While popular carmakers producing electric vehicles (EV) such as Nissan, Tesla or BMW are focusing on how customers can charge their cars in a faster and more seamless way, new entrants in the market are pushing another method to give EV their charge. Founded in 2014 in Shanghai, China, NIO is a car manufacturer specialising in EV (Wikipedia, 2022). Nio is known for developing an alternative to the charging stations: the swapping stations. In December 2021, NIO had more than 700 swapping stations throughout China, which provided more than 5,3 million battery swaps in total (NIO, 2021). The principle of these stations is simple: when an NIO owner arrives at the station, the car parks itself on the swapping location, the battery is swapped within 3 minutes and the driver does not have to come out of the car during the whole process. The business model behind this technology was named by NIO as “Battery as a service”. The car can be bought without a battery, leading to a cost reduction of around 10.000 USD. The customer can then pay per swap or take a subscription that will include a certain number of swaps in a month.
But is this technology better than the existing fast-charging possibilities?
Battery swapping comes with advantages, but also a set of drawbacks.
First of all, the main advantage of this technology is the waiting time for the user. While a full charge for a Tesla at a Tesla Supercharger takes around 25 to 30 minutes (Cline, 2022), a battery swap usually takes between 3 and 5 minutes. A report by McKinsey showed that the waiting time for the charging process was one of the barriers to the adoption of EVs (Heineke et al., 2020). Additionally, this short time required for swapping a battery allows for more efficiency, which would be ideal in congested areas. The second advantage is economic. In swap stations, batteries can be charged when the cost of electricity is lower, making it more cost-efficient. Thirdly, this service can enable easy battery upgrades when a more advanced battery is available. This can help preserve the car’s performance, but also resale value.
On the other hand, battery swapping brings the problem of battery standardization. Not all batteries are the same size, and not all carmakers are willing to standardize their battery size among their models. Moreover, always having charged batteries at the swapping stations require the manufacturers to produce far more batteries than cars, increasing the pressure on the finite supply of resources required for their production.
To conclude, it is still unclear whether battery swapping can achieve better economical, ecological, and practical performance than fast charging. Both methods have great opportunities, but they both require important development. As the BaaS model is increasingly important in China, it will be interesting to follow its performance closely, to understand where and how the swapping stations can play a role in the new EV charging network. It is easy to imagine a coexistence of these two systems, where battery swapping could benefit professional usage, and where charging stations would be used for the regular commute.
References:
Cline, A. (2022, July 22). How Long Does It Take to Charge a Tesla at a Charging Station? MotorBiscuit. Retrieved October 9, 2022, from https://www.motorbiscuit.com/how-long-does-take-charge-a-tesla-charging-station/
Heineke, K., Holland-Letz, D., Kässer, M., Kloss, B., & Müller, T. (2020). ACES 2019 survey: Can established auto manufacturers meet customer expectations for ACES?
NIO. (2021, December 10). NIO Achieves Annual Target of 700 Battery Swap Stations Ahead of Schedule | NIO. Retrieved October 9, 2022, from https://www.nio.com/news/nio-achieves-annual-target-700-battery-swap-stations-ahead-schedule?noredirect=
Wikipedia. (2022, October 9). NIO (car company). Retrieved October 9, 2022, from https://en.wikipedia.org/wiki/NIO_(car_company)
Hi Enzo, thank you for your article. I worked in installing charging stations for 2 years and had never heard of these swap stations, it’s a very interesting idea. Do you think that the batteries not being used by electrical cars could be used to store energy and putting it back into the circuit when the demand is at its peak?
Hi Enzo, I really enjoyed reading your article. Personally I am not yet a big fan of electric cars but I do think it is the future. I do like the speed at which electric cars can pull up, however until now I’ve driven two electric cars (read: Tesla model 3 and Polestar 2), and quality wise I didn’t really like them. Also the fact that you need to plan out your journey is a disadvantage to me because charging stations aren’t available everywhere. To convince me to buy an electrical car, there need to be more charging/battery points. As the batteries are probably still quite expensive and a stock needs to be available at all times, I do think that increasing the amount of charging points is a cheaper option at the moment to increase the satisfaction of most electric car drivers. Don’t you think that a battery swapping company is too costly to be profitable in the next 10 years?
Its an interesting take on the sort range problem of EV’s. It makes sense as a short-term solution but battery tech could become extremly efficient in a not so far future, allowing EV’s to compete on ranges with combustion engine vehicles (CE). Moreover, it increases several overhead costs. Batteries are expensive and the changing station infrastructure doesn’t come cheap either. These are costs that will be pushed onto consumers, making EV less cost efficient than CE (a main selling point at the moment). Only time will tell which model is more efficient.
Thanks, Enzo for this insight. I’m personally a small investor in NIO and I believe in this company. The possibility to swap batteries brings many opportunities, including improving battery life time and driving range, even with not needing to buy a needed car. Something very important for lower-income households. A great way to make EVs more popular. Thanks again, great job.
Very insightful article! I was not aware of NIO as a company prior to this article but now it definitely entered the list of companies I follow. However, I believe that when considering the scalability of such projects one ought to take into account the market for EVs. It is true that the market seems to be ever increasing, but in reality, the (electricity) grid infrastructure in most countries can not support even the implementation of normal EV charging stations. So in this case NIO would run into the problem of having to invest more than necessary for building charging stations in these countries. Building on the previous reason, EV cars, are seen as an unnecessary luxury good in countries that can not support the operation of EVs. Thereby the market in the upcoming years will remain rather limited.
Maybe to also touch upon another point; you mention that these stations can allow for upgrades and therefore to better batteries. Such an “improvement in business offerings” can bring the industry some steps backwards when it comes to sustainability, as perhaps more affluent customers will continuous purchase new batteries, thereby creating a new waste stream in the sector.
Of course, my comments are not a critic to your article as you have described the company’s offerings as they are, just some food for thought and considerations for the future of NIO.
Hi Enzo, interesting topic! I had heard of the NIO company before but had no idea that this was one of their USP’s. I was actually in Norway recently where I believe is one of their first locations that they are trying to break into Europe because of their high electric car adoption rates. I could see the benefits of swapping batteries as the ones you mentioned, saving a lot of time instead of charging. However, I do wonder is there also an option to charge them normally, because if I come home from work for example with 15% or so I would want to charge my car and not need to stop at a swapping station, of which there probably wont be very many to start with, before getting home. It could also be of benefit to customers because a big problem with electric cars is that after a few years the battery needs to be replaced, which is a very costly service. This solution would get rid of this problem for the customer as I would assume NIO replaces the worn out batteries as soon as they can no longer be used. I do wonder however, how do they do this with different specs of cars, electrics cars do work similarly to conventional cars in the sense that you can get different battery packs for different performance and/or range of the car. Do the swapping stations have all the different battery options in stock or does NIO only offer one kind of battery pack for their cars?