EV Maker Nio Plans New 40 GWh Battery Plant In China - Report

Nio plans to build its first battery plant to produce big cylindrical cells similar to those used by Tesla, two people familiar with the matter said, as the Chinese EV maker seeks to cut its reliance on CATL for supplies.

The plant underscores Nio's ambition to ramp up its presence in the electric vehicle (EV) market at home and abroad. The Chinese company is also planning a factory in the neighbouring city of Chuzhou to make budget EVs to sell to Europe.

The new battery plant will have an annual capacity to produce 40 gigawatt hours (GWh) of batteries, which can power about 400,000 units of long-range electric vehicles (EVs), the people said on condition of anonymity as the matter is private.

It will be located next to its main manufacturing hub in Hefei city, in eastern China's Anhui province, they said.

Reuters is reporting the details of Nio's plan for the first time. The automaker did not respond to a request for comment.

Nio's founder and chairman, William Li, had in June said that Nio would start making 800-volt lithium-ion battery packs, which recharge faster, in the second half of 2024, as part of a plan similar to Tesla's to use a combination of self-produced and externally sourced batteries in the long run.

He did not elaborate on the details at the time.

Like other loss-making Chinese EV makers, Nio has been seeking to gain more control over batteries, the most expensive single-piece component, to improve its profitability.

CATL, short for Contemporary Amperex Technology Co Ltd, is currently Nio's sole supplier of batteries for cars and battery swapping stations. Nio has a smaller battery-focused plant in Shanghai where it tests batteries.

CATL did not immediately respond to a request for comment.

BETTING ON CYLINDRCAL BATTERIES

Prismatic batteries, which are rectangular in shape, have become the most common form of auto battery in the past two years as they can be more densely packed, saving on costs.

But proponents of cylindrical batteries, led by U.S. EV maker Tesla, argue the newer larger format cylindrical cells are more cost-effective due to improvements in energy density.

Tesla has said it plans to expand its $6.2-billion battery plant in Nevada to be able to make 100 GWh 4680 cylindrical battery cells - denoting 46 millimetres in diameter and 80 millimetres in length.

The plant is now able to annually produce more than 37 GWh of battery cells including current-generation 2170 cylindrical battery cells and the smaller 18650 batteries. 

Tesla has said it expects the 4680 cylindrical battery cells to lower production costs and improve range versus the 2170.

BMW has also said it would shift to large cylindrical batteries supplied by CATL and EVE Energy to power its new class of EVs from 2025.

(Reporting by Zhang Yan, Zhuzhu Cui and Brenda Goh; Editing by Himani Sarkar)