In-depth Analysis of the Reasons for the Widening Losses in Aodong New Energy's Battery Swapping Business

Aodong New Energy Co., Ltd. (referred to as “Aodong New Energy”) was established in June 2016. Cai Dongqing and Zhang Jianping founded the “Aodong” brand in Beijing and launched the “Taxi Swapping Hundred-Station Plan” [1]. According to the latest data, the company ranks first among independent third-party battery swapping solution providers in mainland China by revenue from swapping station operation services in 2024 [1]. It is currently preparing for an IPO on the Hong Kong Stock Exchange and has submitted listing application documents [1].

From the shareholder structure perspective, Cai Dongqing and Zhang Jianping are the first and second largest controlling shareholders, holding 39.11% and 13.24% of the shares respectively [1]. The company has introduced several well-known enterprises as strategic investors, including NIO Capital (under NIO Inc.), Toyota Tsusho Corporation of Japan, Guangzhou KINGDE (a Korean listed company), and Shanghai Changlian Logistics Co., Ltd. (an A-share listed company) [1].

Aodong New Energy’s revenue growth shows an obvious downward trend:

Report Period	Revenue Amount	YoY Change	Main Reason
2023	RMB 1.155 billion	-	Base comparison year
2024	RMB 926 million	Down 19.8%	Overall slowdown of battery swapping business
H1 2025	RMB 324 million	Down 31.7%	Slowdown in sales of swapping stations and modules in Changchun and other cities

From the data, the company’s revenue not only failed to grow but also showed an accelerating downward trend. Revenue in H1 2025 dropped by 31.7% year-on-year, which was significantly wider than the 19.8% decline in 2024 [1]. Management attributed this to two points: first, the slowdown in sales of swapping stations and modules in Changchun and other cities; second, the strategic adjustment of deployment in multiple cities [1].

Although the loss in H1 2025 narrowed (from RMB 283 million in H1 2024 to RMB 157 million, a 44.5% year-on-year narrowing), it is important to note that

[1]. This means the company’s business fundamentals have not improved; it only reduced the book loss through cost compression.

Although the battery swapping model has significant advantages in refueling speed (usually completed within 10 minutes, while battery charging usually takes 15 minutes or even 10 hours), in the early stage of pure electric vehicle industry development, the charging model became the mainstream solution due to lower construction costs and unified technical standards [1]. Up to now, swapping is still not the mainstream refueling method for electric vehicles, which directly limits the market space and revenue scale of swapping operators.

From market data, China’s swapping electric vehicle sales increased from 66,000 units in 2020 to 269,000 units in 2024, with a compound annual growth rate of 42%, and are expected to reach 1.138 million units by 2030 [1]. The number of swapping stations increased from 600 in 2020 to 4,400 in 2024, with a compound annual growth rate of 68.2%, and is expected to rise to 24,000 by 2030 [1]. Although the growth rate is considerable, the overall market scale is still limited, which cannot support swapping operators to achieve economies of scale.

Swapping stations are heavy asset investments, requiring a large amount of capital for construction and operation. According to industry characteristics, the core costs of swapping stations include:

• Equipment Investment Cost
  : Swapping equipment, battery storage systems, automated robotic arms, etc.
• Battery Reserve Cost
  : A large number of power batteries need to be reserved to meet swapping demand
• Site Rental Cost
  : Swapping stations usually need to occupy core urban areas
• Electricity Cost
  : Electricity expenses for battery charging
• Maintenance Cost
  : Daily equipment maintenance and battery health management

This heavy asset nature means that swapping stations need to reach a high utilization rate to achieve break-even. However, due to factors such as limited swapping vehicle base and unformed user habits, the utilization rate of many swapping stations is insufficient, leading to high unit costs.

Aodong New Energy’s business mainly includes two parts: swapping station operation services (main revenue source) and swapping equipment sales [1]. However, the swapping equipment sales market has a fragmented competitive landscape, and most participants focus on equipment supply rather than swapping station operation. Due to many competitors, Aodong New Energy’s market share in China’s swapping equipment sales was only 5% in 2024 [1].

A single revenue structure exposes the company to greater operational risks. When the core business (swapping station operation services) declines, there is no support from other business segments, leading to a rapid decline in overall revenue.

The “strategic adjustment of deployment in multiple cities” mentioned by management is one of the direct reasons for the revenue decline [1]. Such strategic adjustments may include:

• Optimizing the swapping station network layout, closing or integrating inefficient stations
• Adjusting operational strategies to improve single-station profitability
• Re-evaluating market layout and focusing on high-potential areas

Although strategic adjustments help optimize resource allocation in the long run, they will cause revenue decline and cost increase in the short term, thus affecting performance.

In the swapping market, Aodong New Energy faces competitive pressure from multiple dimensions:

• NIO Inc.
  : As an investor of NIO Capital, NIO Inc. is also actively laying out the swapping network (has built 600 high-speed swapping stations by October 2024), forming a complex relationship of competition and cooperation [2]
• Other Swapping Operators
  : Including joint swapping projects promoted by Geely and NIO [2]
• Charging Pile Operators
  : Large-scale construction of charging pile networks poses a substitution threat to the swapping model

In addition, the swapping industry currently mainly serves commercial vehicles (taxis, ride-hailing cars), with high customer concentration, which increases operational risks [1].

From the industry development trend, the swapping model still has unique values in the following aspects:

• Refueling Efficiency
  : 10 minutes to complete swapping vs. 15 minutes to 10 hours for charging
• User Convenience
  : Reduce waiting time and improve vehicle operation efficiency
• Grid Optimization
  : Charge during off-peak hours to ease grid pressure
• Battery Health Management
  : Swapping stations can conduct centralized testing and optimization of batteries

The market expects swapping vehicle sales and swapping station numbers to continue to grow, but it will take time to achieve scale profitability.

To expand revenue sources, Aodong New Energy is actively exploring the international market and plans to launch pilot swapping station sales in Southeast Asia and Latin America [1]. The company has conducted negotiations with potential customers in Hong Kong and Mexico, and has signed a memorandum of understanding with a Hong Kong company [1]. This strategic move is expected to reduce dependence on the Chinese market, but it is difficult to contribute significant revenue in the short term.

It is worth noting that there are no pure electric vehicle swapping companies listed globally so far. Precedents can refer to US charging station companies ChargePoint (CHPT.US) and Blink Charging (BLNK.US), whose price-to-sales ratios are 0.5x and 1x respectively [1]. Considering Aodong New Energy’s continuous revenue decline and the swapping model not yet becoming mainstream, its IPO valuation faces significant pressure. If it is listed at a price-to-sales ratio higher than 1x, the possibility of the stock price “diving” (breaking the issue price) is high; even if it is listed at a price-to-sales ratio below 0.4x, the attractiveness is relatively limited [1].

Based on the above analysis, the root causes of Aodong New Energy’s swapping business losses can be summarized as follows:

Loss Reason	Impact Degree	Improvement Difficulty
Swapping model not mainstream	High	Long-term
Heavy asset and high cost of swapping stations	High	Mid-term
Single revenue structure	Medium	Mid-term
Regional strategic adjustment	Medium	Short-term
Intensified market competition	Medium	Continuous

From the financial data, although the company’s loss in H1 2025 narrowed, it was mainly driven by cost compression rather than business growth, so the sustainability of this improvement is doubtful. The company’s future profit turnaround depends on the following key factors:

1. Increase in swapping vehicle penetration
   : Growth in swapping vehicle sales drives swapping demand
2. Improvement in swapping station utilization
   : Through optimizing layout and operational efficiency
3. Breakthrough in international business
   : Southeast Asia and Latin America markets contribute incremental revenue
4. Optimization of cost structure
   : Further compress operational costs and improve economies of scale

In the current market environment, investors should maintain a cautious attitude towards Aodong New Energy, focusing on its revenue recovery, changes in swapping station utilization, and the progress of international business.

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[1] Yahoo Finance Hong Kong - Aodong New Energy’s Losses Narrowed but Revenue Continued to Fall, Outlook Not Optimistic (https://hk.finance.yahoo.com/news/奧動新能源虧損雖降-收入續下跌前景不樂觀-233121514.html)

[2] Wall Street Journal Chinese Edition - China Concept Stock Briefing: Li Auto’s October Deliveries Exceeded 40,000 for the First Time (https://cn.wsj.com/articles/中概股简报-理想汽车10月交付首破4万辆-小鹏突32万辆-均创各自单月记录-21c0f3ea)