Battery Swapping for EVs Is Big in China. Here’s How It Works

A move by the world’s biggest battery manufacturer, China’s Contemporary Amperex Technology Co. Ltd., to make a concerted push into EV battery swapping has shone a spotlight on the alternative to charging electric vehicles.

Tried and abandoned by EV pioneer Elon Musk last decade, battery swapping is starting to catch on in China, aided by a mix of demographics, geography and surging take-up of EVs.

Here’s a quick explainer of how battery swapping works, and whether it has a future outside of China.

1. How does it work?

It’s pretty simple. The EV is driven into a booth where the depleted battery is removed from the car and replaced with a fully charged power pack. At the newest facilities, the whole process is automated, and can be completed in a matter of minutes. Customers can either pay a monthly fee, or pay as they go. While the cost is usually more than fast-charging services, it’s still cheaper than putting a full tank of gasoline in a petrol-fueled car.

2. What are the advantages?

Speed and convenience, mainly. Videos on YouTube show a battery swap being completed in less than 10 minutes, including maneuvering the car into the changeover bay. By comparison, even Tesla’s fast super-charging network takes at least half an hour to fully charge a battery, although the company says its newest technology delivers 200 miles of charge in 15 minutes. That can be a big time saver for taxis and delivery fleets that are on the road all day, or drivers covering long distances away from home who may not be able to plug in to a charger overnight.

Batteries are the most expensive component of an EV, and separating the power pack from the car can lower the upfront purchase price, reducing one of the main barriers to entry for drivers considering the switch to an electric car. Upstart Nio Inc. has been offering this “battery-as-a-service” option for a couple of years. The constant turnover of batteries makes it easier to monitor for defects and fix them before they catch fire or cause serious accidents, like fires. And regular charging at swapping stations may extend battery life.

Longer term, it could help cut design and development costs for automakers if they adopt a standardized battery for the convenience of swapping. Battery-swap networks also lay a foundation for recycling of depleted batteries, a growing concern as early EVs reach the end of their life span and shortages of key battery components such as lithium worsen.

3. And the disadvantages?

Companies looking to get into the battery-swapping game face high startup costs — building an automated swap station can cost 10 times as much as setting up a fast-charging station.

The batteries are also expensive, making it a capital-intensive business and imperative to maximize the amount of time batteries are in use, which can require good use of data and technology.

Most battery-swapping stations have a limited supply of charged batteries on hand, raising the risk for drivers that any time savings could be negated by waiting in line for a fully charged pack to become available. That means sometimes drivers will opt for a battery charged to only 70% or 80% capacity.

Given the battery structure accounts for a major part of vehicle design, it might be hard to persuade automakers to cede control and embrace a standardized battery pack to facilitate automated swapping.

And so far, it’s unclear who would be responsible if a defective battery caused an accident or fire — the driver, the automaker, the battery maker, or the battery-swap operator.

4. Who are the main players?

Battery-swapping is mainly taking place in China, so it’s no surprise the field is dominated by Chinese firms. According to BloombergNEF, six Chinese companies, including Aulton New Energy Automotive Technology Co., Geely Automobile Group and Nio, plan to build more than 8,000 battery-swapping stations by the end of the year, and 26,000 by 2025 — a 17-fold increase from current numbers.

Nio currently has the most extensive network with more than 700 battery-swapping stations, offering customers a chargeable, swappable, and upgradeable power plan. Companies including Aulton and BAIC Corp. are targeting taxis and other fleets that are centrally managed and require longer daily driving range. Companies like Geely’s Soland Energy and State Power Investment Corp. are testing battery swaps for trucks.

Utilities and oil and gas companies such as Sinopec are also increasing investment in battery-swapping infrastructure in preparation for a time when the traditional gas station goes the way of Blockbuster outlets. The entrance of CATL will undoubtedly bring more momentum to the sector, adding to the potential other battery makers will also get involved.

5. Will it catch on outside China?

One of the key components of making battery swapping viable is large-scale adoption of EVs by regular drivers. That’s not a problem in China where EVs in December accounted for one in five new-car sales, and deliveries are forecast to climb to 5.5 million vehicles this year, according to the China Passenger Car Association.

Demographics and geography also play a part. Most Chinese EV drivers live in apartments and don’t have access to at-home charging, while high population density and the nation’s vast distances also increase the appeal of battery swapping.

That compares to the U.S., where many early EV adopters, particularly Tesla owners on the West Coast — live in detached houses and could easily install at-home chargers, and Europe, where drivers tend to have less demand for daily driving range.

While Tesla’s Musk once lauded battery swapping as the “ultimate solution” for EV charging, it didn’t catch on in the U.S. Tesla opened its first and last swap station in California in 2013 and closed it two years later because of poor uptake, according to the CEO. Some questioned whether the station was merely a ploy to earn extra regulatory credits from the state of California.

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Tesla’s exit hasn’t deterred others from trying. San Francisco-based startup Ample has started working with automakers to set up battery-swap stations using modular batteries. Nio has just established its first swap station in Norway, where it sent its first batch of exported vehicles. Taiwan-based Gogoro Inc. offers a battery-swap service for scooters and two-wheelers, and says its network handles 330,000 swaps a day.