CATL is the leading battery supplier for NIO, which is only second to Tesla as a customer. Although that seems like a solid partnership, that’s actually a bit shaken. In 2019, when NIO faced some financial troubles, CATL demanded that NIO paid in advance for the cells and gave the carmaker a hard time, afraid that it would go bankrupt. Apart from that, CATL would be facing capacity problems that would make it unfit for supplying cells for a new high-volume brand.
Although these aspects may play a role in NIO’s partnership with BYD, we see other possible reasons for that. First of all, NIO said it would be willing to make a partnership with other carmakers that wanted to use its battery swapping system. It may be the case that BYD is interested in incorporating that system into its e-platform 3.0, which would be an excellent competitive advantage.
If BYD cars had NIO’s battery swapping system, they could use all NIO Power Swap stations, which could create some difficulties for NIO owners. However, the higher volume in battery swaps would generate the need to increase the number of swap stations, and BYD builds cells. NIO could use a battery manufacturer as a partner for expanding its battery-swapping network.
NIO once told me that sharing its tech with other companies would require “large-scale synergies among different manufacturers.” BYD may be the first one to join NIO in that with a significant advantage: it not be a mere “alliance;” it would be a partnership. When (and if) the deal is confirmed, we will know more about the possibilities it opens for both companies.