NIO Outmaneuvers Tesla

For better or worse, Tesla is well-known for implementing automotive industry innovations faster than the competition. The innovations cut across multiple technology trends, like vehicle connectivity, automation, online sales, and electrification. Considering the latter, Tesla’s development of the Supercharger network, which started in 2012, was way ahead of the competition. Now that some are catching up via ultra-fast charging networks in both North America and Europe, Tesla is rolling out the V3 update to the network. The update will boost some chargers to 250 kW and add on-route battery warmup to further shorten charge time. While this certainly keeps Tesla in front of most competitors, there is one, NIO, deploying two charging strategies that surpass Tesla’s in both speed and convenience. 

Last year, Chinese EV startup NIO posted over 13,000 sales of the company’s 200 mile+ crossover, the ES8. It leads a field of multiple startups rushing to capture a slice of China’s fast-growing EV market. It is likely there are too many startups. In this regard, however, NIO’s innovative exploits in battery swapping and mobile charging are likely to ensure a space for it in the long-run.

Avoiding Complications and Uncertainties

Battery swapping is the holy grail for reducing EV charging downtime; however,the EV industry has mostly avoided the concept since the failure of Better Place. NIO’s stations boast a 3-minute swap and avoid the complications and uncertainties of ultra-fast charging like demand charges and impacts on battery life. While swapping is an attractive technical solution, questions regarding vehicle compatibility have prevented third-party service providers from pursuing it for the individual market. Additionally, given the other charging services available to NIO owners, the swap concept may run into difficulties with utilization that has also plagued fast-charging. 

On the more practical side is mobile charging. This innovation is not specific to NIO, indeed variations of the concept are driven, cycled, or guided to parked EVs that do not have a charger. The use cases are specific: 1) corporate campuses that want to avoid potentially large stationary charger investments and shocking electricity bills via additions to the demand charge, and 2) individual EV owners that do not have a garage and therefore a place to plug-in their vehicle. NIO’s mobile service tackles the latter using a fleet of over 500 vans that are signaled by needy customers using a smartphone app. As reported by Teslarati, the cost to an EV owner is ¥280 ($42) and been used over 93,000 times by NIO owners. Considering the company’s brief sales history this works out to the average NIO owner using the service just over once a month. The company has now expanded the service to non-NIO vehicles like Teslas. The idea likely has particular resonance in China where home charging is reportedly less common than in North America and Europe.

Confined to China

While NIO may be pushing the edge on charging innovations, its global effect is likely muted as it is currently confined to China and no Chinese automaker has successfully deployed a light duty EV offering to North America or Europe. Yet, depending on how well NIO’s sales in China look relative to Tesla’s and the other EV startups, NIO’s most important contribution to the global EV market may not be its vehicle at all, but instead the company's approach to charging services.