Analysis
14 Dec 23

The Battery Series: Nio has a comprehensive plan for 2024 and onwards

Most electric vehicle (EV) makers are keen to focus on one or a couple of battery types, while Nio wants to master all. 

Nio has followed an ambitious expansion strategy in Europe and innovation in recent years, launching operations first in Norway in 2021, followed by Germany, Sweden, Denmark and the Netherlands. Perhaps the most alluring tech of Nio is the futuristic battery-swapping technology, which the company first tested in Norway in 2021, today evolved into Nio Power Swap. Based on 1,600 patents, the fully automatic battery swapping system replaces the battery pack in three minutes. Power Charger 3.0, the ultra-fast charger with a liquid-cooled charging cable, is another nifty tech in the EV world. Yet, sales are not aligned with this outlook.

NIO's profit problem

Nio sold 200 cars in Europe in 2021, which jumped to 1,350 in 2022. While the European venture is slowly growing, the major market for Nio is China. According to the China Passenger Car Association (CPCA), Nio sold 126,067 cars in the first ten months of 2023, up 36% from the previous year, making the EV maker the ninth best-seller in the Chinese EV and plug-in hybrid market. 

Nio reported a loss of $835 million between April and June 2023, pointing to a $35,000 loss for each car it sold. Heavy investment in research and development (R&D), innovative tech in manufacturing, and battery swapping cost the company more than its profits, resulting in receiving help like almost all other Chinese EV makers. Nio faced bankruptcy in 2020, hit hard by the pandemic. Still, the government of Henfei, home to the Nio-JAC (Anhui Jianghuai Automobile Group) joint venture plant, funded the brand with $1 billion in exchange for 24% of the stakes. 

The generous government backing is critical for Chinese brands competing in Europe and other parts of the world, as their dominance in the old continent triggered an inquiry in September 2023. Still, Nio and other Chinese brands are keen to stiffen their ties with European partners

The battery tech of Nio 

Nio has a strong appetite for various batteries and has chosen solid-state batteries (SSBs) as the primary option to compete in the battery market. The company adopted SSB technology in 2021, choosing ET7 (Tesla Model S rival) and ES6 as the first models to be equipped. Nevertheless, ET7, available in Germany and the Netherlands since October 2022, has a 75 kWh lithium-ion battery (118 battery cells) and uses lithium iron phosphate (LiFe or LFP) and nickel cobalt manganese (NCM) as the cathode material, offering a 400 km range. According to the Nio website, the 150 kWh battery pack range will be over 1,000 km, depending on the China Light-Duty Vehicle Test Cycle (CLTC) estimate. 

Nio is working with two suppliers to develop the SSB battery technology, WeLion (a subsidiary of Nio) and Gotion. But both companies produce semi-solid-state batteries, which don't contain a solid electrolyte but a solidified solid-liquid electrolyte. In May 2023, Nio announced that the 150-kWh SSB would be available in July, and WeLion delivered the first SSB that month, produced in Huzhou, China. Thus, Nio became the first EV maker to offer mass SSBs (yet not fully SSBs). 

Later, the NIO EV user manuals dimmed the curiosity about the first mass-produced SSB. It weighs 575 kg, slightly heavier than 100 kWh lithium-ion battery packs, and offers an energy density of 261 Wh/kg, 44.44% higher than the lithium-ion pack. The range is not 1,000 km but 930, according to Nio. 

Gotion, the other Chinese semi-solid-state-battery manufacturer, launched a semi-solid flow battery with a capacity density of 360Wh/kg in June 2022 along with other products, and other than Nio, is rapidly furthering collaboration with Volkswagen in many arms, including R&D and manufacturing. 

Nio has set an open partnership approach in batteries with its sub-brand, ALPS. In January 2023, Nio expanded its partnership with CATL for another five-year, comprehensive strategic deal. The partnership will focus on strengthening Nio's ability to produce batteries and supply chains, boosting the operations in China and overseas. 

ALPS’s other partners include the CALB Group and BYD's battery unit FinDreams. According to Chinese sources, Nio will employ CALB's One-Stop battery solution, announced in 2021, which is still in development and supports a 700km range for LFP batteries. 

On the in-house R&D side, Nio aims to develop multiple batteries, including 4680 battery cells, souring all the tech know-how from its partners. Nio has a battery team of over 400 engineers (included in the total of 11,000 people in R&D), aiming to produce low-cost lithium manganese iron phosphate (LMFP) and high-performance 4680 battery cells, according to Cnevpost. 

The LMFP battery will have the exact cost as the LFP but provide 15-20% more energy density, while the 4680 battery cells, currently favoured by Tesla, are to be used in high-performance vehicles. The cylindrical 46mmx80mm batteries can hold much more energy and resist heat, offering long-range. 

Nio WeLion battery pack. Source: Nio.

Nio's third-generation battery swapping system. Screenshot: Nio. 


The strategy of Nio 

We can simplify the current strategy of Nio as below: 

  • Balancing the heavy in-house R&D with increasing sales
  • Owning own facilities for battery and EV manufacturing
  • Enhance penetration into Europe through a strong charging network
  • Increasing sales in China by lowering prices and reducing costs

There have been several developments to reinforce this strategy in recent months: 

In November, Nio announced that it would shrink its workforce by 10% in a month, mainly to reduce the costs even more and face the price competition better. Two developments pushed Nio to lower its spending, slowly distance itself from outsourcing and reduce the workforce: Sales of more economical PHEVs surged 84.5% in the first nine months of 2023, while price wars on EVs shook the balances in that segment. 

While new energy vehicle (NEV) maker BYD and EV giant Tesla boosted their sales along with other rivals, sales of Nio dipped in Q2 to 23,520 (31,041 in Q1). The green car campaign launched by the Chinese Commerce Ministry in June was the last call for Nio, which announced price cuts on all models by $4,200. In Q3, the sales jumped back to 55,432 units (31,607 in Q3 2022). 

Nio also plans to spin off the battery manufacturing unit to reduce costs and improve efficiency as the EV maker struggles with competition in China and overseas. According to Reuters, the spinoff can happen as early as the end of 2023. CEO William Li said this month that the EV maker will continue in-house R&D on batteries but now plans to outsource manufacturing.

In December, according to Reuters, Nio said it would take over some of the fixed assets and equipment at the F1 and F2 factories owned by JAC to lower manufacturing costs, which were put up for sale.

Nio has been busy installing battery swap stations across Europe, reaching 30. The UK is to follow Denmark, Sweden, Germany, Norway, Spain, and the Netherlands in having battery swapping stations. The third-generation Nio stations can hold 21 EV batteries and perform 408 daily swaps. 

Nio announced a partnership with Geely in November, followed by Changan Auto in December, allowing the models from these brands to use Nio's charging network. This is a significant move, as models from Volvo, Polestar and several other carmakers will become compatible with Nio's charging network in Europe. 

Nio reached 2,200 power swap stations globally and targets over 2,300 by the end of 2023, having built over 1,000 in China this year. 

Nio aimed to reach 250,000 sales in 2023, which seems unlikely. Yet, with a revised strategy and tactics, it could be very well possible in 2024. In 2025, the target will be North America.

Check earlier articles in this series:
The Battery Series: How Tesla wants to keep world leadership?
The Battery Series: What does BYD have on the menu?
The Battery Series: Volkswagen to boost performance through dry-coating
The Battery Series: Toyota to master both li-ion and solid-state batteries
The Battery Series: Mercedes-Benz's global battery network is ready
The Battery Series: Renault to unleash future EV mobility with the R5
The Battery Series: Volvo's strategy combines performance and safety
The Battery Series: Li Auto wants to topple German giants with 'Qilin'
The Battery Series: Lucid Motors has a unique battery tech and a new strategy

The main image shows Nio ES6. Courtesy of Shutterstock, 1971046598.

Authored by: Mufit Yilmaz Gokmen