Chinese EV Manufacturer to Spinoff Battery Division

­Chinese multinational auto manufacturer Nio, which designs and develops EVs, batteries, and operates battery-swapping stations for its vehicles, is taking rather dramatic steps to reduce costs and become profitable – the Shanghai-based automakers plans to spin off its battery production division and is looking for external investors.

The news that any Chinese EV company is struggling might come as a shock – the People’s Republic has the world’s largest stock of plug-in electric vehicles and they dominate the globe in EV, raw mineral, and battery production.

But this EV renaissance for the PRC also means that competition has never been tighter.

And as recent as 2020, Nio was nearly bankrupt, its stock price falling 62% since its initial public offering just 2 years prior.

The new battery spinoff is part of Nio’s ongoing struggle to turn around its fortunes, with R&D remaining in-house but the entire production process outsourced.

According to Electrive, which quoted a Reuters source, the outsourced items would include a planned 40 GWh battery factory for the production of large round cells, test equipment, and intellectual property.

The interesting part is that Nio had been trying to move away from its main battery cell suppliers CATL, CALB, and WeLion towards in-house production, but their financial struggles (and recent 10% layoffs) forced their hand.

As Reuters points out, “The spin-off underscores Nio's efforts to turn profitable sooner, as its previous plan was to develop and manufacture some batteries on its own and outsource production for the remainder to other suppliers like Tesla does.”

The spinoff could happen as early as this year.