The automotive industry has been incredibly active recently! On September 28, Geely Holding and NIO announced a comprehensive strategic partnership in the battery charging and swapping sector. The two parties will not only share technologies and standards but also further connect their respective energy businesses through equity cooperation. On the same day, GAC Group disclosed a plan for major asset restructuring, proposing to acquire a 50% equity stake in FAW Toyota held by FAW Share by issuing shares.
One connects previously separate capabilities in the energy replenishment sector, while the other reallocates joint venture assets through capital operations. These may appear to be two completely different things, but viewed together, they actually reflect a current issue in the automotive industry.
As automotive competition increasingly relies on systemic capabilities, do automakers also need to rethink which tasks should be handled independently and which can be tackled collaboratively?
01. Why Are Some Capabilities Increasingly Suited for Collaboration?
In the past, competition in the automotive industry occurred more among complete vehicle products. A car's product competitiveness, pricing, brand, and channels ultimately reflected in its market performance. However, new energy and intelligent vehicles have gradually extended this competition beyond the vehicles themselves. Power batteries, intelligent driving, software systems, energy replenishment networks, supply chains, and service systems all require continuous investment. Some capabilities not only have long construction cycles but also require achieving a certain scale for the investment to be better utilized. Energy replenishment networks are a typical example. The recent cooperation between Geely Holding and NIO is not simply about procuring battery swapping services.
According to the agreement announced by both parties, Geely Holding will inject equity into NIO Energy with 100% equity of YiYi Interconnection plus CNY 640 million in cash, holding a 30% equity stake in NIO Energy upon completion of the transaction; NIO China will subscribe to the newly added equity of Haohan Energy in cash, holding a 10% stake, with the capital increase used to acquire some of NIO's charging assets. Both parties will also achieve comprehensive interconnection of their charging networks and jointly build unified consumer-facing battery swapping technologies and standards. Geely will subsequently develop consumer-oriented battery swapping models to integrate into NIO's swapping network. This means that the assets, technologies, and operational capabilities of both parties in the energy replenishment sector will be connected at a deeper level, but the ownership of the core battery swapping network will not be exchanged.
The reason for this cooperation is that the battery swapping network belongs to a capital-intensive field with strong infrastructure attributes. NIO has cumulatively invested over CNY 20 billion in the charging and swapping sector and has recently continued to shift towards a model where assets belong to partners while NIO is responsible for operations. Introducing industrial capital like Geely this time is not only about resource synergy but also about sharing the capital pressure for expansion.
If an infrastructure requires long-term investment and the networks of different enterprises can serve each other, there is no need to completely duplicate the construction of some resources. This does not mean that all capabilities should be cooperated on; rather, some capabilities with infrastructure attributes that require long-term investment and can be shared at the same time may be increasingly suited for improving utilization efficiency through collaboration.
02. Why Is Collaboration Shifting from Procurement to Joint Construction?
There is another notable aspect in the case of Geely and NIO: the relationship between the two parties is no longer just a traditional supplier model. In the past, when automakers cooperated with external enterprises, it was often the case that automakers proposed requirements and suppliers provided products, with both parties completing the cooperation around price, quality, and delivery. This cooperation, however, involves both parties further connecting their related energy businesses through equity investment and simultaneously promoting operational synergy.
Geely Holding enters the equity structure of NIO Energy, and NIO also enters the equity structure of Haohan Energy, with both parties simultaneously advancing synergy in technology, standards, networks, and business.
In other words, the two parties are not simply buying services but are attempting to further interconnect their originally relatively independent energy replenishment networks and jointly expand their service capabilities. This is actually an adjustment in the division of labor within the automotive industry. When the construction cost of a certain capability becomes increasingly high, and different enterprises can share this capability, the cooperation between enterprises may extend from simple product procurement to joint investment, joint construction, and resource sharing. This is also why the cooperation emerging among automakers now goes beyond just jointly developing a single vehicle model.
Some collaborations occur in the battery swapping and charging sectors, some in technology R&D and software, and others go directly into the equity and asset levels. The boundaries between enterprises have not disappeared, but more resources that can be jointly utilized are beginning to emerge beyond these boundaries.
03. Why Are Some Enterprises Starting to Reallocate Assets?
If the cooperation between Geely and NIO is closer to capability collaboration, then this transaction between GAC and FAW Share is closer to the reallocation of assets and capital relationships. On September 28, GAC Group disclosed a plan for major asset restructuring, proposing to acquire a 50% equity stake in FAW Toyota by issuing shares while raising matching funds. Currently, the relevant audit and evaluation work has not yet been completed, and the transaction still needs to go through subsequent approval procedures; therefore, this remains a restructuring plan under promotion. This is not a direct merger between FAW and GAC groups, nor can it be simply understood as a traditional automaker merger. More accurately, it is about GAC Group and FAW Share rearranging the equity relationship around a joint venture automotive asset. FAW Toyota was originally established as a joint venture between FAW Share and Toyota Motor. The current shareholding structure is 50% held by FAW Share, 45.77% by Toyota Motor, and 4.23% by Toyota China.
According to the currently disclosed plan, upon completion of the transaction, GAC Group will hold a 50% equity stake in FAW Toyota, while the Toyota Motor system will still hold the remaining 50%. FAW Share will no longer hold any equity in FAW Toyota, but will instead become the second-largest shareholder of GAC Group by acquiring shares issued by GAC Group. However, this transaction does not constitute a change in the actual controller. The controlling shareholder of GAC remains Guangzhou Automobile Industry Group, and the actual controller remains the SASAC of Guangzhou Municipality. Although different in nature from the cooperation between Geely and NIO, both involve a similar issue: when the industrial structure formed in the past and the new market environment change, do enterprises need to reallocate their assets and resources? Such reallocation does not necessarily mean a merger. It can be an equity adjustment, an asset restructuring, a business cooperation, or simply connecting originally independent infrastructures. From this perspective, there is more than one form of automaker integration.
04. What Are Automakers Really Trying to Recombine?
If these recent market changes are simply understood as automakers starting to stick together, it is actually somewhat one-sided. What automakers are recombining may not be the complete vehicle enterprises themselves, but the capabilities and resources behind them. What Geely and NIO are reconnecting is energy replenishment capabilities; the transaction between GAC and FAW Share involves joint venture assets and capital relationships; looking further back, the cooperation between automakers and tech companies is recombining intelligent driving, cockpit, and software capabilities. Although these matters take different forms, they share a common point.
Enterprises have not abandoned their own brands and complete vehicle businesses as a result; instead, they are re-evaluating which capabilities need to be kept in their own hands, which capabilities can be obtained through cooperation, and which assets need to be reallocated. This is actually a realistic issue that needs to be faced given the current development of new energy and intelligent vehicles.
If all capabilities are built independently, R&D and infrastructure investments will continue to increase; if there is excessive reliance on external partners, it may weaken the enterprise's control over core technologies, products, and users. Therefore, in the current development of intelligent driving, what automakers need to consider is not whether to cooperate, but on which capabilities to cooperate, in what ways to cooperate, and where to draw the boundaries of cooperation.
05. Will Automotive Competition Turn into Enterprise Alliances?
The cooperation between Geely and NIO solves the resource synergy in the charging and swapping sector; the transaction between GAC and FAW Share also has clear asset and equity arrangements. Neither can directly prove that the automotive industry has entered a stage of comprehensive integration. However, from these cases, it can be found that the relationship between automotive enterprises is showing the characteristics of coexistence of competition and cooperation.
Enterprises can compete in the complete vehicle market while cooperating on energy replenishment networks; industrial assets that were previously operated separately may also be reallocated through the capital market. In the future, more collaborations around technology, supply chains, energy, and service capabilities may emerge. Undeniably, competition in the automotive market will still fall on products, prices, and sales, but for some automakers, efficiency competition is also beginning to extend to how resources are shared, how costs are apportioned, how infrastructures are connected, and how industrial assets are reallocated.
From the charging and swapping cooperation between Geely and NIO to the asset restructuring surrounding FAW Toyota between GAC and FAW Share, automotive enterprises are rethinking what should be done independently and what can be done together. This may be the more discussable change behind these cooperations and restructurings.