By Chris Robinson, Lux Research

Battery swapping allows EV owners to replace depleted batteries with charged ones at swap stations in roughly the same time it takes to fill up a tank of gas.

The process can be automated and completed in minutes or even less with the latest technologies, making it a viable solution to range anxiety and other problems, such as long charging times and limited charging facilities.

Major carmakers and investors are now giving the solution closer attention more than a decade after the first failed attempt to popularise swappable batteries by tech start-up Better Place in partnership with French carmaker Renault.

China is expected to be a leader in battery swapping due to the country’s favourable regulations, demographics, geography, its surging numbers of EVs, and commitments from large automakers to expand swapping networks.

Six Chinese companies – including Nio, Geely Automobile Group, and Aulton New Energy Automotive Technology – plan to build 26,000 swap stations by 2025, a 17-fold increase on current numbers, according to BloombergNEF. China’s high proportion of people living in multi-unit dwellings without access to home charging may be drawn to EVs if swapping networks expand.

The world’s largest battery manufacturer, China’s Contemporary Amperex Technology Co. Ltd. (CATL), has recently rolled out a battery swap solution featuring modular battery swapping, comprising battery blocks, fast battery swap stations, and an app.

Taiwan-based battery swapping provider Gogoro, meanwhile, became a publicly listed company on the Nasdaq Global Select Market in April 2022. The company currently has more than 10,000 swap stations in its home market and more than 465,000 subscribers and is expanding its business to overseas markets including Israel.

Taxis rank as most likely swappers

Calculating battery swapping costs

At Lux, we explored this question by modelling a taxi fleet of 100 EVs to quantify the costs of operating fast-charging stations – with and without battery storage facilities – compared with battery swapping stations, evaluating scenarios in the UK and China, where the most enthusiastic efforts have so far been made to electrify fleets.

Our analysis covered a 10-year project timespan, and we found the three options for supporting EVs are surprisingly similar in cost but with very different cost structures.

Our analysis found that adding on-site storage to a fast-charging station increased up-front capital costs but enabled savings through lower grid connection costs and the avoidance of demand charges. This makes storage particularly valuable in urban areas, where distribution-level congestion and construction costs are both challenges.

Battery swapping fleets, on the other hand, require high upfront costs due to the station and battery costs, but enable savings through reduced vehicle maintenance. While fast-charging batteries is possible, it reduces a battery’s lifespan.

In applications like taxis which require one or two charging sessions a day, the frequency of fast-charging batteries rapidly degrades the battery, necessitating mid-project battery replacements. Battery swapping provides not only a speedier return to the road but does it in a way that recharges batteries at a slower rate, preserving battery health and getting more miles from each battery pack.

Battery swapping networks for taxis need between 20% and 30% excess batteries to ensure each vehicle is guaranteed a charged battery. Stock will depend on the number of batteries a station can hold, how quickly it can charge those batteries, and the geographic location of the swapping stations.

Charging into the future

With promising economics this early in the technology’s adoption curve, the future looks promising for battery swapping to be more widely deployed. As the number of EVs on the road worldwide continues to grow, issues surrounding costs and delays of large grid connections while maintaining stability will become easier to judge.

The ability of battery swapping to separate demand for power from demand for range will be a crucial advantage in the future, but it would be a mistake to imagine swap stations will eventually replace fast-charging stations altogether.

Rather, both solutions will co-exist as not all customers need battery swapping solutions. Automakers are working flat out to meet EV production targets today, but they also need to dedicate time and resources to building vehicle platforms and swapping stations before EVs are even more widely used.