In this article, we are going to discuss Battery Swapping Technology. The battery swapping technology was also discussed in Budget 2022. Here in this blog, we are going to talk about how this technology will play the role in the Electric Vehicle ecosystem. So, let’s start!
3 Major Problems of Electric Vehicles:
1. High Cost of Batteries:
- Lithium-Ion batteries which are used in Electric Vehicles (EVs) forms 30%-40% of the total EV cost in both cases- 2 Wheelers as well as 4 Wheelers.
- The Cost of EVs is still higher than their ICE counterparts despite the availability of subsidies and other benefits provided by the governments.
- Battery Replace Cost is expected to be around Rs. 45,000 for 2-3 wheelers.
- Charging Cycles of 1,000-2,000 for 2-wheeler batteries, which means they need replacement every 3-5 years.
2. Anxiety of Range:
- The 2-3 wheelers EVs market is majorly present in B2B applications.
- Also, the charging stations are low, whereas charging time is also a bit high which gives the anxiety of range.
3. Charging Time:
- Battery Charging Time is more than the refueling time for ICE.
- Fast chargers reduce charging time but cause battery degeneration
How Battery Swapping Technology is the solution for the current problems of EV:
First of all, before talking about how Battery Swapping Technology can be a great solution for the currently existing problems of Electric Vehicles, first, let’s talk about what is Battery Swapping Technology.
Battery Swapping Technology is a system where the drained battery is taken out from the vehicle and is replaced with a fully charged battery from the battery swapping station.
In 2 wheelers, the battery would be replaced handly when it is drained from the battery station. The battery is not owned by any individuals.
In 4-wheelers, there will be charging docks/stations which will charge the stations, but it will be in a robotic system.
Benefits of Battery Swapping:
- Minimizing charging as battery swapping takes only 3-5 minutes.
- It converts the owning cost of the battery to the operational costs, reducing EV cost by 30-50%.
- Different models of payment, subscription, or pay-per-use.
- A battery-swapping station requires a small land compared to a charging station.
- Increase in efficiency for Battery use.
Operations of Battery Swapping:
- Customers can buy a vehicle without a battery. The battery can be leased from an Energy Operator.
- When the battery drains, it can be swapped with the fully charged battery. Customers would have to pay only for the electricity consumed.
- Similar to LPG cylinders, household owners never own a cylinder. EV users won’t own the battery. Security deposit could be paid.
- The Energy Operator owns the batteries. It also setups charging stations to charge multiple batteries.
- It can also set up a network of swapping and charging stations.
- Time taken for swapping batteries would be similar to refueling fuel.
- ICE users can visit any station but EV users would have to visit only a specific EO.
Players of Battery Swapping Technology:
- Removes Depleted battery modules from cars by replacing fully charged batteries. Depleted modules are put on shelves for recharging.
- Any EVs can use the station regardless of size or model.
- Swapping time is less than 10 minutes.
2. Chinese Companies
- The company names include- Aulton New Energy Automotive Technology Co., Geely Automobile Group, and Nio – 700 battery swapping stations.
- And 3 more companies plan to set up more than 8000 battery swapping stations by end of the year.
- Plan to reach this number by 26,000 by 2025.
How Gogoro is scaling up Battery Swapping Technology?
- Gogoro is a battery swapping solution provider which has commercialized and scaled this technology in Taiwan.
- The company also has patented battery technology which has been designed for swapping.
- Transition to the electric vehicle will first happen in light vehicles – 2W and 3W space.
- Gogoro has more than 4 Lakh plus subscribers and has been able to set up its network over 2,000 locations in Taiwan.
Gogoro in Indian Market:
- Gogoro has also entered the Indian Market by a partnership with Hero MotoCorp to set up this technology in the Indian Market.
- Allied with Gogoro, an electric mobility manufacturer from Taiwan.
- Gogoro will bring battery swapping technology to India and also its smart mobility innovation.
- The company will also roll out Electric vehicles by Mar 2022.
- ‘Gogoro Viva’ will be the first model. Followed by Maestro Edge Electric.
- Launching of EV on two platforms: Fixed Charging & Battery Swapping
- Hero MotoCorp will be the strategic partner with Engine No. 1 and another investor to make a PIPE investment into the Gogoro Poema Global PIPE (Private Investment in public equity) which has now oversubscribed at $285 million.
What the Other Indian Companies are saying about Battery Swapping Technology?
- In its recent earnings call during the Q3FY22 results, Bajaj Auto mentioned the battery swapping technology.
- Developing this technology would lead to a high CAPEX.
- At the current costs, there should be at least 2 batteries for 1 vehicle. It would drive up the CAPEX for the electric ecosystem.
- But from the technology perspective, the company said it is investing behind it.
- Less volumes and the high cost of batteries do not make it much of an economic case.
How Indian Government is focusing on Battery Swapping?
- In the 2022-23 Budget, the government addressed that it would consider policies for battery swapping technology.
- A reason for the same is due to the constraint of space for charging stations in urban areas.
- Policies for the same will be brought out and interoperability standards will be formulated.
- The government will also encourage the private sector to develop business models for ‘Battery as a Service.
- The policy aims to improve efficiency in the EV ecosystem
Challenges in Battery Swapping:
- The major challenge with Battery Swapping is the integration with the OEM.
- Also, there are no standards set in India for design and compatibility.
- To remove the range anxiety, the network of the battery swapping station should also be large.
- Difficult for 4-wheeler as the batteries are big and heavy and only a robot can manage the task.
- Introduction robots in the operation make it a capital-intensive business model.
What Should Investors Do?
Battery Swapping Technology is expected to be future technology for the Electric Vehicles (EVs) ecosystem. With the entry of Gogoro in the Indian market with Hero MotoCorp which is a leading player in the 2-wheeler market, this technology has made its first step in the Indian EV ecosystem. It will be an interesting thing to watch how things develop in this technology with the arrival of other players as well. Here one should also check the indications and comments of existing battery players in India like Exide, Amara Raja batteries, etc. Hence one should closely observe the development in this technology and should keep the related stocks under the radar.
Disclaimer: The information here is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent are commendation to buy or sell stocks or MF.