China’s Nio is betting on replacing a battery with Tesla’s challenge

Chinese electric motor maker Nio bets that battery replacement will play a key role in challenging it to Tesla in the world’s largest auto market, even if U.S. rival avoids the expensive technology.

Battery replacement allows drivers to quickly replace the charged battery for a fully charged one at a specially equipped service stations. In April, New York -listed Nio partnered with state -run oil group Sinopec as part of plans to more than double its network of such stations across China to 500 this year.

Nio also plans to open battery exchange stations in Norway this year as part of its expansion into Europe.

“A lot of users have told us that changing a battery is the reason they chose this car,” Shen Fei, Nio’s vice president for power management, told the Financial Times, adding that several drivers in Chinese cities do not have access to home-based electric vehicles pay. “Battery replacement is already the reason we’re so competitive.”

Nio is one of several Chinese automakers attempting to challenge Tesla’s leading position in the country’s electric motor market. The U.S. group is under pressure from China recently after the futile handling of a high-profile customer protest turned into a nightmare in publicity.

New York -listed Nio has partnered with state -run oil group Sinopec as part of plans to more than double its network of such stations across China to 500 this year © Nio

China, the largest market for battery-powered and hybrid vehicles, is an outlier in an industry focused on developing infrastructure to support home charging and stations.

Geely, China’s largest private automaker by retail, plans to build 100 relocation stations in the southern city of Chongqing this year before rolling out facilities in other parts of the country.

Beijing New Energy Vehicles, a subsidiary of state-owned automaker Baic Motors, focuses on the electric taxi fleet and operates 121 swap stations.

Global interest in battery replacement has waned in recent years, in part due to high costs. Tesla ended a two -year trial of its own exchange system in 2015 after heated customer seizures.

The technology has benefited from Beijing’s strong support. Last year, the government made the battery replacement necessary for receiving subsidies for electric vehicles worth Rmb300,000 or more, in a move that benefited Nio.

One appeal to buying a battery for drivers is to lower the initial cost. Nio launched a subscription option for batteries last year that allows customers to purchase cars without a power pack, cutting nearly $ 10,000 from the purchase price.

However, some analysts remain unconvinced, pointing to the high cost of construction stations. They argue that the powerful charging systems made by Tesla and others are more efficient once the overall operating cost and the potential to charge multiple cars simultaneously are considered, even if it is slower than replacing a battery. .

Even if Nio and others can make a profit-making battery replacement depending on the use of stations and running operating costs through automation, said Edison Yu, an analyst at Deutsche Bank.

Nio, which was built in 2014, previously struggled to build battery replacement infrastructure. The cash flow crisis in 2019 meant it fell short of its initial targets of 1,100 buying stations by 2020. The group revived expansion efforts after securing $ 989m in state support. investments early last year.

Shen, Nio’s executive, believes the battery replacement will help Chinese manufacturers open up an advantage over their foreign competitors, who are unlikely to use the technology. “Whether or not it’s the last game for the industry, Chinese manufacturers want to win now,” he said.

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