Helping to Reduce the Environmental Impact of Transportation

August 2022

NIO, an electric vehicle (EV) company, appeals to consumers who want to reduce their consumption of fossil fuels. The world is gradually shifting away from fossil fuels to renewable energy. To contribute to this transition, NIO leverages technology, infrastructure, and its relationships with its customers and suppliers to reduce the environmental impacts of transportation.

Focused on Environmental Sustainability 

NIO is committed to contributing to the global effort to implement a low-carbon strategy.¹ It has taken a series of measures to support decarbonization, recycling, and sustainable product design and development. NIO has conducted a carbon emissions evaluation of its product lifecycle and has developed strategies to meet today’s strict industry standards for carbon emissions.

The firm also collects and monitors all vehicle material information based on the China Automotive Material Data System and has established its own internal material database, Material WorX, which studies and calculates the carbon emissions of the entire vehicle lifecycle from raw material sourcing and production to utilization and eventual recycling.

At the product design and development stage, based on its philosophy of design for recyclability, NIO conducts comprehensive research on the availability and application of sustainable materials on its products, including post-consumer recycling materials. As an example of this, it applies karuun® renewable rattan—an alternative to plastic—on its ET7 model and clean and sustainable material on its ET5.

The firm routinely looks to improve technologies and material applications to reduce the carbon emissions and energy consumption of its products. The firm successfully reduced its product energy consumption by over 25 percent in the past few years.

During the manufacturing process, NIO actively leverages clean energy, both in its plants and at its partners’ facilities. This includes applying photovoltaic technology and a ground-source heat pump system.

In March 2022, NIO reached a strategic cooperation agreement with Chinalco (the Aluminum Corporation of China) to join forces on new material research and carbon reduction efforts. In addition, NIO implemented recycling of water, aluminum, and other scrap materials in its plants, and it aims to further expand its recycling efforts throughout its product lifecycle. As an example of this commitment, NIO Life launched a green-thinking product line, Blue Sky Lab, to create eco-friendly fashion products by reusing the scrap materials generated during the car manufacturing process, including leather and fabrics.

Supporting the Broader Community

The firm has initiated activities with different stakeholders to protect the environment and support the broader community. For example, in 2021, NIO launched a Blue Points Plan to help users of its products certify emission reductions and trade carbon credits.

NIO also launched Clean Parks, an ecosystem co-construction initiative. The firm has rolled out the initiative in six ecologically sensitive areas in China. NIO aims to contribute to ecosystem building and supports the adoption of smart electric vehicles and clean energy infrastructure in nature reserves. In April 2022, NIO joined with WWF China (World Wide Fund for Nature) in the Clean Parks initiative, and it expects to work with more partners to build a more sustainable environment.

The firm obtained an ISO (International Organization for Standardization) 14001 Environmental Management System certification, an independent evaluation that verifies environmental risks are considered and managed throughout a product’s lifecycle. The firm also stablished a self-regulation mechanism for environmental management based on PDCA (Plan, Do, Check, and Action) and asked its entire staff to pay attention to environmental protection in the firm’s daily activities and business operations.

NIO’s workplace culture and its interactions with its customers are highly focused on sustainability. It offers employees time to volunteer for causes that support lowering carbon emissions, addressing global warming, and fostering a healthier planet. The firm also regularly makes field trips to organizations that can educate the staff about these topics. Employees are highly engaged in these efforts and frequently post on social media about environmental issues and NIO’s commitment to them.

On the NIO app, the firm delivers exclusive sustainability-related content to its customers. Users of the app can also buy other eco-friendly products, like the sustainable clothing offered through the NIO Life brand. These non-car products are not managed to be major revenue generators for the firm, but are instead offered to support customers’ goals of living a more environmentally friendly lifestyle. In the Chinese market, the firm’s name is Wei Lai, which means “the future.” It serves as an expression of the firm’s mission to create a healthier environment for everyone.
NIO’s commitment to sustainability also extends to its vendors and business partners. While NIO considers the basics of technical capabilities and pricing when evaluating potential partners, it also looks for firms that share its commitment to lowering carbon emissions. As part of its process of onboarding new partners, NIO provides comprehensive training on its standards for sustainability.

A Battery-Swapping Service

NIO has helped make EVs more convenient and easier to use through its battery-as-a-service subscription model and the installation of a network of battery-swapping stations across China.² It is also in agreement with firms like Royal Dutch Petroleum³ to establish a similar network across Europe. At these stations, a battery near the end of its charge can be swapped for a fully recharged one in about five minutes. That is about the same time it takes to fill up the tank of a gas-powered car.

After the battery is exchanged, technicians at the station check to make sure the original battery is still working and can be switched to another driver’s car after recharging. Drivers have a choice of what type of battery they receive. If their upcoming driving needs will include only short-distance daily commutes and errands, they can opt to receive a small and lighter-weight low-range battery. Alternatively, if they plan to travel great distances, they can opt for a long-range battery. When they return from their trip, they can switch back to the small and lighter low-range battery.

By the end of 2021, NIO had built 700 battery-swapping sites across China. This network covers several thousand kilometers of Chinese expressways.⁴ NIO plans to install 600 more sites in China—and is targeting the installation of more than 4,000 battery-swapping stations worldwide—over the next three years.

Swapping Stations Make It Easier to Own EVs

By offering the battery service and building an expansive network of swapping stations, NIO has made owning an EV easier and more affordable. The battery service has reduced the price of each electric vehicle by $10,000 because the battery service is decoupled from the sale of the car.

More people can also now consider owning an EV. Many drivers, especially those who live in apartment buildings, cannot charge their batteries at home. This group has to rely on public charging. The convenience and simplicity of NIO’s battery-swapping service provide a powerful incentive for consumers to buy EVs.

Sustainable Development Goals

The Sands Capital six investment criteria tend to lead us to businesses that are innovators or vital facilitators of change in industries undergoing significant transformation. NIO is one of many portfolio businesses that create impact by addressing at least one major social or environmental challenge identified by the United Nations Sustainable Development Goals (SDGs). NIO’s efforts support SDG 9, Industry Innovation and Infrastructure; SDG 11, Sustainable Cities and Communities; SDG 12, Responsible Consumption and Production; and SDG 13, Climate Action.