVs become more prevalent, the construction of charging and swapping facilities becomes a pivotal constraint. NIO's plan addresses this issue, providing convenient and efficient battery swapping services, thereby accelerating NEV industry growth.

However, battery swapping faces challenges, including non-standardized battery packs and limited NEV ownership, making it difficult to balance costs and benefits for private vehicles. The combination of these issues creates a formidable barrier to the commercialization of battery swapping for private use.