In an effort to reduce the cost of electric vehicles overall, Chinese manufacturer Nio and battery giant CATL struck a partnership deal on Thursday to create longer-lasting batteries.

William Li, the founder and CEO of Nio, told reporters in Beijing that the company will work together to use their respective technologies to reduce what is known as the “full life cycle” costs of batteries, which are crucial for the running expenses of Nio’s thousands of battery-swapping and charging stations.

“One of the most important problems that has fundamentally not been solved nor attracted widespread attention is battery life,” Li said.

“This is not only a problem that Nio needs to solve, but one that the whole industry must work together to solve.”

EV batteries are normally covered by warranties for eight years. According to Nio, there will be around 20 million EV battery warranties expire in China between 2025 and 2032. This is because EV batteries have a shorter lifespan than automobile batteries and power pack replacement is more expensive.

Through their study, Nio claimed to have increased the longevity of swappable batteries, keeping 80% of their capacity after twelve years.

Additionally, the business proposed a battery rental system for Nio users that would reduce monthly rental payments by up to 33%. This would effectively cut the cost of purchasing an EV by up to 128,000 yuan ($18,000).

Nio, which last year received almost $3 billion from Abu Dhabi investor CYVN Holdings, has been trying to accelerate its profitability by reducing staff and postponing long-term investments in order to increase productivity.

However, the business declared that it would continue to make independent investments in the development of essential technologies like batteries. Its electric vehicles (EVs) now come with 150 kWh semi-solid-state batteries from Beijing Welion New Energy, with a maximum range of 1,000 km (620 miles).

Nio has also made significant investments in the infrastructure needed to switch and charge batteries. According to Li, there are currently 21,652 public charging stations and 2,382 exchanging stations. Although charging has become lucrative for Nio, the company continues to lose money on battery swaps.

When drivers recharge during peak hours, swapping might help reduce the load on power grids. However, executives and industry analysts predict that swapping won’t become commonplace until batteries become more standardised.

Although some have attacked switching stations for being an expensive investment, Nio claims they can serve as an energy storage facility to increase grid stability as well as a rapid way to power up EVs.

Nio anticipates launching its second brand, dubbed Ledao in Chinese, in May, according to Qin Lihong, president of the company. To reach a larger audience, Nio has been creating two sub-brands; Alps was the project code name for Ledao.

The majority of Nio’s batteries are now purchased from CATL, however the company has been looking into other suppliers of batteries, like CALB

(Adapted from Nasdaq.com)