Nio (NYSE:NIO) believes battery swapping could be the preferred charging source of the future, and it’s putting its money where its mouth is.

One of the problems of battery swapping is that you need a standardized battery. To address this, Nio has partnered with other Chinese electric vehicle (EV) companies, including Changan, Geely (OTCMKTS:GELYF), Chery and JAC.

“Swapping right now is mainly driven by Nio. Of course, Nio found out this is an ecosystem,” said CLSA Deputy Head of Research Ding Luo. “If only one player is trying to build up the whole ecosystem, it’s impossible for [them]. That’s why they’re thinking whether they can invite some partners”

Range anxiety is a major fear for prospective EV owners and Nio believes that battery swapping can help alleviate this. Battery swapping also offers a faster charging time when compared with battery charging stations.

NIO Stock: Nio Moves Forward With Battery Swapping Partnerships

Shen Fei, Senior Vice President of Nio’s Power Division, added that the company has plans to provide additional non-Nio vehicles with access to its swapping services. As of mid-March, Nio had successfully completed 40 million battery swaps from its portfolio of over 2,300 battery swap stations. It has plans to build another 1,000 stations this year. At the same time, the majority of the battery swap locations are unprofitable.

Nio has also completed almost 37 million charges through its public charging stations and plans to install 20,000 more of these stations this year. The company is the first large EV company to provide access to both battery swapping and charging in China and Europe. Its power services and other products contribute around 10% to its sales, per CNBC.

However, a problem to consider is whether battery swap stations can contribute to Nio becoming a profitable company. These stations aren’t cheap to install. According to Mobility Impact Partners’ Shay Natarajan, the stations cost around half a million dollars to build, while a two-port charging station costs between $200,000 and $300,000.

Nio is taking a risk by trying to become the leader in battery swapping while also receiving a first mover’s advantage.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.