What happened
Investors in electric vehicle (EV) companies look for technology that can differentiate one company from its competitors. Chinese EV maker Nio (NIO 2.59%) offers a battery swap technology that is unique, and it received some publicity today. One might think that would move Nio shares higher, but that's not the case, at least this morning. Nio's American depositary shares were down 3.3% as of 10:15 a.m. ET.
So what
Today's drop might reflect some profit taking after Nio shares have soared more than 60% from a recent low in mid-March. But reports that the company is in talks with other automakers to license its battery swap technology may make today's dip a buying opportunity.
Nio is expanding its battery swap stations into Europe. Image source: Nio.
Now what
Nio's battery swap offering allows customers to pay a lower upfront cost for the vehicle, and use existing swap stations through a subscription service to install fresh batteries in as little as three minutes, according to the company. It says the technology is enabled by more than 1,400 patented technologies. Today, the Financial Times reported that Nio is now also discussing licensing the technology to competing electric vehicle makers.
The report cited Hui Zhang, who heads Nio's Europe division, saying the company is discussing licensing agreements with both Chinese and international automakers to use its battery swapping stations. Nio expects its number of stations to grow from 800 to 5,000 globally in just the next few years.
Nio built its first swapping stations outside of China when it established a business presence in Norway last year. The report states that Nio has placed its swapping stations there beside Tesla superchargers to help show how quick and easy the process is to existing EV owners.
The technology provides Nio with a stream of subscription income from customers that opt for it. Licensing the technology to competitors will add to that income, as well as help promote the adoption of electric vehicles. Today's share drop doesn't seem to be considering this fresh news.
