Its previous insistence on pure electric vehicles must give way to profit-making.

Body

'Sticking to battery swapping' has always been NIO's biggest label, but recently, there have been signs of loosening.

According to Reuters, NIO is planning to launch a new extended-range hybrid model in 2026.

As evidence, at the end of October, NIO posted a job recruitment notice for a 'Powertrain NVH Engineer' on official channels. This position requires candidates to possess development capabilities related to NVH for intake and exhaust systems.

In response to this news, NIO's Chairman and CEO, William Li, directly responded: "Don't guess, everyone. Battery swapping is available in every county, so there's no need for anything else.""Combining information from both sides, NIO will not launch hybrid models in China for now, but it is indeed developing hybrid models. Reuters reports that these will be under the 'FIREFLY' brand, specifically for North Africa, the Middle East, and Europe.

Forced to Launch Hybrid Models

NIO's move is quite helpless.

Not long ago, Europe officially adopted a targeted tariff policy for Chinese-made pure electric vehicles. All electric vehicles produced in China and exported to Europe must pay huge tariffs. This is undoubtedly the worst news for NIO, which has always wanted to expand into overseas markets, especially the European market.

However, the above policy only targets pure electric vehicles, which means that Chinese-made plug-in hybrid models still have a chance in Europe.

Moreover, NIO itself has had some difficulties adapting to the European market. Its prized battery swapping network has been difficult to expand on a large scale in Europe. Previously, NIO planned to establish 1,000 battery swapping stations in Europe by the end of 2025, but as of mid-July this year, the number of NIO's battery swapping stations in Europe had only surpassed 50. The inefficiency in establishing charging and energy replenishment facilities has further restricted NIO's presence in Europe.

In May 2021, NIO ambitiously announced its entry into Europe. However, as of April 2024, NIO has sold less than 5,000 vehicles in Europe.

Under these obstacles, it is understandable that NIO wants to change its path.

In addition to external variables, NIO's decision may also have been driven by internal shareholders. NIO's major shareholder, CYVN Holding, an investment company from Abu Dhabi, also believes that extended-range hybrid models have a better chance of success in the Middle East market compared to NIO's existing pure electric models.

This large Middle Eastern conglomerate invested a whopping $3.3 billion in NIO in two installments last year. In October, it also signed a memorandum of understanding with William Li to establish a new R&D center in Abu Dhabi and jointly develop exclusive models suitable for the local market. This model is likely to be an extended-range hybrid model under the 'Firefly' brand.

On the 5th of last month, NIO officially announced the signing of a strategic cooperation agreement with its strategic investor CYVN, announcing the establishment of an advanced technology R&D center in Abu Dhabi, United Arab Emirates. The two parties will jointly develop a new model tailored to the local market. At the same time, NIO announced that it will officially launch operations in the Middle East and North Africa through a joint venture established by NIO and CYVN, NIO Middle East and North Africa. The United Arab Emirates will be the initial market for NIO Middle East and North Africa. According to the plan, NIO will start deliveries in the United Arab Emirates in the fourth quarter of this year.

For the domestic market, NIO has launched its second brand, Lido, to tap into the market below RMB 250,000. A month ago, William Li said that orders for the Lido L60 were booming, and the company was accelerating production capacity. However, the first-month sales data was only 832 units. This figure is not only lower than market expectations but also in stark contrast to the 2,819 units of the simultaneously launched Lynk & Co Z10.

Originally, if the Lido brand had been successful, NIO's sales pressure would have been greatly reduced. Rushing to launch extended-range models domestically would have damaged the brand image. However, facing such sales figures now, the market may have had excessively high expectations for the Lido L60.

Imagine if this extended-range hybrid model exported in the future shines brightly in overseas markets, will NIO really not switch to domestic sales? It is difficult for anyone to guarantee this now.

Has battery swapping made NIO successful?

In the past year, NIO has shifted from a car company focused solely on battery swapping to opening its battery swapping stations to third parties. Its strategic partners for battery swapping include a total of seven automakers: Changan Automobile, GAC Group, Geely Holding Group, Chery Automobile, JAC Group, Lotus, and FAW Group.

However, there are many voices in the industry questioning whether 'battery swapping will eventually replace supercharging.' Li Xiaolong, CTO of Huawei's Terminal BG, once responded to this question: "If you have the opportunity to compare the thickness and size of batteries designed for swapping a few years ago with the latest batteries today, you might change your mind. Modern technology is developing too fast, and being compatible with old batteries is a heavy burden.""The cost of battery swapping is a well-worn topic, but it may not be NIO's biggest problem. The most critical challenges often come from breakthroughs in other competitive avenues, such as advancements in battery technology.

Unlike the multiple paths available for upgrading photovoltaic technology, the industry has long had a unified understanding of the ultimate form of battery technology: solid-state batteries.

Currently, the development of solid-state batteries is accelerating. Contemporary Amperex Technology Co., Limited (CATL) plans to achieve small-batch production of all-solid-state batteries by 2027. Chery Automobile plans to conduct on-board testing of all-solid-state batteries in 2026 and mass produce them on a large scale in 2027. SAIC Motor also plans to achieve mass production of all-solid-state batteries in 2026, with an energy density exceeding 400Wh/kg.

In other words, the commercialization of solid-state battery technology is expected to be achieved by 2025. For electric vehicle users, the application of solid-state battery technology means longer driving range, faster charging speeds, and higher safety.

Compared to NIO's battery swapping, solid-state batteries have a significant advantage: battery-body integration, which means more passenger space, a lower chassis center of gravity, a lighter vehicle body, and lower energy consumption.

With its unified battery interface limiting model diversity, does NIO have an advantage in the fierce market competition?

Additionally, NIO prides itself on its battery swapping speed. Recently, NIO launched its first batch of fourth-generation battery swapping stations, using four NVIDIA Orin X chips and six ultra-wide-angle LiDARs, reducing battery swapping time to three minutes. To make battery swapping even faster, NIO has spared no expense and raced against the clock.

But is there really a significant difference for users between four minutes and three minutes? If solid-state battery charging time is reduced to less than 20 minutes, how many advantages will the battery swapping model, with its high cost, weak compatibility, and limitations, still have?""In response, many automakers have also realized this issue. For example, CATL has launched 'Chocolate Swappable Battery Blocks,' which, like building blocks, can provide a range of about 200 kilometers per block. Users can choose one or more blocks based on their mileage needs.

Of course, NIO is also constantly seeking breakthroughs in its battery swapping business. In February this year, NIO signed a strategic cooperation agreement with China Southern Power Grid to use battery swapping stations as distributed energy storage to participate in grid regulation and jointly develop virtual power plants.

In short, NIO's battery swapping model still faces many challenges. We look forward to NIO becoming a player that does not lose money at the table.