Nio's battery R&D team has now exceeded 800 people, with annual R&D investment expected to exceed RMB 1 billion, according to local media.

(Image credit: CnEVPost)

Nio is seeking talents for its battery project, poaching former Apple and Panasonic executives, local media 36kr reported today.

Shawn Hao, who worked for Apple's automotive program, and Zack IZAKI, former Panasonic general manager of battery technology in North America, have joined Nio, reporting to vice president Zeng Shuxiang, according to the report.

Hao is a battery industry veteran, having worked at Daimler Chrysler Group before moving into the battery industry with A123, a battery company owned by Wanxiang Group, according to its LinkedIn profile.

Hao joined Apple in 2012 and was initially responsible for battery technology management and supplier quality management for products including phones.

He entered Apple's car project in August 2015 and was a core figure in Apple's car manufacturing engineering, leading a team to build a set of processes, SOPs, quality and other production systems, according to 36kr.

However, Apple's car-building project did not progress smoothly, and Hao ended his 8-year and 7-month career at Apple in October 2020.

Hao worked briefly with CATL chairman Robin Zeng during his early days at Apple, the report said, citing people familiar with the matter.

Izaki, from Panasonic, has extensive experience working in battery engineering and led the engineering of Panasonic batteries in North America, according to the report.

At the Nevada plant jointly built by Panasonic and Tesla, IZAKI was involved in building an engineering team to produce battery packs for the Model 3, the report said.

The Model 3 faced a long period of capacity hell in its early days, and IZAKI was one of the key players along with Elon Musk in pulling Tesla out of that situation, according to the report.

William Li, Nio's founder, chairman and CEO, confirmed in an earnings call on June 9, 2022, that the company would develop its own batteries.

He said at the time that Nio has a battery team of more than 400 people to research areas including battery materials, cells and battery management systems to fully establish battery system development and industrialization capabilities.

Beijing-based Cbea.com, which focuses on the battery industry, reported on February 27 that Nio held a battery partner forum in Hefei, Anhui province, on February 24, where the company announced the start of construction of the first phase of its battery base.

Li said at the time that Nio's battery R&D team has exceeded 800 people, with annual R&D investment expected to exceed RMB 1 billion, according to the report by 36kr today.

The planned investment amount is high, considering that China's third largest battery maker CALB invested less than RMB 300 million in R&D in 2021, and the more aggressive Svolt Energy put RMB 724 million in R&D in 2021, the report noted.

Bringing in senior talents, heavy investment and bold capacity plans show Nio's determination to develop its own batteries, the report said.

On February 24, Reuters reported that Nio plans to build its first battery factory to produce large cylindrical batteries similar to those used by Tesla.

The new plant will have an annual battery capacity of 40 GWh, which could power about 400,000 long-range electric vehicles, the report said.

Moreover, the 36kr report also mentioned that Nio has developed prototypes of large cylindrical cells at its small-scale pilot production line in Anting, Shanghai.

The experimental site, which covers cell and pack trial lines, has seen key equipment manufacturers working there for nearly six months, although it is not yet fully completed, the report said.

Nio's head of battery development, Zeng Shizhe, had assured Li that the company's in-house developed cells would be delivered within the planned time frame, the report said, citing industry sources who had access to the team.

In addition to Nio, there are other new car makers with well-established technical solutions for manufacturing their own batteries, but just haven't decided whether to put them into mass production, the report said.

In Li's view, in-house developed batteries are an important foundation for automakers to get enough gross margin.

He said in an internal speech last November that if Nio wants to achieve a 20 percent gross margin in the mass market, it must produce its own batteries and chips, otherwise, there is no possibility to achieve that goal.

Li listed his calculations:

Batteries currently account for nearly 40 percent of vehicle costs. Assuming that the battery manufacturer's gross profit is 20 percent, if Nio produces its own batteries, then it can get 8 percent more gross profit.

And if Nio produces its own chips, it can get an additional 10 percent gross profit.

Normally, the gross profit of a car is 10 percent, and if you can get 10 percent more you can reach 20 percent. "If it doesn't reach that level, it's over."

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