After BYD's flash charging, is NIO's battery swapping model still valuable?

After the Spring Festival, BYD launched its flash-charging technology with high-profile, which claims to fully charge an electric vehicle in just 10 minutes. Once the news spread, NIO became the most worried in the "automobile circle". If the flash-charging technology becomes popular, the rationality of NIO's battery-swapping model will be greatly questioned.

So, will NIO be "iterated" by the technology? Taking the opportunity of NIO's 2025 financial report release, let's try to answer this question. The core views of this article are as follows:

Firstly, the rebound of NIO's performance is closely related to the battery-swapping model. The separation of WENENG from NIO is equivalent to setting up a moat for the listed company. In the short term, the impact of flash-charging technology on battery-swapping is relatively controllable;

Secondly, the recovery of the profit margin mainly relies on the optimization of supply-chain management. The increase in delivery volume also reduces the consumption of marketing expenses;

Thirdly, the anti-involution environment is beneficial to automobile manufacturers, but NIO needs to maintain the current situation, which tests its future business skills.

What exactly is the impact of flash-charging on battery-swapping?

2025 (especially the second half of the year) was indeed a favorable period for NIO. On the one hand, the vehicle delivery volume was significantly higher than in previous years. On the other hand, the company's operating profit finally turned positive in Q4 for the first time since its establishment, and the management could hardly hide their joy on some occasions.

There are different explanations in the market for the sharp increase in NIO's delivery volume. For example, the LeDao series launched two major models, the L80 and L90, in the second half of the year, and the NIO ES8 and ES9 also made concentrated efforts at this time. However, in our view, none of these contributed as much to NIO as the battery-swapping model.

At the beginning of NIO's battery-swapping model, the market (including myself) thought that NIO was using the expansion of its balance sheet to offset the costs on the income statement. Simply put, the heavy-asset model of battery-swapping would increase NIO's fixed-asset scale, and this model that improved the user experience could also bring relevant revenues.

If this model continued to develop, although NIO's battery-swapping model could boost sales in the short term, its huge asset-amortization costs would also magnify the overall costs, which might not necessarily have a positive impact on improving the business quality. This was also a risky move. However, later, the management launched WENENG (a battery-asset management company associated with NIO) through a series of operations, getting rid of the above-mentioned potential burden:

Every time a BaaS vehicle (battery rental) is sold, NIO sells the battery to WENENG (WENENG is not included in NIO's financial statements), and lets WENENG provide battery-swapping services. This is equivalent to transferring NIO's battery assets to WENENG, greatly reducing the pressure on NIO's balance sheet. From then on, NIO can enjoy the increased revenues brought by the user experience of the battery-swapping model, but does not need to bear the corresponding asset-amortization pressure in the financial statements. The design of this structure is really ingenious.

How much contribution does WENENG make to NIO?

The accounts receivable from related parties in the financial report mainly consist of the accounts receivable for the batteries sold by NIO to WENENG. It can be clearly seen that this data has shown an exponential increase since 2025. We can basically confirm that most NIO customers have chosen the BaaS car-purchasing model, that is, they only buy the car body (excluding the battery) when purchasing a car, and the battery is leased by paying a monthly rent. This model has the characteristics of a low car-purchasing threshold and low costs (car insurance does not cover the battery part). Selling the car body and the battery separately is also a major innovation of NIO.

In 2025, NIO's delivery volume increased significantly, which is of course related to the intensive release of its vehicle series. However, we cannot deny the contribution of the battery-swapping model. Therefore, when BYD launched its flash-charging technology, the "automobile circle" immediately began to worry about NIO.

In our view, on the surface, BYD's flash-charging technology makes battery-swapping no longer the only solution to relieve car owners' range anxiety, which does have a certain impact on NIO. However, based on the previous analysis, we believe that the impact of flash-charging technology on NIO should be relatively controllable in the short term:

1) In addition to relieving charging anxiety, the battery-swapping model also has the advantage of lowering the car-purchasing threshold (after all, for those who choose NIO's BaaS service, the battery rental is spread over the monthly rent, and the amount is relatively small). This is very attractive to young people and those eager to change cars, which is something that flash-charging does not have;

2) In the above process, NIO transferred the heavy assets related to battery-swapping to WENENG. Even if flash-charging affects the battery-rental business, its impact on the financial report is relatively small (at most, it affects part of the accounts receivable from WENENG);

3) For users, the improvement of flash-charging technology only gives users one more choice when facing range anxiety. It is difficult to say that one will replace the other in the short term (most of NIO's accounts receivable from WENENG should also be safe).

In terms of choosing the advanced model, the market also took some time to digest. For example, after BYD released its flash-charging technology in early March, NIO's stock price immediately dropped sharply, which shows that a considerable number of views still believed that the new technology would impact the original industry model. However, later, the market sentiment gradually stabilized, and NIO's stock price soared after the release of the financial report, which also shows that the market has gradually digested the information and calmed down from excessive nervousness.

How does anti-involution affect NIO's profit?

Next, let's look at NIO's profitability.

If we look back at NIO in 2025, "cost reduction and efficiency improvement" was the most prominent keyword.

The company's gross profit margin jumped to 13.62% that year, with the gross profit margin of automobiles being 14.6%. At the same time, the ASP (average selling price per vehicle) of automobile sales was declining. After the market competition became extremely fierce, it was difficult for enterprises to transfer upstream costs through price adjustment. The main driving force for the improvement of NIO's gross profit margin this time is the optimization of the supply chain and internal costs.

In the fierce competition in the automobile industry, the prices of downstream complete vehicles are constantly being compressed, and the upstream supply chain has lost some bargaining power due to objective reasons such as the low PPI (Producer Price Index). When NIO's battery-swapping model became successful and the delivery volume of complete vehicles increased sharply, this inevitably improved its pricing power over the upstream supply chain, and the gross profit margin began to improve.

In addition, NIO's period expenses are in a compression channel. In Q4 of 2025, the selling and general administrative expenses were 3.5 billion yuan, compared with 4.9 billion yuan in the same period of the previous year. This is the main driving force for the profit to turn positive in that quarter. Of course, this also confirms once again from the side that after the pressure of front-end vehicle delivery is reduced, the management is adjusting the expenditure structure and reducing unnecessary expenditures to maintain the positive operating profit as the main goal.

Many friends are also very concerned about the sustainability of the positive profit margin. Due to space limitations, I will only give some of our perspectives:

1) Since the end of last year, the senior management has been addressing the issue of disorderly competition in the automobile industry. Simply put, the model of price-cutting competition among automobile manufacturers will be greatly curbed, which is of great benefit to maintaining the gross profit margin of automobile manufacturers;

2) In the short term, flash-charging is still difficult to have a substantial impact on NIO's vehicle sales. Judging from the sales situation in the first two months of 2026, NIO's delivery volume is still on the rise, which creates good conditions for the continuous compression of period expenses;

3) In the short term, NIO's income statement will be in an improving channel, but in the medium and long term, it still needs to rely on the industry's prosperity and the stable growth of its own sales volume. At that time, we need to more carefully observe the impact of flash-charging on the battery-swapping model.

Since its establishment, NIO has encountered numerous pitfalls and has been on the verge of failure many times. Its products and the enterprise have been in the spotlight for a long time, and it has finally waited for a good time in 2025. So far, the company's business model has been gradually improved, and the management of the supply chain has basically got on the right track. Next, we also hope that the enterprise can maintain the current situation and keep the current development trend, which is worthy of the car owners and the majority of investors.

This article is from the WeChat official account "Speculative Finance", written by Tong Zhibin and published by 36Kr with authorization.