China's NIO Cuts EV Charging Time With Battery Swapping Technology

Batteries are by far the most expensive component of an electric vehicle, and swinging raw-material prices can make the task of lowering their cost more difficult. China’s NIO Inc. and Contemporary Amperex Technology Co. Ltd. aim to lighten that burden by allowing customers to lease batteries separately from cars, reducing upfront purchase costs.

The approach means customers can buy just the vehicle shell outright, while agreeing to pay rental fees for the battery. They can also replace the battery with a newer, improved one in the same car shell as technology rapidly advances.

Such a model could expand the potential pool of customers and help to spur sales at carmakers such as NIO, which announced a standalone battery business with CATL in Beijing on Thursday.

Under the new model, the starting price of NIO’s ES6 SUV without a battery will be 273,600 yuan ($39,500), and the battery’s monthly lease starts at 980 yuan, NIO said. Customers can still choose to buy the entire vehicle, battery included, for 343,600 yuan.

The so-called battery-as-a-service model could “considerably lower the purchase cost,” Credit Suisse Group AG analysts said earlier this week.

The new venture, which will handle leasing, charging, maintenance and upgrades of batteries separate from its cars, will be part owned by NIO and battery giant CATL. Other investors are Guotai Junan Financial Products Co. and the government-backed Hubei Provincial Science and Technology Investment Group.

The four owners will each invest an initial 200 million yuan into the venture, called Wuhan Weineng Battery Asset Management Co. More investors are in the process of participating, NIO Chief Executive Officer William Li said.

Shanghai-based NIO, which this year received a municipal government cash injection and credit facilities from local banks, reported a positive gross margin for the first time in the second quarter. Its sleek ES8 and ES6 SUVs are attracting buyers as the coronavirus pandemic eases in China, helping NIO’s stock price more than triple this year.

NIO is the only EV maker so far to roll out models with swappable batteries for individual customers. Rival BAIC Motor Corp. uses swappable battery technology too but only for fleets.

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