CHINA REPORT
Driven by multiple factors such as government support, market demand, and battery technology upgrades, the battery swap solution is attracting much attention from the market.
NIO Energy has obtained a strategic investment of 1.5 billion yuan from Wuhan Guangchuang Xingxin Technology Phase I Venture Capital Fund Partnership and other institutions. Earlier, FAW Group signed a strategic cooperation framework agreement with NIO[ it is the seventh car company to sign a battery swap cooperation agreement with NIO, following GAC Group, Changan Automobile, Geely Holding, Chery Automobile, Jianghuai Automobile Group, and Lotus. This covers almost half of the mainstream domestic car companies.
Competition in the battery swap track involves more than just NIO and several passenger car companies. Recently, power battery enterprises, commercial vehicle companies, and mobility platforms also have been aggressively entering this field. On May 16, 2024, CATL signed a framework agreement for a battery swap project cooperation with GAC Aion and Era Electric Service; in the commercial vehicle sector, Nanjing Golden Dragon, Sany Automobile, China National Heavy-Duty Truck, Dongfeng Liuzhou, and Hanma Technology have all started to plan the layout of battery swap heavy trucks. In addition, State Power Investment, GCL New Energy, and Sany Group are also positioning to layout heavy truck battery swap stations.
The support from multiple parties is due to the recognition of the huge market space and commercial value contained in the battery swap track, which has begun to attract the attention of the capital market. Open-Source Securities estimates that by 2025, the market size of China’s battery swap industry chain is expected to reach 133.4 billion yuan; Orient Securities believes that by 2025, the proportion of domestic battery swap models is expected to reach 30%.
Source: Finance. Sina Read The Article
PSR Analysis. The battery swap model achieves “car-battery separation,” where the electric vehicle easily can be separated from the battery. Users can quickly change the battery at a battery swap station, which greatly shortens the energy replenishment time and convenience. This model can alleviate range anxiety of electric vehicle users and also improve the efficiency and lifespan of the batteries.
The growth in the number of new energy vehicles has led to frequent reports of issues such as long charging lines, stranded electric vehicles, and uneven distribution of charging units. This increases consumer demand for more convenient and faster charging.
The advantages of battery swapping include high energy replenishment efficiency, small land occupation, low battery wear and tear, long driving range, and high safety. This reduces the pressure on power grid expansion, and lowers initial vehicle purchase costs. Disadvantages include high construction costs, long payback periods, difficulty in establishing standards, and challenges in making the business model profitable.
The battery swap model involves several key issues such as sharing of battery swap stations, management of battery banks, and interchangeability of batteries from different brands.
It is difficult for a single company to drive the construction of the industry ecosystem; a battery swap alliance with multiple car companies is needed to promote the construction of the battery swap system. Although the battery swap model has many advantages, it also faces many challenges. As a heavy asset and heavy investment energy replenishment model, the huge financial pressure alone can be a heavy burden for companies, such as the considerable construction and operation costs of the battery swap stations, and the inability to achieve profitability quickly. The battery swap model seems beneficial for competing for users, especially those with commercial characteristics like ride-hailing car users. However, the benefits it brings to users are limited, and there is a conflict with the car companies’ recovery of the costs of the battery swap stations. PSR
By Jack Hao, Senior Research Manager – China
