The Chinese Government is seemingly supporting the construction of more battery swapping centers as part of the country’s growing electric vehicle infrastructure. The government’s support for battery swapping systems gives NIO an advantage in the Chinese car market.
In April 2020, China’s Ministry of Finance announced that EV subsidies would be extended until the end of 2022 for new energy passenger vehicles priced below $45,700. For instance, Tesla China’s MIC Model 3 qualifies for the subsidy since it costs $39,000. The MIC Model Y is not eligible for the subsidy because it has a price tag of $54,000.
China’s EV subsidies have coaxed premium EV makers to reduce their prices. However, EV automakers who produce new energy cars with swappable battery packs do not have to follow the price restriction. According to local media, cars with swappable batteries can still benefit from the EV subsidy without adhering to the price requirements. So EV makers like NIO—whose entire lineup comes standard with swappable battery packs—can maintain their current prices and still offer customers EV subsidy benefits.
ARK Invest’s Sam Korus wondered if the Government’s favor towards swappable battery packs meant NIO needed some help.
“In our view, such government support could impair NIO’s global ambitions in the long term,” Korus wrote in Ark’s weekly newsletter.
“ARK’s research suggests that, with or without subsidies, the economics associated with battery swapping will result in design constraints and shortened battery lives. Encouraging these sub-optimal results, the Chinese Government could limit NIO’s success globally, even more so if the company relies on subsidies instead of aggressive investments in innovation to deliver competitively priced vehicles,” he added.
NIO recently announced its foray into Europe, starting with Norway. It plans to introduce battery swapping stations for its European customer base. EV giant Tesla attempted swappable battery packs in the past but deemed it impractical. Charging stations have become the more common way of recharging BEVs, so it would be interesting to see if NIO can make swappable battery packs mainstream.