Is vehicle-battery separation the future? Is the electric vehicle battery replacement model feasible?

Since the release of the new policy on subsidies for new energy vehicles in my country in 2020, in addition to the continued adjustment of subsidies, there is also a green light: encouraging innovations such as battery swapping. At a time when battery technology has not made breakthrough progress, the battery swapping model seems to be much simpler than the infrastructure construction and battery life improvement that need to be solved in the charging model. Can the separation of vehicle and battery provide a new development direction? Is the battery swapping model for electric vehicles feasible?

In China and even in the world, only NIO and BAIC New Energy are promoting the battery swap model. Once the new policy was released, the battery swap model of NIO and BAIC New Energy was encouraged. NIO responded publicly that "the new policy on subsidies for new energy vehicles encourages the separation of vehicle and battery, which shows that this technical direction has been recognized by the country." Xu Heyi also believes that the new business model brought about by the separation of vehicle and battery will be promoted in China in the future with the advancement of technology, and will extend to more new formats and new business models.

Advantages of vehicle-battery separation

In our conventional impression, charging the battery is the most natural way to replenish energy. However, facing the many technical problems of battery technology capacity, density, and safety, there is no breakthrough at present. The alternative solution of battery replacement mode to improve power efficiency seems to be recognized by some manufacturers.

The pure electric models currently on sale are generally much more expensive than the same type of fuel vehicles. The battery and powertrain basically account for almost half of the vehicle cost, followed by electronic control and motor, which basically account for about 10% to 20% of the vehicle cost. For traditional fuel vehicles, the engine and powertrain system only account for 15% of the total cost. This difference in cost structure is the main reason why the cost of electric vehicles is higher than that of fuel vehicles.

The battery swap mode is to separate the battery from the vehicle of a pure electric vehicle, which can replenish the battery life more quickly than the charging mode. Currently, it is mostly done through battery leasing. For consumers, it can reduce part of the car purchase cost, replace purchase with leasing, reduce one-time expenses, and do not have to worry about battery loss, warranty and other issues. The separation of the vehicle and the battery can also increase the residual value of used new energy vehicles. For daily use, the battery can be swapped according to actual use needs, and the overall expenditure will be greatly reduced; for new energy vehicle manufacturers, it has created a new profit model.

Bottlenecks in the development of vehicle-battery separation

Of course, there are three bottlenecks in battery swapping at this stage: 1. Too high cost: the construction cost of battery swapping stations is too high, the initial investment is large, and the investment recovery period is long; the existing batteries cannot get subsidies and the cost is high; 2. Technical bottleneck: the battery packs of different OEMs cannot be unified, and economies of scale cannot be formed; 3. The policy is relatively lagging: the land approval process for battery swapping stations is long and the procedures are cumbersome; it is difficult to unify the battery swapping standards. At the same time, it will take some time for users to accept the business model of battery swapping or vehicle-battery separation.

The progress of battery swapping model

According to data from the China Charging Infrastructure Promotion Alliance, as of March this year, NIO has built 131 battery swap stations across the country, covering 58 cities across the country. NIO plans to add 50 battery swap stations in places with dense battery swapping this year, and plans to launch the second generation of battery swap stations; BAIC New Energy is also stepping up its efforts to promote the battery swap model. As of the end of 2019, it has put more than 18,000 battery swap vehicles into service in 19 cities including Beijing, Xiamen, Lanzhou, and Guangzhou, and built more than 200 battery swap stations across the country.

Now, not only NIO and BAIC are actively participating in the construction of battery swap stations, but more automakers such as Geely and Great Wall are also beginning to make arrangements in this field. Vehicles with both charging and battery swapping modes will become the trend of new energy vehicles in the future.

NIO demonstrated its new battery swap technology at the NIO booth at the Shanghai Auto Show last year. Although this is not the first time that NIO has focused on displaying its battery swap technology at an auto show, it has attracted widespread attention because of the unprecedented battery swap time of 3 minutes. The battery swap mode provided by NIO is very fast, and the entire battery swap process only takes 3 minutes, which ensures the efficiency of battery swapping without long waiting times. This is basically the same as the time it takes for a fuel car to fill up at a gas station, so it can be said that charging is faster than refueling.

At the beginning of its development, BAIC New Energy has taken the battery swap model as one of its main development directions. At the BAIC New Energy Exhibition Center in Daxing District, Beijing, battery swap technology has always been the focus of display. However, BAIC New Energy has not launched pure electric vehicles with battery swap mode in the early market promotion. It was not until last year that battery swap vehicles were launched on a large scale in the field of new energy taxis, mainly due to the increasing maturity of battery swap technology. With the advancement of battery swap technology, a battery swap can be completed in 3 minutes or even 90 seconds, which greatly enhances the market competitiveness of the battery swap model.

While the country is vigorously promoting new energy policies, taxis, online ride-hailing vehicles, and special vehicles for public infrastructure security have been popularized through electrification. Among them, due to the high frequency of use of taxis and online ride-hailing vehicles, the charging mode is not applicable. Compared with the previous problems of difficult charging and long charging time, the battery swap model has certain advantages.

Summary: Although the current battery swap model has been recognized and supported by national policies, it also requires a lot of infrastructure construction, which means a lot of capital investment. At present, only NIO and BAIC New Energy are building and promoting battery swap stations, and they are mostly swapping batteries for their own models. It can be seen that the entire industry still needs policy guidance, as well as the standardization of battery swap models and the unification of battery pack specifications. I believe that the battery swap model will truly become popular.