Nio (NYSE: NIO) and CATL (SHE: 300750) have reached an agreement to jointly build a battery swap network, a move that is expected to boost the outlook for the electric vehicle (EV) maker and send its shares soaring.
Nio announced today that it signed a strategic cooperation agreement with CATL on March 17 in Ningde, Fujian province, where the latter is headquartered, to jointly build a battery swap network for passenger vehicles across the full range of products and to strengthen capital and business synergies.
The two companies will work together to build the world's largest and most advanced battery swap service network for passenger cars, enhance battery swap network sharing and accelerate the adoption and advancement of battery swap services on the basis of unified battery standards.
CATL will support Nio in developing the battery swap network, while its Choco-Swap technology standard and network will be introduced into subsequent newly developed models under Nio's new brand Firefly, according to a statement.
The two networks will operate in parallel to provide EV users with a more seamless and efficient battery swap experience, making it easier to travel with pure electric vehicles, the statement said.
The two sides will work together to promote the development and adoption of national standards for battery swap technology in China to further enhance battery compatibility across different brands and models.
They will work together to establish a complete life cycle loop of battery research and development, battery swap services, asset management, reuse and material recycling, to help reduce costs and increase efficiency of the entire new energy vehicle (NEV) value chain.
The two sides will also pursue capital cooperation, and CATL is currently advancing an investment of up to RMB 2.5 billion ($346 million) in Nio Power to further consolidate the strategic partnership.
Through exchanges and cooperation in technology, capital and business, Nio and CATL will realize a synergy effect where "the whole is greater than the sum of its parts," the EV maker said.
Yang Jun, general manager of CATL's battery swap business, and Shen Fei, senior vice president of Nio, signed the agreement on behalf of the two companies, which was witnessed by William Li, founder, chairman and CEO of Nio, and Robin Zeng, founder, chairman and CEO of CATL.
"The strategic cooperation between NIO and CATL marks a pivotal moment, propelling battery swapping into a brand-new phase," Li said.
"With the support from CATL, NIO's swapping network will extend to more regions and provide better services. This cooperation is beyond capital investment—it facilitates mutual empowerment in technological standards and service systems," Li added.
"Leveraging our Choco-Swap and the parallel operations of both CATL's and NIO's networks, we are able to build a smart power network that caters to a wide range of needs across multiple levels and dimensions," Zeng said.
Nio is one of CATL's largest power battery customers, although the EV maker has already introduced batteries from other battery makers including BYD (HKG: 1211, OTCMKTS: BYDDY), and CALB.
In August 2020, Nio launched a BaaS (battery as a service) battery leasing business, and Mirattery, a joint venture between CATL, Nio, Guotai Junan and Hubei Science Technology Investment, is the manager of these battery assets.
CATL, the world's largest supplier of power batteries, also entered the battery swap space in January 2022, and on December 18, 2024, announced ambitious plans aimed at standardizing swappable batteries.
CATL announced two standardized Choco-SEB battery packs in December, naming them #20 and #25, just as gasoline is available in the Chinese mainland as #92, #95, and #98.
Nio Power, Nio's energy division, received a RMB 1.5 billion strategic investment from state-backed investors in Hubei in May 2024, the first external investment in the unit.
On June 6, 2024, Nio's management said in an earnings call that Nio held around 90 percent stake in Nio Power after it received its first external financing.
The latest tie-up with CATL is key for Nio, especially given that whenever its vehicle deliveries have weakened, questions have arisen about the battery swap business model.
As CATL launches its battery swap brand EVOGO on January 18, 2022, Nio's Shen said the move was an endorsement of the EV maker's lone strategy that it had insisted to for six years.
CATL is the world's largest power battery maker and continues to be the world's No. 1 with a 37.9 percent share in 2024, according to South Korean market researcher SNE Research.
Nio, on the other hand, has the largest battery swap network, with 3,172 battery swap stations currently in place.
Over the past year, Nio has announced multiple partnerships on battery swaps with other automakers, including Changan Automobile (SHE: 000625), Chery, GAC Group, and JAC Group, albeit with a lack of details.
The partnership pushed Nio's Hong Kong-traded shares soaring, up more than 16 percent by the morning close.
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