Many years ago, a certain Shai Agassi (53) caused a sensation with an idea. The longtime SAPmanager, who would have liked to have become CEO of the Dax group, wanted to sell replaceable batteries for electric cars with his start-up Better Place from 2008. He even raised $850 million in capital from investors – but the company went bankrupt in 2013. Even Tesla-Boss Elon Musk (50) experimented in the USA for a while with the idea of changing the empty battery cells in his vehicles instead of charging them. However, as he explained about a year ago, such an alternative would be “full of problems and not suitable for widespread use”.
At least since then, the concept seemed dead. None of the major manufacturers rely on replaceable batteries, many even see their own battery cells or their own fast charging systems as a differentiator in the competition, as is the case with Tesla. Yes in China, the largest car market in the world, the idea is currently experiencing a politically supported revival.
Charging and quick-charging stations are also being set up in China, there are currently more than 1.2 million nationwide. But the government in Beijing is also supporting the construction of battery swapping stations as a technological alternative. Several companies are planning to significantly expand the still small network of currently around 1400 stations. The two electric car manufacturers Nio and Geely, the developer of battery swapping stations Aulton and the state oil company Sinopec want to set up a total of 24,000 swapping stations across the country by 2025.
The idea is simple. Instead of waiting at a charging station until their vehicle’s battery is recharged, drivers should be given a fully charged, fresh battery in special, garage-like stations. Nio promises to create such a hardware exchange fully automatically in 180 seconds. Structurally, this could help to cushion peak loads in the power grids. And in the densely populated cities, where by no means all residents have access to a charging station, this could help e-mobility to gain further acceptance. For the system to work, however, the battery cells would have to be standardized, the cars redesigned – and a completely new, expensive infrastructure would have to be built.
The Chinese plans, which have been announced piecemeal over the past few weeks and months, have attracted little attention outside of the domestic auto sector. They are part of Beijing’s broader plan to achieve 25 percent of new car sales by EVs by 2025, equivalent to more than 6 million cars according to current projections. Estimates vary widely as to how many of these will come with swappable batteries.
The Ministry of Industry and Information (MIIT) is an important supporter of the concept. Last year it published the world’s first standards for exchange technology. They came into force in November and set out the safety requirements, test methods and inspection regulations for electric vehicles with removable batteries. By 2023, more than 100,000 cars, delivery vans and trucks with replaceable batteries should be on the roads.
The driver is China’s Tesla challenger Nio
The industrial pioneer is the electric car manufacturer Nio. CEO William Li (47) has made the exchangeable batteries a brand-defining feature, similar to Tesla boss Musk’s supercharger. The company currently has more than 880 swap stations in which the batteries are changed fully automatically. Customers who opt for the technology can get Nio vehicles at a lower price – and also buy the monthly change service as “Battery-as-a-service”. Depending on requirements, they should also be able to switch between cell variants with different ranges. By 2025, Nio wants to have set up a total of 4,000 such stations, around 1,000 of them outside of China. The state plant manufacturer CNTIC is to support the construction worldwide.
Overall, more than 50 companies in China are working on this technology, “there’s really a revolution taking place,” says Gert-Jan Geerinckx. The former Tesla manager has been Nio’s head of power since December and is responsible for the rollout of the switching technology.
Earlier this year, Nio launched the first battery-swap station in Norway opened, the first market away from home. By the end of 2022, Nio also wants to be in Germany become active and is already advertising with the technology. “Germany is a primary market for battery swaps,” says Geerinckx. From 2025, Nio also wants to offer the service in the USA.
Similarly internationally oriented the world’s largest battery manufacturer CATL, which controls more than 30 percent of the global battery cell market. The exchange technology is not only being developed for China, but “to meet the demand of global markets,” the company told the Reuters news agency. “We are gaining experience in the Chinese market while communicating closely with overseas partners.” CATL would like to impose a standard battery design on the domestic manufacturers so that they can not only serve the models of one manufacturer in the changing stations. As the first customer for the new exchange service Evogo, the group has just that Volkswagen-Partner FAW won.
There are no real standards in China either; the providers sometimes pursue different goals; the investments required are immense. However, if China succeeds in enforcing battery swapping on a large scale, this could even change the business models of global car manufacturers such as Tesla, Volkswagen, bmw or undermine General Motors. Even small changes in the country could have major consequences for the corporations whose future depends on success in China.
Of course, western carmakers are still holding back. Tesla currently has no ambitions to deviate from the established model in China either. US company GM told Reuters that swappable batteries “are not part of our strategy at this time.” And a Volkswagen spokesman said the company originally considered battery swapping to avoid waiting at charging stations, but advances in fast charging and the lower cost of non-swappable batteries have led it to focus on the latter. However, the corporate strategists would closely monitor the competitive environment and all developments in this area.
How China’s politics behaves is likely to be decisive. If Chinese authorities make replaceable batteries a standard and a requirement for auto production in China, says John Helveston of the School of Engineering at George Washington University, manufacturers will have little choice if they want to stay in business.
Outside of China, it’s once again a start-up that is pushing the idea loudest: Ample from San Francisco. Ample has started pilot programs with Uber and the car rental start-up Sally. The concept is particularly attractive for fleets, i.e. for a relatively small number of vehicles with high utilization. Ample has already convinced investors such as the energy companies Shell and Repsol or the private equity company Blackstone: they have so far invested around 275 million dollars in the idea.