NIO Inc (NIO): Nomura sees Geely partnership improving the outlook for NIO's battery-swapping business

Overview

This quick note examines NIO's agreement with Geely Holding to jointly develop battery-swapping and charging businesses. Nomura views the deal as a constructive strategic partnership that could enlarge NIO's infrastructure footprint, improve operating efficiency and reinforce its longer-term development.

Core views

NIO announced on 27 September an agreement with Geely Holding, parent of Geely, covering battery swapping and charging. Geely Holding will contribute its 100% interest in Yiyi Internet Tech, which provides commercial-vehicle battery-swapping services, and invest CNY640mn in newly issued equity of NIO Power. Following the transaction, Geely is expected to own 30% of NIO Power and NIO 63.6%; NIO states that this implies a post-event valuation of CNY16bn for NIO Power. Geely's final holding is subject to post-closing operational milestones: it could fall to 20% in the worst case, while an option could allow Geely to invest a further CNY640mn and increase its stake to as much as 34% within a specified period. The transaction also includes NIO subscribing for newly issued equity in Zhejiang Haohan Energy, a Geely Holding subsidiary operating a battery-charging business. NIO will hold 10%, and the cash consideration is intended to be used by Zhejiang Haohan Energy to buy certain NIO charging assets. Nomura interprets this structure as a consolidation of charging piles and stations from the two companies, which it believes can improve operating efficiency. For battery swapping, Nomura argues that scale is central. It expects the combination with Yiyi Internet Tech to accelerate NIO's infrastructure coverage across China and believes Geely may introduce future models with battery-swapping services to explore the battery-as-a-service model. In Nomura's view, if more participants adopt swapping, the service can coexist with conventional charging in the new-energy-vehicle era. The institution also sees the agreement, following the potential GAC–FAW tie-up referenced by GAC, as evidence of a possible shift from intense competition toward cooperation and resource sharing among Chinese OEMs; it considers this potentially beneficial for industry operating efficiency and participants' opportunities. Nomura characterizes 2026 as a transition year for China's auto market because local demand is muted. It nevertheless notes NIO's performance from new models, including the flagship ES9, and argues that continued operating momentum combined with an eventual demand recovery could place NIO well in the premium market. Nomura maintains its Buy rating and USD8.60 DCF-based target price. The stock traded at 0.5x 2026F price-to-sales, while the target price implies 1.1x 2026F price-to-sales.

Analysis framework

Nomura assesses the transaction terms, ownership outcomes and planned asset transfers, then links them to infrastructure scale, battery-as-a-service adoption and charging-asset efficiency. It places the partnership in the context of cooperation among Chinese OEMs and NIO's new-model performance, while valuing NIO using a discounted-cash-flow framework.

Methodology notes

• Valuation methodsDCF (Discounted Cash Flow)

  Discounted cash flow valuation

  Nomura derives its USD8.60 target price by discounting projected cash flows to 2026 using a 9.8% WACC, 10.1% market risk premium and 1.5% terminal growth rate.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Battery-swapping and charging infrastructure integration

  The report examines how combining swapping-service capacity and charging assets could broaden infrastructure coverage and improve operating efficiency across the EV service chain.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• NIO Inc (NIO.US)

  Primary covered company; the Geely transaction is viewed as supportive of its battery-swapping, charging and long-term business development.

  Strengths

  New-model performance, including the ES9, and the potential to expand battery-swapping infrastructure through cooperation with Geely.

  Weaknesses

  Muted local demand in China's auto market during the 2026 transition period.

  Comparison

  Nomura cites potential cooperation among Chinese OEMs, including the GAC–FAW tie-up, as a broader industry backdrop.

  Risks

  Production capacity may fail to meet rising demand; new models may not gain further market share; opex improvement may disappoint and increase financial pressure.

• Geely Holding Group

  Strategic counterparty investing in NIO Power and contributing its Yiyi Internet Tech battery-swapping business.

  Strengths

  Its participation could help scale battery swapping and support future Geely models using swapping services.

  Risks

  Its final NIO Power ownership is subject to post-closing operational milestones.

Key data

• Geely Holding investment in NIO PowerCNY640mnSubscription for newly issued NIO Power equity.
• Expected Geely Holding stake in NIO Power30%Subject to post-closing operational-milestone adjustments; could be reduced to 20%.
• Maximum potential Geely Holding stake34%Possible through an option to make a further CNY640mn investment.
• NIO stake in NIO Power after transaction63.6%NIO remains the majority shareholder.
• Indicated post-event NIO Power valuationCNY16bnAccording to NIO.
• NIO target priceUSD8.60Maintained; based on DCF valuation.
• Closing priceUSD3.58As of 25-Sep-2026.
• 2026F price-to-sales0.5xCurrent trading multiple; target price implies 1.1x.

Impact & implications

Nomura believes the partnership can give NIO's battery-swapping business greater scale, potentially accelerate nationwide infrastructure coverage and support wider BaaS adoption. The related charging-asset transaction is expected to consolidate assets and improve efficiency, while broader OEM cooperation could improve operating efficiency in China's auto market.

Risks

• NIO may fail to ramp production capacity sufficiently to meet rising demand.
• New models may fail to gain further market share.
• Less-than-expected operating-expense improvement could place greater pressure on NIO's financials.

What to watch

• Post-closing operational milestones that determine Geely Holding's final NIO Power stake.
• Whether Geely launches models offering battery-swapping services.
• Progress in expanding battery-swapping coverage and consolidating charging assets.
• NIO's new-model operating momentum and any recovery in China auto-market demand.