LONDON, Oct 1 (Reuters) - Nio is partnering

with UK artificial intelligence software startup Monolith to

test and improve electric car battery packs in real-time using

the Chinese EV maker's battery swapping service in Europe, the

companies said on Tuesday.

Testing is due to start soon in five markets in Europe and

Monolith CEO Richard Ahlfeld told Reuters the company is working

through regulatory requirements to do the same in China. That

should enable it to work with other Chinese automakers, Ahlfeld

said.

Monolith already works with around 10 of the world's top 20

automakers test electric vehicle batteries using machine

learning algorithms, including Mercedes-Benz, BMW and Honda, to

speed up their development and help western automakers catch up

with newer Chinese rivals.

"They're obviously way behind China so they need to learn

really, really quickly," Ahlfeld said.

A European automaker needs around five years or more to

develop a new car, while Chinese EV makers only need around two

years.

"The Chinese want to push even faster, they're currently

thinking 'okay, can we do it in one year?'", Ahlfeld said.

Nio runs a battery swapping service that allows car owners

to swap out EV batteries in minutes rather than charging them.

Frank Kindermann, Nio's European battery system head, said

that 98% of customers in its five key European markets use the

battery swapping service.

That allows the automaker to test out new batteries and

check on their health, performance and durability each time they

are swapped out, using Monolith's AI algorithm to crunch the

numbers.

"Nio can essentially give you a prototype of a car early on

and they keep testing and learning from what you're doing,"

Ahfeld said.

Monolith has so far raised around $22 million from

investors, including private equity firm Insight Partners and

venture capital firm Pentech.