Contemporary Amperex Technology Ltd (CATL), China's largest new energy vehicle battery producer, is partnering with U.S.-listed Chinese electric carmaker Nio to build a network of battery-swapping stations across the country. The two companies announced that they will be establishing a new joint venture, called Wuhan Weineng Battery Asset, to accomplish the task.
CATL and Nio agreed to jointly invest a total of 800 million yuan, or roughly $115.4 million, in the new joint venture. The funds will be used as initial capital to set up the venture's operation, including the leasing of new batteries for battery-swappable electric car owners.
According to a joint statement, Wuhan Weineng Battery Asset will have four major stakeholders, with each company taking an equal stake. The other two companies are Hubei Science Technology Investment Group and financial services firm Guotai Junan International.
The move to establish a new battery-swapping network underscores the companies' optimism toward the rapid adoption of new energy vehicles in China. The wider industry forecasts that NEV sales in the country could triple by 2025, even with the recent market disruptions caused by the coronavirus pandemic. The ambitious goal set by the industry is also being heavily supported by the Chinese government and lawmakers, which have started to roll out measures to encourage sales and adoption.
CATL mentioned in a statement that the new network should greatly benefit both drivers and manufacturers. Battery swapping NEVs provide significant advantages when compared to traditional NEVs as they are much cheaper and driving range anxiety is relatively non-existent, the company added.
Both Nio and CATL expect that the BaaS (Battery as a Service) business model for NEVs should greatly accelerate the country's full electrification in the coming years. Nio's latest model, the Nio ES6 sports utility vehicle (SUV), is equipped with a 70-kilowatt-hour battery pack. The vehicle, which is typically sold at around 358,000 yuan, will be offered to customers at a much lower price if they opt to use CATL's BaaS model. Under the program, the ES6 will be sold at only 287,000 yuan, with an additional 980 yuan monthly battery leasing fee.
Apart from being able to access the two companies' new battery-swapping network, customers will also have the advantage of free upgrades to newer battery types once they come out. Industry experts point out that the new business model is definitely advantageous, but that it will need a very wide network of swapping stations to become equitable.
