The layout of battery replacement is an important business for CATL to complement the battery industry chain and form a closed-loop industry, which is of great significance to the company. If successful, CATL’s cell R&D and manufacturing will form a strategic connection with the battery recycling business, forming a closed loop from raw materials to battery recycling.
Table of Contents
Why does CATL have to do the battery swap by itself
The main business of CATL is to sell batteries to OEMs and energy storage power plants, and to do B-side business. According to the data, in 2022, CATL power batteries will have a global market share of 37%, ranking first in the world for six consecutive years; energy storage batteries will have a global market share of 43%, ranking first in the world for consecutive years.
1) The technology and scale of competitors are constantly improving, and the pressure and intensity of competition are increasing day by day. CATL’s leading position in China is not as significant as it used to be. The market share in the first quarter of this year has dropped to 35%.
2) CATL’s dominance and the arrogance brought by it are feared by OEMs. In recent years, OEMs have continuously contacted and cultivated other suppliers or independently developed batteries, actively reducing their dependence on CATL. For example, in 2022, 19 companies including 6 OEMs will invest RMB 12 billion in Sunwoda at the same time.
CATL’s shipments may expand with the continuous development of new energy vehicles, but the decline in market share will happen sooner or later. CATL needs to find another way to find new growth points and further expand its business scope. On the one hand, it chose to make energy storage batteries. This is a market that is currently small in size, but its prospects are not inferior to those of new energy vehicles. On the other hand is the layout of ev battery swapping.
CATL has been deeply involved in the battery exchange business. One of Weilai’s battery exchange entities: one of the major shareholders of Wuhan Weineng is CATL. At the same time, it is also one of the main shareholders of the battery swap company established by SAIC and PetroChina Sinopec: Jieneng Smart Electric.
The battery swapping operating company established solely by CATL itself: Times Electric Services and its EVOGO battery swap brand have much greater ambitions.
1)Increase battery shipments. Every time a power station is built, it will naturally bring in the sales of more than a dozen batteries, which is faster than selling cars.
2)Adjust production and inventory. At present, CATL sales and production are mainly determined by the orders of OEMs. With the replacement power station, the sales volume can be regulated by itself to a certain extent. The battery swap station can be used as a buffer to adjust production and shipments, and adjust “good years” and “grain years” to achieve stable business and production. For the manufacturing industry, smooth production is invaluable.
3)Form a battery closed loop. CATL’s business layout revolves around batteries, with a deep layout of upstream minerals, raw battery materials and downstream recycling in the battery industry chain. But there is a lack of strategic interface between battery production and battery recycling.
The battery is sold to the car factory, and then sold to the car owner. In the future, it will be too troublesome to recycle the battery from the car owner. By operating a battery exchange company, holding a large number of batteries in your hands, forming a battery closed loop, the battery circulates within its own system and generates operating income, which is simply a stroke of magic.
What are the characteristics of CATL’s EVOGO battery swapping
There is no difficulty in entering the game, and the benefits far outweigh the risks. CATL has several core advantages when it comes to battery swapping:
1) The battery is cheap and large. Power swapping is an asset-heavy business, and the core asset is the battery. For CATL, there are as many batteries as you need. Compared with NIO and SAIC Geneng, its battery cost is much lower. It also means that the asset burden is relatively much lighter.
2)Deep pockets. The investment of power station replacement is large and the payback period is long. In the early stage, it is difficult to make a profit due to insufficient frequency of use. It needs to bear a loss for a period of time, and it cannot be profitable until the frequency of use of a single station reaches a certain level. NIO is fully supported by the capital market, but this amount of money has no pressure on a giant with a quarterly net profit of more than 8 billion.
3) Adaptation advantage. The major car companies in China and even the world are customers of CATL, and the battery size and technology of each company have no secrets from him. Based on this data, it is possible to develop a battery replacement block that is suitable for most models. It’s advertised as such. In January 2022, CATL released the battery replacement brand EVOGO, which consists of 3 businesses:
1) Chocolate battery
A battery has a capacity of 26.5kWh, and car owners can choose to load 1 to 3 batteries based on their own needs. The commuting distance is usually short, and 1 battery is enough to cover daily use. Occasionally, there is a need for long-distance travel, and 3 batteries can be temporarily installed. As a result, the monthly rent of 1 battery is paid most of the time, and the monthly rent of 3 batteries is paid occasionally. The use cost is reduced for the user, and the battery waste is reduced for the society.
2) Power station replacement
The battery swapping station is very small, occupying only 3 parking spaces, but it saves 48 batteries, and the battery swapping time for a single battery only takes 1 minute.
3) APP
The role of the APP is to make an appointment for the battery, navigate to the nearest replacement station, pay the monthly rent, and form a link between the car and the station and the battery. The main advantage of the chocolate battery promoted by CATL and the biggest difference from NIO lies in the on-demand rental of batteries. If I don’t have long-distance needs for a month, a battery can meet daily commuting, and the monthly rent is only 399 RMB, while the monthly rent of Weilai’s battery is at least 980 RMB (75kWh battery).
Can CATL’s battery swap be successful?
From the user’s point of view, the bigger the car, the higher the energy consumption, and the more frequent the battery change will be. Users who want to spend money on convenience will not accept this model. They wanted to replace the battery to bring convenience, but they were kidnapped by the battery replacement. So, are entry-level users who focus on economy willing?
Of course, it can also be said, why doesn’t the car owner charge it? I can change a battery for a long time without changing the battery, or change the battery less. This presents two contradictions:
1) For car owners, what is the significance of buying an electric model? The swappable battery car has one more mechanism than the charging car, which has additional costs, and it is not a lot.
If you just want to save money, you can choose financial services to pay in installments, and then charge at home. Installments can also control the ownership of the battery.
2) For battery swap operators, the utilization rate of the swap station is the source of profit, and merchants very much hope that car owners will swap batteries.
If no one comes to replace the electricity, the operating cost will be passed on to the monthly rent, and the high monthly rent will be used to urge users to replace the electricity. It is not worthwhile to tell users not to enjoy the battery swapping service after paying the battery swap rent.
CATL underestimated the psychological anxiety caused by the battery balance. As a pure electric car owner, the battery will definitely be charged when the cruising range drops to close to 100km. It is unimaginable that the car’s cruising range is only tens of kilometers for a long time.
Changing the battery with chocolate will cause the car owner to suffer from mileage anxiety for a long time. If one day forgets to change the battery, the car may be at risk of lying down halfway. Car owners who want convenience don’t get it. Car owners who want to save money don’t save much money. There is a problem with this mode of thinking. Times Electric Service needs to make some concessions.
The country attaches great importance to the technical route of battery replacement. With the support of the country, there is a possibility of success by superimposing other factors.
Based on its leading position in the battery industry, CATL also has the possibility to promote the standard of chocolate battery replacement as a unified standard in the industry.
1) Promote this technology to weaker car companies, and use CATL’s brand power to support weaker car companies to sell cars.
2) Promote this technology to strong car companies, cooperate with car companies to develop battery replacement models, and give battery price discounts, even car companies do not need to pay for batteries. Because in the end, the battery ownership will return to CATL, which is just a process of bookkeeping and circulation. This is very attractive.
3) Create a battery replacement alliance across multiple car companies. Different vehicles of different car companies use the same standard battery. Expand the overall scale, improve the operating efficiency of the power station, and reduce the overall operating cost. Realize win-win.
If this level can be achieved, it will not be far from the industry standard. But CATL has to give up profits to car companies and users in the process. Some media speculated that either CATL insisted on its strong position and refused to give up profits, or major manufacturers insisted on their own technical standards and refused to accept it. It is indeed difficult to reach an agreement on matters involving key technologies and core business models.
Is there a chance for CATL’s EVOGO battery swap
Why does CATL have to do the battery swap by itself
The main business of CATL is to sell batteries to OEMs and energy storage power plants, and to do B-side business. According to the data, in 2022, CATL power batteries will have a global market share of 37%, ranking first in the world for six consecutive years; energy storage batteries will have a global market share of 43%, ranking first in the world for consecutive years.
1) The technology and scale of competitors are constantly improving, and the pressure and intensity of competition are increasing day by day. CATL’s leading position in China is not as significant as it used to be. The market share in the first quarter of this year has dropped to 35%.
2) CATL’s dominance and the arrogance brought by it are feared by OEMs. In recent years, OEMs have continuously contacted and cultivated other suppliers or independently developed batteries, actively reducing their dependence on CATL. For example, in 2022, 19 companies including 6 OEMs will invest RMB 12 billion in Sunwoda at the same time.
CATL’s shipments may expand with the continuous development of new energy vehicles, but the decline in market share will happen sooner or later. CATL needs to find another way to find new growth points and further expand its business scope. On the one hand, it chose to make energy storage batteries. This is a market that is currently small in size, but its prospects are not inferior to those of new energy vehicles. On the other hand is the layout of ev battery swapping.
CATL has been deeply involved in the battery exchange business. One of Weilai’s battery exchange entities: one of the major shareholders of Wuhan Weineng is CATL. At the same time, it is also one of the main shareholders of the battery swap company established by SAIC and PetroChina Sinopec: Jieneng Smart Electric.
The battery swapping operating company established solely by CATL itself: Times Electric Services and its EVOGO battery swap brand have much greater ambitions.
1) Increase battery shipments. Every time a power station is built, it will naturally bring in the sales of more than a dozen batteries, which is faster than selling cars.
2) Adjust production and inventory. At present, CATL sales and production are mainly determined by the orders of OEMs. With the replacement power station, the sales volume can be regulated by itself to a certain extent. The battery swap station can be used as a buffer to adjust production and shipments, and adjust “good years” and “grain years” to achieve stable business and production. For the manufacturing industry, smooth production is invaluable.
3) Form a battery closed loop. CATL’s business layout revolves around batteries, with a deep layout of upstream minerals, raw battery materials and downstream recycling in the battery industry chain. But there is a lack of strategic interface between battery production and battery recycling.
The battery is sold to the car factory, and then sold to the car owner. In the future, it will be too troublesome to recycle the battery from the car owner. By operating a battery exchange company, holding a large number of batteries in your hands, forming a battery closed loop, the battery circulates within its own system and generates operating income, which is simply a stroke of magic.
What are the characteristics of CATL’s EVOGO battery swapping
There is no difficulty in entering the game, and the benefits far outweigh the risks. CATL has several core advantages when it comes to battery swapping:
1) The battery is cheap and large. Power swapping is an asset-heavy business, and the core asset is the battery. For CATL, there are as many batteries as you need. Compared with NIO and SAIC Geneng, its battery cost is much lower. It also means that the asset burden is relatively much lighter.
2) Deep pockets. The investment of power station replacement is large and the payback period is long. In the early stage, it is difficult to make a profit due to insufficient frequency of use. It needs to bear a loss for a period of time, and it cannot be profitable until the frequency of use of a single station reaches a certain level. NIO is fully supported by the capital market, but this amount of money has no pressure on a giant with a quarterly net profit of more than 8 billion.
3) Adaptation advantage. The major car companies in China and even the world are customers of CATL, and the battery size and technology of each company have no secrets from him. Based on this data, it is possible to develop a battery replacement block that is suitable for most models. It’s advertised as such.
In January 2022, CATL released the battery replacement brand EVOGO, which consists of 3 businesses:
1) Chocolate battery
A battery has a capacity of 26.5kWh, and car owners can choose to load 1 to 3 batteries based on their own needs. The commuting distance is usually short, and 1 battery is enough to cover daily use. Occasionally, there is a need for long-distance travel, and 3 batteries can be temporarily installed. As a result, the monthly rent of 1 battery is paid most of the time, and the monthly rent of 3 batteries is paid occasionally. The use cost is reduced for the user, and the battery waste is reduced for the society.
2) Power station replacement
The battery swapping station is very small, occupying only 3 parking spaces, but it saves 48 batteries, and the battery swapping time for a single battery only takes 1 minute.
3) APP
The role of the APP is to make an appointment for the battery, navigate to the nearest replacement station, pay the monthly rent, and form a link between the car and the station and the battery.
The main advantage of the chocolate battery promoted by CATL and the biggest difference from NIO lies in the on-demand rental of batteries. If I don’t have long-distance needs for a month, a battery can meet daily commuting, and the monthly rent is only 399 RMB, while the monthly rent of Weilai’s battery is at least 980 RMB (75kWh battery).
Can CATL’s battery swap be successful?
From the user’s point of view, the bigger the car, the higher the energy consumption, and the more frequent the battery change will be. Users who want to spend money on convenience will not accept this model. They wanted to replace the battery to bring convenience, but they were kidnapped by the battery replacement. So, are entry-level users who focus on economy willing?
Of course, it can also be said, why doesn’t the car owner charge it? I can change a battery for a long time without changing the battery, or change the battery less. This presents two contradictions:
1) For car owners, what is the significance of buying an electric model? The swappable battery car has one more mechanism than the charging car, which has additional costs, and it is not a lot.
If you just want to save money, you can choose financial services to pay in installments, and then charge at home. Installments can also control the ownership of the battery.
2) For battery swap operators, the utilization rate of the swap station is the source of profit, and merchants very much hope that car owners will swap batteries.
If no one comes to replace the electricity, the operating cost will be passed on to the monthly rent, and the high monthly rent will be used to urge users to replace the electricity. It is not worthwhile to tell users not to enjoy the battery swapping service after paying the battery swap rent.
CATL underestimated the psychological anxiety caused by the battery balance. As a pure electric car owner, the battery will definitely be charged when the cruising range drops to close to 100km. It is unimaginable that the car’s cruising range is only tens of kilometers for a long time.
Changing the battery with chocolate will cause the car owner to suffer from mileage anxiety for a long time. If one day forgets to change the battery, the car may be at risk of lying down halfway. Car owners who want convenience don’t get it. Car owners who want to save money don’t save much money. There is a problem with this mode of thinking. Times Electric Service needs to make some concessions.
The country attaches great importance to the technical route of battery replacement. With the support of the country, there is a possibility of success by superimposing other factors.
Based on its leading position in the battery industry, CATL also has the possibility to promote the standard of chocolate battery replacement as a unified standard in the industry.
1) Promote this technology to weaker car companies, and use CATL’s brand power to support weaker car companies to sell cars.
2) Promote this technology to strong car companies, cooperate with car companies to develop battery replacement models, and give battery price discounts, even car companies do not need to pay for batteries. Because in the end, the battery ownership will return to CATL, which is just a process of bookkeeping and circulation. This is very attractive.
3) Create a battery replacement alliance across multiple car companies. Different vehicles of different car companies use the same standard battery. Expand the overall scale, improve the operating efficiency of the power station, and reduce the overall operating cost. Realize win-win.
If this level can be achieved, it will not be far from the industry standard. But CATL has to give up profits to car companies and users in the process. Some media speculated that either CATL insisted on its strong position and refused to give up profits, or major manufacturers insisted on their own technical standards and refused to accept it. It is indeed difficult to reach an agreement on matters involving key technologies and core business models.