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NIO And Shell Partnership Could Be A Game Changer

Dec. 05, 2021 3:59 AM ETNIO Inc. (NIO)SHEL43 Comments


  • NIO and Shell are partnering up to build battery swap and charging stations across China and Europe.
  • This is great news for NIO, which is laying the groundwork to become much more than an EV manufacturer.
  • Shell will benefit by gaining access to NIO's keen insights into battery technology.

Game Changing Startups

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Thesis Summary

NIO Inc. (NYSE:NIO) and Royal Dutch Shell (RDS.A)(RDS.B) are partnering up to offer battery swapping stations in Europe and China. Battery-as-a-Service has been a key offering of NIO’s, and this

This article was written by

James Foord profile picture

James Foord is an economist by trade and has been analyzing global markets for the past decade. He leads the investing group The Pragmatic Investor where the focus is on building robust and truly diversified portfolios that will continually preserve and increase wealth.

The Pragmatic Investor covers global macro, international equities, commodities, tech and cryptocurrencies and is designed to guide investors of all levels in their journey. Features include a The Pragmatic Investor Portfolio, weekly market update newsletter, actionable trades, technical analysis, and a chat room. Learn more.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of NIO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (43)

Battery swapping doesn't make sense at this time. No one will ever get the EV manufactures to go along with this. Maybe they do something different in Europe, but in the US the EV batteries are not something that can be pulled out and replaced like a AA battery. It's dangerous and they weigh a lot.
I wonder when NIO is ordered to delist from New York?
The real partnership is with Sinopec (China Petroleum) whom NIO have already partnered with. They have set up 5000 battery swap stations already, as mentioned by the author, but Sinopec owns 30,000 gasoline stations in China and so potentially there lies 30,000 battery swap stations. But the Shell deal is good news of course, but 100 stations in China is chicken feed, let's see what they can do together in Europe.
@Lingers Do you think that 30,000 battery swap stations will each have inventory on hand for every model, make of EV?
There is no standard yet for size and dimension of the battery packs for the different makes and models. The cost of the inventory has to be recovered in the price to exchange on every NIO, XLEV, etc. Using average annual mileage of 12,000 miles / 300 mile recharge = 40 exchanges per vehicle per year.
Tesla Supercharger rates average $0.25/KW, which costs approximately $22 for every 250-mile range. Using that cost as a basis, a battery exchange station would be able to charge $27.00.....good luck!
Battery swap will take a lot of extra batteries sitting on the shelf.
Tesla batteries are not swappable, only replaceable. Tesla batteries are an integral part of the vehicle and changing them on a Model 3 ranges from $5,000 to $7,000 (possibly needed at 300,000 to 500,000 miles, about like a high quality diesel engine).
He who controls the pipeline makes the money.
They call me Smarty profile picture
Good article lifted from FB- Only thing that's wrong is about who pays.
Shell pays. Shell needs NIO more than NIO needs Shell.
BP, Chevron and Exxon will be chasing NIO as soon as this week
This is an amazing collaboration for both companies.
Nio has experience in China and Shell is from Holland and have massive experience all over the world.
This also strengthens the fact that NIO wants to be in Europe and is willing to grow.
Shell will have a positive respond from the newer, younger population who wants change from extracting natural, oil resources.
Reading is never enough profile picture
I added on Friday at 32,37 ,1000shares.I know that shorters are creating fear and rumors.but I am certain they are doing for their agenda.
Read and make your decision using your knowledge.I don’t want to pump the stock.I find so rotten to persuade someone where to put his money.take care.we can make it if we are concentrated and read and understand.
These days you must be ready to keep the stock for a long period…if something goes wrong.
So for me Nio is one of the very best companies.and I know that it will make me happy.I never worry about Nio actually I was waiting for it.to fall to 33 because I missed it and the run to 43 was so quick that i had to wait patiently and of course not sold my 1000shares that was my first buy ,last year..stay on your course but be ready to adapt.don’t let anyone make you unhappy.be certain and confident.
And welcome the dips in your favorite stocks and don’t be misled by stupid stocks…that look cheap as they will be proven very expensive.
Long Nio .
the removal of the Chinese adr, has already been denied 2 times ... and it is a fallacy so far that does not hold ... a rumor ... but this rumor to this day is being manipulated for the benefit of many, and unfortunately they will last as long as they want or start to buy their downfall ... I see more than a political-economic problem: massive manipulation, but I can fall into a state of conspiracy ... but I know that many think so. ... even before the regulations and this fear of delisting and multiples between American and Chinese companies were ridiculous
How will the delisting affect the ability to trade shares? How will brokers like Fidelity buy/sell/trade shares?
@Rellif why will you think the delisting will happened?
Reading is never enough profile picture
@Rellif there will be no delisting for Nio.
And although I don’t know about other stocks,I read a lot about delisting and mostly it has been a good thing for stocks .they made a huge run.but delisting is not happening to Nio.

From my experience with CHL, this is what happened:
The day the stock is delisted, there is nowhere to trade your ADR. I was even told by a clueless representative from my brokerage that my share is worth nothing. Thank God I knew he has no idea what he was talking about.

A few months later, the bank sponsoring the ADR gave us the option to either take back the underlying HK shares back for a fee, or they will liquidate it at a certain time and return the proceeds to us at whatever price it happened to trade at the time.
CHL was listed in HK, so it was a matter of choosing to take the underlying HK shares of CHL and sell it there thru your broker (if they participate in the HK market). But the commission in HK is much higher, so is the exchange fee, in addition you lose a bunch (2-3%?) converting back to US currency from your sale. Hope that helps.

No, the stock tank all the way to the delisting day unlike what some poster said here.
Time to buy NIO?
Reading is never enough profile picture
@katmandu100 for me yes.but because it is wrong to pump a stock,I will give you an advice …google Nio and then decide.it is your money.take care.and invest carefully.
This partnership makes sense, particularly in Europe and Asia where the population density is much higher than in the USA or for that matter Arctica!
The evolving technology makes batteries ever more lasting but each battery will have to be replaced at some time and having a dense network of service providers will make the brand more attractive and to become a potential service points for other EV brands. I believe that they would be able to buy competitor batteries and swap them too if required. Think about today's oil service stations. WHAT concerns me the most however - as a small stake holder - is whether the deal has been blessed by the CCP! If not, the whole deal is not worth the paper it is printed on, it will go the DiDi way... and that is AWAY!
Reading is never enough profile picture
@Mirage57 although I don’t like it that I have to admit that CCP favors Nio.it was the first thing that I searched before I invested to Nio last year.I understand your concerns as I was thinking the same.
I believe that China promotes EVs and wants to make people all over the world to see the superiority of their industry.
As I really admired Ma of Alibaba I never invested on Baba for this reason.I hope that everything will go well for the shareholders of Baba and I wish that one day I will be jealous of their gains but I couldn’t afford to be so sad.
Long Nio.
And buying the dips whenever they occur.
Take care.
Invest carefully.
Better wait than loose money.
goodwell111 profile picture
I don't believe in battery swap idea from the beginning.

I don't believe it even more now, after recent XPEV announcment they charge battery to 80% in just 5 minutes.

Battery swap is expensive dead-end.
fine wine profile picture
@goodwell111 Xpeng Model 480 G seems to have one of the lower ranges of their models, a range of 288 miles. The five-minute charge supercharger they claim will recharge to 125 miles. That is 43%, not 80%.
vooch profile picture

Agreed - battery swapping is simply a silly idea. It might have a minuscule niche market, but otherwise battery swapping is not understanding how BEVs work.

By the way - far more promising is SEVs ( solar electric vehicles ) ticker SEV
Please explain battery swap stations. Is this like exchanging for a full tank of propane for the gas grill? They can't even get all device makers to agree on a universal recharger. And how long would it take to switch out a battery every time your battery goes low, every 250 to 400 miles right now, depending on EV model. Is this really realistic?
You should inform yourself.Do your own DD and than you know the answer on your question.
Visit the Nio website.Then you will learn something.This is mindboggeling for me(those kind of questions)
@marcmotors1 Always wondered why people ask questions that could easily be answered by a simply Google search. Maybe they enjoy the dialogue and don’t mind wasting time? Lol
Western companies never learn
Shell has in many countries world wide excellent full service petrol stations. In some countries they work already together with the national electricity suppliers. The problem seems for me not to be the technical solutions but the financial, who is going to do and finance what when.
Tuco's Child profile picture
Q: Where does the electricity come from for these batteries?

A: Burning Russian natural gas and coal imports.

After banning nuclear, (except for France), Europe beholden to Putin. Thanks Angela!
On the surface this partnership between NIO and Royal Dutch Shell makes me excited for both companies, especially for RDS. As the decades pass by the need for oil will most likely diminish so for RDS to position itself having a part in the EV infrastructure is very smart for the future of the company.

I can imagine some future 'gas' stations having the big Shell logo on the sign and not even be selling gasoline. This would help ensure Shell doesn't go the way of the dinosaurs.
This does seem a shrewd move by NIO.

Building the infrastructure to support the inevitable need, is not only designed to support its own EV roll-out but, and more importantly imo, the whole EV market as well as increasing its diversity and partnership building outside the CCP.

Even though partnering with Shell ensures a partner with deep pockets and existing sites that can be adapted, NIO will still be required to find extensive finance as part of the agreement. This could further impact its share price in the short term. On the positive side it does have Tencent as a significant shareholder which has already shown its willingness to invest/support EV companies in times of need. It previously stepped in to invest further in NIO when it was near bankruptcy and desperate for funding. Tencent also stepped in and took a 5% holding in Tesla, when everyone else was saying Musk/Tesla was a basket case. That 5% holding cost $1.78B that is now worth $50B+ even after Friday's pull-back. Tencent also has board representation, so a key and possibly noteworthy pointer on NIO's potential in this area, will be if Tencent signifies its willingness to provide further funding if/when NIO requires as this Europe/Worldwide expansion ramps up.

A further, and most significant aspect for the short-term share price, is what appears the almost inevitable US de-listing of its shares. On top of that is the current averse risk sentiment afflicting investors in the US, compounded by the CCP's continuous attack on anything tech-related. NIO's share price had also run away to reach $65+ and $100B+ valuation, and was overdue a pull-back, and still has a $50B+ valuation whilst still loss making. All of these aspects are short-term related and will pass, but all these do is to complicate the decision process for the investor on when to invest, if they want to invest, and how to invest given the probable de-listing.

Long term NIO seems to be on the right track and today's share price equivalent in 5-10 years may be seen as cheap. The question is, in the short-term does the share price have further to fall, or is it worth taking a long term view and investing at today's valuation? Whatever people decide, NIO is definitely worth keeping a close watch.
@BlueGreenLine very good response
06 Dec. 2021
@BlueGreenLine NIO is already listed in Europe… (i hold shares in EUR) So what would happen if NIO is delisted from NY?
Given what we know as of now - which is a better long term investment: NIO vs XPEV? Thanks
@kalu0003 Xpev for short term, Nio for medium and long term. I stick with Nio. 2022-2023 and forward they will become a behemoth. Once they come with a mass market vehicle things will get pretty crazy
burmank profile picture
Have worked in Shell retail. It's a great opportunity for xsell retail products to the consumers at the forecourt. But Shell would not get anything related to battery tech here.
@burmank keep living..the oil going into 2030-2035 ... will start to disappear and shell will need to create new businesses in the retail sector and in the higher income sector as well
@burmank - I did work in Germany in the whole sale business. We started as first whole sale group to sell a limited food, sweet and soft drink assortment in the petrol stations. Nearly the whole German trade considered us as crazy.
Shell not, within half a year nearly all shell petrol station did have the new assortment.
burmank profile picture
@Peter Peeters - old Exactly and you echo my point earlier. But I work now in electric mobility and battery swapping technology. For any retail partnership like Shell, we will not share any sensitive data regarding battery related.
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