• As Nio's car sales rise, the number of battery swap services is expected to grow rapidly, analysts said.

• They expect Nio to see a big improvement in the bottom line in 2025.

(A Nio ES6 on display at a CATL showroom in Chengdu, Sichuan province in August 2024. Image credit: CnEVPost)

A team of China-based analysts thinks Nio's battery swap business is on track to break even by the end of next year, and believes the electric vehicle (EV) maker's overall business conditions will improve this year.

Nio's battery swap business is likely to break even by the end of 2026 as sales grow, said analyst Qi Tianxiang's team at Chinese brokerage Western Securities in a research note yesterday that initiated coverage of the company.

The core issue with the business at the moment is that the number of services in a single day at a single station is too low, and revenues are not enough to cover day-to-day operations and depreciation expenses, the team noted.

As Nio's car sales ramp up and its new battery renting model advances, the number of single-day services at a single station is expected to grow rapidly, the team said.

The team expects Nio to provide an average of 61 services per battery swap station per day by the end of 2026, allowing the business to break even.

Last November, Nio CFO Stanly Qu mentioned at an automotive industry forum that a battery swap station can break even if it serves 60 to 70 times a day.

On February 8, Nio founder, chairman and CEO William Li said in a live video broadcast that the company's battery swap business was trending better, and that the stations in Shanghai were basically close to profitability.

In that livestream, Shen Fei, Nio's vice president for power business, mentioned that the company was offering more than 9,000 battery swaps per day in Shanghai, and would soon be approaching 10,000 per day.

"I can boldly tell you that in the vast majority of places in Shanghai at the moment, you can definitely make money if you can build a battery swap station," Shen said.

Shanghai-based Nio currently has 3,131 battery swap stations in China, with Shanghai having the most at 183, according to data compiled by CnEVPost.

In yesterday's research note, Qi's team believes Nio is expected to see a big improvement in the bottom line in 2025.

Nio Inc's vehicle sales are expected to grow significantly over the next 2 years, with sales of the main Nio brand expected to increase steadily, the team said.

For the Onvo sub-brand, sales are expected to grow rapidly with the launch of new models, the team said, noting that the expansion of the battery electric vehicle (BEV) market in Onvo's price band is still expanding.

Another sub-brand, Firefly, will also bring incremental sales, the team said.

Nio's gross margins in the automotive business are expected to improve markedly as volumes grow and new platforms are utilized, the team said.

Nio management said on an earnings call last November 20 that it was confident of doubling sales in 2025 and targeting 2026 for profitability.

That means Nio was expecting it would deliver about 440,000 vehicles in 2025.

Nio Inc delivered 221,970 vehicles in 2024, including 201,209 under the Nio main brand and 20,761 under the Onvo sub-brand.

Analysts at Western Securities expect Nio Inc to deliver 430,000 vehicles in 2025 and 563,000 in 2026, representing year-on-year growth of 94 percent and 31 percent, respectively.

Nio's shares saw a rare surge in the US yesterday, rising 10.54 percent to $4.72 by the close of trading.