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Source: Standard Business
In the face of external doubts, NIO continued to exchange power up the ante.
On November 21, NIO officially announced that,Signed a cooperation agreement with NIO in Chongqing, the two sides will cooperate in promoting the establishment of replacement battery standards, the construction and sharing of replacement networks, the research and development of replacement models, and the establishment of an efficient battery asset management mechanism to jointly promote the high-quality development and low-carbon transformation of the automotive industry.
According to the agreement, Changan Automobile’s first exchangeable passenger car model that shares a battery pack with NIO is planned to be launched in 2025.
After years of investment in the power exchange business, NIO has finally welcomed its first partner.
The day before, NIO CEO Li Bin’s internal speech was a hot search. Li Bin said that the road to changing electricity is very difficult, but it is difficult and correct. "Everyone imagines changing electricity as if Amazon wanted to do Cloud as a Service in 2003. Cloud as a Service like Alibaba, Tencent, Amazon, Microsoft, etc., they lost many years before they finally achieved success."
Three major controversies in the power exchange model
In the new trend of car manufacturing, the biggest feature of NIO is the "power exchange mode".
On October 26, NIO announced that NIO has deployed 2,000 power swap stations across the country, including 601 expressway power swap stations, opening up the high-speed power swap network in 6 vertical, 4 horizontal and 8 major urban agglomerations.
As of November 20, NIO had a total of 2,103 power stations nationwide, and 798 new power stations were added this year. According to the plan, NIO will have a total of 2,300 power stations this year.
For a long time, the outside world has been skeptical about NIO’s insistence on the power replacement model, mainly due to the investment, compatibility, rapid development of charging technology, and the necessity of power replacement.
In terms of cost, at this year’s Shanghai Auto Show, NIO President Qin Lihong once said that the cost of a single station replacement is about 3 million yuan.
Although the cost of each generation of NIO’s third-generation replacement stations is slightly different, based on a rough calculation of 3 million yuan per station, the fixed cost investment of all 2,000 replacement stations in NIO will reach RMB 6 billion. This does not include additional expenses such as site rental, personnel operation and electricity expenses. According to NIO’s goal of adding 1,000 replacement stations this year, the cost of building website alone is as high as 3 billion yuan.
When will high-cost power stations become profitable? Shen Fei, vice-president of NIO, once said: "At present, each power station averages 35-36 orders per day. As long as it can handle 50-60 orders a day, the power station can break even."
According to NIO official website data, the average number of daily power changes at the power station exceeds 60,000 times. 2,000 charging stations are equivalent to 30 times per station per day, lower than the earlier data of NIO Vice President Shen Fei.
According to the calculation of the brokerage, when the power station reaches the break-even point, the utilization rate is about 20%, that is, each station needs to be serviced 88 times a day to barely make a loss. That is to say, more car companies need to develop power replacement in order to form a scale effect.
Another issue with power replacement is compatibility.Chairperson Wang Chuanfu said at the 2022 annual general meeting that power replacement in the passenger car sector will not be the mainstream, and this model has standardization issues such as vehicle design, bulking, and structural safety.
At present, there are several companies trying to lay out the power exchange model on the market, but generally the construction of power exchange stations is fragmented, and the industry is relatively scattered. Since 2020, relevant state departments have continued to promote the formulation of standards such as power exchange stations and power exchange battery packs. Minister of Industry and Information Technology Xin Guobin said at this year’s Global Power Battery Conference that it is necessary to guide social capital to invest rationally and avoid blind expansion and disorderly development. Promote the unification of standards such as battery size, power exchange interface, and communication protocol.
As the main promoter of the power swap model, NIO is mainly used by NIO owners. At the China Electric Vehicle Hundred Forum held in April this year, Li Bin said that "the power swap service has reached the stage where it can be exported externally." He hopes that other companies can share and build a charging and swapping infrastructure with NIO, and revealed that existing car companies are discussing this matter with NIO.
Only now has one company been finally finalized: Changan Automobile, but the real landing time will be in 2025.
However, Li Bin believes that power replacement is a huge first-mover advantage of NIO, and it has reached the time node when it can be opened to the outside world. NIO will give the standard of next-generation battery packs to the whole industry. At present, NIO is still negotiating cooperation with 4 to 5 automobile companies.
It’s hard to ride a tiger
"The road to power replacement is very difficult." Li Bin said that NIO’s power replacement is equivalent to the large-scale investment of Cloud as a Service by Internet technology companies such as Amazon. Both need to establish a national network, and the investment scale is large and the investment cycle is long. Once it can serve external customers, the threshold for latecomers to enter will be very high.
The problem is that power replacement is not a necessary option for new energy vehicles. Another opponent of the NIO power replacement model is charging technology, which is also the choice of most new energy vehicle companies.
On August 16 this year, the global power battery leaderReleased a new 4C super fast charging battery based on lithium iron phosphate cathode material system, with a battery charge of 10 minutes and a battery life of 400 kilometers.
At present, Tesla, Ideal, Xiaopeng, Great Wall, Geely, etc. are all deploying fast charging technologies. For example, Xiaopeng G6 uses 800V SiC silicon carbide high voltage technology and is equipped with a 3C ultra-fast charging battery pack, which can charge 300km in as little as 10 minutes. The Zhijie S7 jointly built by Huawei and Chery is matched with Huawei 800V high-voltage overcharging, which can be charged at a speed of 200 + km in 5 minutes, charged for 15 minutes, and has a battery life of 400 + km.
Many people use the example of mobile phones to compare the charging of new energy vehicles. Ten years ago, most mobile phones could be replaced with batteries, but now they are basically not used.
In other words, the rapid development of fast charging technology has impacted the meaning of the power exchange model itself. If fast charging basically achieves the same time as power exchange, what are the advantages of power exchange? Is Li Bin’s "Cloud as a Service" a false proposition?
For a long time, Li Bin has used "long-term doctrine" to describe NIO. In 2019, Li Bin said, "NIO is still a company that has just been established for four years. You can’t ask a four-year-old child to support the family."
In the first half of this year, Li Bin responded to the suggestion that he should save some money and do subtraction properly. "How long does it take to see our investment return? This is very important."
This time, Li Bin used "large investment scale and long investment cycle" as the replacement model. The question is how much time is left for NIO in the market?
NIO is now in a difficult situation to ride a tiger and continue to invest, the difficulties are obvious, Li Bin has said a lot, and when to make a profit is a problem. No more investment means admitting that the strategy is improper and may dissuade potential car owners who are keen on changing electricity.
At present, smart electric vehicles are already a highly invaded market. On the one hand, leading car companies continue to raise funds, merge vertically and horizontally, and expand their power; on the other hand, new energy car companies such as Weimar, Aichi, and Byton below the waist have been in trouble this year.
In the new energy sales rankings, the new car-making force "Wei Xiaoli" has been among the top ten for a long time, leaving Geely, Changan and many other established independent enterprises behind. Now, Geely, Changan, Chery, etc. have risen significantly in the new energy field, forming a large and powerful market impact on new car-making forces and joint venture brands.
However, NIO is still in a state of continuous loss, and the construction of a service system centered on power exchange is also regarded as one of the culprits of NIO’s loss.
Recently, a news of "NIO lost 76.40 billion in five and a half years" appeared on Weibo’s trending topic list and caused heated discussion. From 2018 to 2022, NIO’s net profit attributable to the parent was – 23.328 billion yuan, – 11.413 billion yuan, – 5.611 billion yuan, – 10.572 billion yuan and – 14.559 billion yuan respectively.
In the first half of 2023, NIO lost 10.926 billion yuan in net profit, and the company has accumulated losses of 76.40 billion yuan in the past five and a half years.
Due to the huge losses, there were rumors of NIO going bankrupt.
Qin Lihong, co-founder and president of NIO, responded to the rumors of the company’s collapse at the Guangzhou Auto Show: "There are indeed a group of people on the Internet who can’t see how good NIO is, and they sing NIO down one after another. It can be predicted that 2024 is the peak year of tram shopping. After 24 years, NIO will know if it will fail!" "NIO will not go bankrupt, and there is absolutely no possibility of it going bankrupt. Please feel free to experience and buy NIO’s cars."
From the current financial situation and investment in power replacement, NIO may still have a long way to go to achieve profitability.
