Swappable Batteries
Could Swappable Batteries Revitalize Struggling Electric Vehicle Sales?
According to the German Federal Motor Transport Authority, electric vehicles held an 18.4 percent market share in Germany in 2023. However, after the discontinuation of purchase incentives, this figure dropped to 11.6 percent in the first two months of 2024, with only 11.6 percent of newly registered cars being battery-powered vehicles. Similarly, the expansion of electromobility has lost momentum across the European Union. While hybrid vehicles saw their market share increase from around 25 percent to 30 percent in 2023, fully electric vehicles declined from about 18 percent to 13 percent across Europe. These trends suggest that governments are finding it increasingly challenging to meet their zero-emissions targets.
Surveys indicate that the decline is primarily due to the high costs of new EVs. Other contributing factors include limited range, insufficient public charging infrastructure, long charging times, and the lack of at-home charging options. Although the charging network for EVs is expanding, it remains a significant bottleneck to widespread adoption. Charging can be cumbersome, time-consuming, and inconvenient, with charging stations often occupied while vehicles are recharging, causing other drivers to wait or search for alternative stations. Battery swapping, on the other hand, would take only a few minutes, requiring significantly fewer stations for the same number of EVs.
Swappable batteries once held promise as a solution to the limited range and long charging times of EVs. In 2009, Israeli startup Better Place, together with Nissan, unveiled a battery-swapping station prototype designed to equip an EV with a fully charged battery within minutes. However, the project never progressed beyond the prototype stage. Now, battery swapping appears to be resurfacing as a trend in the EV market, particularly as the industry in the U.S. and China reaches critical mass. In 2023, a record 1.2 million EVs were sold in the U.S., and as of January 2024, approximately 20 million EVs were on the road in China. This solution is particularly appealing for city residents, who often lack access to personal charging stations.
The concept, now called “battery swapping,” is relatively straightforward.
The battery swapping principle
The battery swap occurs at specialized, fully automated stations roughly the size of a double garage. The driver parks the car in a designated spot, and the rest of the process is automatic. The vehicle’s battery unit is detached, removed, and replaced with a fully charged one. The discharged battery is recharged externally, separate from vehicle use. In theory, the battery swap could be completed in about the same time it takes to refuel a gasoline car. After the swap, the empty battery remains at the station, where it is carefully recharged for future use. Stations typically have about a dozen batteries on hand, allowing for up to twelve swaps per hour.
Although establishing a battery-swapping station is costly, it may prove more economical in the long run than traditional charging stations. Swappable batteries can extend battery life, reducing the overall demand for new batteries. This could help mitigate the environmental impact of battery production and disposal. Through the “Battery-as-a-Service” (BaaS) model and digital technologies, battery reuse can be effectively coordinated.
For battery swapping to become a widespread solution, several challenges still need to be addressed. A successful battery-swapping system requires standardized battery sizes and types to ensure compatibility across various vehicle models. Battery-swapping stations would need to be brand- and battery-neutral, with standardized protocols across Europe—a task more complex than in regions like China. Including swappable batteries in the mix could reduce the total number of charging stations needed.
Battery as a service
Users of the BaaS model can immediately increase their vehicle’s range by swapping batteries instead of waiting for charging, making long-distance travel with EVs more practical. Battery swapping also reduces charging time, which is especially critical for commercial EV fleets, such as taxis and delivery vans, or for public transportation.
EVs remain particularly expensive; in Germany, the average price of an EV is currently € 52,700, according to the Center of Automotive Management (CAM). The battery is a major cost component. However, with swappable batteries, EV owners would not necessarily have to own the battery. Instead, the battery could be leased separately, significantly reducing the purchase price of the vehicle, while the battery use would be billed based on consumption. Currently, this business model is especially popular in China, where many battery-swapping stations have already been established, with millions of swaps performed, and China’s market share in EVs is growing globally.
The market leader is Chinese EV manufacturer NIO, which has built a network of over 1,500 battery-swapping stations in China. The company has ambitious plans to operate more than 4,000 stations worldwide by 2025, with the majority in China but with expansions planned for Europe, focusing on Germany, Scandinavia, and the Netherlands. To expand its business, NIO entered a strategic partnership with Shell in November 2023.
In the U.S., startup Ample is also developing a rapid battery-swapping solution for EVs. Stellantis, the parent company of Opel, plans to convert 100 Fiat 500 car-sharing vehicles in Madrid to the swap system in collaboration with Ample, aiming to improve fleet availability currently limited by long charging times.
Fazit
In summary, swappable batteries offer an innovative solution to some of the challenges facing EV adoption, particularly regarding charging times and range. However, battery-swapping stations require significant investment, which must be recouped over time. In Germany, NIO offers a 75-kWh battery subscription at € 169 per month and a 100-kWh pack for € 289, with only two free swaps per month; additional swaps cost € 10 each, with electricity priced at around € 0.39 per kWh through a partnership with RWE.
While this seems relatively costly for a quick charging solution, it also removes battery expenses from the vehicle purchase price. Currently, the battery represents approximately 40 percent of an EV’s production cost. Furthermore, battery-as-a-service reduces battery-related risks for vehicle owners, as battery health can be difficult for repair shops and insurers to assess, leading to higher scrappage rates for EVs with even minor damages compared to gasoline vehicles. In most EVs, batteries are built in, making replacement complex and costly. Designing vehicles with easily replaceable batteries could improve reparability and support the development of a Power Swap Station network.
Doris Höflich, Market Intelligence Senior Expert
Sources:
- Futurezone
- Electrive.net
- Autohaus
- Heise
- Handelsblatt
- NIO Power
