Nio To Invest $32M Toward Vertical Integration Of Battery Manufacturing: Report

Nio, Inc. NIO is pursuing vertical integration amid the supply crunch and input price inflation.

What Happened: The Chinese electric vehicle startup is planning to set up lithium-ion battery labs and a pilot production line for batteries in Shanghai, the CnEVPost reported, citing an environment assessment report filed with the local municipal body.

The company plans to invest about 218.5 million yuan ($32.75 million) in the plant and commence construction between August and October.

The new plant would likely come up in the Anting town, Jiading district, Shanghai and have 31 labs doing research in lithium-ion cell and battery pack. It would also have a lithium-ion cell pilot line and a battery pack production line.

The pilot line and battery pack assembly line would work on the trial production of lithium-ion cells and battery packs with an eye set at exploring large-scale production in the future.

The Shanghai-based company reportedly plans to employ 400 personnel for research and development.

Related Link: Nio Delivers 500th Vehicle In Norway A Year Into Launch

Why It's Important: Following the Ukraine-Russia war that sent prices of battery materials spiraling, EV manufacturers have been exploring options to secure supplies.

Battery accounts for the bulk of the cost of an EV and is, therefore, the key to bringing down the cost of ownership of an EV — an essential prerequisite for increasing adoption.

Nio now sources batteries primarily from China's CATL and it is reportedly working with WeLion to develop solid-state batteries. Nio currently uses ternary lithium and the cheaper lithium iron phosphate batteries in its vehicles.

Price Action: Nio closed Monday's session down 2.68% at $16, according to Benzinga Pro data.