– Aodong New Energy (奥动新能源), China’s largest independent third-party battery swap solution provider, has reported consistent annual losses averaging 6.2 billion yuan over three years, despite strategic partnerships with major automakers.
– Founder Cai Dongqing (蔡东青), previously known as the ‘Toy King’ behind hit IPs like ‘Pleasant Goat and Big Big Wolf’ (喜羊羊与灰太狼), illustrates the high-risk pivot from entertainment to capital-intensive EV infrastructure.
– Financial data shows persistent negative gross margins and concerning cash flow trends, with revenue contraction in 2024 raising sustainability questions ahead of a potential IPO.
– The battery swap business model, involving both self-operated stations and partnership services, faces significant scalability and profitability hurdles in a market dominated by players like Nio (蔚来).
– Investors must critically assess the long-term viability of battery swap infrastructure investments amidst evolving regulatory and competitive landscapes in China’s EV sector.
The Battery Swap Conundrum: More Than Just Nio’s Game
The battery swap business has long been a topic of intense debate in the electric vehicle (EV) industry, often met with skepticism from giants like Tesla. Yet, in China, companies like Aodong New Energy (奥动新能源) are betting big on this model, despite mounting financial losses. This story isn’t just about one company’s struggle—it’s a window into the broader challenges of building sustainable EV infrastructure in the world’s largest automotive market.
Aodong New Energy: The Independent Leader in a Niche Market
According to Zhuoshi Consulting (灼识咨询), Aodong New Energy ranks as China’s largest independent third-party battery swap solution provider by 2024 operational service revenue. Unlike Nio, which focuses on a closed, self-operated network, Aodong adopts a hybrid approach. It has collaborated with over 16 mainstream automakers, including FAW (一汽), Dongfeng (东风), Changan (长安), SAIC (上汽), BAIC (北汽), GAC (广汽), Dongfeng Nissan (东风日产), and Hezhong (合众), to develop more than 30 swap-compatible vehicle models. This partnership strategy aims to create a multi-brand, shared infrastructure, but profitability remains elusive.
Financial Struggles: Revenue vs. Losses
Financial disclosures paint a stark picture. From 2022 to 2024, Aodong’s revenue fluctuated between 9.26 billion yuan and 11.55 billion yuan, while annual losses ranged from 4.19 billion yuan to 7.85 billion yuan. Gross margins stayed negative throughout: -15.7% in 2022, -3.4% in 2023, and -3.7% in 2024. In the first half of 2025, revenue declined by 31.71% year-over-year to 3.24 billion yuan, with losses narrowing to 1.57 billion yuan from 2.83 billion yuan. However, this improvement coincided with a contraction in revenue, particularly from equipment sales and operational services, indicating that cost-cutting alone may not solve the core issues of the battery swap business.
The Founder’s Journey: From Toy Empire to EV Infrastructure
The narrative of Cai Dongqing (蔡东青) is a classic tale of entrepreneurial diversification gone awry. After building a fortune in the animation and toy sector, his venture into EV infrastructure highlights the immense risks of跨界 (cross-industry) pivots in China’s fast-evolving economy.
Cai Dongqing: The Man Behind the Magic
Crossing Industries: The Bold PivotCai’s shift reflects a common trend among Chinese entrepreneurs seeking growth in high-tech sectors. However, the battery swap business requires massive capital expenditure, regulatory navigation, and long gestation periods. Unlike content creation, which offers scalable margins, EV infrastructure demands continuous investment in physical assets—521 swap stations as of June 30, 2025, with only 267 self-operated—without guaranteed returns. This divergence in business models underscores why even well-funded pioneers face uphill battles.
Dissecting Aodong’s Business Model
Aodong operates on a dual-mode strategy, but both avenues have struggled to turn a profit. Understanding this structure is key to gauging the viability of the battery swap business in China.
Dual-Mode Strategy: Self-Operation vs. Partnership
The company’s approach includes:
– Self-operated swap stations: Similar to Nio’s model, where Aodown owns and runs the stations directly.
– Partnership model: Collaborating with energy giants, local city investment firms, transportation enterprises, and car dealers to sell equipment and provide swap operation and platform services.
As of mid-2025, 521 stations were connected to its smart energy service platform: 267 self-owned, 62 using its operational services, and 192 accessing platform services. Initially, equipment sales drove revenue, but recently, swap services from self-operated stations have taken the lead. Yet, neither mode has achieved positive gross margins, highlighting the inherent challenges in the battery swap business.
Revenue Streams and Their Pitfalls
Market Realities and Competitive LandscapeThe battery swap business in China is not just about Aodong or Nio; it’s shaped by broader market forces, regulatory frameworks, and competitive dynamics.
The Tesla Factor and Industry Skepticism
Tesla’s public dismissal of battery swap technology has cast a shadow over the sector, emphasizing the preference for fast-charging solutions in many global markets. In China, however, policy support for battery swap exists, with initiatives like the ‘New Infrastructure’ (新基建) drive promoting EV charging and swapping networks. Despite this, the financial performance of key players indicates that subsidies and partnerships alone may not suffice. The battery swap business requires high utilization rates to break even, but with EV penetration still growing, stations often operate below capacity.
Collaboration with Automakers: A Silver Lining?
Aodong’s alliances with over 16 automakers could be a strength, enabling standardized swap systems across brands. For example, partnerships with state-backed giants like FAW and SAIC provide access to fleet vehicles and government projects. However, the slow rollout of compatible vehicles and the fragmentation of the EV market dilute these benefits. Investors should monitor announcements from the Ministry of Industry and Information Technology (工业和信息化部) on battery swap standards, as regulatory clarity could boost the battery swap business. Outbound links to such policy documents, when available on official sites like www.miit.gov.cn, can offer deeper insights.
Financial Health and Future Prospects
Aodong’s cash flow and funding situation are critical to its survival, especially as it eyes an IPO. The battery swap business is capital-intensive, and current metrics suggest a precarious position.
Cash Flow Concerns and Burn Rate
Path to Profitability: Is IPO the Answer?An IPO could provide liquidity, but public market investors will scrutinize the sustainability of the battery swap business. Key factors to watch:
– Utilization rates of swap stations: Data from the China Electric Vehicle Charging Infrastructure Promotion Alliance (中国电动汽车充电基础设施促进联盟) shows average utilization below 15% for many stations.
– Cost reduction through technology: Innovations in battery management and automation could lower operational expenses.
– Policy tailwinds: Subsidies from local governments, such as those in Guangdong province, might offer temporary relief.
However, without a clear roadmap to positive gross margins, an IPO may merely delay inevitable restructuring in this tough battery swap business.
Implications for Investors and the EV Sector
The story of Aodong New Energy offers broader lessons for stakeholders in Chinese equities and the global EV ecosystem. The battery swap business is a microcosm of the risks in transitioning to green mobility.
Lessons from Aodong’s Story
The Road Ahead for Battery Swap in ChinaLooking forward, the battery swap business may find niches in commercial fleets, such as taxis and logistics vehicles, where downtime minimization is critical. Partnerships with state-owned enterprises could also provide stable demand. However, for broad consumer adoption, challenges like battery standardization and high costs persist. Investors should stay informed through resources like the Shanghai Stock Exchange (上海证券交易所) disclosures for listed EV players and reports from the China Association of Automobile Manufacturers (中国汽车工业协会).
In summary, the journey of Cai Dongqing and Aodong New Energy underscores the formidable obstacles in China’s battery swap business. While innovation and policy support drive optimism, financial realities—from persistent losses to cash flow woes—demand cautious investment. For sophisticated market participants, this case serves as a reminder to prioritize sustainable business models over speculative growth. As the EV revolution accelerates, due diligence on infrastructure plays will be paramount. Consider diving deeper into regulatory filings and market data to navigate this dynamic sector effectively.