Battery-Swapping Unlikely To Ruffle Fragile U.S., European Chargers

The revival of battery-swapping in China is unlikely to catch on in a big way in America or Europe unless governments force automakers to standardize batteries and insist their vehicles are swap-compatible.

This will be good news for the mushrooming electric car charging industry, currently struggling to make its technology compete with the traditional internal combustion engine’s (ICE) ease of refuelling. For the electric car revolution to succeed, charging must be at least as convenient as legacy methods, where an ICE-powered car or SUV can take on a 400 mile-plus load of gasoline or diesel in 5 minutes.

Currently, that’s a pipe dream for electric vehicle charging stations in North America and Europe, where 30 minutes to gain 200 miles, would be a rarity. Battery swapping offers a replenishment time close to ICE standards.

And incredibly, you often still can’t simply go into a recharging station, fill the battery, and pay with a credit card as you can with gasoline or diesel. You must download an app, input your credit card details, pay a deposit, then plug in the charger.

Cynics will say politicians in Europe, who have decreed no new ICE vehicle be sold from 2035 regardless of the available technology, could easily make electric charging at least as easy with a few new regulations. Making drivers of ICE vehicles rent fire-proof suits every time they fill up their ICE vehicles would do the trick nicely. After all, gasoline is unarguably dangerous stuff.

Fast-charging must overcome huge hurdles to make its real-world performance compatible with the traditional method. Solid-state battery technology will one day make batteries lighter, more energy dense and longer range. But despite some claims its arrival is imminent, experts believe it will be between 6 and probably 10 years before it proves its worth in real-world conditions.

Meanwhile, battery swapping is undergoing a renaissance in China. The bankruptcy of concept pioneer Better Place seemed to have ended the idea, but Chinese players are having second thoughts and their ambitious plans for Europe and the U.S. must be spooking the nascent charging networks.

Better Place’s business with Renault of France went bankrupt because of the huge cost of storing batteries. Nevertheless, Chinese companies like electric vehicle startup NIO Inc are building battery swapping networks. Battery costs have been cut by standardization and helped by big Chinese government leasing subsidies. NIO has completed more than 2 million battery swaps in China and is already operating in Europe and planning to enter the U.S. market. It plans to open 5,000 stations globally by 2025, up from 800 now. NIO, Geely, battery swap developer Aulton and state-owned oil company Sinopec plan to establish 24,000 swapping stations across China by 2025, compared with about 1,400 now.

Despite all this apparent confidence in the swapping concept, fast-charging networks in Europe and the U.S. can breathe easy for the time being, according to Graham Evans, Director, Supply Chain and Technology within the Automotive department at S&P Global Mobility. China is a different story.

“Fast-chargers will continue to be the dominant way to get power if electric car drivers want to charge quickly away from home. Globally in 2022, about 2% of plug in-electric vehicles (including plug-in hybrid electric vehicles) produced globally had battery swapping capability. These were almost exclusively in China and represented 4% of the Chinese EV market. By 2030, we expect this to rise to 4% of vehicles produced globally, again still largely in China, and therefore 11% of the Chinese EV market. It will remain niche in Europe and in the U.S. hardly at all, unless there is a significant change in strategy or the regulatory environment mandates car companies to facilitate common battery standards,” Evans said in an interview.

Evans points to some appealing aspects of the swapping concept, demonstrated by NIO’s technology.

“Yes, it’s quick and that’s a huge advantage – battery out, battery in – and NIO’s technology allows you to stand outside while the car’s technology drives it into the swapping station and centres itself for the swap operation. And you can still charge at home or seek a fast-charging station so there’s plenty of flexibility. NIO is pitching itself as a premium brand and swapping is part of its pitch. Perhaps Ferrari, when it brings its first electric car to market (in 2025), will offer battery swapping as an additional benefit to overcome range anxiety,” Evans said.

The economics of battery swapping have drastically improved since the failure of Better Place, which only offered the facility for one car, the Renault Fluence. The scale was too small. Battery standardization is crucial and China was able to mandate battery size and shape.

“It’s not the same in the U.S. or Europe with its many different platforms and the battery itself becoming a unique selling point for some electric vehicles,” he said.

Analysts at Frost & Sullivan are a bit more hopeful about battery swapping in the U.S., but not much. It all depends on the success of NIO’s venture there.

“If for some reason NIO’s swap business doesn’t work in U.S., it will be off the agenda for a few years. If NIO is a success then there will be interest from other (manufacturers) too to adopt. NIO understands this and therefore is considering licensing its technology to other automakers. Achieving standardization is essential, which is the biggest commercialization roadblock,” said the analysts in an email exchange.

The analysts were Anjan Hemanth Kumar, Mobility Research Director, and Prajyot Sathe, Mobility Research Manager

Some manufacturers will see swapping as a way to enter the energy business, in what would be another challenge to the charging industry.

“Many car companies are looking to venture into the energy business and battery swapping is a huge ticket. An automaker will not just be selling a car, but also energy and service through swap stations it operates like NIO in Norway. Battery as a service model. This can boost the value proposition of an automaker,” they said.

“As you rightly pointed out initially battery swapping might not be for everyone but it would fit well for typical use cases such as taxi fleets, delivery, logistics vehicles etc and of course owners without a residential or overnight chargers,” according to the analysts.

They said swapping must overcome big challenges in Europe and the U.S. like standardization and the capital-intensive nature of swapping. Big investments in the charging infrastructure and adoption of home charging looks likely to provide adequate resources for electric car users.

That will be welcome news to the likes of ChargePoint, which says it is the world’s largest network of electric vehicle charging stations in North America and Europe.

ChargePoint, in a statement, said it didn’t see a clear case for battery swap technology, and that users of electric cars, both domestic and business are getting the charging they need when and where they need it.

That will come as a surprise to many new electric car users, when they find absurd barriers stopping a smooth consumer experience. Firstly, the payment system often ignores the well-established personal credit card system where you simply drive up to a gasoline pump, fill up your tank and pay with the card. But the charging industry often insists, nonsensically, you download a special app, link your card to it, and pay a deposit. A long journey will often require a multitude of different apps. And often across Europe, you will drive up to a charger, breathe a sigh of relief you have the right downloads, to find the machine is broken or simply too busy to accommodate you.

Just as well that in Britain and Europe, about 90% of charging takes place at home, according to S&P Global Mobility’s Evans.

These charging hurdles need to be overcome or the electric car revolution will come unstuck.

Evans said early electric car owners are often devotees to the creed, but the next wave of mass market buyers won’t be so forgiving.

“A lot of electric vehicle owners are technically savvy, have paid a lot of money and these people want it to work and are forgiving of the technology. The reality is charging to the general public is still very difficult, with the multitude of apps and there has to be a level of standardization of payment. The next wave of buyers will be less forgiving for the less technically savvy and these pay points need to be improved,” Evans said.