The development trend of battery swapping stations in two years
Table of Contents
With the recent introduction of several supportive policies in China, the accelerated layout of battery swapping stations planning by relevant companies, and the influx of capital, the competition for new energy vehicles in China continues to heat up.
Since June alone, there has been a lot of news about China’s battery swapping market: SAIC’s “Magic Square” battery, which can support battery swapping, was revealed for the first time; CATL EVOGO battery swapping service was officially launched in Hefei, Anhui Province; Geely launched three models that require battery swapping cabinets and is expected to complete the construction of more than 200 battery swapping stations by the end of this year; a report from Grizzly Research LLC, which points directly to NIO attempt to implement BaaS (a new type of vehicle purchase with vehicle-electricity separation and battery rental) as well as the battery exchange business, has to some extent pushed the battery exchange model to the limelight …
At the same time, the battery swapping stations application pilot work has been launched one after another, Chongqing, Wuhan and other local governments have issued favorable policies to support the development of the power exchange mode – Chongqing clearly by 2023, the completion of more than 200 exchange stations, the promotion of new energy vehicles in the power exchange mode more than 10,000; Wuhan strives to build a total of 50 exchange stations by the end of 2022. Wuhan aims to build a total of 50 power stations by the end of 2022 and 100 by the end of 2023.
Behind the leading enterprises strive to squeeze into the power exchange industry, indicating that the scale of the battery exchange cabinet market is gradually expanding. Related institutions predict that battery exchange cabinets are expected to usher in explosive growth in 2022, with the number of new battery exchange cabinets exceeding 3,000 units for the year; the industry is expected to add more than 10,000 units by 2025, corresponding to the amount of investment in equipment and electricity exchange industry operating income will reach 100 billion RMB.
Supporters of China’s battery swap industry
In fact, the development of new energy vehicles so far, range, replenishment energy has been a difficult problem for electric vehicle users. At present, there are two replenishment modes of new energy vehicles, charging and power exchange. With the growth of the number of new energy vehicles, the charging mode faces the safety problems of irregular charging, thus causing explosions, and the slow charging speed, which affects the efficiency of couriers.
On the basis of the speeding up of the construction of traditional charging piles, battery swapping stations have become a brand new industry. The so-called battery exchange mode, that is, through the centralized charging station for a large number of batteries centralized storage, charging, unified distribution, and battery replacement services for electric vehicles in the exchange station. Compared with charging, the battery exchange is faster and less different from the fuel car refueling method. In the latest new energy vehicle development plan, the battery exchange is also given a proper name and is listed among the new energy vehicle replenishment methods.
Business leaders said: “The advantages and disadvantages of power exchange are very clear, the advantages are high replenishment efficiency, small footprint, low battery loss; long range, high security, rich application scenarios; ease the pressure of grid expansion, low pre-purchase costs. Disadvantages are high construction costs, long return cycle, standardization is difficult to establish, business model profitability is difficult, etc.”
According to statistics from the China Electric Vehicle Alliance, as of June 2022, the estimated number of battery exchange stations in China is 1,582. In terms of the current state of provincial and municipal development, Beijing, Guangdong, Zhejiang, Jiangsu and Shanghai top the list in terms of number, with 272, 213, 154, 144 and 103 respectively.
Right now, China’s battery exchange industry presents the following pattern: vehicle enterprises represented by NIO, Geely and BAIC, battery manufacturers represented by CATL and SK, large central enterprises represented by State Grid Corporation of China and Sinopec, and third-party service providers represented by Aulton New Energy and Hangzhou Botan Technology Engineering. Among them, representatives of vehicle companies and third-party service providers share almost all of the market share – NIO, Aulton New Energy and Hangzhou Botan Technology Engineering operate 1024, 450 and 108 battery exchange stations respectively.
The relationship between charging mode and battery exchange mode
There is a consensus in the industry that charging and battery exchange are complementary, not competitive, modes of replenishment.
However, in the opinion of some industry insiders, battery swapping stations will not become mainstream at this stage.
The director of the China Electric Vehicle Alliance said in an interview with reporters that the power exchange industry is divided into two categories, one for passenger cars and one for commercial vehicles. “
In the passenger car sector, there is a demand for battery swapping stations scenarios in the to B end of the operating market. But for private car owners, the current power exchange is part of the demand of some people in some scenarios, at this stage will not become mainstream, just one of the ways of new energy vehicle replenishment. Now what kind of people will choose to change electricity? The first category is the home can not be installed charging pile, the unit also has no place to charge; the second category is the middle class and above, from their work style, lifestyle, time is more important.”
Industry professionals believe that the charging and switching modes are not unable to develop together, and integrate development to suit market demand. The characteristics of different electric energy replenishment methods determine their own specific scenarios applicable to each – for commercial vehicles and cabs, power exchange is a good business model; for passenger cars, the best way to look at the medium and long term or charging, usually can be at home or unit slow charging; highway long-distance travel, super fast replenishment energy and refueling at the gas station The experience is similar.
Challenges of the power exchange model
High cost
It is important to note that while there are many advantages to the battery swap model, there are also many challenges, such as the huge financial pressure on the company’s back, and the high cost of building and operating the battery swap station. Data show that the NIO generation battery swap station cost about 3 million RMB, the second generation battery swap station cost in about 1.5 million RMB; a company revealed that a single passenger car battery exchange station investment of 5.072 million RMB, of which the battery exchange station investment of 2.672 million RMB, accounting for about 52%, line investment of 1 million RMB, battery investment of 1.4 million RMB.
As the first taster of the power exchange model, Israel’s Better Place was unable to sustain the company due to the difference between high investment and low return, large-scale operational investment and meager earnings, and only one customer, so it filed for bankruptcy after only six years of existence; later Tesla also tried the power exchange model, eventually abandoning it due to high pricing and inconvenient operation; NIO has so far failed to achieve power exchange business profitable …
NIO leaders have estimated that at 0.6 RMB per kWh and an average of 50 kWh per unit, a battery exchange station can generate 50 units a day and 500,000-600,000 RMB a year, which can basically cover the site rental and equipment depreciation costs of the exchange station.
According to the calculation that each car is changed once a week, a battery exchange station should have about 350 cars to cover the cost. This also means that if NIO’s 1024 battery exchange stations were to bear the profit and loss by NIO itself, it would need to sell more than 350,000 electric cars.
However, in the opinion of NIO’s president, the clear point of NIO’s battery swap business is not profitability; at least in the short term, the replenishment network, including the swap, is to serve the cars. He said at NIO Power Day 2022 that power exchange is not a business, but a service, “Many people see power exchange as a (separate) business and care when this business will be upgraded, which is like going to a restaurant and asking when the paper towels he delivers will be profitable.”
The chairman of Tesco previously said, “The power exchange model solves the current pain point problem of long charging time, but it has to add greater costs. Let’s say it takes about 100,000 RMB to make a charging station, 200,000 to 300,000 RMB to make a power exchange station, and the extra cost companies will add to the user.” At the same time, he said, “users spend 1 million to buy a car, are they willing to change a battery of about 200,000? So it’s hard for the power-swap model to go for such a balance in terms of assets, applications and management.”
It is understood that the cost of the power exchange model is about 1-3 times that of the charging model, generally charging models a car needs a battery, but the power exchange business needs to prepare 1.1 or 1.2 batteries for each car.
Battery specifications are not standardized
In addition, another problem that stands in the way of the development of the power exchange model is the lack of standardization of battery specifications. On the one hand, the technical standards of each company’s electric vehicles are constantly being updated, and the battery standards are very different; on the other hand, car companies are unwilling to share the technical standards among themselves, so the battery exchange mode cannot be practically applied to different models.
Therefore, the chairman of Geely Group proposed to promote the development of standards for battery packs, so that the battery packs can be interchangeable between different vehicle enterprises, different exchange stations and different users.
To this end, some industry insiders said, “There are difficulties in establishing a unified battery standard. Take the cell phone battery for example, after 20 years of development, the standardization of cell phone batteries have not been solved. The same is true for electric vehicle power exchange. For the field of power exchange to develop rapidly, it requires car enterprises, power battery enterprises including charging enterprises and users to work together. I think one of the most difficult is the car companies, because they are emphasizing that their way is right and others are not, but it is not true.”
In fact, the power battery as the core element of new energy vehicles, host manufacturers and battery manufacturers have been playing the game. For the car companies, the power exchange involves power battery product specifications unified problem, which is also the main reason why the “power exchange mode unified standardization” has been slow to land. Although CATL claims that its chocolate battery exchange block can be adapted to 80% of the world’s listed and pure electric platform models to be listed in the next three years, but at present, in addition to FAW Pentium’s NAT models to join EVOGO, has not yet announced the promotion of other cooperative brands; Azure announced BaaS model, despite the positive release of cooperation sincerity, but has not yet successfully developed an external car enterprises.
The head of CATL subsidiary confessed, “At present, most car companies have their own customized development platform, and almost every model or every brand has customized requirements for battery packs. Switching aspect launched at the beginning of the year ‘chocolate for electricity’ universalized battery, universalization is the premise of switching, explore whether the user can accept through the ‘chocolate’ model.”
The vice president of Aulton New Energy proposed two unifications: one is the specification unification, currently Aulton cooperation of 16 car companies, more than 30 models, 40,000 vehicles, the specifications of the battery pack is unified, to achieve the battery pack can be shared in any power exchange station; the second unification is the size unification, currently not achieved, for which a joint effort is needed to develop a standard.
In addition, the industry personnel is very optimistic about the prospects of the battery swap model, in his opinion, it only takes two years for the power exchange to become a generally accepted business model for consumers.
The development trend of battery swapping stations in two years
With the recent introduction of several supportive policies in China, the accelerated layout of battery swapping stations planning by relevant companies, and the influx of capital, the competition for new energy vehicles in China continues to heat up.
Since June alone, there has been a lot of news about China’s battery swapping market: SAIC’s “Magic Square” battery, which can support battery swapping, was revealed for the first time; CATL EVOGO battery swapping service was officially launched in Hefei, Anhui Province; Geely launched three models that require battery swapping cabinets and is expected to complete the construction of more than 200 battery swapping stations by the end of this year; a report from Grizzly Research LLC, which points directly to NIO attempt to implement BaaS (a new type of vehicle purchase with vehicle-electricity separation and battery rental) as well as the battery exchange business, has to some extent pushed the battery exchange model to the limelight …
At the same time, the battery swapping stations application pilot work has been launched one after another, Chongqing, Wuhan and other local governments have issued favorable policies to support the development of the power exchange mode – Chongqing clearly by 2023, the completion of more than 200 exchange stations, the promotion of new energy vehicles in the power exchange mode more than 10,000; Wuhan strives to build a total of 50 exchange stations by the end of 2022. Wuhan aims to build a total of 50 power stations by the end of 2022 and 100 by the end of 2023.
Behind the leading enterprises strive to squeeze into the power exchange industry, indicating that the scale of the battery exchange cabinet market is gradually expanding. Related institutions predict that battery exchange cabinets are expected to usher in explosive growth in 2022, with the number of new battery exchange cabinets exceeding 3,000 units for the year; the industry is expected to add more than 10,000 units by 2025, corresponding to the amount of investment in equipment and electricity exchange industry operating income will reach 100 billion RMB.
Supporters of China’s battery swap industry
In fact, the development of new energy vehicles so far, range, replenishment energy has been a difficult problem for electric vehicle users. At present, there are two replenishment modes of new energy vehicles, charging and power exchange. With the growth of the number of new energy vehicles, the charging mode faces the safety problems of irregular charging, thus causing explosions, and the slow charging speed, which affects the efficiency of couriers.
On the basis of the speeding up of the construction of traditional charging piles, battery swapping stations have become a brand new industry. The so-called battery exchange mode, that is, through the centralized charging station for a large number of batteries centralized storage, charging, unified distribution, and battery replacement services for electric vehicles in the exchange station. Compared with charging, the battery exchange is faster and less different from the fuel car refueling method. In the latest new energy vehicle development plan, the battery exchange is also given a proper name and is listed among the new energy vehicle replenishment methods.
Business leaders said: “The advantages and disadvantages of power exchange are very clear, the advantages are high replenishment efficiency, small footprint, low battery loss; long range, high security, rich application scenarios; ease the pressure of grid expansion, low pre-purchase costs. Disadvantages are high construction costs, long return cycle, standardization is difficult to establish, business model profitability is difficult, etc.”
According to statistics from the China Electric Vehicle Alliance, as of June 2022, the estimated number of battery exchange stations in China is 1,582. In terms of the current state of provincial and municipal development, Beijing, Guangdong, Zhejiang, Jiangsu and Shanghai top the list in terms of number, with 272, 213, 154, 144 and 103 respectively.
Right now, China’s battery exchange industry presents the following pattern: vehicle enterprises represented by NIO, Geely and BAIC, battery manufacturers represented by CATL and SK, large central enterprises represented by State Grid Corporation of China and Sinopec, and third-party service providers represented by Aulton New Energy and Hangzhou Botan Technology Engineering. Among them, representatives of vehicle companies and third-party service providers share almost all of the market share – NIO, Aulton New Energy and Hangzhou Botan Technology Engineering operate 1024, 450 and 108 battery exchange stations respectively.
The relationship between charging mode and battery exchange mode
There is a consensus in the industry that charging and battery exchange are complementary, not competitive, modes of replenishment.
However, in the opinion of some industry insiders, battery swapping stations will not become mainstream at this stage.
The director of the China Electric Vehicle Alliance said in an interview with reporters that the power exchange industry is divided into two categories, one for passenger cars and one for commercial vehicles. “
In the passenger car sector, there is a demand for battery swapping stations scenarios in the to B end of the operating market. But for private car owners, the current power exchange is part of the demand of some people in some scenarios, at this stage will not become mainstream, just one of the ways of new energy vehicle replenishment. Now what kind of people will choose to change electricity? The first category is the home can not be installed charging pile, the unit also has no place to charge; the second category is the middle class and above, from their work style, lifestyle, time is more important.”
Industry professionals believe that the charging and switching modes are not unable to develop together, and integrate development to suit market demand. The characteristics of different electric energy replenishment methods determine their own specific scenarios applicable to each – for commercial vehicles and cabs, power exchange is a good business model; for passenger cars, the best way to look at the medium and long term or charging, usually can be at home or unit slow charging; highway long-distance travel, super fast replenishment energy and refueling at the gas station The experience is similar.
Challenges of the power exchange model
High cost
It is important to note that while there are many advantages to the battery swap model, there are also many challenges, such as the huge financial pressure on the company’s back, and the high cost of building and operating the battery swap station. Data show that the NIO generation battery swap station cost about 3 million RMB, the second generation battery swap station cost in about 1.5 million RMB; a company revealed that a single passenger car battery exchange station investment of 5.072 million RMB, of which the battery exchange station investment of 2.672 million RMB, accounting for about 52%, line investment of 1 million RMB, battery investment of 1.4 million RMB.
As the first taster of the power exchange model, Israel’s Better Place was unable to sustain the company due to the difference between high investment and low return, large-scale operational investment and meager earnings, and only one customer, so it filed for bankruptcy after only six years of existence; later Tesla also tried the power exchange model, eventually abandoning it due to high pricing and inconvenient operation; NIO has so far failed to achieve power exchange business profitable …
NIO leaders have estimated that at 0.6 RMB per kWh and an average of 50 kWh per unit, a battery exchange station can generate 50 units a day and 500,000-600,000 RMB a year, which can basically cover the site rental and equipment depreciation costs of the exchange station.
According to the calculation that each car is changed once a week, a battery exchange station should have about 350 cars to cover the cost. This also means that if NIO’s 1024 battery exchange stations were to bear the profit and loss by NIO itself, it would need to sell more than 350,000 electric cars.
However, in the opinion of NIO’s president, the clear point of NIO’s battery swap business is not profitability; at least in the short term, the replenishment network, including the swap, is to serve the cars. He said at NIO Power Day 2022 that power exchange is not a business, but a service, “Many people see power exchange as a (separate) business and care when this business will be upgraded, which is like going to a restaurant and asking when the paper towels he delivers will be profitable.”
The chairman of Tesco previously said, “The power exchange model solves the current pain point problem of long charging time, but it has to add greater costs. Let’s say it takes about 100,000 RMB to make a charging station, 200,000 to 300,000 RMB to make a power exchange station, and the extra cost companies will add to the user.” At the same time, he said, “users spend 1 million to buy a car, are they willing to change a battery of about 200,000? So it’s hard for the power-swap model to go for such a balance in terms of assets, applications and management.”
It is understood that the cost of the power exchange model is about 1-3 times that of the charging model, generally charging models a car needs a battery, but the power exchange business needs to prepare 1.1 or 1.2 batteries for each car.
Battery specifications are not standardized
In addition, another problem that stands in the way of the development of the power exchange model is the lack of standardization of battery specifications. On the one hand, the technical standards of each company’s electric vehicles are constantly being updated, and the battery standards are very different; on the other hand, car companies are unwilling to share the technical standards among themselves, so the battery exchange mode cannot be practically applied to different models.
Therefore, the chairman of Geely Group proposed to promote the development of standards for battery packs, so that the battery packs can be interchangeable between different vehicle enterprises, different exchange stations and different users.
To this end, some industry insiders said, “There are difficulties in establishing a unified battery standard. Take the cell phone battery for example, after 20 years of development, the standardization of cell phone batteries have not been solved. The same is true for electric vehicle power exchange. For the field of power exchange to develop rapidly, it requires car enterprises, power battery enterprises including charging enterprises and users to work together. I think one of the most difficult is the car companies, because they are emphasizing that their way is right and others are not, but it is not true.”
In fact, the power battery as the core element of new energy vehicles, host manufacturers and battery manufacturers have been playing the game. For the car companies, the power exchange involves power battery product specifications unified problem, which is also the main reason why the “power exchange mode unified standardization” has been slow to land. Although CATL claims that its chocolate battery exchange block can be adapted to 80% of the world’s listed and pure electric platform models to be listed in the next three years, but at present, in addition to FAW Pentium’s NAT models to join EVOGO, has not yet announced the promotion of other cooperative brands; Azure announced BaaS model, despite the positive release of cooperation sincerity, but has not yet successfully developed an external car enterprises.
The head of CATL subsidiary confessed, “At present, most car companies have their own customized development platform, and almost every model or every brand has customized requirements for battery packs. Switching aspect launched at the beginning of the year ‘chocolate for electricity’ universalized battery, universalization is the premise of switching, explore whether the user can accept through the ‘chocolate’ model.”
The vice president of Aulton New Energy proposed two unifications: one is the specification unification, currently Aulton cooperation of 16 car companies, more than 30 models, 40,000 vehicles, the specifications of the battery pack is unified, to achieve the battery pack can be shared in any power exchange station; the second unification is the size unification, currently not achieved, for which a joint effort is needed to develop a standard.
In addition, the industry personnel is very optimistic about the prospects of the battery swap model, in his opinion, it only takes two years for the power exchange to become a generally accepted business model for consumers.