Tesla and Battery Swapper Nio Face Off in China
This week, we talk about a brewing rivalry in China between electric car makers Tesla and Nio.
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Happy New Year, Dave! Tesla captured plenty of headlines last year after its stock rose to new heights and it joined the S&P 500. But there is another rising star in the world’s largest electric car market: China.
That’s right. Enter Chinese electric carmaker Nio, which takes a different approach to charging. Instead of plugging in, the company has stations that can replace the car’s battery with a fully-charged version in as little as five minutes with a range of around 260 miles. For about $150 a month, you can get six battery replacements at more than 150 stations in China. (The average American spent around $175 a month on gasoline in 2019, according to the U.S. Department of Labor.)
You can also plug in or even buy a Nio without a battery and choose to receive the service. Replacing batteries this way can mean an experience that’s faster than a gas station. Tesla has sped ahead as the EV market leader in China, but should Elon Musk be worried about Nio?
Well, we should remember that Nio isn’t the first to showcase battery swapping. Back in 2013, Tesla demoed its battery swap tech and tested a station the following year in California. But it eventually dropped the program, saying its more than 2,000 charging stations world-wide were fast enough. Those stations can take about 75 minutes to fully charge a car.
Tesla might have a point. Car analysts say that creating a viable battery swapping business is difficult since batteries are expensive. Batteries are also still rapidly developing so manufacturers are reluctant to standardize swapping equipment as Nio has done. Not to mention, the Chinese government had to bail out Nio when it teetered on the edge of bankruptcy during the initial shocks from the coronavirus.
But investors remain excited about Nio’s electric cars and battery stations. Nio’s stock soared last year, earning a market value above General Motors and becoming one of the world’s five most-valuable automakers. Speaking of investing, what else have we seen in the markets, Dieter?
Last year turned out to be a banner year for stocks and bonds. The S&P 500 index, which tracks the U.S. stock market broadly, rose more than 15% last year, while the Bloomberg Barclays Global Aggregate bond index climbed 9.2% on a total return basis. The rise stands in contrast with how dire the market meltdown seemed during the pandemic’s early stages.
In fact, stocks and bonds did so well that you would have been better off putting money into a stock market index fund than in fine art or diamonds. (Funds that track broad market indexes, like the S&P 500, often carry low fees and let you easily invest in hundreds of companies, providing a diversified portfolio.) In the past, investors often bet on hedge funds, classic cars and luxury goods to boost their overall returns. Those alternative investments weren’t so hot last year.
Index funds have really helped simplify and democratize investing. We’ll see if they continue to outperform luxury goods in the year ahead. Share your thoughts below, email us or catch us on Twitter. Happy New Year! 👋
Meet the team:
Elevate the Conversation is produced by the editorial teams of The Wall Street Journal and Dow Jones Newswires. Here's a little bit more about us, along with our contact information. We'd love to hear from you.
Dieter Holger, Reporter: I have a knack for uncovering values-based investing trends and I’m obsessed with spreadsheets and charts. I really enjoy ‘80s music and skateboarding (but I’m bad). dieter.holger@wsj.com @dieterholger
Dave Sebastian, Reporter: I'm interested in covering the intersection of business and economic trends—and the people behind them. In my free time, I like to check out dim sum spots in New York, and I can't wait to venture out again after the pandemic. dave.sebastian@wsj.com @depsebastian
Catherine Lindsay, Editor: I like breaking down complex ideas and explaining them. On the weekend, you’ll find me wandering the city with my film camera at the ready. catherine.lindsay@wsj.com @CathsLindsay
Tammy Lian, Designer: As a visual producer, I'm always excited by the challenge of creative problem solving. In my spare time, you can usually find me taking care of my ever-growing collection of plants and drinking tea. tammy.lian@wsj.com @violian.tammy