(Bloomberg) -- Electric-vehicle maker Nio Inc. and Chongqing Changan Automobile Co. signed an agreement to cooperate on battery swapping, the latest in a trend of Chinese EV upstarts partnering with traditional automakers.
The companies will collaborate in areas that cover ownership, technologies, maintenance and financing of swappable EV batteries, Nio said in a statement Tuesday. Changan Auto Chairman Zhu Huarong added that the carmakers will expand cooperation in other areas too, including vehicle development.
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Batteries are the most expensive component of an EV, and accessibility to charging stations tends to be a major concern for potential buyers. With swapping technology, an EV can be driven into a booth where the depleted battery is removed and replaced with a charged power pack. At the newest facilities, the process is automated and can be completed in minutes.
Nio introduced its “battery-as-a-service” program in 2020, where owners buy a Nio car shell — reducing the upfront cost — and pay rental fees for the swappable battery.
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Nio in February pledged to build 1,000 battery swapping stations this year, more than double its original target of 400. It has over 2,000 battery swap stations nationwide and is trying to expand the business to Europe.
Once considered one of the brightest rising stars in China’s EV market, Nio has been falling badly short of its sales targets and continues to post losses. It delivered 126,067 vehicles in the first 10 months of the year, barely half its original annual target of 250,000.
This month, Nio announced in an internal letter signed by founder and Chief Executive Officer William Li that it would cut 10% of staff positions in November, and may spin off non-core businesses to reduce costs and improve efficiency.
In June, an Abu Dhabi government-backed investment fund said it was injecting about $740 million into Nio in return for a 7% stake. Other recent deals involving Chinese automakers include Volkswagen AG investing $700 million in Xpeng Inc. and Stellantis NV putting $1.1 billion in Zhejiang Leapmotor Technology Ltd.
Nio was founded in 2014 and hasn’t yet posted a profit. Its market value has slumped to $12 billion from a peak of $99 billion in February 2021.
State-backed Changan Auto has a partnership with Huawei Technologies Co., making EVs under the Avatr brand. Changan Auto’s new energy vehicle sales totaled more than 364,000 in January-October, up 89% from a year earlier.
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