Can NIO still be called NIO if it doesn't use the current battery-swapping system "Firefly"?

NIO’s second brand, “Alpine”, has not yet been unveiled, but the third brand, “Firefly”, has been exposed.

Recently, some media revealed that NIO’s third brand, code-named “Firefly”, will settle in Chuzhou, Anhui Province. The factory will be integrated on the basis of the original factory of Leopard Automobile.

Officials from relevant departments in Chuzhou City confirmed the news that the NIO vehicle factory will be built here, and said that more information will be released from March to April.

Just when everyone was guessing how the third brand would layout, NIO Chairman Li Bin announced on the NIO APP that the new goal for NIO’s battery swapping station construction in 2023 has been raised from the original plan of adding 400 stations to adding 1000 stations, and emphasized the focus on laying out in cities and counties with certain user base but without battery swapping stations.

As the news of the lower-positioned third brand and the layout of battery swapping stations in lower-end markets overlap, it has triggered speculation that “the third brand will also use NIO’s battery swapping system.”

Although there is little information about “Firefly” at present, it can be concluded that “Firefly” will not use NIO’s current battery swapping system.

Firstly, NIO needs to ensure the car experience of its high-end users for the first and second brand;

Secondly, the physical limitation of the current battery pack, which is too large, makes it unsuitable for small and medium-sized cars positioned at lower levels.

Considering these two aspects, NIO can only let “Firefly” seek its own way.

Shortcoming of NIO’s battery swapping system: battery pack is too large to meet the demand of small cars

Battery swapping is NIO’s biggest feature, and also the biggest obstacle to its penetration into lower-end markets.

Li Bin has been a supporter of the battery swapping model for a long time. As early as 2014, when NIO was just an idea, Li Bin and his deputy Qin Lihong counted the cost composition of the battery swapping station.

At the end of 2017, NIO’s first car model, ES8, was officially launched, and Li Bin’s insistence on the battery swapping model gradually ushered in its own glorious moment.

“The advantages of battery swapping are too many.”

“Battery swapping is like winning a gold medal at the Olympics.”

Li Bin has emphasized the advantages of the battery swapping model on multiple occasions. The battery swapping has not only largely eliminated the problem of charging difficulty, but also helped NIO to build an excellent service system, which is the basis for NIO’s fast development in the early stage.“`

The advantages of battery swapping are many, but the disadvantages are gradually becoming apparent in the rapidly developing industry. The problem that makes NIO slightly passive is not the battery swapping mode, but the size of the battery pack.

When the first generation of NIO ES8 was launched at the end of 2017, NIO provided a 70kWh battery pack, which was a leading configuration at that time. After all, the battery pack of MODEL X 75D was only 75kWh.

But at that time, the energy density of the battery was still relatively low as the new energy industry had just started. The physical size of NIO’s 70kWh battery pack had reached 20621539136.

With the development of the new energy industry, the energy density of the battery has also been greatly improved. NIO has gradually upgraded its battery pack with the same physical size to 100kWh.

Recently, when NIO’s co-founder and president Qin Lihong was interviewed, he said that NIO’s 150kWh battery pack will also be launched in the summer. Compared with the 70kWh battery pack at the end of 2017, the energy density has doubled.

Corresponding to the rapid increase of the energy density of the battery pack is the rapid expansion of NIO’s vehicle layout. The layout of the three major series of ES (SUV), EC (coupe SUV), and ET (sedan) has also quickly taken shape. Among them, ET5 has become the smallest model under the NIO brand.

The length, width and height of NIO ET5 are 4790mm1960mm1499mm, and the wheelbase is 2888mm.

As a reference, the body size of the popular Nissan Sylphy in the market is 4631x1760x1503mm, and the wheelbase is 2700mm.

According to NIO, the NIO brand will not have a smaller model than ET5 in size, mainly because the length of NIO’s battery pack has reached 2062mm, which limits NIO’s space to compress the wheelbase of the vehicle. It is difficult for NIO to penetrate into the more popular compact market.

NIO had to choose the large battery pack out of necessity, while Fayton, which also launched a battery swapping model, avoided the pitfalls of the large battery pack, a problem that affects the layout of the vehicle. The cube battery pack released by SAIC Group has two main features:

1. The battery pack adopts standardized design, and the length and width of the battery pack are fixed;
2. The interior of the battery pack adopts a lying core and CTP technology, which can achieve higher energy density and is compatible with the ternary lithium and lithium iron phosphate systems.

The length and width of the cube battery pack are 1690mm and 1300mm respectively, and there are three heights to choose from: 110mm, 125mm, and 137mm.

While ensuring that the length and width of the battery pack remain unchanged, the capacity of the battery pack can be controlled by controlling the thickness of the battery pack. This method is more flexible.

Moreover, the 1690mm length of the cube battery pack is smaller than the 2062mm length of NIO's battery pack, which basically does not limit the layout of the vehicle's wheelbase. According to official information, SAIC's cube battery pack can cover a range of 44-150kWh, and is suitable for A0 to D-class vehicles.

From this comparison, it is not difficult to find that the large battery pack has become a drag on NIO's expansion into the compact market. To make up for this shortcoming, NIO will also launch its second brand "Alpine" and its third brand "Firefly".

Among them, "Alpine" will adopt the same battery swapping system as NIO, but will be sold at a lower price. This approach is also quite clear, which is to spread costs.

The lower-positioned "Firefly" will fill in the gap in the low-end market for NIO. This also means that Firefly, which is not limited by the size of NIO's battery pack, will have more room to play.

## Targeting small cars, can "Firefly" help NIO illuminate Europe? 

According to previous disclosures, "Firefly" will be positioned in the market segment of RMB 100,000 ~ 200,000, and Qin Lihong has also publicly stated that "Firefly" will debut in Europe in the third quarter of 2024.

And with the disclosure of the Chuzhou factory, more information about “Firefly” has gradually emerged.

According to an insider from NIO, “Firefly” will first be sold in Europe, with the product benchmarking Volkswagen POLO. Like other products under NIO, it will support battery swapping and battery leasing. Compared with the main brand and the Alpine project, “Firefly” will have relatively weaker intelligent driving function. However, compared with the products of European car companies, the intelligent advantages of “Firefly” are still obvious.

Although the amount of information is limited, there are several key words worth paying attention to, which are:

Based in Europe, benchmarking Volkswagen POLO, supporting battery swapping, battery leasing, and weaker intelligent driving.

For the time being, NIO’s development in Europe is not going smoothly.

One reason is that developing sales channels and laying out battery swapping stations takes time.

Secondly, European people prefer smaller and better-driving small cars.

According to overseas blogger NIO Admire, as of February 19, 2023, NIO’s registration volume in Europe in February was only 32 vehicles, including 27 EL7 (i.e. domestic ES7), 1 ES8, and 4 ET7s. In January this year, NIO’s registration volume in Europe was only 17 vehicles.

Looking at the best-selling models in Europe, the most popular model in Europe last year was the Peugeot 208 (206,816 units, up 5\% year on year);

The second was Dacia Sandero (200,550 units, up 1\%);

The third was Volkswagen T-Roc (181,153 units, down 3\%); The fourth was the Italian Fiat/Abart 500 (179,863 units, up 3\%); The fifth was the Volkswagen Golf (177,203 units, down 14\%).

“`A fleet of small cars.

This is mainly because the roads in Europe are narrower, especially in the old city areas where the roads are even more cramped. For enterprises like NIO which are famous for producing large cars, it is difficult to quickly integrate into the European market.

Considering the European market’s preference for small cars and the information that the “Firefly” will be released in Europe as the first model that directly competes with the Volkswagen POLO and has relatively weak autonomous driving capabilities, it can be inferred with a high degree of probability that the “Firefly” is a small car brand that focuses on maneuverability.

This also means that the “Firefly” cannot adopt NIO’s current battery swap system. If the “Firefly” still insists on taking the battery swap route, there are only two ways for NIO:

  1. Build a small battery swap system on their own.
  2. Utilize the public battery swap system, such as NINGDE TIMES’ EVOGO.

This is a problem that NIO needs to consider.

Using the public battery swap system is most likely the best choice for the “Firefly” as, for NIO, this is a relatively low-cost operating method.

Although the battery swap model largely solves consumers’ concerns, the high upfront investment cost is also the fundamental reason why NIO’s business model is difficult to replicate. According to information from various listed companies involved in the construction of battery swap stations, the current construction cost of a battery swap station is approximately 5 million yuan, roughly divided into equipment investment, battery, land and labor, and other expenses.

In addition, after the construction of the battery swap station, there are still high operating costs. The total operating cost of a single battery swap station is about 500,000 to 600,000 yuan per year, mainly due to labor costs. It requires three shifts or 24-hour on-duty staff. Although some companies, like NIO, have claimed that their battery swap stations can be unmanned, workers are still present to provide services, and there is still room for optimization.

NIO has a stable user base, and this user group is gradually expanding. This gradual positive trend has laid the foundation for NIO to massively expand its battery swap stations. Additionally, NIO is also working hard to optimize its operations. For example, it is expanding to county areas where land prices will be greatly reduced, and it is also promoting unmanned services. Economies of scale in NIO’s battery swap system are gradually beginning to show.

"Can incorporate the small battery packs required by 'Firefly' into NIO's current battery-swapping system to reduce operational costs," while a good idea, is technically difficult to implement.

Battery packs of different lengths and widths have different "hole positions," which requires the swapping station to match and identify the car model and battery pack, and adjust and adapt the assembly position. This is perhaps why SAIC Roewe Cube compromises by determining the length and width of the battery pack and only modifying the thickness.

In addition, the number of battery packs that can be loaded into a swapping station is limited, and the unified operation of the three major brands, "Firefly," "Alps," and NIO, will also face considerable pressure.

From this perspective, independent construction of the battery-swapping system by borrowing from public swapping stations is the best solution for "Firefly." Moreover, from the entire market perspective, the unified swapping standards are also being steadily promoted.

In July 2022, the National Standards Drafting Group Meeting for Pure Electric Commercial Vehicles and Pure Electric Passenger Vehicles' Battery Swapping Standards was held in Xiamen, where the Chief Engineer of Standards Institute of the China Automotive Technology and Research Center Co., Ltd., Liu Guibin, stated, "Battery swapping standardization has a tight timeframe, heavy task, and urgent industry demand. We hope to achieve consensus through joint efforts of relevant units, promote the implementation of battery swapping standards, and promote the standardized and healthy development of the electric vehicle battery-swapping industry."

Although detailed swapping standards were not established at the meeting, standardized swapping has gradually become an industry consensus, which is good news for "Firefly," which will be released in 2024.

From the perspective of market share, NIO, which has accelerated the layout of swapping stations, has already taken the lead in the medium and large passenger car swapping fields. In other vehicle types, CATL is also rapidly developing "chocolate swapping," which CATL states can adapt to 80% of already launched and upcoming pure electric platform developed vehicles around the world, to a large extent resolving development concerns for the "Firefly" brand.

In addition, quick charging technology is also rapidly developing. If the quick charging system is established, the advantages of battery swapping will be rapidly reduced, and the costly investment in swapping stations will be difficult to become a brand-boosting element; therefore, there is no need to take on such risks by adopting public swapping stations. "

Based on this, relying on the public battery swapping system may be the best choice for “Firefly”.

This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email