Sweden-China Bridge

Sweden-China Bridge
Collaborative Academic Platform for the

Electrification of Transportation Systems
March 2021
ELECTRIFICATION OF THE TRANSPORTATION SYSTEM IN CHINA
EXPLORING BATTERY-SWAPPING
FOR ELECTRIC VEHICLES IN CHINA 1.0
1
Authors: Mike Danilovic1 and Jasmine Lihua Liu2 .
1
Halmstad University, Sweden & Shanghai Dianji University, China.
2
Lund University Sweden & Shanghai Dianji University, China.
In cooperation with Tomas Müllern3 , Arne Nåbo & Phillip Almestrand Linné 4
3
Jönköping University, Jönköping International Business School, Sweden.
4
Swedish National Road and Transport Research Institute, Sweden.
Funded by: The Swedish Transport Administration (Trafikverket, TRV).

ISBN: 978-91-987011-0-4
Report number: 2010-1
Edition: Only available in pdf for individual printing.
Copy right: Sweden-China Bridge
2
ABOUT THE SWEDEN-CHINA BRIDGE PROJECT
Exploratory approach Expected value creation

This project is exploratory in nature and includes a This project is expected to create value for the key
step-by-step approach to knowledge development in stakeholders and players involved in the electrifica-
both the Swedish and Chinese contexts. The project tion of transportation systems in the following general
spans different areas of knowledge in which we will ways.
highlight what technologies and systems are prior-
itized in China, Sweden and Europe, what drivers and 1. To create insights into the current and future
motives exist, which players are involved in the tran- status of electrification of transportation systems
sition to electrified, intelligent and integrated transpor- in Sweden and in China from technical, social,
tation systems, and what the conditions and business societal and economic perspectives.
models will look like for achieving this conversion to
electrified and integrated transportation systems in an 2. To learn and mutually develop insights into how
intelligent and smart society. new knowledge, technology, system-based solu-
tions, logistics and transportation systems can be
The purposes of the Sweden-China developed, commercialized and operated accord-
Bridge Project ing to a life cycle perspective in both Sweden
and China.
1. The project aims to establish and develop a plat-
form for academic knowledge sharing and know- 3. To create a long-term learning context in which
ledge transfer between Sweden and China for Sweden and China exchange experience for the
collaboration between universities and research benefit of both countries and their industries.
institutes in the two countries. Its purpose is to con-
tribute to increased understanding and information 4. To develop a deeper understanding of how
and knowledge sharing on the technical and com- Sweden and China are managing the large-scale
mercial development of electrified vehicle systems, electrification of the road network using different
integrated transportation system solutions, and technologies, including electric charging, energy
energy supply infrastructure as a fully integrated production (fuel cells, hybrid vehicles, battery
system for intelligent and smart cities. storage and electric roads): what do the short- and
long-term potentials look like? How are they using
2. From this perspective, the project will explore long-term industry policy instruments to develop
the development and implementation of relevant technology and implement it in society? How are
technology for the electrification of vehicles, such they outlining business models for the large-scale
as fuel cells, bioenergy, battery storage, combina- roll-out of electrified transportation systems?
tions of energy systems for hybrid vehicles, energy
supply for integrated electrified vehicles, integrated
electric road technology, associated charging infra-
structure, and static and dynamic technology.
3. We also intend to explore the management of

renewable energy supply systems, from the pro-
duction of renewable electricity to its distribution
to consumers of electrified transportation systems,
which is needed to power electrified vehicles and
transportation systems.
3
Research team
Mike Danilovic Philip Almestrand Linné
Ph.D., Project leader, Professor, Halmstad University, Ph.D., Researcher, Swedish National Road and
Sweden & Distinguished Overseas Professor at Transport Research Institute (VTI), Sweden.
Shanghai Dianji University Shanghai, China.
Wang Junhua
Tomas Müllern Ph.D., Professor, Tongji University, Shanghai, China.
Ph.D., Professor, Jönköping University, Jönköping
Liu Shuo
International Business School, Sweden.
Ph.D., Assistant Professor, Tongji University,
Jasmine Lihua Liu Shanghai, China.
(刘莉华), Ph.D., Senior researcher, Lund University &
Qiu Xiaoping
Affiliated researcher at MMTC, Jönköping University,
Ph.D., Professor, Southwest Jiatong University,
International Business School, Sweden & Shanghai
Chengdu, China.
Dianji University, China.
Susan Lijiang Sun
Arne Nåbo
Ph.D., Professor, Shanghai Dianji University,
Tech. lic., Research director, Swedish National Road
Shanghai, China.
and Transport Research Institute (VTI), Sweden.
Ma Hongwei
Jeanette Andersson
Ph.D., Associate Professor, Shanghai Dianji
Ph.D., Researcher, Swedish National Road and
University, China.
Transport Research Institute (VTI), Sweden.
Academic partners in China

China Electric Power Research Institute Shanghai
Shanghai Power Keeper, Shanghai, China.
(CEPRI), Beijing, China.
Shanghai Jiulong Power, Shanghai, China.
Zhejiang VIE-Evatran Electronic Technologies Co.,
Zhejiang University, Deqing Research Center,
Ltd., Shanghai, China.
Institute of Artificial Intelligence, Hangzhou, China.
BYD, Shanghai, China.
Urban and Rural Construction and Transportation

Shenzhen
Development Research Institute, China.
DST, Shenzhen, China.
Xieli innovation Center, Shenzhen, China.
Industrial partners in China Shenzhen Bus Group, Shenzhen, China.
Beijing Shenzhen Electric Vehicle Application and Promotion
Scania China Innovation Center, Beijing, China. Center, Shenzhen, China.
Potevia New Energy, Shenzhen, China.
Haylion, Shenzhen, China.
Guangzhou Bus Group, Guangzhou, China.
Contact
Mike Danilovic, Ph.D. Phone:
Professor of Industrial Management Innovation and +46708157588 (Sweden) | +8613761129945 (China)
Technology Management.
E-mail:
Halmstad University mike.danilovic@hh.se
P O Box 823
Visiting professor:
SE18 301 HALMSTAD
Distinguished Overseas Professor at Shanghai Dianji
SWEDEN
University Shanghai, China.
4
ACKNOWLEDGMENT
First of all, we would like to express our appreciation We will be always grateful for the support of the
to the Swedish Transport Administration (Trafikver- Scania Innovation Team in Beijing for their support
ket, TRV) for their financial support of this project. and their opening of doors for us, sharing of con-
Without funds the research underlying this paper nections to industry in this area, and joint efforts in
would not be possible. Without the TRV support we Shenzhen study.
would know less of the global development of the
electrification of transport. Finally, we are grateful to all people in academia,
institutes and industry that spend their time in read-
We are also very happy of the support from our ing this paper about electrification of transport in the
Chinese academic colleagues that supported es- Chinese context, and particularly the development
tablishing this project and supported the work of the of battery-swapping in China. As researchers we are
research team in the Chinese context, for sharing interested in knowledge development and the pros-
their experiences of the Chinese achievements of perity of humankind and our environment, the good
electrification and opening up their hearts for laowai life for all people of the world, and the future for our
from Sweden (in English “foreigners”) and our kids.
understanding of what and how this very complex
and important societal transformation in electrifica- As researchers we want to share our knowledge the
tion is being conducted in China. Together we can best we can, for mutual learning and mutual benefits.
learn from each other, with each other and together As researchers we leave politics outside our mission.
we can change the world to a better place to live and Outside our work and hope that this knowledge we
for our kids to grow-up. develop can be seen as assets that we share with
all of the others that want to contribute to the devel-
As project leader of this project, I am very happy with opment of our world, our life’s and our joint human
the work of the Swedish research team, our Chinese prosperity.
partners and our steering group. Some of us went to
China to grasp the context and explore the deve- We hope that other stake holders such as decision
lopment in the real life of electrification in China. makers, industry and other researchers find this
This project was conducted during the most difficult paper of interest and continue where we end. Our
conditions possible, during the global lock-down due results is only the beginning of the work of others.
to covid-19, with all the restrictions it created. Hopefully we contribute to the better understanding
of the conditions for the development of our
environment and the world.
Magnus Lindgren (TRV) Qiu Xiaoping (SJU)

Jonas Jansson (VTI) Liu Shuo (TU)
Arne Nåbo (VTI) Jasmine Lihua Liu (LU)
Philip Almestrand Linné (VTI) Åsa Lindholm Dahlstrand (LU)
Mike Danilovic (HH) Tomas Müllern (JU/JIBS)
Joakim Diamant (Scania) Susan Lijiang Sun (SDJU)
Andreas Jerhammar (Scania) Ma Hongwei (SDJU)
Wang Quichen (Scania) Wang Junhua (TU)
Ye Patrik (Scania)
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TABLE OF CONTENT
About the Sweden-China Bridge Project..................................................................... 3
Exploratory approach .................................................................................................................................. 3
The purposes of the Sweden-China Bridge Project ..................................................................................... 3
Expected value creation .............................................................................................................................. 3
Research team.............................................................................................................................................. 4
Academic partners in China.......................................................................................................................... 4
Industrial partners in China........................................................................................................................... 4
Contact.......................................................................................................................................................... 4
Acknowledgment............................................................................................................ 5
List of figures................................................................................................................... 8
Outline of the paper...................................................................................................... 10
Research methodology................................................................................................ 11
Battery-swapping for electric vehicles in China........................................................ 12
Abstract........................................................................................................................................................12
PART ONE - Electrification of transportation in China............................................. 14

We are at the early stage in electrification of transportation and a new energy revolution..........................15
Our research purpose..................................................................................................................................18
Electric vehicle sales are taking off..............................................................................................................19
China takes the lead in developing electric vehicles................................................................................... 21
China starts to export electric vehicles....................................................................................................... 22
Top automakers in China in 2020................................................................................................................ 23
China takes the lead in developing the charging infrastructure.................................................................. 24
PART TWO - Exploring battery-swapping development in China............................ 28

Battery-swapping progress in China by 2020............................................................................................. 29
BAIC........................................................................................................................................................................... 29
SKI & BAIC joint venture............................................................................................................................................ 30
NIO............................................................................................................................................................................. 31
Geely......................................................................................................................................................................... 33
Aulton New Energy Automotive Technology ............................................................................................................ 34
PART THREE
Analysis and reflections of battery-swapping development in China..................... 35
From cable charging to battery-swapping................................................................................................... 36
From exploration to exploitation, from technology to business................................................................... 37
The main players in battery-swapping in China.......................................................................................... 37
Six main development phases.................................................................................................................... 38
The current strategic position of the battery-swapping solution in China................................................... 42
From idea to innovation............................................................................................................................... 47
The Chinese development approach for the battery-swapping system................. 49

Conditions for establishing battery-swapping in China............................................................................... 49
Government policies support battery-swapping solutions.......................................................................... 55
Battery-swapping solutions become Chinese strategic positioning............................................................ 55
Battery-swapping is becoming big business............................................................................................... 56
Chinese regulatory support for battery-swapping....................................................................................... 56
Reduction of Chinese subsidies for NEV.................................................................................................... 57
Battery-swapping is now a growing industry in China................................................................................ 57
Battery-swapping requires large-scale infrastructure solutions.................................................................. 58
Battery-swapping creates a huge strategic energy reserve........................................................................ 58
Battery-swapping may help EVs to cross the innovation chasm................................................................ 59
6
Multi-perspective analysis on battery-swapping in China.......................................63
Technology perspectives............................................................................................................................. 63
Business perspectives................................................................................................................................ 64
Economic perspectives............................................................................................................................... 65
Market and customer perspectives............................................................................................................. 66
Power and control perspectives.................................................................................................................. 67
National energy supply perspectives.......................................................................................................... 68
Multi-aspect readiness analysis of battery-swapping in China................................................................... 68
Battery-swapping going into China and going out from China............................... 71

Battery-swapping triggers automotive industry transformation in manufacturing....................................... 73
Conclusions and final comments................................................................................................................ 75
APPENDIX The history of battery-swapping in China.............................................. 77

Introduction................................................................................................................................................. 78
Battery-swapping in China........................................................................................... 78
Nothing is new under heaven...................................................................................................................... 78
Battery-swapping is an old idea.................................................................................................................. 79
Commercialization started in Israel …........................................................................................................ 80
… and moved to the USA to become an invention..................................................................................... 81
From Tesla to Siemens in Germany............................................................................................................ 84
… to innovation in China............................................................................................................................. 85
BAIC takes the lead in battery-swapping.................................................................................................... 86
NIO launches “Battery-as-a-Service” to make EV ownership even easier................................................. 88
NIO has already completed more than 700,000 battery swaps in 58 cities by 2020.................................. 90
Illustration of the impact of battery-swapping.............................................................................................. 91
NIO is expanding the ecosystem for growth............................................................................................... 93
From niche to large scale, diffusion of battery-swapping in China......................... 94

Geely enters battery-swapping................................................................................................................... 94
South Korean SKI enters the Chinese battery-swapping market................................................................ 95
Battery-swapping goes global …................................................................................ 96

Battery-swapping in India …....................................................................................................................... 96
Two- and three-wheelers............................................................................................................................. 97
Battery-swapping in Europe …................................................................................................................... 99
Battery-swapping in Sweden......................................................................................................................101
New battery-swappig in USA.................................................................................................................... 102
Battery-swapping in Japan … goes international...................................................................................... 103
References................................................................................................................... 104
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LIST OF FIGURES
Figure 1: Key figures for global electric vehicle use..............................................................................................16
Figure 2: Global sales of electric vehicles 2010-2019...........................................................................................19
Figure 3: Anticipated growth of electric vehicles from 2019 to 2030 ....................................................................19
Figure 4: Growth of electric vehicles between 2013-2019, in the main countries adopting electric vehicles...... 20
Figure 5: Key numbers in the development of NEVs.............................................................................................21
Figure 6: Export of passenger cars and commercial vehicles from China 2010-2020......................................... 22
Figure 7: Top ranked suppliers of electric cars in China in 2020...........................................................................24
Figure 8: Basic charging solutions: battery-swapping, conductive and inductive charging..................................24
Figure 9: Distribution of slow charging technology suitable for over-night charging............................................ 26
Figure 10: Global distribution of slow charging piles in private charging places. ................................................ 26
Figure 11: Global distribution of fast publicly available charging piles................................................................. 27
Figure 12: Battery-swapping process in a 4th generation station........................................................................ 30
Figure 13: NIO battery-swapping. .........................................................................................................................31
Figure 14: Geely battery-swap station. ................................................................................................................ 33
Figure 15: Aulton battery-swapping...................................................................................................................... 34
Figure 16: Main players in the transformation to transportation electrification in China...................................... 38
Figure 17: Key phases in the development of battery swapping technology and systems in China.................... 38
Figure 18: Main reasons for hesitation in adopting a battery-swapping system at an early stage...................... 40
Figure 19: Illustration of the main eight aspects of the Chinese process of adopting
battery-swapping technology and systems. ....................................................................................... 49
Figure 20: Symbiotic relationships between the main players in the new battery-swapping ecosystem.
Dynamics of establishing battery-swapping in China. ....................................................................... 53
Figure 21: Some basic statistics of NEVs development in EU. ............................................................................ 60
Figure 22: Multi-aspect analysis of battery-swapping system...............................................................................61
Figure 23: Multi-aspect analysis of battery-swapping system...............................................................................61
Figure 24: Multi-aspect analysis of battery-swapping system.............................................................................. 69
Figure 25: Mercedes-Benz battery-swapping solution in the 1970s ................................................................... 79
Figure 26: Better Place battery-swap station ...................................................................................................... 80
Figure 27: Tesla battery-swapping solution. .........................................................................................................81
Figure 28: Tesla battery-swapping solution. Second ................................................................................................... 81
Figure 29: Operation of Tesla battery-swapping. . .............................................................................................. 82
Figure 30: Distribution of Tesla charging stations in US. ..................................................................................... 82
Figure 31: Elon Musk tweet................................................................................................................................... 82
Figure 32: Bus undergoing conductive charging.................................................................................................. 84
Figure 33: Two-wheeler with battery-swapping. .................................................................................................. 85
Figure 34: Taxi in BAIC battery-swapping station................................................................................................ 86
Figure 35: NIO scooter.......................................................................................................................................... 88
Figure 36: NIO board............................................................................................................................................ 88
Figure 37: New NIO ES8 EV car suitable for battery-swapping .......................................................................... 89
Figure 38: NIO ES6 at a battery-swap station...................................................................................................... 89
8
Figure 39: The principal model of the NIO battery-swapping system ................................................................. 90
Figure 40: A standardized and fully automated NIO battery-swap station, in Beijing, China................................. 90
Figure 41: Distribution of NIO’s battery-swap stations in eastern China............................................................... 90
Figure 42: Distribution of NIO swapping-stations along two highways.................................................................91
Figure 43: Geely new battery-swapping station................................................................................................... 94
Figure 44: BAIC new Blue Park Smart Energy swapping station......................................................................... 95
Figure 45: Trips under 15 kilometers in the USA and suitable mobility trip distances......................................... 96
Figure 46: Illustration of battery-swapping in India on popular two- and three-wheelers.....................................97
Figure 47: Fiat Centoventi with battery-swapping ................................................................................................ 99
Figure 48: Logo Flymove with battery-swapping.................................................................................................100
Figure 49: Adaptive City Mobility battery-swapping............................................................................................100
Figure 50: Tank-Two alternative energy...............................................................................................................100
Figure 51: Powerswap battery-swapping ............................................................................................................101
Figure 52: Powerswap battery-swapping in detail ..............................................................................................101
Figure 53: Ample’s modular electric vehicle batteries.........................................................................................102
Figure 54: Fomm new car for battery-swapping..................................................................................................103
9
OUTLINE OF THE PAPER
This paper consists of three main parts and
appendix:
Abstract To understand the development and implementation

This provides the reader with a brief summary of the of battery-swapping, we need to place it in the
work and main conclusions. specific Chinese context and societal approach to
work - the interplay between politics, institutions,
Part one industry and main stakeholders aimed at developing,
establishing and spreading battery-swapping systems.
Electrification of transportation in China
This part demonstrates and considers the fast devel- We call this the symbiotic business model where the
opment and diffusion of new energy vehicles (NEV) politics, institutions and industry together develop the
and pure electric vehicles (EV). The purpose is to new eco-system. Based on the eco-system actors
place the development of EVs in the larger devel- develop the business models for commercialization
opment context as this is a new and fast emerging of battery-swapping systems. This new business
industry. model for battery-swapping is based on the decom-
position of the vehicle as a system, the separation of
Part two cars, batteries and charging into three separate but
Exploring battery-swapping in China integrated business components providing customers
This part demonstrates the establishment and with a high level of customized solutions.
diffusion of battery-swapping technology by some
early companies and demonstrates with numbers the Appendix
diffusion of swapping system solutions. The history of battery-swapping in China
This part presents a history of battery-swapping in
Part three China. It provides a brief historical overview of battery-
Consideration and analysis of swapping development from the modern invention to
battery-swapping development in China inception in Germany, China, Israel and USA prior to
This part provides the reader with a broader analysis development and scale-up in the Chinese context.
of battery-swapping development and some thoughts This part outlines different approaches taken in China
on the development of electrification and battery- by different players and shows how the new business
swapping with particular reference to China. model is emerging, enabling exploitation and large-
scale diffusion of battery-swapping in China.
This part is based on the extensive descriptions and
analysis of the information presented in the sections Finally, this part illustrates the latest attempts to
below and the appendix, which contains the historical expand battery-swapping in India, Italy, Germany,
overview, as well as some recent perspectives of the Sweden and Finland, and Japanese attempts to
development. exploit battery-swapping in global markets.
10
RESEARCH METHODOLOGY
This research is conducted based on primary data corporate organizations and academic institutes in
and through the collection of secondary data in Beijing, Shanghai and Shenzhen, and carried out
English and in Chinese. One senior research team personal interviews with people on the research area
member, Dr. Jasmine Lihua Liu, is of Chinese of the electrification of transportation systems in
origin and thus we were able to cover this area from China. Also discussed was the status of battery-
Chinese perspectives, both in respect of a literature swapping as a means of providing a reliable
search and from the point of view of a deeper electricity supply to battery based vehicles.
understanding of the societal, cultural and contextual
environment in the process of electrification of trans- During December 2020, in one intensive week, we
portation and the development of battery-swapping in conducted company visits, discussions and formal
China. We followed discussions in different webinars, interviews with key players in the electrification of
conferences and discussions among experts to Shenzhen city in southern China. This working week
deepen our understanding. was a joint collaborative venture with the Scania
China Innovation Team in Beijing.
Dr. Liu is an experienced researcher both in the
Swedish and Chinese context of transformation The information collected during this intensive period
towards renewable energy. She received her PhD in China is due to be elaborated in forthcoming
in Innovation Sciences from Halmstad University in papers on electrification technology development and
2019 and thus is well oriented in the Swedish context. research into the electrification of Shenzhen as the
In October – December 2020 part of the research only city in the world that has succeeded in achieving
team travelled to China where they visited both 100% electric taxis, buses and the majority of intra-
city based logistics and working vehicles, as well as
also being covered in this paper on battery-swapping
in China.
11
BATTERY-SWAPPING FOR ELECTRIC VEHICLES IN CHINA
ABSTRACT
Thus far, the global electrification of transportation From 2012 to 2016, battery-swapping charging
has been conducted mainly by the use of battery- stations underwent large-scale development as the
powered vehicles. Over the years, the number of major complementary energy solution in China. BAIC,
electric vehicles (EV) has grown substantially in Lifan, NIO and some other Chinese OEM brands
number, the batteries have become larger in size together with third-party battery-swap station opera-
providing vehicles with longer ranges, the efficiency tors, such as Aulton, insisted on exploring the battery-
of batteries has improved, and the prices have swapping option and made substantial progress.
decreased substantially, etc. However, all batteries Market scale reached a certain volume and the
need to be charged with electricity. Several solutions technology became more mature. When cable-based
to battery charging have been introduced, static and charging solutions became insufficient, forming the
dynamic conductive and inductive technologies as bottleneck of the rapidly growing EV market, Lifan
well as cable charging. The most common, almost again proposed battery-swapping as a complementary
the dominant global solution, is stationary charging solution to the national congress in 2016. This time,
using cables, whether normal or fast charging. the attitude of the various players was more positive.
In 2020, after a discussion meeting with delegations
There is, however, another battery charging tech- from major stakeholders related to EV development,
nology, that of battery-swapping, i.e. replacement of Chinese central government included battery-
the discharged battery in the vehicle with a charged swapping technology in the National New Energy
battery from outside the vehicle. This modern Vehicle Development Strategy 2021 to 2035 and
battery-swapping technology was used by the included battery-swapping in the list of the New
German company Mercedes-Benz in the 1970s, the Infrastructure Construction campaign.
Israeli company Better Place in 2007 and also by
US company Tesla in 2013. Tesla originally designed Since 2020, there has been fast growth in battery-
their car in a modular way that embraced battery- swapping infrastructure in Chinese cities and along
swapping but then opted for their own proprietary the main highways. Modularly designed cars with fully
cable-based charging system and a business model integrated automated fast battery-swapping system
that integrates cars and charging. solutions are available. There are also other emerging
application areas for battery-swapping such as buses,
During the 2010s, when the country started the trucks, heavy-duty vehicles etc.
substantial development of new energy vehicles,
Chinese grid operators and entrepreneurial OEMs The new emerging business model for commercial-
tried to put the swapping technology into practice in ization of battery-swapping is based on the idea of
collaboration with Better Place. However, the early separating the price of the electric car from its cost
exploitation of battery-swapping failed due to the liest part, the battery. Batteries can be chosen flexibly
high cost of battery-swapping systems and batter- based on their size and can either be purchased
ies, lack of standards, lack of openness and diver- or rented on a monthly basis to reduce anxiety and
gent technical and economic interests among key uncertainty among customers. Also, the charging of
stakeholders and objections from car manufacturers batteries can be cable-based or based on a monthly
to opening up their vehicle structure. Additionally, subscription according to the required amount of
one fire accident on a pilot project car raised safety energy, resulting in great flexibility for the customer.
questions that needed to be solved. Lastly, political
support was lacking because the Chinese govern- Thus, the investment cost for customers is based on
ment did not promote battery-swapping technology their purchasing power, risk taking attitude, level of
in the countries’ first strategic development plan for uncertainty and driving habits. The swapping time is
a new energy vehicle 2012 to 2020. reduced down to 1 minute. This system enables great
flexibility because the customer can choose and, if
necessary, subsequently change the battery size
depending on their needs as well as choosing the
charging system and payment methods.
12
ABSTRACT
At the end of January 2021, there were 562 We call this the Chinese approach, the Symbiotic
battery-swap stations operative in China, providing Business Model, the collective exploration and
a service to taxis, online car-hailing vehicles, private experimenting of industrial, institutional and political
passenger vehicles and business operation vehicles. players, leading all the way from technology devel-
More than 100,000 cars have been sold with batery- opment through to the establishment of local market
swapping systems. Battery-swapping’s status as solutions for the development and commercialization
an important complementary solution to EV energy of battery-swapping systems, and the simultaneous
supply has been recognized by various parties. The construction and reshaping of a new ecosystem.
feasibility of developing battery-swapping for taxis,
online car-hailing vehicles, logistic vehicles and other The placement of battery-swapping on the national
business operation vehicles has been preliminarily strategic list demonstrates the systematic approach
verified. to the electrification of transportation that needs to
be seen and understood starting from energy pro-
The major challenges faced by players include the duction, distribution, charging, and the creation of a
large investment required for battery-swapping balancing component in overall energy sourcing and
station construction, operation and maintenance energy storage. Thus, the new ecosystem comprises
requests, the high financial cost of batteries in the the major part of the main players in the energy and
swapping stations, and battery depreciation, difficulty electrification system. Battery-swapping must not
in achieving unified standards, overlap of the division be seen as just one technology that is only a busi-
of responsibilities, limited space for station construc- ness target for some players, but rather as strategic
tion and safety issues. Accordingly, solutions are solution to the entire energy system transformation
being intensely worked on by various players. and part of the ongoing energy and transportation
transformation.
A multi-player, new ecosystem is investing jointly in
battery-swap stations and battery asset companies The battery-swapping system when operated on
are also starting up. Third-party operator Aulton is a large-scale has significant strategic importance
initiating the exploration of battery standardization by as decentralized, distributed and localized energy
unifying the interfaces of the battery outer package storage helping to balance energy production and
and the vehicles, leaving the content of the battery distribution in the national grid system. Substantial
to OEMs. Government agencies are also driving a rapid developmental growth in battery-swapping is
discussion on the standardization issue. Innovative expected in China from 2021. It is still not possible to
collaborations on space sharing is providing space predict the long-term development of this technology
for battery-swap stations. Active and passive safety approach, but it is only in trying it, that it will be possi-
technologies are being developed that address the ble to discover the outcome.
safety issue.
Implementation of the battery-swapping system can
A combination of local provincial governments, the only be successful when all the main players in the
automotive industry, IT-developers, entrepreneurs, energy-transportation system and along the value
state grid system operators, swapping system chain collaborate in the development and commer-
operators, electricity suppliers, institutes and univer- cialization, implementation and large-scale diffusion.
sities are developing a new ecosystem and placing
large-scale systems in operation.
13
PART ONE
ELECTRIFICATION OF
TRANSPORTATION IN CHINA
14
PART ONE - ELECTRIFICATION OF TRANSPORT IN CHINA
We are at the early stage in electrification of transportation and a new energy revolution
The traditional transportation system has been sub- • It was the Toyota Prius, released in Japan in 1997,
ject to change for several centuries, since the intro- and worldwide in 2000, that became the world’s
duction of the first steam-powered car by Verbiest, a first mass-produced hybrid electric vehicle, com-
member of a Jesuit mission in China, in around 1672. bining a combustion engine with a battery-powered
electric drive. Toyota started the new energy
The starting point for electric vehicles is difficult to vehicle (NEV) revolution, although few really saw it
establish clearly because there were many different in that way at the time. Toyota foresaw societal chal-
construction attempts in several parts of the world, lenges, they invented solutions, they developed the
nevertheless, there was a series of breakthroughs markets and they created the innovation of hybrids.
from the battery to the electric motor in the 1800s At that time, it was a revolutionary approach.
that led to the first electric vehicle. In 1828, Ányos
Jedlik invented a type of small electric car. Recharge- • Chinese also recognized the environmental
able batteries that provided a viable means for challenges and wanted solutions. The electrifica-
storing electricity on board a vehicle did not come tion of China started at the end of 1990s. In 2001
into being until 1859. The first electric vehicle with China launched its ”863 EV Project”. The National
its own power source was demonstrated in Paris in Development and Reform Commission followed
1881. New York City had a fleet of more than 60 that initiative with the Auto Industry Development
electric taxis at the end of 1890s. Policy in 2004. China started to move down the
path of the electrification of transportation.
In 1870 a new liquid-fueled internal combustion engine
was developed that used gasoline, the technology • Tesla Motors was established in 2003 and
still in use today. However, it was probably Ford’s announced in 2006 that they were to develop an
Model T mass-produced in the USA that killed off electric car before launching production of a luxury
the electric car. Introduced in 1908, the Model T car in 2010.
made gasoline-powered cars widely available
and affordable. Two young entrepreneurs saw the future that they
wanted to create, Elon Musk lent his support and
By 1912, a gasoline car in the USA cost only $650, Tesla took off. It was another revolutionary
while an electric car cost $1,750, almost three times approach that subsequently pushed the world
more. This was the turning point when vehicle towards the electrification of vehicles.
technology switched from electrical to oil-derived
energy. At that point in time, nobody could foresee Both the Toyota Prius hybrid energy car and the
the consequences of gasoline-powered cars on Tesla electric car are now legendary in their creation
health and the environment, and global warming was of what is now the new revolution in the energy and
a still undiscovered concept. transportation system. At that time, few could see
where the vision of those early pioneers would lead.
Oil became all conquering. During several oil crises Now there are many more followers.
in the 1970s and 1980s, many car manufacturers
tested electric cars as prototypes, but none ever went Today in 2021, a majority of vehicle manufacturers
into mass production. Aside from the awareness of offer hybrid solutions - following the course set by
environmental issues and, more recently, the issue Toyota in 1997. Today, whilst many NEV manufactur-
of global warming, three modern industrial initiatives ers are launching their first hybrids, Toyota is deliver-
in Japan, China and the US are worthy of note in that ing the 5th generation of their own technology, which
they contributed to a change in the prevailing situa- demonstrates the importance of a visionary approach
tion and later helped to initiate the transformation of to problem recognition, invention and creation on
the transportation system. innovation, technology and market development
and exploitation.
15
For years Toyota has been identified as the most Considering large scale manufacturing of NEVs, the
innovative automaker in the world followed closely transformation is complex, and many different areas
by Tesla. need to be changed: renewable energy production
and distribution, energy storage in vehicles, large
The rest is history. Now we are living through scale and widespread charging of batteries, devel-
dynamic change, witnessing transformations from opment of new logistics systems, reeducation of
fossil fuels to renewable energy, from ICE vehicles people to handle emerging technologies, etc. Viewed
to electric vehicles. Hybrids are merely a mitigating globally, the transformation is huge and dramatic, as
solution on the way to new technologies. all revolutions are.
The development of NEVs is both fast and slow,

depending on the perspective chosen.
Thus far, the achievements in electrification and the introduction of electric vehicles can be
summarized as follows:
The total number of vehicles in the world in 2019 was 1.4 billion vehicles in total.
The total global stock of electric vehicles was 7.2 million in 2019, of which 47% were in China.
About 1.5 million electric vehicles were added to the worldwide fleet in 2019.
Global electric vehicle sales passed 2.1 million vehicles in 2020, up from the 1 million level in
2017 and surpassing the record year 2018.
Electric cars accounted for 2.6% of global car sales compared to 1.5% in 2017, which is about
1% of the global car stock in 2019, and represents a 40% year-on-year increase.
Figure 1: Key numbers of electric vehicle exploitation on the global basis (Global EV Outlook, 2019).
The total transformation to NEVs based on electrifi- “Batteries and battery cells are the new vital part
cation and the use of hydrogen as energy storage is of the car value chain - and a country’s employ-
just ahead of us. It will still take many years before ment. But despite the fact that Sweden has one
the major part of the transportation system is based of the very few European battery manufacturers,
on 100% renewable energy. It might not happen until the Northvolt, Volvo buys batteries from Asian
the second half of this century. battery manufacturers.”
Håkan Samuelsson, CEO of the Swedish Volvo in
“In 2025 our target is to have 50% sales of new Dagens Nyheter, 25th February 2021
cars based on pure electric cars. I am ready to
discuss the time for when all of our cars shall be What Håkan Samuelsson is stressing is that the
pure electrical. Around 2030 might be possible transformation to electric cars takes time and that
that we only produce pure electric cars.” the battery system is one of the most vital systems
in the car.
16
Batteries need to be charged, the entire value chain conducted varies from country to country. The con-
is global, and China has taken a strong position in text and conditions differ between countries. A major
the electrification of transportation and battery manu- question is whether the jobs lost or gained will occur
facturing. This is not a minor development issue. at the same place in the world or whether jobs will be
transferred from one place to another in the world.
What we are facing is an enormous transformation of Who will lose and who will win in this energy revolu-
transportation systems from fossil to renewable. This tion is the “million-dollar question”?
is an energy revolution that we are right at the
beginning off. It is not only the vehicles that need to In the early days of this transformation, it was almost
be developed; also the entire supply chain of renew- impossible to imagine and estimate what the situation
able energy is facing giant transformation. Gasoline would look like in 10 or 20 years. The speed of
and diesel are being replaced and new infrastructure development is fast. The speed of technological
has to be introduced. However, that is not enough. evolvements is high. We see different solutions being
Where will the amount of renewable energy that will developed by different countries and industry, and
be needed to power the global fleet of renewable utilized by different customers and operators. We are
energy vehicles come from? How will we connect living through the early stages of the divergence in
the grid system to the millions of EVs that are going the development of new solutions, before we will be
to be produced? How do we ensure the power used able to see the convergence to some mainstream
by EVs is renewable and green? Vehicles, energy solutions. Some estimates indicate that 2025 might
production and supply system have to exist hand be the year when electric cars achieve a similar price
in hand. This is challenging and in combination will level to ICE cars. 2025 may well be the turning point
create an energy revolution, from production to distri- in the establishment of EVs.
bution and consumption based on renewable energy
systems. Thus far, battery-based technology has become
a key solution although it is still impossible to say
The impact on society will be huge as a result of the whether it will become the dominant solution in the
transformation of technology towards electrification. future.
Electric vehicles are simpler and contain fewer
components while the electric systems themselves Hydrogen is progressing through the laboratory
are much cheaper than the old mechanical systems phase and entering the market penetration phase.
such as engine, gearbox, powertrain etc. Many Nevertheless, the hydrogen fuel cell technology path
people within the contemporary automotive industry chosen by Toyota has been criticized by Tesla CEO
will lose their jobs, while other industrial segments Elon Musk who stated:
will grow such as IT, electrical engineering and elec-
“mind-bogglingly stupid” … “fool cells” … “load
tronics, charging systems and energy production and
of rubbish” … “success is simply not possible”.
distribution. The old sales, service and maintenance
industries will have to transform to electrical mainte- Makichuk in Asia Times, 1st March 2021
nance that will be quite different.
However, Toyota might repeat their success of 1997
One German government report predicts that about by launching the first mass-produced hydrogen car
80,000 jobs might be lost by 2030 in the Swedish and hydrogen trucks in 2021. While a major part of
automotive industry as a consequence of the electrifi- the automotive industry is stuck in the hybrid stage,
cation of vehicles. However, new jobs will be created Toyota is moving on to the next generation of vehicle
in the new segments. Across the world, politicians, technology, hydrogen-based energy. Toyota is
decision makers, energy producers, industry leaders setting-up a new hydrogen energy based experimen-
and ordinary people are thinking of how this trans- tal city outside Tokyo, The Woven City, in order to
formation will take place and how it will impact them. develop large-scale hydrogen technology in a city-
Globally, countries are targeting 100% renewable type infrastructure and create a true-to-life transpor-
solutions, although the chosen technologies, solu- tation experimental area for hydrogen technology
tions, technological and business paths to achieving development alongside autonomous vehicle and
targets, and the way the transformation is being interconnectivity development.
17
Alongside Toyota, Hyundai of South Korea is also Currently, the dominant battery charging solutions are
launching a hydrogen-based vehicle in 2021. We see stationary cable-based charging or battery-swapping.
hydrogen-based solutions being introduced in Japan, Other conductive or inductive technologies will provide
South Korea, USA and also in China. competing solutions in the future.
Other technological progress includes development However, we currently have to use the technology
of high-density battery and charging technologies. that is developed, known, practical and usable, and is
economically affordable. In the short term, there are
few options.
Our research purpose

The choice of China as the target of our research is current level of achievements, direction of the tech-
because China has become the largest market for nology and its implications for society.
the electrification of transportation and because there
is little knowledge and understanding of the processes We have chosen to explore battery-swapping solu-
of establishing electrification in China outside China. tions because they are complementary to stationary
charging piles, and because their introduction in
The purpose of our research is to explore and China has been ongoing since 2010.
understand the electrification of the transportation
systems in China. To achieve this target, our intention We want to understand the motivation, drives and
is to use a number of research activities, targeting barriers to this development and explore the under-
different areas such as battery storage technologies, lying technical as well as the business aspects of
hydrogen energy development, inductive charging establishing and expanding these new solutions. As
and battery-swapping technology. We will be looking researchers, it is our ambition to explore and under-
at large scale implementation projects to deepen our stand the underling aspects, motives and drivers as
understanding of Chinese approaches to the well as conditions, challenges and consequences,
ongoing transformation of the transportation system. in this case, the introduction of battery-swapping
Our intention is that we will gradually develop new systems.
knowledge to share and learn from.
Battery-swapping is not new. It was explored in
The purpose of this report is to explore the situation Europe, Israel and the USA before China took the
vis-à-vis battery-swapping in China to give an under- initiative to develop large scale swapping systems.
standing of which solutions are being developed and This is explored in the Appendix to provide a histori-
put into practice and to discuss the possible direction cal and context-based understanding of its origin and
of this technology for electrification of the transporta- global status in order to better understand the
tion system in general. Chinese situation.
Our research is not intended Our focus is initially on new energy vehicles (NEV),
more specific the segment of small electric cars. We
• To argue which is the best transportation electrifi- are aware that there are also buses, trucks, heavy
cation solution from any particular perspective or duty vehicles, small sized two- and three wheelers
any point of view. etc. that use battery-swapping technology, however,
they are not focused upon in this paper.
• To argue which battery charging solution is pre-
ferable whether cable based or battery-swapping, Our intention is to subsequently expand this explora-
conductive or inductive, from any particular tion to other related areas such as battery-swapping
perspective or any point of view. for buses and heavy-duty trucks, the status of battery
technology, inductive charging and hydrogen tech-
In this report we explore the situation in China vis- nology in China, and then also to explore large-scale
à-vis battery-swapping technology, its history, the electrification such as that taking place in Shenzhen
city and others.
18
Electric vehicle sales are taking off

The focus of this paper is on electric vehicles, Figure 2 shows the increase in sales volumes of
although new energy vehicles (NEV) also include electric vehicles between 2010 and 2019.
hybrid technology, hydrogen and bio energy-based
solutions.
Global electric car stock, 2010-2019
Figure 2: Global sales of electric vehicles 2010-2019 (Source: IEA, 2020).
Figure 2 illustrates the fast diffusion of electric cars Global electric vehicle stock in the Sustainable
from very low levels in 2010 to the 7+ million level in Development Scenario, 2019-2030
2019, and rapidly increase in the pace of sales.
Figure 3 shows the estimated expansion from 2018

to 2030, the anticipated development and exponen-
tial growth of electric vehicles from 7+ million in 2019
to an estimated 250 million by 2030.
If this is really to happen, we face step changes both

in the transformation and in establishing the revolu-
tionary energy changeover to renewable energy that
is required if we are to ensure that this growth in EVs
is based on renewable energy.
Figure 3: Anticipated growth of electric vehicles from 2019

to 2030. (Source: IEA, 2020).
19
Otherwise it might end in a zero sum game. What is If this estimate is reasonable it will have severe
gained on vehicles is lost on the energy production implications for the charging infrastructure. For this
side. reason, our research will explore if, how and under
what conditions battery-swapping will help to support
this development.
Figure 4: Growth of electric vehicles between 2013-2019, in the main countries adopting electric vehicles.
We can see that in Europe, Germany is the biggest We are now facing a situation in which electric
market followed by Norway, Netherlands, France, UK vehicles are achieving rapid market penetration in
and Sweden. (Source: IEA, 2020). many countries. It is clear that the supply of electricity
to vehicles, the renewable energy supply and dis-
tribution and charging capacity for electric vehicles,
may soon become key bottlenecks.
20
China takes the lead in developing electric vehicles

In 2020 there were more than 200 electric NEV In 2020 around 1.37 million new energy vehicles
brands in China. Not all of those brands have their (NEV) were sold in China compared to 360,000
own manufacturing capabilities. They are using a NEVs sold in the USA and about 60,000 NEVs in the
few large-scale manufacturers to produce their own UK. In 2021 this number is expected to grow to 1.6
specific design and technology. million NEVs.
The rapidly developing Chinese NEV market has Figure 5 shows that sales of NEVs are surging in
become a source of innovation as conditions, mar- many countries, and that Europe is catching up with
kets, customers and rapidly growing numbers and China. As the total number of NEVs is growing rapid-
transformation to NEVs create a dynamic for change. ly across the globe, the charging infrastructure must
It is no wonder that manufacturers are now starting also grow rapidly. The more NEVs, the more new
to innovate new solutions and in this way create new energy supplies, in particular electricity, and the more
business opportunities. charging points are needed.
USA has 1.5 million electric vehicles, representing 20% of the global market of NEVs.
The total number of electric cars in Europe at 1.7 million accounts for 25% of the global market.
The total number of electric cars in China in 2019 was about 3.4 million NEVs,
accounting for 25% of the global market.
Almost half (47%) of the global new energy/electric NEVs were sold in China. This is a 45%
increase compared to 2018.
Sales of electric vehicles in China are surging, up 43% in 2020 from 2019
In December 2020 in China alone NEV sales surged 49.5% on an annual basis to 248,000 NEVs.
Sales of electric vehicles in Europe are surging even more, up by 137% in 2020.
Figure 5: Key numbers in the development of NEVs (IEA, 20202 b).
21
China starts to export electric vehicles

China has rapidly become one of the largest and We have seen witnessed the successful diffusion of
most important markets for vehicles in general, and Japanese cars in the 1970-1980s and South Korean
new electric vehicles (NEV) in particular. This is due cars in the 1990-2000s. In 2019, China accounted for
to the rapid economic growth of China, the size of nearly 30 percent of global vehicle production while
the population, increased awareness of impacts on only some 3% of passenger cars produced in China
the environment and pollution, increased consumer were exported. China has been a large importer of
demands and purchasing capabilities and the fast vehicles over a long period.
growth of the automotive market.
However, China is gradually moving from being an
Another key driver of the technological development importer of cars, both fossil-fueled and electric, to
towards new energy vehicles (NEV) is the need to becoming an exporter.
reduce the negative environmental impact of pollution.
The following figure shows the export of passenger
cars and commercial vehicles from China between
2010 and 2020.
Figure 6: Export of passenger cars and commercial vehicles from China 2010-2020. (Source: Statista, 2020).
In 2010 the total number of exported vehicles was sold in Europe and other western markets, including
566,700 increasing to 995,000 in 2020. To a large Tesla, BMW and Renault (Automotive Logistics, 2020).
extend this relates to exports of traditional fossil-
fueled cars. The export of electric vehicles is just According to Automotive Logistics:
about to start.
• Tesla will start exporting the Shanghai-
A growing number of carmakers are looking to China manufactured Tesla Model 3 in November 2020.
for the production of electric vehicles that are to be The plan is to export 250,000 cars annually.
22
• BMW is planning to export its first fully electric The total number of electric buses in the world is
SUV, the iX3, from China to Europe. expected to undergo a 300% increase from 386,000
in 2017 to about 1.2 million in 2025, with China
• The Renault-Nissan-Mitsubishi Alliance is also accounting for a major share of the global electric
planning to export the Dacia Spring electric SUV bus market. In 2020 China had 410,000 electric
from China to Europe. buses in operations.
• Daimler is also planning to export its Smart city car Batteries are one of the most critical components of
from Hangzhou as part of the joint venture it sig- NEVs. Sales of batteries in China to power new energy
ned with Geely last year. Polestar, the performan- vehicles (NEVs) rose by 56.9% in 2020 compared to
ce EV joint venture between Volvo and its parent 2019 and battery prices are falling.
Geely, is already exporting its Polestar 1 and 2 to
Europe from China Those numbers indicate that China is moving towards
being a major manufacturer of electric vehicles as well
• Chinese start-up carmaker Xiaopeng Motors as beginning to emerge as a new exporter of electric
(XPeng) has started exports of its G3i electric SUV vehicles to many parts of the world on behalf of
to Europe, with the first models expected to be on multiple players.
the road in November of this year.
Source: Statista, 2020
Top automakers in China in 2020

The following table shows the market share of the Until now, the production of conventional vehicles
main EV automakers in China in 2020. Tesla is the has been carried out by a few large-scale auto-
market leader with almost 100,000 sold cars. It motive manufacturers with a long history and tradition
should be noted that Tesla has established a factory of mechanical engineering and perfection in manu-
in Shanghai in collaboration with Shanghai Automobile facturing. Now, with the entry of electric vehicles into
and the establishment of a Gigafactory for battery the market, traditional manufacturing is being pushed
manufacturing in China is underway. out and a new manufacturing approach is starting to
emerge. We are on the verge of an automotive and
In Europe in 2019, Tesla had a market share of 31%. transport revolution.
In 2020, the three most popular electric models have
been the Renault Zoe with 63,000 units sold, This is a period of innovation, and history has shown
followed by the Tesla Model 3, with 57,000 units sold, that at such times, many old players will be outpaced
and the Volkswagen e-Golf, with 27,000 units sold. by faster moving new more visionary players who can
In January of 2021 Tesla delivered 1,619 vehicles grasp the new technology, rearrange and recombine
which is 3.5% of the monthly sales of electric and instigate new value creation solutions. This was
vehicles and compares to 1,977 in January 2019. apparent in the transformation to digital photography,
the smartphone industry and now it is occurring in
On an annual basis this indicates a large loss in the automotive industry.
market share for Tesla from a 31% to a 13% total
market share of the European electric vehicle market. By 2020 there were about 200 domestic Chinese car
Cheaper competitors are changing the competitive brands in China. Most do not have their own manu-
situation. Currently, it is impossible to say how the facturing capacity. They are technology developers
future situation will look in Europe once Chinese and designers, business developers, marketing and
manufacturers of electric vehicles and Toyota´s system integrators. They represent the beginning of
hybrid vehicles enter the European market. the new vehicle industry, the beginning of a decade
of integrating energy, information and interconnectivity
into a new electric vehicle design.
23
Tesla has become the premium

brand of the rapidly growing
Chinese middle class. However,
the second car is a much cheaper
Chinese brand, Wuidling followed
by GAC, SAIC, BYD and Great
Wall. The overall Chinese market
for electric cars is shifting away
from targeting the top premium
markets in big cities to the lower
end of the average middle class
and is also targeting new
markets in rural China as well as
the coming boom in the western
part of China.
Of the top 20 brands sold in 2020,

15 were Chinese brands and 5
were western brands.
According to figure 7, Tesla is the

excelling top brand with more than
120 thousand sold cars in 2020,
followed by major domestic EV
brands.
Some indicators show it is pos-

sible that Chinese EV sales will
Figure 7: Top ranked suppliers of electric cars in China in 2020 (Statista, 2021).
reach 1.8 million units in 2021.
What we see in China is that the growing number This is a new way of creating economies of scale
of brands of electric cars is achieved by separation while simultaneously managing a large variety.
of car design, development and manufacturing. Not A wide variety on the customer side and economies
all new Chinese EV brands manufacture their own of scale on the production side means all brands
cars. This issue is elaborated upon at the end of this have an opportunity to be flexible in adopting new
paper. technologies, adjusting to match customer demands
and to rapidly change deliveries to customers.
China takes the lead in developing the charging infrastructure
After the entire automotive industry switched to

fossil-fuels (gasoline and diesel) the first electric cars
were largely relegated to museums with some limited
exceptions. Later, due to the emissions of energy
systems based on fossil fuels, environmental issues
(especially relating to CO2 emissions), and the politi-
cal desire to switchover from oil to renewable energy,
the electrification of vehicles began a renaissance. Batttery Swapping Conductive charging Inductive charging
Now, electric cars use batteries for energy storage.
Energy distribution to vehicles occurs in three major Figure 8: Basic charging solutions: battery-swapping,
ways as shown in the picture: conductive and inductive charging.
24
Figure 8 illustrates the three basic principles used the batteries against overheating, catching fire and
in charging electric vehicles: battery-swapping, destruction. Charging technology is critical, and it is
static charging via cable charging or other conduc- important that the charging system, vehicle and bat-
tive charging (via cable or rails in the ground), and tery management system communicate intelligently
dynamic charging via wireless inductive charging with each other.
(by magnetic energy transfer, or cable in the air or
rails while driving). Conductive charging is available Charging of vehicles can be done via cable at normal
with different charging speeds and uses different speed in the convention manner, or via fast charging
standards of cables. Inductive charging too is associ- which enables a shorter charging time but is associ-
ated with a variation in energy transfer and speed of ated with a higher risk of battery wear and higher risk
charging. At this stage, however, inductive charging in general. To charge a modern car by fast charging
is yet to progress beyond the experimental phase. can take about one hour compared to slow charging
that can take 6-8 hours. Electric vehicle owners can
The most widely accepted and globally distributed choose to charge their vehicles at home, at the office
charging systems are based on a plug-in cable from or other private places or in public places, at public
a charging station to the vehicle. Inductive wireless charging stations etc. Thus, vehicle charging vehicles
charging can occur either with the car stationary or depends on the available technology and charging
via dynamic charging while the car is moving. The location.
third energy supply method is the swapping over of
discharged batteries from the vehicle for charged For home charging, slow charging is the dominant
batteries from a supply point. solution while for public charging fast charging at
different speeds is the dominant solution. Battery-
Vehicle electrification started more than 20 years ago swapping is primarily available via public charging
in China. Until now, the dominant solution has been or special private charging for businesses such as
a wide variety of plug-in charging units, with different taxi services. All other alternatives such as static or
cabling standards and charging speeds. Lack of dynamic inductive charging, or solar charging remain
standardization is an obvious barrier to the rollout of possible future solutions.
a single harmonized solution. The wireless charging
system is still in the development phase with some The China Electric Vehicle Charging Infrastructure
of the issues preventing its release into the market Promotion Alliance recorded that by the end of June
including the fact that generic standards do not exist, 2020 there were more than 1.68 million charging
the speed of electricity transfer is still too low for both piles in operation, with 807,000 public charging piles
practical static use and also for dynamic use, and and 874,000 private ones operating across the country.
that the radiation from inductive magnetic technology According to the alliance, China added 462,000 new
is perceived to be too high or is associated with public charging piles in 2020, with an average annual
uncertainties. Inductive technology is being devel- growth rate of 37.9%.
oped at several sites with the USA, Europe, China,
Israel, Japan and South Korea among the dominant As a comparison to the growth in charging stations
players. The third solution, battery-swapping, is an in China, 144,000 charging points were available
old solution but a growing interest in this system- across the European Union in 2019, over 26% being
oriented approach and applied solutions is now located in the Netherlands (37,037 in 2019 increas-
apparent. ing to 60,000 stations in 2020), with another 19% in
Germany (27,459), 17% in France (24,850) and 13%
Charging electric vehicles “filling the batteries” with in the United Kingdom (19,076). These four countries
electricity is crucial operating EVs. A charging system combined account for 76% of all ECV charging points
is a system for distribution of electricity to a pile that in the EU while covering only 27% of the EU’s total
has one or more charging outlets that provide elec- surface area. At the other end of the scale is Roma-
tricity to the electric vehicle via a cable. The charging nia, roughly six times larger than the Netherlands
piles need to have a certain level of intelligence so with 125 charging points in 2019 and 70 new
that they can charge at the right level, intensity and charging stations installed in 2020 to give a total of
dynamics in order to adapt to the different capabil- 195 installed charging stations in 2020, or 0.1%
ities of batteries to receive charge thus protecting of the EU total.
25
Considering the absolute number of NEVs and the b. With semi-fast charging at 11-22 kW the charging
total population in China, both are very large, so that time is usually 1-3 hours.
if the charging pile density per NEV or per capita is
considered, China is actually lagging behind Europe. c. With fast charging at 40-50kW the charging time is
Also of note is that the installation of charging usually 20-40 minutes.
stations occurs mainly in the large cities and eastern
provinces with the majority of the Chinese population. There are also some proprietary superfast charging
As mentioned, there are different charging solutions technologies developed solely for certain car brands.
for cable-based charging in respect of charging In the Global EV Outlook 2020 these three standards
speed. The technology is developing rapidly and new are presented as two main groups, one representing
solutions are being introduced by different technology slow/normal charging while semi-fast and fast are
providers. Also, different terminology is used in differ- integrated into the group of fast chargers.
ent countries to label different charging speeds.
To make an international comparison we use the
Here we refer to three common charging speeds: presented summary derived from The Global EV
Outlook 2020.
a. The traditional slow/normal charging that can be
conducted in private homes using 220 V standard
supplies. Normal charging energy is 2-4 kW and
the charging time is usually 5-8 hours.
Figures 9-11: Global distribution of charging piles (Source: The Global EV Outlook 2020).
Figure 9: 598 thousand publicly accesible-slow charges Figure 10: 6.5 million private chargers
Figure 9: The figure shows the distribution of the slow/ Figure 10: Global distribution of slow charging piles in
normal charging technology suitable for over-night private charging places.
charging, home charging or when there is time available
for several hours of charging. Here China’s domination is lower, 37% of the world’s slow/
normal charging piles are located in China. The low num-
Figure 9 shows the available charging piles for public ber can be understood in the light of the density of Chinese
charging. From Figure 9 we can see that about 52% of the cities and the lack of opportunities for people to setup their
slow/normal charging piles were installed in China in 2019. private charging piles with the distribution of electric vehi-
cles being largely concentrated in large city areas.
26
This is one of the motives in searching for other

Figure 11: 264 thousand publicly accessible fast chargers efficient publicly available solutions, and explains
why battery-swapping has gained high attention
now that the technology has improved, battery-
swapping time is reduced, and total system
solutions are in place combined with suitable
vehicle solutions; i.e. the ecosystem is ready and
the timing is right.
Battery-based NEVs need to be charged with

electricity in order to operate whether it be using
conductive technology such as cables from
stationary charging piles, by swapping over the
vehicle’s battery or by dynamic charging while
driving via conducting overhead wires similar
to trams or via conducting rails in the ground.
Research and development is also ongoing into
turning the entire car into a solar energy
recipient and storage entity.
Figure 11: The figure shows the global distribution of

semi-fast and fast publicly available charging piles. Here
we see that China is in a leading position with 82% of
charging piles. Here too, the situation can be understood
as above because access to charging infrastructure is
limited and thus the solution is constrained towards
charging.
Nevertheless, irrespective of the leading position, there

are insufficient charging piles to catch up with the rate of
growth of electric vehicles.
27
PART TWO
EXPLORING BATTERY-SWAPPING
DEVELOPMENT IN CHINA
28
PART TWO - EXPLORING BATTERY-SWAPPING DEVELOPMENT IN CHINA
Battery-swapping progress in China by 2020

By the end of January 2021, different players had This listing is based on the main business players’
installed a total of 562 battery-swapping stations, battery-swapping installations, comprising the OEMs
primarily and largely located in the eastern part of BAIC and NIO, and the third party swapping station
China (Source: China Electric Vehicle Charging Infra- operators Aulton, as well as the newly announced
structure Promotion Alliance). OEM Geely.
Below is a summary of the results in establishing Details of the entry of SKI into the market and its joint
battery-swapping in China up until the end of 2020. venture with BAIC remain unknown, so what this will
As battery-swapping was only placed on the Chinese mean for the swapping industry, battery technology
strategic technology list in 2020, we believe that the development or the increased diffusion of complete
establishment of battery-swapping as a practice will systems also remains unknown.
grow, new players will enter the market and diffusion
increase.
BAIC
• BAIC started R&D on battery-swapping in Now it only takes 30 seconds for a single power
collaboration with Better Place as early as 2009. change, and the whole process has been further
shortened from 3 minutes to 90 seconds. The
• As long ago as 2010 BAIC and Better Place station occupies 75 square meters and can hold
established a pilot swapping station in Shenzhen. 60 batteries; the designed service capacity is up to
400-500 swaps per day.
• The strategic business focus for BAIC battery-
swapping started based on the b2b market targe- • In 2020 all BAIC vehicle models introduced the
ting taxis in Shenzhen. same battery design and same battery-swapping
system.
• By November 2020, BAIC had developed and
established 225 battery-swap stations in 19 cities • BAIC has had a strategic collaboration with the
in China and launched 22,000 battery-swapping State Grid since 2011. In July 2020, the two parties
vehicles on the market. 6.8 million battery- further strengthened their collaboration.
swapping services have been realized. The total
mileage of battery-swapping vehicles has now For the first time in China, the two parties are to
reached 950 million kilometers. launch a large-scale business model of naked
(battery-less) vehicle sales and battery leasing for
• BAIC plans to build 100 new battery-swap stations business vehicles.
in 2021 to provide a service for 10,000 vehicles.
The separation of vehicle and battery, is an at-
• Beijing authorities decided to add 6,000 battery- tempt to reduce the purchase cost of new energy
swapping electric vehicles to its taxi fleet in 2019 vehicles to the same level as internal-combustion-
and another 20,000 in 2020. engine (ICE) vehicles, and to provide users with a
fast service similar to refueling.
• BAIC will replace 50,000 existing taxis with EVs
equipped with swapping batteries for the 2022 Due to the battery storage/reservation ratio of
Winter Olympic Games in Beijing and Zhangjiakou. 1:1.12, charging, battery-swapping and energy
storage can be integrated in one station.
• The 4th generation of battery-swapping vehicles
and swapping stations entered the market in 2020.
29
Figure 12: Demonstration video of the battery-swapping process in a 4th generation station.
Source: New infrastructure, new power – the sustainable development of new energy vehicle Salon 2020 hosted by BAIC.
BAIC official website.
Link: https://www.bjev.com.cn/html/charge-transfer.html
At the same time, the battery load can be flexibly The new car will be officially launched in November
mobilized to participate in power grid operation by 2021 at the Shanghai auto show.
optimizing peak load reduction and valley filling of the
power grid, as well as clean energy consumption. • On January 21, 2021, BAIC received more than
$47 million of financing jointly invested by SKI new
• BAIC/BJEV plan to invest more than 10 billion yuan energy, CATL and the Langfang Anpeng fund.
($1.4 billion) to build 3,000 battery-swap stations
capable of serving 500,000 electric vehicles by the • BAIC holds a 30% stake in Aulton, the largest
end of 2022. third-party battery-swapping service provider
in China.
• BAIC has had a strategic collaboration with Huawei
extending over many years. BAIC and Huawei are • The 4th generation of a BAIC battery-swap station
cooperating in developing the first mass-producible is demonstrated in following picture and video:
autonomously driving passenger vehicle with lidar
as a perception tool.
SKI & BAIC joint venture

• Although it is more than likely that the new joint • SKI, BAIC, and Beijing Electric Control jointly
venture will probably impact the development and established a battery production factory named
diffusion of battery-swapping solutions, just how BEST in China in 2019. The completed factory is
remains unknown, although, SKI is indeed one of SKI’s first global battery cell production base.
the leading battery manufacturers in the world.
30
NIO
• NIO delivered 20,565 vehicles in 2019 and 43,728 • By the end of 2020, NIO had installed 53,000 NIO
vehicles in 2020. slow charging piles and 100 supercharge stations.
• NIO is targeting the 100,000 vehicle level in 2021. • NIO is the process of setting up its “NIO’s Power
Mobile team” which offers an impressive 40-60
• NIO’s battery-swapping technology has been kW mobile charging service wherever an electric
available since 2014. vehicle might be.
• NIO built its first battery-swap station in May 2018. • On August 20, 2020, NIO officially launched its
Battery as a Service (BaaS). BaaS is a break-
• NIO has applied for more than 1,200 patents for its through innovation both in terms of technology
battery exchange station. and business model, which allows consumers to
buy a car without a battery, and provides battery
• From the start, the strategic business focus for rental together with recharge, replace and upgrade
NIO has been the business to consumer (b2c) services and options.
market targeting private car owners.
• Users who choose BaaS when buying an NIO car
• By 2020, NIO had established 178 battery-swap do not need to buy a battery pack when they buy
stations across the country in 64 different cities in the car. BaaS users can choose to rent battery
the eastern part of China. The stations cover two packs with different capacities according to their
major highways between Beijing-Guangzhou and actual needs and pay a monthly service fee.
Beijing-Shanghai.
• As with battery buyers, BaaS users enjoy NIO’s
• Their plan is to reach 500 battery-swap stations by battery-swapping service and flexible battery
the end of 2021. upgrade service and can benefit from the national
new energy vehicle purchase subsidy and purchase
• By June 2020, NIO had completed more than tax exemption policy.
700,000 battery swaps.
Picture and video of NIO battery-swap station
Figure 13: Demonstration video of NIO battery-swapping.

Link: https://www.bilibili.com/video/BV15z411q7qw?p=2
Source: NIO president and vice president speeches at China EV100 forum 2021. NIO official website.
31
• When consumers use BaaS to buy any NIO • In 2021 a new 150 kWh battery pack will be intro-
model, the vehicle price will be reduced by duced enabling NIO cars to run for 1000 km on
$10,852 (relative to a vehicle with a 70 kWh battery one charge.
pack) and by about $20,000 (relative to a vehicle
with a 100 kWh battery pack). The idea behind • NIO’s second-generation battery-swapping station
BaaS is that consumers feel that their electric car can accommodate 13 batteries, allowing for up to
is a little cheaper than an ICE car irrespective of 312 swap services per day.
when they buy or use the car.
• NIO had about 9,000 employees in 2020.
• For a 70 kWh battery pack, the monthly rental fee
is $152. For a 100 kWh battery pack, the monthly • Together with CATL and two other investors, NIO
rental fee is $229. With the above renting package, Battery Asset Co., Ltd., was registered on August
consumers receive six free swaps per month. 18 2020 with $124 million registered capital. The
Beyond six swaps, users have to pay for the swap. battery asset company will purchase battery packs
The battery-swapping fee equals the quantify of while NIO will provide consumers with battery rental
electricity in kWh * (electricity unit price + and operation services.
service fee).
• NIO’s new NEV is the ES6, all-wheel-drive,
• Taking a 45kWh battery exchange as an example, available with either a 70 or 100 kWh battery
the battery swap fee in 2020 was 45 kWh* delivering 536 PS (529 HP) and acceleration of
(electricity price of $0.21/kWh + service fee of 0–100 km/h in 4.6 seconds.
$0.06/kWh) = $12,14.
• NIO signed a strategic collaboration agreement
• Powered by a 100-kWh battery, the range of NIO with the Norwegian Electric Vehicle Association
models can reach up to 615 km (382 miles). in October 2018. NIO’s ”Marco Polo Project” is
aimed at entry into the European market, and the
• The new battery pack boosts energy density to first overseas NIO dealership may well launch in
360 Wh/kg due to a hybrid electrolyte, an Copenhagen.
inorganic Si/C composite anode, and a nano-
coated high-nickel cathode. This battery increase
the range of the new ES8 to 850 km, the ES6 to
900 km, the EC6 to 910 km, and the ET7 to 1,000
plus km.
32
Geely
• Geely (owner of the Swedish Volvo Cars group) • The new battery-swapping station occupies 126
was founded in January 1986. square meters and has 39 battery charging posi-
tions. The station can support nearly 1000 battery
• In 2020 Geely announced its entry into the battery- swaps per day. It takes 60 seconds to complete a
swapping business by establishing operations in battery swap.
Chongqing.
• Geely is planning to build 35 battery-swap stations
• On February 2 2021, Geely completed and put in Chongqing alone, rapidly expanding by an addi-
into service its first 10 smart battery-swap stations tional 100 in 2021 and 200 in 2023.
in the Chongqing Expressway Service area. Each
new energy vehicle requires just 60 seconds to • Geely is developing a new business model based
complete battery-swapping. Announcement of on a membership model including insurance and
rental battery prices for these stations is expected maintenance, differentiating Geely from the more
around the Chinese New Year. The battery-swap common purchasing or leasing models.
stations will not only provide battery rental for
Geely new energy vehicles, but also provide • Geely owns the new electric vehicle brand
battery-swapping interfaces for other makes Polestar as well as Volvo.
of new energy vehicle.
Photograph of Geely battery-swap station
Figure 14: Geely battery-swap station.

Source: Geely official website
33
Aulton New Energy Automotive Technology

(largest third-party battery-swapping operator in China)
• Aulton began to explore the battery-swapping • In 2021, Aulton will build 500 battery-swap stations
technology in 2000. In 2005, the world’s first ex- covering more than 50 cities, increasing the
perimental charging and swapping station was set battery-swapping capacity to 320,000 commercial
up in Lanzhou. In 2008, the world’s first electric bus vehicles or 3.2 million passenger vehicles.
with a battery-swapping mode was used success-
fully during the Olympic Games. The world’s • By 2025, the company plans to build 5,000 battery-
largest battery-swap station was established at the swap stations in 100 cities across China, serving
2010 Shanghai World Expo. In the same year, a 2 million battery-swapping enabled NEVs.
battery-swap station was operated commercially
for the first time at the Guangzhou Asian Games. • One third will target private consumers and two
thirds will target commercial customers and
• The 2020 fourth generation Aulton battery- operators.
swapping service can change a battery in 20
seconds, the whole process takes only 1 minute. • To promote standardization, Aulton plans to provide
It is currently the world’s fastest swapping speed. standard exterior packaging for batteries.
The service capacity of a single battery-swap
station is 500-1000 vehicles. “It’s like Aulton provides bottles for bottled water.
As for the content inside the bottles, it’s the
• The battery-swap station has a modular design OEM’s business. ”
and can be built within a day. The station holds 28 President of Aulton
batteries (third generation station) and each battery
costs about CNY 50,000 (about $7,728). Adding • BAIC holds a 30% share in Aulton.
the overheads, such as land rental etc., each station
costs about CNY 5 million (about $770,000). • NIO is also a shareholder in Aulton.
• Aulton has more than 1200 international and

domestic patents.
Aulton 4.0 generation battery-swap station is
• By the end of 2020, more than 300 battery-swap demonstrated in following picture and video
stations had been set up in China, equal to 50% of
the total number of battery-swap stations in China.
The total service capacity exceeds 50,000 vehicles
spread across 20 cities.
• More than 7.5 million battery-swapping operations

have been carried out; the total mileage equivalent
of this battery-swapping exceeds one billion km,
the maximum mileage travelled by a single vehicle
has exceeded 930,000 kilometers.
• Aulton battery-swapping is a sharing platform for

vehicle services. Thus far, they have shared their
service with 9 vehicle models manufactured by 7
mainstream OEMs. Aulton has developed a stand-
ardized interface and electromechanical Figure 15: Aulton battery-swapping video available at:
https://v.qq.com/x/page/x3205o5nnoz.html
connectivity model.
Source: Aulton president and vice president speeches at

China EV100 forum 2021. Aulton official website.
34
PART THREE
ANALYSIS AND REFLECTIONS OF
BATTERY-SWAPPING DEVELOPMENT IN CHINA
35
PART THREE - ANALYSIS AND REFLECTIONS OF BATTERY-SWAPPING DEVELOPMENT IN CHINA
From cable charging to battery-swapping

The idea of battery-swapping was initiated by Chinese Tesla initially adopted the idea of battery-swapping
transmission system operators (TSOs) already as when developing its new Tesla electric car. The new
early as the 2000s. However, the timing was not right Tesla was innovative in many different aspects, far
for exploitation, neither was the technology ready nor ahead of competitors. Moreover, it was a beautiful car
were industry and business ready. Technology and that appealed to customers’ feelings and expecta-
industry readiness came almost ten years later when tions as a premium car. Comparisons with Apple are
the technology had been developed and several local not inappropriate. Tesla’s cars are, like Apple phones,
auto manufacturers together with the national grid a combination of break-through technology in an
company supported by political players, TSOs and advanced state-of-the-art design, a beautiful product
swapping-station operators set about creating a new appealing to feelings.
large-scale battery-swapping ecosystem.
Initially, Tesla cars were designed to be modular,
To begin with, the cost of battery-swapping systems enabling battery-swapping solutions, and Tesla also
was much higher than the cost of cable-based charg- developed practical swapping systems.
ing systems. The NEV as a whole was much more
expensive, and the additional battery-swapping cost Tesla developed fully automated and fully integrated
was unacceptable from the industry perspective. This swapping technology solutions but failed to develop
changed a few years later when prices of NEVs went an appropriate business model that supported the
down as sales volumes went up and economies of idea. Tesla’s focus was on premium car design for
scales made NEVs cheaper, and the industry started premium customers who could not see the benefits
to find new competitive solutions and new business of swapping when there was a lack of established
models to attract new customers. Nevertheless, the battery-swap station infrastructure to visualize and
big picture of what electrification means, was still demonstrate the power of the solution. Customers
missing in those early days. Something which is now rejected the idea during the concept phase.
changing.
Chinese entrepreneurs were then inspired by the
The modern idea of battery-swapping was first pro- Better Place and Tesla solutions and developed new
moted by an Israeli entrepreneur who founded the fully automated and fully integrated battery-swapping
business Better Place. Although the original idea solutions that were appropriate for the Chinese
appeared brilliant, the idea failed in its exploitation context. In the Chinese solution, the core players
and commercialization phase due to a lack of cus- were NEV manufacturers, third party battery-
tomers and market focus, lack of integration with new swapping operators and TSOs who created a val-
electric vehicle (NEV) manufacturers, lack of stand- ue-chain-inclusive collaborative network that was
ardization of the NEV swapping system, lack of entire supported by the political, institutional and regulatory
value chain collaboration in joint exploitation of the players in China in developing and commercializing
basic idea, lack of political and institutional support the basic idea. Beijing was the focus for the estab-
and lack of an appropriate business model support- lishment of BAIC swapping solutions focusing on
ing commercialization of the battery-swapping idea. city taxis while NIO established swapping stations in
Battery-swapping is a radical approach to battery- cities and along highways.
powered electrical vehicles and as such requires
radical exploitation solutions. There were about 1,400,000 taxis in China and about
72,000 taxis in the capital Beijing in 2019.
36
From exploration to exploitation, from technology to business

However, the global introduction of battery-swapping Whether the majority of automakers will adopt
is subject to a harsh environment both technically but battery-swapping or not, does not come down to the
especially from a business point of view. Battery- technology. Technology is the easy thing, and it is
swapping requires that the NEV is designed for the already available and established. The technology is
modular use and battery-swapping in the early already there, available for large scale exploitation for
concept and design phases. It is almost impossible those that see opportunities and want to adopt it. The
for swapping technology to be applied retrospective- technology is already proven to be mature enough for
ly to an NEV, after its design. The implications are global exploitation.
severe for those companies that decide to implement
swapping systems. It might take 5-10 years after the We need to recognize the importance and size of the
decision is taken before the corresponding infrastruc- Chinese domestic market. There is a large variety in
ture is available in the real world. the needs and expectations of Chinese consumers.
A national experimental approach allows industry to
However, due to the size and design of buses and establish different large-scale experimental solutions
heavy trucks, here the implementation of swapping that can be tried-out and compared competitively
technology is substantially easier during the vehicle with each other. It is also possible that the size of
design phase. Some trucks and buses already have China supports development of parallel solutions in
a substantially modular design and can be adapted to different parts of China as they are not competing
battery-swapping much more easily and quickly than with each other simultaneously at the same place
small cars. and time.
The main players in battery-swapping in China

Battery-swapping development in China needs to be saw an opportunity in transforming the economy
viewed in the light of the specific Chinese context of towards renewable energy and electrification of the
history, economic development, technological devel- transportation system.
opment, transformation to renewable energies and
establishment of NEVs at the end of 1990s. Several Early in the 2010s, an evaluation of different possible
simultaneously developing processes came together. routes for electrification of transportation started. Two
routes were quickly identified as possible and com-
The rapid economic development post 1978, and early plementary to each other, cable-based charging and
attempts to develop a domestic automotive industry, battery-swapping. Cable-charging was technically
demonstrated that the technological advantage held less complicated, cheaper, and essentially used old
by western countries was complicated, difficult to established technologies.
handle and hard to catch-up with.
Hence cable-charging quickly came to dominate the
Increasing environmental challenges, the energy market. Nevertheless, battery-swapping was also
needed for economic growth and their deep belief in explored by different players. See the Appendix for a
technological opportunities meant Chinese leaders historical overview of battery-swapping development.
37
Government and politics Institutions and experts Regulatory & Industry associations
policy makers
Energy & electricity Grid system operators Swapping-station Battery manufacturers

producers operators
IT providers, Service & OEM automotive Gasoline station Investors

Maintenance providers developers, manufacturers operators
and suppliers
Customers:
- Commercial operators
and
- Private consumers
Figure 16: Main players in the transformation to transportation electrification in China (Own construct).
All these players interacted in different ways during divided into six main phases, with each of the main
the period from the beginning of the 2010s to 2020. players acting in different ways. Here we intend to
briefly summarize the process to understand why
The Chinese transformation to electrification of trans- the process looked the way it did until it reached its
portation using battery-swapping technology can be tipping point in 2020.
Six main development phases

In the following section we will briefly describe and In our analysis we have divided the development into
reflect on the process and the interplay between the six phases that are not clearly separated but rather
main players which led to battery-swapping being overlapping. Some players, activities and actions
made a complementary solution to stationary cable- were initiated or started to become important in one
based technology in the national strategy for electri- phase but only had a significant impact in the next
fication. This section “Six main development phases” phase.
is primarily based on information from China Automo-
tive Research.
Figure 17: Key phases in the develop-

Before 2011 – Discovery
ment of battery swapping technology
and systems in China.
Between 2011 and 2012 – Internal struggle
Source: Forecast report on the devel-
Between 2012 and 2013 – Drift opment and investment prospects of
China’s new energy vehicle charging
infrastructure market in the 14th five
Between 2014 and 2015 – Low point year plan from 2021 to 2025, China
Automobile Research.
Between 2016 and 2019 – Growth
After 2020 – Battery-swapping becomes national strategy
38
Before 2011 – Discovery

As evidenced in Appendix 1, battery-swapping was However, the State Grid and China Southern Grid
initially investigated in Germany, Israel and the US. proposed a development model based on battery-
In the early phase of electrification of vehicles and swapping, which is easier for TSOs to manage.
charging infrastructure in China, it was difficult to see
the future technological path. The State Grid established an operating model of
“mainly battery-swapping, complemented by cable-
Initially the main stakeholders entering the market based charging”. The predecessor of the electric bus
were those with physical and financial resources and demonstrated battery-swapping with electric buses in
financial investment strength, such as the large state- Lanzhou in 2006.
owned enterprises State Grid, China Southern Power
Grid, and China National Offshore Oil Corporation. In 2005, the world’s first experimental charging and
Their investment choices determined the develop- swapping station for buses was set up in Lanzhou. In
ment direction of the entire early NEV market. 2008, the world’s first electric bus with battery-
swapping was used successfully at the Beijing Olym-
In July 2010, the Ministry of Finance, the Ministry of pic Games. The world’s largest battery-swap station
Science and Technology, the Ministry of Industry and was established at the 2010 Shanghai World Expo. In
Information Technology, and the Development and the same year a battery-swap station was operated
Reform Commission jointly developed the ”National commercially for the first time at Guangzhou Asian
Private New Energy Vehicle Pilot Work Conference” Games.
in Shenzhen, Guangdong province.
The State Grid established the first battery-swap
From the political perspective, standardization of the station in Hangzhou. BAIC New Energy set-up a
specifications and sizes of batteries used in electric demonstration station in the city of Guangzhou in
vehicles determined the feasibility and opportunities collaboration with the Israeli company Better Place
for replacing batteries. The recommended charging and China Southern Grid.
method, and the one that was politically adopted,
was slow cable-based changing and a decentralized At this point in time the driving force promoting
charging system. At that time, it was not considered battery-swapping came mainly from the transmission
appropriate to build centralized fast charging equip- system operators who would be responsible for sup-
ment on a large scale, especially not for private cars. plying electricity and ensuring that the decentralized
The suggestion was to use ”slow charge + battery- system would be capable of charging the emerging
swapping” as the energy supply method for pure fleet of NEVs.
electric vehicles and high-hybrid vehicles.
Between 2011 and 2012 – Internal struggle
However, the vehicle manufacturers were afraid that new energy vehicle development of almost two years.
once the model was fully rolled out, the State Grid Further to that, an incident in which one taxi caught
would monopolize battery procurement, and they, fire in Hangzhou in 2011 shed doubts on battery-
the manufacturers, would lose business. The vehi- swapping as a future route for charging NEVs. Also
cle manufacturerxs’ position at that time was very the main players involved had different visions of
clear, they would never give up their rights to control the future: transmission system operators saw the
vehicle design and control their business including development from the perspective of electrical power,
battery procurement. The TSOs continued to pro- the political decision makers hesitated about which
mote their choice of a battery-swapping solution and route to take believing the technology was not mature
announced their strategic development plan in that enough for large-scale operations, the OEMs of
direction. NEVs were unwilling to open up their vehicle archi-
tecture and separate the car from the battery and
This dispute, based on a lack of trust and mutual thus rejected proposals for battery-swapping that
understanding, was not only between the business would be outside their full control, and the battery
players but also between different ministries with manufacturers wanted to achieve more influence in
different perceptions of where the development was the development of NEVs.
taking China. It led to a delay in the national strategy for 39
Between 2012 and 2013 – Drift

Transmission system operators and OEM manufac- In 2012, the State Council deliberated and approved
turers were in dispute with each other about different the “energy saving and new energy vehicle industry
solutions, market share etc. Various stakeholders development plan (2012-2020)”. The plan did not
were competing with each other over the construction elaborate on battery-swapping explicitly It focused on
of charging infrastructure and the choice between the construction of slow charging piles and public fast
cable charging mode and battery-swapping mode charging piles. Battery-swapping systems were left to
was always not far from the focus of any disputes. be developed by local actors.
The main reasons for not including battery-swapping in the national plan were:
High cost
Lack of standardization
Fight for control and self-interest
Figure 18: Main reasons

Lack of trust
for hesitation in adopting a
battery-swapping system
Power struggle at an early stage.
(Own construct)
High cost Lack of trust

The construction cost and the investment needed to The OEMs were generally unwilling to share tech-
develop battery-swapping stations is too high com- nical standards as technical information was and
pared to a charging cable based approach. remains viewed as proprietary and business-sensitive.
The OEMs did not trust the transmission system
Lack of standardization operators.
The electric vehicle technical standards of different
companies are different, and the battery standards Power struggle
are also very different; moreover, the automobile Transmission system operators had opposing views
manufacturers did not want to adopt one unifying concerning the establishment of swapping system
standard solution. solutions when compared with those of the OEMs.
The TSOs saw themselves as the drivers behind this
Fight for control and self-interest development. The OEMs did not agree.
The OEMs felt they needed to keep control of their
proprietary system design. OEMs followed the tradi-
tional way of thinking in wanting to retain full control
over their products.
Better Place went bankrupt in 2013 and Tesla also Some Chinese players continued developing the
gave up on the battery-swapping approach in the swapping system on their own, while some third party
same year. Gradually, Chinese transmission system players initiated minor experiments and some busi-
operators refocused on cable-based system solu- ness OEM pioneers such as DongFeng, Zhongtai,
tions to support the needed transformation and Kangdi and Nanjing Automobile continued to launch
aimed at providing electricity to the growing a series of battery-swapping commercial vehicles for
cable-based systems. They almost gave up the business markets. However, they failed at that time
struggle for swapping systems. because both the technology and market were still
not mature enough. 40
Between 2014 and 2015 – Low point

The fast establishment of cable-charging as the battery-swapping model was going through its low
charging solution although quick was not sufficient point, several OEMs continued to invest in establish-
to keep up with the development of the entire NEV ing battery-swap stations, namely, BAIC, NIO and
market and was not sufficient to charge all NEVs. Lifan. Gradually, the main players gained in experi-
ence, learning and insight, leading to the conclusion
The lack of charging capacity acted as a bottleneck that the focus should be on the commercial market
on the quick introduction of NEVs. Even though the and not the private consumer market.
Between 2016 and 2019 – Growth

Even a large-scale expansion of cable-based Some key players, third party swapping system
systems could not keep up with the growth in NEVs. developers and operators such as Aulton, had been
New solutions were needed. The main players in the working in this direction for several years gaining in
battery-swapping ecosystem concluded that the time experience, and the swapping technology had
was right to discuss the swapping system as a joint matured, so that the OEMs started to seriously
solution. discuss the swapping system as a strategy.
Every year a National Congress is held in China that • In 2016 Linfang focused on buses as a business
is a very important arena for discussions and decision market segment.
making in respect of the county’s annual working • In 2017 BAIC focused on taxis as a business
plan. In 2016, Lifan as an OEM delegation put market segment.
forward the proposal of ”Inclusion of the new
• In 2018 NIO focused on the consumer market.
energy vehicle battery-swapping mode in the national
top-level planning”, and proposed to solve the
On July 31, 2019, the Equipment Industry Depart-
”bottleneck” in new energy vehicle battery charging
ment of the Ministry of Industry and Information
by use of the battery-swapping mode of charging.
Technology visited the Zhejiang SKIO Motors company
The Government listened to the suggestion. Lifan
premises to investigate the situation in new energy
was an OEM that explored a battery-swapping solu-
vehicle battery-swapping technology. Thy organized
tion for buses at an early stage in the development
a symposium to listen to the opinions of industrial
process; they were recently taken over by Geely.
enterprises.
Also, in 2016, an industry association held a semi-

The meeting analyzed the development and actual
nar on this issue to discuss swapping as a solution
operation of different battery-swapping technologies in
to support the transformation of transportation to
detail, swapped experience and know-how in battery-
renewable energy. The industry association decided
swapping solutions and business model innovation,
to support battery-swapping.
and discussed the existing system, standards and
other problems as well as the future direction of work.
With the start of power transformation and the
Representatives from State Grid, Botann Technology,
improvement of battery-swapping technology, the
SKIO, BAIC New Energy, NIO Automobile and other
battery exchange model finally found its own position
related enterprises took part in the research and dis-
in the market after several twists and turns. Lifan
cussion event.
Automobile and BAIC New Energy began to establish
their business in the field; Shanghai Automobile,
Guangzhou Bus and Zhongtai Automobile discussed
cooperation with companies operating battery-
swapping infrastructure.
41
After 2020 – Battery-swapping becomes national strategy

In 2020, battery-swapping could not be overlooked. In 2011, the China State Grid company’s 12th Five
In 2020 the Government put battery-swapping system Year Plan for electric vehicle charging service net-
technology on the national strategic list and thus work development, proposed the mode of centralized
restarted battery-swapping technology development. charging and unified distribution based on battery-
Now, battery-swapping technology is on the list of swapping, supplemented by plug-in charging.
the New Infrastructure Construction campaign and is
clearly promoted in the National New Energy Vehicle The plan failed due to a lack of support from the main
Development Plan 2021 to 2035. stakeholders and the dominant usage of large-scale
charging solutions. In 2020 the situation is different,
The Chinese Government is gradually decreasing the technology is more mature, and the stakeholders
subsidies to consumer passenger vehicles. However, can see that cable charging on its own will not be
according to the latest subsidy policy, users buying sufficient to satisfy the demand for rapid develop-
battery-swapping models of NEVs priced at more ment of the EV market.
than 300,000 CNY can still receive the subsidy.
Successful large-scale battery-swapping solutions
This new subsidy policy established in 2020 boosted have been established in Beijing by BAIC focusing on
interest in battery-swapping to a higher level. In 2020 b2b solutions, and newcomer NIO has demonstrated
new players entered the Chinese battery-swapping new ecosystems to enable commercialization of
market. South Korean investors and battery suppliers battery-swapping systems focusing on private con-
have also entered the battery-swapping market in China. sumers in the b2c sector.
The current strategic position of the battery-swapping solution in China

Battery-swapping is a supportive solution that com- • Experts and participants are very cautious in
plements cable-based charging solutions. It should respect of the consumer passenger vehicle
not be viewed as an alternative solution seeking to market. TELD, China’s largest EV charging
out-compete cable-based systems. service provider has decided against entering the
battery-swapping field for the time being.
The development path of the battery-swapping
solution in China Experts also perceive that many challenges exist
Now, more stakeholders are following the direction in battery-swapping for the consumer vehicle
set by this battery-swapping policy decision. Where market. Namely:
development of the direction is concerned, different
Chinese experts in the field agree that: • Cost problem. A battery-swap station is expensive
to construct, operate and maintain, and the depre-
• The business vehicle market, or a company’s ciation costs of equipment and batteries are high.
own vehicles, is the first scenario in which the
battery-swapping mode can be used. According to data from NIO, the cost of a battery-
swap station including battery-swapping equipment,
BAIC and several other participants’ actions in this batteries, labor, site leasing, etc. is about 5 million
field have demonstrated that the business is feasi- yuan (about $772,800), which is much higher than
ble. In particular, buses, logistics centers, loading the construction cost of a charging station of about
and unloading forklifts, small transport vehicles, 2 million yuan (about $309,112). Equipment depre-
luggage vehicles at airports etc.. For commercial ciation is calculated over ten years, and the annual
passenger cars, such as shared cars and taxis, depreciation cost of the station is some 500,000
battery-swapping is a good business model in yuan (about $77,280). In addition, batteries are
principle. However, the best scenario for battery- expensive; each one can cost tens of thousands of
swapping is probably the electric medium and yuan/dollars. NIO first generation stations keep 5
heavy truck. to 6 batteries in storage.
42
Second generation station can keep up to 13 • Limited available space for station
batteries. Aulton third generation stations keep 28 construction. Location selection for battery-swap
batteries. This means a high level of tied-up capital stations is very demanding. Easy physical accessibil-
and thus a high total cost of investments. When ity, high voltage electricity resource availability, and
a new generation of batteries is launched on the high environmental safety requirements all have
market, it will depreciate the value of the old batter- to be considered simultaneously. To be conven-
ies belonging to operators quite substantially. ient enough for consumers, the density of stations
needs to reach a certain level. However, in busy
• For new energy car owners, the battery-swapping mega cities, spaces that can satisfy the above
model is more expensive to run. The lowest requirements are limited.
cost mode is slow charging, with an average cost
of about 50 cents/km ($ 7.8 cents/km), while the • Safety problem and difficulty in determining
average price of fast charging is 1 yuan/km ($ responsibility when a safety incident occurs.
15.5 cents/km) without including parking fees. At Under the battery-swapping model, batteries will
present, the price of battery-swapping mileage be swapped many times during their life cycle. If
works out at about 1-2 yuan ($ 15.5-31 cents/km) the battery is not fixed firmly, it may be shaken
in China. loose. If the power line is plugged in and out multi-
ple times and sand or foreign matter gets into the
• Non-unified standards. Compared to electric connection, it may conduct electricity and result
commercial vehicles, electric passenger vehicles in a fire. If a safety incident occurs, who is liable/
have many more varieties in respect of brand responsible? The car manufacturer, the battery
image and vehicle design. All OEMs are very manufacturer, or the battery-swapping service
reluctant to share their core standards, standards provider? It is not an easy question to answer.
relating to batteries and battery management
systems. Source: China EV100 forum 2021, keynote speeches;
TELD president interview on topic of battery-swapping and
charging solutions for EV, EV Observer
To conclude, some experts are not currently suggest- Business vehicles do not require such a density of
ing fast development of the battery-swapping model stations, do not have such a wide range of battery
in the consumer vehicle market. The alternative standards, and the driving behavior of drivers is more
suggestion is that battery-swapping should “expand easily catered for with simpler swapping solutions in
from city to city, not expand everywhere simultane- the early days. If a certain scale of battery-swapping
ously”. Economies of scale, rate of diffusion, localized business vehicles can support the survival of a given
positioning and gradual changes in consumer behav- number of battery-swap stations, the total number of
ior are some of the underling arguments. battery-swap stations will gradually increase to reach
a scale that is sufficient to also support consumer
What Chinese players did in developing the battery- passenger vehicles. We are not there yet.
swapping model was a fast rollout in the b2b segment
first such as taxi in cities. In this way they gained
experience, developed know-how, further developed
technology, reduced prices and increased volumes to
make the model more attractive to users and
investors.
43
Advantages of the battery-swapping model

There are reasons for participants to insist on
exploiting the battery-swapping model. The following
are the specific advantages the battery-swapping
model can deliver to key stakeholders.
To EV users: To transmission system operators and energy

producers:
1. Separation of vehicle and battery, reduces the
cost of EV purchase, enhances the competitive- 1. Easier management. With the battery-swapping
ness of the EV market and facilitates the maturity model, batteries are centrally charged; the power
of the whole industry. of a centralized charging station is large, but the
power can be centrally controlled, which is ben-
2. It can improve the safety and prolong the life eficial to the special planning of power grid lines.
of the battery by correct charging. Individual connection to a grid of mass-distributed
cable-charging systems is more complicated than
3. Users don’t need to worry about the attenu- when swapping system providers connect to the
ation and residual value of the battery, and grid using systematic standardized solutions; it is
car owners can continue to enjoy the dividends also easier to negotiate with fewer players.
brought about by improvements in battery tech-
nology, and they can choose batteries on demand 2. It can support the transformation of the whole
by renting them. energy structure so that it can absorb and store
more renewable energy. Centralized orderly charg-
4. It can redesign the value of second-hand EVs. ing means forecasting power demand is more
If the whole electric car is sold as a second-hand accurate, making it easier for the TSO to manage
car, the value of the battery is not clear. There is a and participate in peak shaving and trough filling.
large battery value both in echelon utilization and
in recycling of the battery. However, if the battery
assets belong to scattered users, the information
transparency is low and the transaction cost is
huge, which is not conducive to large-scale
recycling and utilization.
5. With centralized management of batteries,

including echelon utilization of the whole battery
and physical disassembly, closed-loop man-
agement of the whole industrial chain can be
achieved, effectively reducing the user cost of
the whole new energy vehicle.
For instance, when all the cars in Beijing have been during the peak time, it could easily bring about the
replaced by electric cars, their daily storage capacity failure of the whole transmission system.
will be equivalent to the daily power requirement of
the city. This means that if EVs charge during the Through the use of battery-swapping the charging
valley time, they will make a significant contribution can be anticipated, predicted and adopted to the
to peak shaving and valley filling, but if EVs charge supply and demand side in a generally better way.
44
To industry in general:
1. Battery-swapping is a platform for battery fully adjust the battery demand through the distrib-
resource sharing. Separation and unified uted battery-swapping network, so that the battery
management of vehicle and battery can realize assets are systematically used to maximally exploit
the maximum value of the whole life cycle of the their cycle life.
battery. Private cars and commercial vehicles
share the calendar life, improving the efficiency of 3. Key nodes of energy flow network. The battery-
battery use, allowing the batteries to be recharged, swap station provides a platform for battery transfer
replaced, upgraded, and harshly used over a and scheduling among OEMs, users, maintenance
longer calendar life, effectively reducing the cost of sites and recycling. New models of batteries can
the battery sharing operation. be quickly distributed to the battery circulation
system, which enables convenient upgrading for
2. Life cycle perspective. Calendar life has an users; faulty batteries can be quickly transferred to
important impact on the attenuation of the battery’s the maintenance site without affecting the car
performance. As the battery ages, not only does owners; users can choose battery models accord-
the performance of the battery decline, but also ing to their needs; retired batteries can be smoothly
the failure rate of the wiring harness, structural removed from the circulation system.
parts and controller in the battery pack increase
significantly. As most batteries have to be retired
on reaching the battery calendar life of 10 years,
Source: New infrastructure, new power – the sustainable
when the battery has only used less than 50% of
development of new energy vehicle Salon 2020 hosted by
its useful cycle life, this represents a huge waste BAIC; NIO president speech at China EV100 forum 2021;
of social resources. Commercial organizations can EV infrastructure salon at China EV100 forum 202
45
Solutions to challenges faced by the battery-swapping model

To address the above mentioned challenges faced by - Third party operator Aulton has demonstrated
the battery-swapping model, system participants are an approach to developing technology that
working towards solutions. makes it easier for OEM-developers and manu-
facturers to utilize swapping without scarifying
• To meet the high cost and high investment their individual designs. Aulton can currently
challenge, more players are joining the sector swap across up to seven brands and up to 9
to share both cost and risk. Multiple players are different battery solutions. Aulton is proposing a
establishing consortiums to jointly operate battery- solution in which the outer packaging of batte-
swapping business, or co-own a battery asset ries is standardized leaving the content inside
company. the battery to be designed freely by the OEM.
For example, - Other parties’ reactions to this have yet to be

- In January 2020, BAIC received investment revealed. Nevertheless, it shows that swapping
from SKI, CALT, and investment funds. technology has room for standardized deve-
lopment.
- In July 2020, BAIC signed a strategic coopera-
tion agreement with the State Grid to collaborate - Government ministries are developing related
on battery-swapping and related business fields. standards, and a batch of standards might be
ready for release in the middle of 2021.
- In August 2020, NIO established the NIO Nevertheless, it is very difficult to standardize
Battery Asset Company in conjunction with battery-swapping solutions because there is
CALT and other investors. also an influence on vehicles, batteries and
swapping technology. However, actions in these
• With national policy support, investing in the EV directions are just starting.
industry and battery-swapping sector is currently a
very attractive proposition in China. • To tackle the limited space issue, in February this
year, NIO signed a strategic collaboration agree-
• The majority of commercial operators such as taxi ment with the Red Star Macalline company (RSM),
companies, bus companies and transport compa- a Chinese furniture department store similar to
nies were public organizations and have taken a IKEA, to build 60 battery-swap stations on RSM’s
socially responsible approach by taking actions to sites. More similar collaborations are anticipated.
support this transformation. Both demand side Through innovative space sharing, it should always
and supply side have collaborated. be possible to find a solution to the space issue.
• To tackle the challenge of standardization, • To tackle the safety issue, technical solutions
various players are making efforts to provide are being worked on to ensure safety.
unified solutions. For instance, active prevention, flexible connection
of the battery pack to the vehicle, and data-driven
- OEM brands have unified their own internal lifetime safety management of the battery are being
standards across different vehicle models. implemented.
Unfortunately, unifying each brands’ internal
standards is not enough, however, it is at least
a first step.
In 2020, NIO sold 43,728 vehicles and their total financial report for February 2021, consumers choos-
revenue was 16,258 billion yuan, double that of 2019. ing the battery renting model account for 55% of all
their buyers.
The net loss in 2020 was 5,117 billion yuan, which is
53,3% lower than that in 2019 when the loss This shows that the acceptance level of the NIO busi-
exceeded 10 billion yuan. According to NIO’s ness model is increasing among private users.
46
From idea to innovation

The innovation process is not a straight line from The following is a summary of the main drivers and
identification of a problem or requirement through barriers to diffusion of electric vehicle and battery-
the discovery of solutions requiring the development swapping technology:
of inventions and on to the creation of a successful
solution which can be brought to market, creating There are four major drivers of battery-swapping
value and profits. Rather it is a dynamic process of diffusion:
intertwined interest and struggle of many stakeholders,
people and ideas, dreams and capabilities. • Government decisiveness, policies and subsi-
diary policy: governments are trying to achieve
As we can see from the description above, this their emission goals set in various global
process of identifying problems, realizing solutions agreements and have devised various incentive
and coming together for the exploitation of the schemes to promote electric vehicle sales.
product was a process that took more than 20 years.
Many challenges and problems needed to be • Tesla effects: while electric vehicles are a major
solved and many solutions needed to be put in place step in advancing environmental goals, Tesla man-
before the whole ecosystem of battery-swapping was aged to add the high performance aspect together
synchronized for large-scale exploitation. Timing is with aesthetic appeal, thereby playing a pivotal
a complex process involving people, activities and role in changing the industry’s overall appeal.
events as well as technology and business synchro-
nization. • Lower battery costs: the drastic fall in the price
of battery packs is also driving mass adoption of
2020 was the tipping point in China for battery- these vehicles.
swapping. However, it must be borne in mind that
every country has its own context and conditions for • Lower operational cost: following the initially
development, as well as variation among key stake- more expensive purchase of NEVs, frequently
holders with many differing perspectives. What was operating costs can be cheaper than ICE vehicles
characteristic of the Chinese development cannot if charging is conducted at home. However, some
easily be transferred to other countries and different private charging stations are extremely expensive,
contexts. making e-driving more expensive than
gasoline-based driving.
47
Five main challenges hindering the adoption of

battery-swapping for electric vehicles:
• Lack of infrastructure, e.g., charging piles and High up-front costs make electric vehicles less
swapping stations: not only are charging stations attractive than traditional ICE cars, mainly due
still very few and far between, they are also to high battery costs, which often account for as
frequently belong to different suppliers without a much as 50% of the total vehicle cost.
standardized charging and payment system which
acts as a barrier to acceptance. • Lack of consumer knowledge and trust:
consumers still do not know enough about the
• Limited range of NEVs: the most common technology behind NEVs, or have concerns
mileage on one battery charge is 200-400 km on regarding electric vehicles’ quality, reliability and
one battery charge. This is suitable for city use but the availability of charging points. Oil companies
inconvenient for inter-city or long-distance driving. and OEMs are lobbying against the fast adoption
of electric vehicles.
• High up-front costs: NEVs are between
30-60% more expensive than similar gasoline- • Unstable governmental policy and subsidy
based vehicles. Estimates indicate that by 2025 systems: the introduction of NEVs is dependent
NEVs and gasoline-based vehicles will cost about on stable and predictable government support
the same. After 2025, NEVs will start to become and predictable subsidy systems to ensure people
cheaper. In the long run, electric vehicles will believe that their new investment makes sense in
probably be much cheaper because of their simpler the long term.
design and lower system and component costs.
Electrification of vehicles is a challenge to traditional vehicle makers

and energy system operators
Traditional car makers have been developing their behind old brand status might change. Moving from
brands since the start of the automotive industry in electro-mechanical technology to electrical technol-
the 1800s and the beginning of the 1900s. Old pres- ogy could change the business logic fundamentally.
tigious brands like Mercedes-Benz, BMW, Jaguar While car manufacturers continue to argue for inte-
etc. are still premium brands, although there are now grated solutions and their own batteries as forming
many other brands that also claim premium status. the quality aspect of vehicles, customers might view
Few have succeeded in moving from bottom to top batteries and electricity as a commodity. In other
of the branding scale quite as well as AUDI. VW tried words, customers might see new opportunities.
and failed with its Phaeton model, just like many
others. The automotive market and industry are still In addition, it is also apparent that the rapid growth
very conservative and slow-to-change when it comes in the number of electric vehicles with a large volume
to branding and technological transformations. of batteries is creating new challenges for the trans-
mission system and overall energy production. First
The rapidly emerging electrification of transportation and foremost the must be an adequate amount of
and emergence of NEVs promises to change this electricity to meet society’s requirements, then there
global situation both dramatically and quickly. The must be enough electricity to meet the requirements
transformation may be too fast for some of the of modernization and the rapidly increasing demands
established brands to handle. When innovation of electric vehicles. We need to investigate and
brings about a technological transformation, then consider how to handle the balancing challenges
many old companies fail to make the transition and between normal production, variable production and
cease to exist. the demand side. Global battery storage needs to be
integrated in the energy supply and distribution
Equally, with the technology shifts driven by electrifi- system and enable balancing of the demand and
cation and entry of new players into the market with supply sides.
new solutions, it is also not impossible that the logic
48
THE CHINESE DEVELOPMENT APPROACH FOR THE

BATTERY-SWAPPING SYSTEM
Conditions for establishing battery-swapping in China
We have identified the following eight aspects of present them in a logical sequential way so that the
the development of battery-swapping in China and development path is recognizable, even though there
is a substantial forth and back dynamic.
Chinese traditional
experimental
approach
Insights showing
New business model that existing cable
design based on new charging needs
business logic complementary
solutions
Conditions for Maturing

establishing battery- battery-swapping
Symbiotic
swapping in China technology
business model
New business
players seeing
Ecosystem opportunities &
development new solutions
Timing of
politics, policy, &
joint insights for
collaboration
Figure 19: Illustration of the main eight

aspects of the Chinese process of adopting
battery-swapping technology and systems.
(Own construct).
49
1. Chinese traditional experimental approach Fuel cell and inductive charging solutions are also
For a long time, China has behaved in an experi- being explored. Two illustrations of the experimental
mental manner. The time period after the civil war approach to the electrification of transport:
and establishment of the People’s Republic of China
(PRC) in 1949 can be characterized as a period of - A new large-scale hydrogen operation is currently
“trial & error”, an experiment in finding the best path being set up in the city of Foshan in the south of
to the revitalization of China and overcoming the China.
most important problem, the poverty of hundreds of
millions of people. - In Jinan in the eastern part of China, solar roads
have been set-up, to explore the possibility of solar
After the economic reforms initiated in 1978, China cells on the roads for the production of electricity
was trying to merge western and Chinese ideas in and developing static and dynamic inductive
order to achieve what was perceived as most suitable charging.
in a Chinese historical, social and societal context.
The main goal was to fight poverty, and industriali- As mentioned earlier, the entire transformation of the
zation and technological development were the best transportation system is still in its early stages, tech-
means of doing so. However, the resultant rapid nology is developing rapidly, and new solutions are
industrialization needed a huge amount of energy still to be released. Thus, China has chosen to set-up
and created pollution problems and an energy short- large-scale trials with several promising solutions, to
age. This energy shortage was met by exploiting coal see the outcome, to learn from it and then explore
as an energy source, although the price included new opportunities “learning by doing”.
severe environmental problems. The rapid economic
development and the establishment of a fossil- However, those experimental solutions require that
fuel-based transportation system only made the the main stakeholders along each path combine
pollution problems even worse. Electrification was together and cooperate in working out solutions from
seen as one possible way of improving conditions idea to implementation.
for the population and combatting pollution and the
CO2 emissions that from the end of the 1990s had This takes time and effort. Not all ideas are worth the
started to be viewed as an issue. “Try and learn” was effort involved.
the approach used in the economic transformation
after 1978, and the southern province of Guangdong 2. Insights showing that existing cable charging
played the leading role. needs complementary solutions.
Different stakeholders see different aspects, benefits
At the focal point was electrification of the modern and challenges where the electrification of transpor-
upstart city of Shenzhen, now the Silicon Velley of tation is concerned. Early solutions focused on
China with 14 million citizens. Here 100% of taxis cable-based charging and it took some time for stake-
and 100% of buses and almost all local transport are holders to see that this solution would not be enough
electrical. The process was initiated in the start of on its own, that there were different segments of
the 2010s and completed by the end of the decade. society, customers, operators and users that needed
Battery-powered vehicles were already available then different solutions because of the technological
and the technology available for charging was ca- limitations of the cable-based solutions.
ble-based, which, at that time, was the most mature
available solution. Different stakeholders have different but intertwined
interests, different targets and ambitions. Gradually
When battery-swapping become possible, a large- they have come to a joint understanding of the
scale demonstration was implemented in Beijing and limitations of cables and the possibilities of swapping
along the long-distance main highways connecting solutions. However, it took some time.
Beijing with Shanghai and Shenzhen. This was
another example of trial-and-error experiments.
There was no direct competition with solutions
established in Shenzhen; rather new complementary
solutions were developed.
50
3. Maturing battery-swapping technology 6. Ecosystem development

It took some time for battery-swapping technology to When major stakeholders, politics and institutional
mature. The speed of battery development, lack of players came to the joint understanding that battery-
standardized solutions and the lack of standards for swapping was technically, practically and commer-
batteries and swapping represented large barriers. cially feasible and supported the overall development
Gradually these barriers were overcome, and demon- of the renewable energy-based transformation of
stration projects convinced many stakeholders that transportation, and that the societal benefits were
the latest swapping solutions were mature enough for positive, the decision makers were ready to act.
large-scale exploitation.
7. Symbiotic business model creation at the
4. New business players seeing opportunities & national level
new solutions The new political decision to put battery-swapping
One of the main barriers to diffusion of battery- technology on the strategic list of the Chinese
swapping was that the OEM developers and manu- government was the ultimate evidence of the success
facturers did not want to lose control of their propriety of the demonstration projects, technological devel-
technology nor lose control of the new core technology, opment and that the new ecosystem was in place
i.e., batteries. guided by the industrial associations. It also meant
that the political players were ready to support the
BAIC focused on redesigning their vehicles for nationwide diffusion of swapping system solutions.
adopting swapping solutions focusing on commercial
markets while one newcomer (NIO) to the industry Now new players such as Geely and Koran SKI
saw the swapping solution as their differentiation and joined the market, new business relationships were
competitive advantage for targeting private custom- formed, joint ownership agreements between players
ers with s new strategy. were made, merging of business interests with new
joint ventures was initiated, and new large-scale
They were strongly supported by energy producers, investments took off at the end of 2020 and the
transmission system operators and third-party swap- beginning of 2021.
ping system providers. The new ecosystem started to
emerge. Battery-swapping technology and system solutions
was launched as the new complementary solution to
Now the main stakeholders started to see the light at cable-based systems.
the end of the tunnel.
8. New business model design based on new
5. Timing of politics, policy, & joint insights for business logic
collaboration However, without an appropriate business model at
Gradually the industry associations, local politics and the company level and inclusion of the main stake-
policy makers also realized that the early ideas of holders it was probable that this situation would not
battery-swapping were possible, although the path occur.
looked far from straightforward at the beginning. The
early arguments among stakeholders and the diver- BAIC and NIO targeted different market segments.
gent approaches started to converge into a basic Both of them have different swapping technologies
understanding of possible solutions, although the but share a common business model that separates
majority of vehicle OEMs had still to come on board. the car from the battery and charging according to
the customer’s interests, needs and expectations,
Now too, national politics, institutions and regulatory and, most importantly of all, decrease the purchasing
players started to revise their old knowledge and price of EVs.
experience.
51
The separation of the car from the battery which It is interesting to note that to achieve the exploitation
then can either be bought or rented and charging of this new technology-based battery-swapping oppor-
based on a single use or subscription model, led to a tunity and create a new business logic based on
reduction of the cost of cars and in this way reduced the design, the integration of technology, products,
the threshold for entering the electric car market for services and businesses, via very new solutions, it
many people and opened the door to brand commer- required new entrants to enter the market, new
cialization of NEVs. entrants who thought outside the box.
A major question remains, will the new players survive? Tesla struggled for years before achieving profita-
Players such as NIO, a technology development bility. A big challenge for Tesla was moving away
company without its own manufacturing capability, from being a technology developer and being able
or is that in fact NIO’s competitive advantage? to scale-up its manufacturing and improve efficiency.
Will NIO make it? The first to market is not always the
company that is left standing at the end.
Symbiotic relationships for developing battery-swapping

Our analysis of the battery-swapping solutions - Very probably the most important factor is the
developed and introduced in China shows that business model of unbundling cost for car, battery
success depends on: and charging, that was used to exploit the battery-
swapping concept.
- The branding of the system solution and develop-
ment of the system in close collaboration with the - This requires deep understanding of the context,
main stakeholders. markets, customers and economy of buyers and
operators of NEVs such as taxi companies in order
- The symbiotic relationship between decision to understand how to develop battery-swapping
makers, politics, institutions, supportive regula- opportunities.
tions, regulatory players and policies, and the
collaboration of industry along the value chain, For the battery-swapping model, the existing value
electricity producers, transmission system and chain of NEVs using stationary charging systems was
electricity distribution players and swapping station insufficient.
operators together with vehicle developers and
manufacturers, altogether creating a new New companies had to be brought on board, new
ecosystem. technology had to be developed to make the entire
system usable and competitive vis-à-vis existing
cable-based charging systems.
52
Government
& politics
Institutions
Gasoline station & experts
operators
IT providers, Regulators &

service & policy makers
maintenance
providers
Industry
associations
Swapping-station
operators Battery-Swapping
Eco-System
Energy &
electricity
producers
Battery
manufacturers
Transmission
Customers,
system
commercial &
operators
private consumers
Green
OEM automotive investors
manufacturers
& suppliers
Figure 20: Symbiotic relationships between the main players in the new battery-swapping
ecosystem. Dynamics of establishing battery-swapping in China. (Own construct).
Our analysis shows a “swarm approach” of different The industrial cluster initiative made key-stakeholders
independent players that come together in the devel- aware of directions and opportunities but they lacked
opment and exploitation of the new ecosystem and successful results showing how swapping could be
its opportunities. It is crucial that all the industries implemented on a large-scale. However, elements in
along the value chain have a collaborative attitude, the industrial cluster initiative gradually continued the
willingness and capabilities in the process from initial process in different combinations and gradually the
exploration to final exploitation. initiative demonstrated results showing that the entire
new ecosystem was obviously in place.
This process represents a business and industry
cluster initiative initiated by the key stakeholders Finally, in 2020, the political decision makers realized
during the 2010s when the government first decided that the timing was right for the industrial cluster initi-
to promote battery-swapping. However, the initiative ative to receive full political support to implement the
had to mature to enable the “swarm” to collaborate, swapping system in practice. The swarm approach
develop and exploit the at-the-time immature swapping made this situation possible, through the industrial
technology and early period of the new business cluster initiative, collaboration and joint efforts as
models for swapping systems. well as new entrants broadening the boundaries and
53
paving the way for new solutions. BAIC and NIO as In our research on the Chinese wind power industry
OEMs, and third party swapping system developers between 2012 and 2019, we noticed a similar ap-
such as Aulton demonstrated that it was possible to proach. China started from nothing and, by cooper-
move to a large-scale implementation. ation between the main domestic stakeholders and
international partners developed the first-generation
Aulton’s solutions show that standard solutions for of wind power in China. They went from learning
swapping are possible, and that in this way it is from western solutions, to learning with collaborative
possible to adapt to the variation between brands partners in developing the technology to indigenous
and range of customer requirements. Whether the development of new technology and systems. Today
OEMs will follow this route, remains to be seen. China is one of the largest and foremost countries in
Figure 20 show the main stakeholders in the new both wind and solar power.
ecosystem for developing and exploiting battery-
swapping systems. This symbiotic relationship The example of the wind power industry helps us see
among the main stakeholders in the Chinese and understand how Chinese players have combined
context is very probably one of the main factors to develop and exploit battery-swapping solutions.
behind the development and exploitation of Similarities include the determination, experimental
battery-swapping system solutions and thus the approaches taken, swarm-oriented ecosystem design
growth of a new industry. and symbiotic business model development.
Developing technology and establishing home markets for battery-swapping

However, it should be borne in mind that one of the In contrast to the normal western, fragmented,
most successful development areas in the world, Sili- piecemeal approach, China seems to operate a more
con Valley in California, was developed in a symbiotic integrated, goal-driven, large-scale experimental
relationship between politics, industry and academia approach with different solutions and fast-adoption of
in the USA and that the success of Swedish indus- new systems in large scale experimental situations.
trial companies such as Ericsson, Asea, Volvo and
Saab were also based on symbiotic relationships Later a newcomer in the fast-growing Chinese NEV
between Swedish politics, industry and academia. market took the idea to the next level by developing a
From a historical perspective, this is a reasonable new NEV based on the radical idea of fully automat-
well-trodden approach to technology development ed and fully integrated battery-swapping aimed at the
and business-based exploitation. private car segment. The new company NIO devel-
oped a complementary business model to support
The symbiotic relationship, mutual understanding, their market choice, a new business model allowing
and joint efforts between politics and business are customers to choose the car design and battery
clear. The first establishment of a swapping system charging functions. A new business model for NEVs
was in Beijing. The main player was a Beijing based is emerging, the decomposition of the traditional
NEV company, BAIC, that together with many value integrated approach comprising vehicles with bat-
chain industries and players developed large scale teries into a model in which the electromechanical
system solutions to create a system for use as the vehicle is separate from the energy storage batteries.
official taxi system. The choice of taxis was a Until this point, all manufacturers had viewed vehicles
purposeful and deliberate choice between business and batteries as an integrated system. NIO changed
and consumer segments. BAIC chose a business-to- the logic to a new business logic that decouples the
business approach (b2b). With this approach, politics vehicle from battery.
supported the technology development, establishing
a complete new ecosystem along the value chain Often, the cost of the battery is about 50% of the cost
with complementary resources, and supported of the entire car. Also, batteries create a lot of con-
establishment of the home market for the BAIC- cerns for customers because of their perception of
driven solution in the Beijing area. We refer to this batteries as a new system, the depreciation of batter-
approach as the “Symbiotic business model driven ies, the second-hand value of the car, future invest-
swarm driven approach”. ments in a new battery, quality issues, safety, reliabil-
ity, charging points when driving long distances etc.
54
The transformation from dominant ICE vehicles to The new option for car owners was to buy the car,
NEVs creates many new challenges for customers. buy or rent the battery according to their needs, and
do their own charging via cable charging, or sub-
This disintegrated, unbundling business model, scribe to a charging plan/swapping batteries.
separating the car from the battery and charging,
decoupling ownership of the car from ownership of This is the core of the disintegrated NIO business
the battery system and the charging function became model. The focus of NIO was towards private cus-
a game changer. Also, the technology for the oper- tomers in medium and high level customer groups.
ating the swapping system was fully developed and They established automated swapping stations in the
automated. Now the time was right to implement the populous eastern Chinese cities and along two main
technology and business solutions, for large-scale highways.
battery-swapping systems.
In 2021 NIO is going international.
Government policies support battery-swapping solutions

In May 2020, China included battery-swapping enables grid balancing in regional or local contexts.
technology into its “New Infrastructure” strategy
specifically focused on the whole life cycle value of In June 2020, the Chinese MIIT (Ministry of Industry
the battery. This is a national strategic development and Information Technology) Minister, Mr. Wei Miao
project. argued, during the Annual National Congress, that
the government supports battery-swapping.
The battery installed in the battery-swap stations will
very probably grow substantially in the future and At the end of 2020, battery-swapping was clearly
become a strategic source for the global energy stor- supported in the New Energy Vehicle Development
age system (ESS). This solution might include build- Plan 2021 to 2035, which is the most important na-
ing-up a power distribution infrastructure which also tional strategy guiding industrial development.
Battery-swapping solutions become Chinese strategic positioning

Estimates have been made about the growth of Shanghai-based Aulton New Energy Automotive
battery-swapping in China over the next 5 years. Technology is claiming that by 2025, the company
The barriers to this growth are high costs and a lack will build 5,000 battery-swap stations in 100 cities in
of standardization. China, serving 2 million swapping-enabled NEVs.
”In the next 5-10 years, the number of commer-

”One-third of them (the 2 million NEVs) will
cial vehicles with potential demand for battery-
be commercial vehicles, and the rest will
swapping will reach 4 million.
be private,”
We believe that by 2025, the number of battery- Huang Chunhua, general manager of
marketing at the Shanghai-based Aulton
swapping NEVs will reach 1.24 million, with New Energy Automotive Technology.
12,370 battery-swap stations needed.”
Zhang Feng, deputy general manager of Blue Park This indicates that battery-swapping technology and
Smart Energy (Beijing) Technology at 2020 China system solutions might very well be reaching a tip-
International Battery Switching Mode Industry
ping point where battery-swapping solutions might be
Summit Forum, held in late December 2020 in
Shanghai. the bridge to cross the innovation chasm, a means
for moving from small-sized segments to large-scale
”In 2021, Blue Park Smart Energy (Beijing) deployment and capture of the mass market.
Technology will build no less than an additional
100 battery-swap stations across China to
reached 2,500 in total, covering at least 120
cities in China by 2025”.
Source: ibid.
55
Battery-swapping is becoming big business

Information indicates that the construction cost of • BAIC: establishing 3,000 stations by 2022 might
a battery-swap station is around $460,000-$1.53 cost as much as $2,318 million.
million depending on the size, swapping volume and
location. • NIO: establishing 500 stations by 2021 might cost
as much as $386 million.
Based on assumptions that each station needs to
have a store of 20 batteries, and each battery is • Geely: establishing 200 stations by 2023 might
valued at $10,000 to $15,000, the cost of batteries for cost as much as $155 million.
each station will be up to $300,000 exclusive of the
real estate costs, 4-5-person labor staff and elec- • Aulton New Energy Automotive Technology:
tricity. The cost of labor is pushing the developers of establishing 5,000 stations by 2025 might cost as
swapping systems towards fully automated solutions. much as $3,850 million.
”If complete automation can be achieved, the Those figures indicate that battery-swapping is
revenue of each battery-swap station can be becoming a significant economic issue in respect
increased by at least 12 percentage points” of investments in infrastructure alone. This is based
Zhang as above on estimates that the market will grow and that the
demand for swapping solutions will increase.
The complexity of the NEVs, with their variation in
vehicle design and shape, battery sizes and formats, The business model of separating the cost of the
different connections, different materials and energy vehicle from the cost of the battery, and a subscrip-
density is one of the main challenges to diffusion of tion-model based payment system for charging and
battery-swapping systems rather than the investment swapping might be the factors that make customers
and operating costs. choose vehicles enabling battery-swapping and
NEV developers redesign their NEVs to embrace
Developing and establishing a large-scale infrastruc- swapping solutions.
ture for nationwide battery-swapping system
is very big business.
Chinese regulatory support for battery-swapping

China’s first safety standard on EV battery swapping This new regulation will serve as safety guidance for
approved by the national standard authority was pub- development of battery-swapping technology and
lished in 2020, “The Safety Requirements of Battery businesses.
Swap for Electric Vehicles”. This is a national volun-
tary standard developed by industries and institutions This regulation regulates key elements such as the
such as BAIC BJEV, NIO and China Automotive vehicle as a whole, battery-swapping system, swap-
Technology & Research Center (CATARC) that has pable battery pack and battery-swapping interface.
been approved by the National Technical Its purpose is to minimize potential failure in battery-
Committee of Auto Standardization (NTCAS). swapping and a vehicle’s running processes, safety
systems and the security aspects of the complete
vehicle, systems and parts.
56
Reduction of Chinese subsidies for NEV

China has started to reduce the subsidies for NEVs that although battery prices are going down substan-
which were set in 2016. tially the capacity of batteries is going up, and that we
are only just at the beginning of a very fast electri-
These actions contributed to a significant drop in fication growth cycle etc., the outcome is that the
NEV sales in China in the 2019. The reduction of proportion of the battery cost in those new NEVs is
subsidies led to a much higher price for customers probably increasing. Currently the battery proportion
and the consequences of course were greater for of the total NEV price may be as high as 60% + of
middle-class citizens with lower financial resources. the NEV price. For all these reasons, the new busi-
ness models are becoming more interesting from the
The future will see further reduced subsidies and in customers’ point of view. If a supplier can separate
a few years’ time they will be removed completely, as the cost for purchasing the NEV from the ownership
people are already noticing. The consequences of and investment in the battery pack, and adapt the
this dynamic in the Chinese market are also having a cost to actual use of the car as a whole this will make
strong influence on the global market because China the average consumer feel safer and more comfort-
represents a major part of the global NEV market. able about buying an NEV that they might otherwise
consider to be outside their price range.
Considering that prices for NEVs are likely to
decrease, that the competition in the NEV market is For those reasons we can envisage increasing
increasing as more players enter the market, that the success for BAIC, NEO and possibly also Geely with
number of Chinese producers is large and that new their new technical solutions for fast battery-
solution are being introduced, and also considering swapping integrated into new business models.
Battery-swapping is now a growing industry in China

Although BAIC and NIO were two of the first play- The world’s largest battery-swap station was
ers in the Chinese battery-swapping industry with established in 2010 Shanghai World Expo. In
complete system solutions including vehicle and the same year, battery-swap station was oper-
swapping station, Geely and the South Korean SKI ated in a commercial mode for the first time at
are now entering the market. The state grid company, Guangzhou Asian Games. In 2016, the Aulton
Southern Power Grid Electric Vehicle Service, has brand was established and implemented the
signed a strategic collaboration agreement with DiDi ”100 stations” plan in Beijing. In 2018, the plan
(Chinese version of Uber), and one of the largest of ”one thousand stations in one hundred cities”
manufacturers of NEVs, BYD, to explore battery was launched, and the nationwide large-scale
swapping and smart vehicle business. business expansion was carried out. In 2019,
strategic cooperation was established with a
Aulton New Energy Technology, the oldest and larg- number of domestic mainstream OEMs to jointly
est third-party battery-swapping company in China, research and develop new vehicle models
sees a solution to fast battery swapping as one of based on battery-swapping.
their strategic targets.
In 2020, the fourth generation of Aulton battery-
“To achieve the capacity of swapping a battery swapping service can change the battery in 20
within 20 seconds we have been exploring for seconds, the whole process is only 1 minute.
20 years. In 2000, we began to explore the We operate nearly 300 battery-swap stations in
battery-swapping technology. In 2005, the 20 cities in China”.
world’s first charging and swapping experimen- Zhang Jianping, CO chairman of Aulton
tal station was set up in Lanzhou. In 2008, the New Energy Technology Co., Ltd, speech
world’s first electric bus with the battery- at EV100 conference in 2021.
swapping mode successfully served the
Olympic Games. This indicates the commitment of one of the largest
operators in China to expanding their battery-
swapping systems.
57
Aulton is striving to be the system integrator and • Battery-swapping is also a platform for battery
provider of generic battery-swapping technology resource sharing. The separation and unified
solutions to all OEMs that wish to follow this path. management of vehicle and battery can realize the
They intend to be the global provider and developer maximum value of the whole life cycle of the battery.
of new swapping technology for small NEVs as well
as for trucks and buses. • Battery-swapping is becoming a commodity, a
sharing platform for vehicle services, shared with
Their newest swapping station can change a battery 9 vehicle models of 7 mainstream OEMs in China.
in 20 seconds, which is currently the fastest in the This creates an opportunity for unification of the
world (2021). physical interface and electromechanical connec-
tion mode, which could go on to be the standard
The arguments for battery-swapping from Aulton’s solution for battery-swapping in the future.
perspective are as follows:
• Battery-swapping enables continuous quality
• Efficient use of land. The fourth generation checking and ensures that no faulty battery is
battery-swap station can change the battery of returned to a NEV that might cause a malfunction
3,000 cars within an area of 150 square meters, and in the worst-case scenario, a fire. Statistics
which means that each car covers just 0.5-0.05 show that about 75% of fire accidents involving
square meters. By contrast, a private charging pile models from brands such as Tesla occur when the
uses 12 square meters. As the area-equivalent vehicles are being charged.
of the car occupied at a battery-swap station is
0.5-0.05 square meters, the occupation of land
resources is reduced by at least 20 times.
Battery-swapping requires large-scale infrastructure solutions

Estimates in China suggest that if all 300 million users. The battery-swapping systems could work as
Chinese passenger cars were converted to pure a huge energy storage and balancing system for the
electric vehicles, and each car has an average 65 national energy production and transmission system.
kWh battery, then the on-board energy storage
capacity would be about 20 billion kWh, which is Seen from this perspective, battery-swapping could
equivalent to the total electricity consumption in have a strategic impact on the national energy
China every day. Thus, the energy storage in vehicle system.
batteries
becomes a balance between production and usage However, to exploit this opportunity, the entire system
in the transportation system. When they are not has to be much more advanced and with a high level
being used, they can be placed back in the energy/ of interconnectivity within the local-provincial-national
electricity supply system to supply electricity to other energy production and distribution system.
Battery-swapping creates a huge strategic energy reserve

Estimates in China suggest that if all 300 million to other users. The battery-swapping systems could
Chinese passenger cars were converted to pure work as a huge energy storage and balancing system
electric vehicles, and each car has an average 65 for the national energy production and transmission
kWh battery, then the on-board energy storage system.
capacity would be about 20 billion kWh, which is
equivalent to the total electricity consumption in Seen from this perspective, battery-swapping could
China every day. Thus, the energy storage in vehicle have a strategic impact on the national energy sys-
batteries becomes a balance between production tem. However, to exploit this opportunity, the entire
and usage in the transportation system. When they system has to be much more advanced and with a high
are not being used, they can be placed back in the level of interconnectivity within the local-provincial-
energy/electricity supply system to supply electricity national energy production and distribution system.
58
Battery-swapping may help EVs to cross the innovation chasm

There is currently a huge level of overstatement • About 1.5 million new battery electric vehicles were
about the electrification of transport. It is easy to added to the global fleet in 2019.
believe that the just-started electrification is already
transforming the entire world and that it will dramati- • In 2019 global electric vehicle sales surpassed the
cally change the climate problems we are facing. It is two million mark, almost doubling the sales
worth remembering that the large effects are still to of 2017.
come.
However, the stock of plug-in electric cars represented
• The growth of the automotive industry has been almost 1 in every 200 motor vehicles (0.48%) on
fast, from around 342 million vehicles in 1976 to 670 the world’s roads by the end of 2019. Although the
million vehicles in 1996. numbers are growing rapidly, it will take some time
before the number of NEVs surpasses the number of
• The total number of vehicles was estimated to be ICE vehicles in the world. Considering the average
about 1.4 billion in 2019. life-cycle of vehicles, which for private cars is about
15 years, the transformation to NEVs will take some
• The world could have 2.8 billion vehicles by 2036 time.
and 8 billion by 2100 (WardsAuto, 2020).
Those numbers show that the proportion of electric
Cars (or automobiles) make up approximately 74% of vehicles both at the global and EU level is very low,
the total global annual production of motor vehicles. irrespective of the rapid growth, due to the relatively
The remaining 26% is made up by light commercial low growth of NEVs in general and because the total
vehicles and heavy trucks (motor vehicles with at number of vehicles in the world is huge. Based on
least four wheels, used for the carriage of goods), these numbers it is clear that currently the electrifica-
buses, coaches and minibuses (comprising more tion of transportation is being wildly overstated and
than eight seats in addition to the driver’s seat). consequently that the work involved in large-scale
transformation is still ahead of us.
Therefore, the global number of vehicles is huge, and
almost all of them are run on fossil fuels, i.e. products It is important to keep this in mind when trying to
derived from oil. understand the development of NEV technology,
business and markets. The most important point is
Although the transformation of transportation that everything we know and everything that is in
systems from ICE vehicles to NEVs and the electrifi- place at the moment related to NEVs is immature
cation of transportation was launched by Toyota in and still undergoing rapid development and redevel-
Japan and Tesla in the USA, and the entire auto- opment, and that we have yet to see the long-term
motive industry is now rapidly developing NEVs, the directions of the development, particularly the tech-
entire NEV sector is still very much in a new and nological development.
immature phase of development, quite apart from the
very low actual numbers of vehicles when seen from The total penetration of NEVs is less than 1% of the
a global point of view. Although the numbers of NEVs total volume of vehicles as of 2020. This means that
entering the market looks large in absolute numbers the operators, users, owners and customers of NEV
and the pace of development is fast, it is only the OEMs are pioneers, ideologists, technology freaks,
start of the growth phase. and those dreaming of a better world tomorrow. The
long-term impact of the transformation to NEVs is
• The total number of electric vehicles in the world huge, but it will take some time before NEVs become
in 2019 was almost 4.8 million. Compare that to the the dominant technology, and which technology will
total number of 1.4 billion vehicles in total. be the dominant solution has yet to be decided, and
currently no one can be certain which it will be.
59
”Volvo Car Corporation urges the EU to coordi- for NEVs as a percentage of the total vehicle
nate incentives whilst supporting research and market (hybrids and electric vehicles) in 2020 grow-
development. The European automotive industry ing to 30% by 2030.
risks losing the present technological leadership
if this doesn’t happen. In the long-term, this ”Both predictions are unrealistic. Considering
jeopardizes our industry’s competitiveness and the lack of coordinated governmental incentives
European jobs. and the high battery system costs, the market
share for electrified vehicles will struggle to pass
Stefan Jacoby, CEO Volvo, Volvo Press 2012.
the one percent mark by 2020.
The European Commission study of 2010 “A European Stefan Jacoby, CEO Volvo, Volvo Press 2012.
strategy for clean and energy efficient vehicles”, esti-
mated that the market share in the EU would be 3-4%
Looking at the EU market situation in 2020/2021 some key figures indicate the following:
The total number of vehicles in Europe is about 300 million in 2020.
In 2019, there were 15.5 million new car registrations in the EU.
The share of diesel cars sold in the EU dropped from 55% in 2011-2012
to 44% in 2017 and to 31% in 2019.
The official level of average CO2 emissions from new passenger cars in the
EU increased to 122 gr/km in 2019, which is 1 g/km higher than in 2018.
The market share of hybrid electric vehicles (HEV) in the EU was

The market share of hybrid electric vehicles (HEV) in the EU was 3% of all new car
3% of all new car sales in 2018 and 4% in 2019.
sales in 2018 and 4% in 2019.
Battery electric vehicles (BEV) made up about 2% of new vehicle
registrations in the EU.
Figure 21: Some basic statistics of NEVs development in EU.

(ICCT European vehicle market statistics 2020/21).
According to Statista, customers in Europe purchased - 3.0% of all new cars being sold in 2019 were
between 1.4 and 1.5 million plug-in electric vehicles electrically chargeable (+2.4 percentage points
in 2020 – more than double the number sold in 2019, since 2014).
an increase of about 240 percent year-on-year.
- 5.9% of all new cars being sold in the EU were
Statistics from ACEA indicate the following outcome hybrid electric last year (+4.5% percentage points
in the EU in 2019: over six years).
60
Looking at the development of NEVs from a marketing

perspective or innovation perspective the penetration
of NEVs is just hitting the early adopter’s stage. In the
field of innovation studies some academics refer to the
chasm that separates early adopters from the mass
market.
Figure 22: Multi-aspect analysis of battery-swapping

system. (LeadBoxer, 2016).
Innovation is when the chasm is crossed and the With a total penetration of only 3% of new sales of the
novelty reaches the vast majority of the market. Not vehicle market in Europe, we are still in the invention
until the market penetration rate is about 20-30% of phase, searching for solutions for scaling up the tech-
the total market can the innovation be sustainable. nology, products and finding suitable business models
for crossing the chasm. We are not there yet. The
innovation is not yet visible.
Figure 23: Multi-aspect analysis of battery-swapping system (Slide Model, 2020).
61
The success of Tesla is only the beginning of the - About 49% of users make short distance trips but
race. It was not until 2020 that Tesla made its first do not have parking spots and need to find external
profits and its bottom line was finally in the black. charging piles.
The Chasm concept was coined by Moore (Moore, - About 21% of users have a strong need to make
2014). This approach identifies phases of develop- long-distance journeys but do not have parking
ment and penetration of markets from early visionary spots and thus don not have a charging opportunity.
customers to gradually maturing markets and grow-
ing numbers of customers in mass markets. The idea - Only about 9% have a strong need for regular
uses a traditional biological approach to describing charging because they drive long distances and
the process as overlapping S-curves. Technology have private parking spots and might have access
matures and gradually dies, then it is taken over by to private charging piles.
new technologies etc. Not until the mass market is
Source: Lei Ye, engineer and author of NIO analysis
reached will there be positive cash-flow for entrepre-
neurs and companies exploring and exploiting solu-
These customer analysis conditions need to be
tions. Until then, somebody has to cover the losses
understood in the light of the very large population
somehow.
size and density of Chinese cities, which makes it
even more difficult for users of NEVs to have access
In this respect China is a bit different. By the end of
to charging opportunities.
2020, China had about 5.5 million NEVs, equaling
a penetration rate of about 1.75%. More than 1.36
The highway network in China is developing quickly.
million new EVs were added in the whole of 2020,
In 2020 China had about 150,000 km of highway.
accounting for about 5.4% of total vehicle sales for
Considering the density of battery-swapping stations
the year. This means that conventional automotive
based on a distance between swapping stations of
technology is still dominant and will remain so for
200 km, it would need about 750 battery-swap
many years to come.
stations to cover the entire highway system. However,
this is just an indicative number because in reality
The specific customer conditions in China are that:
the proprietary adoption of systems implies a much
larger number, one system for each brand.
- 70% of NEV users drive less than 80km per day.
We also see based on China, the country with the
- only 68% of electric vehicles have their own
densest concentration of NEVs, that it is important to
charging pile.
understand the context and yet, even in China, the
penetration level of NEVs is very low.
- 21% of users drive short distances and have access
to a parking place but mostly without a possibility for
setting up a private charging pile.
62
MULTI-PERSPECTIVE ANALYSIS ON
BATTERY-SWAPPING IN CHINA
Technology perspectives
Battery-swapping technology is basically a simple b. Standardization of the technological solutions
technology that has existed for decades. The idea and processes used in swapping.
is not new, but the way it is executed has developed Every NEV OEM views the battery system as their
and it is now used in commercial and practical vehicle propriety technology, even if they buy batteries
battery-swapping systems. However, it is the fine from independent global suppliers. OEMs also
details that make the difference between failure and design vehicles based on a fully integrated vehicle
success. and battery system. This has become the domi-
Three fundamental issues are critical: nant business model; OEMs sell the complete
a. Volumes. system. The fast development of batteries also
creates difficulties in integrating with the electronics,
b. Standardization of the technological solutions and
hence the system integration is crucial. Ultimately,
processes used for swapping.
OEMs have to ensure the overall system quality of
c. Safety of the swapping and charging operations. all systems irrespective of who is their supplier.
a. Volumes of swapping stations, swapping To achieve battery-swapping volumes there is a

operations and vehicles need for standardization of components, sub-
Major considerations are the volume of vehicles systems, interfaces between systems and integra-
that need to swap their battery, the geographical tion with the electronics. Among these, battery and
distribution of these vehicles, the timing during the battery management system are the most impor-
day of swap operations and the swap volumes that tant and most difficult to standardize. The decou-
fully automated battery-swap stations need to be pling of vehicle, batteries and electronics requires
profitable. This is a chicken and egg question. The a complete redesign of the vehicle. This is one of
more NEVs and EVs there are, the more swapping the main barriers to swapping technology.
stations are needed. Where are the tipping and
balance points that ensure there is adequate Therefore, a city’s taxis can have only one brand
availability of battery-swapping as the numbers of and one battery-swapping operator. This of course
NEVs increases? If there are not enough swapping creates a monopoly situation. Once you chose one
opportunities people will not buy NEVs. They also vehicle supplier, you buy the entire system for the
need to be distributed where the NEVs are and life cycle of the vehicle and operations.
meet the requirements. For this reason, battery-
swapping has been deployed in big cities and Both BAIC and NIO have developed product archi-
initially focused on commercial customers such tectures aimed entirely at the separation of battery
as taxis. BAIC and NIO have focused on cities and vehicle and at the same time have standardized
and highways. Few customers swap batteries at systems across their vehicle ranges. BAIC use only
night, but taxis are driving 24/7 and they need a one battery design and one swapping system in
continuous electricity supply, sometimes swapping all their vehicles, cars and SUVs. Standardization
batteries several times every day. Fully automat- among different OEM brands is needed to create
ed swapping systems need to be operating near economic feasibility for the technology route, how-
to their maximum capacity for operations to be ever it has not yet started.
profitable.
63
c. Safety in swapping and charging operations multiple times during the life of the EV, the
Batteries have developed greatlay in respect of connection between the battery and the EV must
their technology content, energy density, charging be reliable.
capacity, connections between internal cells and to
the vehicle and swapping system etc. In the work of BAIC the entire swapping system is
Nevertheless, the battery remains one of the most designed to handle 8,000 swaps and development
challenging sub-systems of NEVs. there is a risk requirements are targeting 10,000 swaps.
of them catching fire, particularly during charging.
The safety issue has emerged as one of the most Also, the swapping station itself has to be safe.
critical aspects of batteries. Each swapping station contains multiple battery
packs which are charged at different currents
With the battery-swapping model, each swapping depending on the status of each battery. Stations
operation must be performed correctly and accu- cannot be located too close to residential areas
rately because any mistake could cause a battery because, like gasoline stations, battery stations
incident. When the battery needs to be swapped require safety arrangements and special fire-
fighting capabilities.
Business perspectives
In the main, it is relatively easy to resolve technology individual company level where each company acts
issues. It is more complicated to master the business- independently from the other companies.
related aspects of battery-swapping.
The separation between vehicle OEM manufacturer
As mentioned, volumes and standardization are and battery supplier changes the business logic in
crucial aspects influencing the economic outcome the favor of battery suppliers. Based on the old busi-
of swapping solutions. The total cost for charging ness logic, OEM automotive manufacturers will lose
vehicles by battery-swapping will probably always be business if they divide their business into vehicles
more expensive than charging by cable. and batteries.
To achieve large-scale battery-swapping solutions, Success of the swapping system solution requires
new ecosystems need to be developed that can stakeholders to develop a new collaborative business
complement each other. model sharing information, responsibilities, risks,
costs, investments and profits in a new approach.
Every player has their own interests, motives and, There is a risk that the old OEMs will simply continue
in the main, wants to make a profit. There must be as before and that it will be newcomers who develop
sufficient business for all the participating business both system solutions and new business models.
players. To achieve this and to develop suitable solu-
tions for all stakeholders, new business models need The future standards for batteries, safety regulations,
to be developed, not just business models at the interoperability etc. are among the major concerns of
the stakeholders in the swapping technology sector.
64
Economic perspectives
Economic scale is crucial for making battery-swapping On the other hand, if there are too many battery-
successful. swap stations and too few cars using the system, the
stations will not survive. Conversely, if there are not
Experience from China indicates that a few years enough stations, buyers will not buy the car because
ago the cost of battery-swapping solutions was of the lack of convenience after they have bought it.
125% higher than for cable-charging. The cost for This is a tricky balancing act, and one of the biggest
establishing battery-swap stations is higher than for headaches for BAIC setting up swapping stations.
equivalent cable-charging systems. Both of these
price indicators are reducing with improved econo- There are important differences between b2b and
mies of scale, as the learning curve is followed, and b2c markets. Each needs different solutions. Techni-
as new technology creates new opportunities. In the cally, swapping stations could use the same solution
future, it is likely that swapping stations will be oper- but different brands have different strategies.
ated by a single person for security reasons. However,
the competence needed and the level of training are This shows that in China initial actions are targeted
high and thus the cost of the technician represents a at the large public transportation sector, buses and
considerable cost. taxis. Experience shows that the public transporta-
tion sector is demanding, has a high traffic density,
In the fully integrated car-battery concept, the car has carries a large amount of people, places high
one battery pack, when using the battery-swapping demands on access to vehicles, and is also sensitive
system the same car needs 1.3 batteries on average to business and economic outcomes. The decision to
to allow for swapping - based on the experience of focus on public transportation is also a relatively easy
TELD, China’s largest charging service provider. one for the decision makers and policy makers. After
Somebody in the value chain will have to pay for the these systems have been developed and experience
0.3 extra batteries. Ultimately, it will be the customer, gained, it might be possible and the timing correct
the question is when and how. This is why the to exploit other sectors and the private consumer
business model used is important. sector.
In Beijing, by the end of 2020, operators had built Although NIO has achieved success in exploiting b2c
battery-swap stations at a radius of 2.53 kilometers swapping stations, BAIC believes that consumer market
to each other in the most dense urban area. In a few demand could become large scale in 2023-2025.
less dense suburbs, the value increases to about 5.6
km in radius. This was to demonstrate to customers
that swapping solutions were permanent and easily
accessible.
65
Market and customer perspectives

As the electrification of transportation is a new and Who is responsible? Who will guarantee compatibility
rapidly growing industry all customers, operators and reliability?
and investors find themselves in a novel business
situation. There is little large-scale experience of The Chinese subsidy system for NEVs includes
long term operations that have proven commercially special green NEV licenses. In some cities, it is
profitable. only if citizens can provide a certificate of access
to a charging pile that they can buy the car with the
The established cable-charging system has emerged registration plate. This has become an issue in China
as the dominant solution largely due to early Tesla because many people do not have charging piles.
solutions and because it is a technically easy and
relatively cheap way to charge NEVs, and because Although China has the largest number of charging
of the assumption that many people can charge at piles in the world, considering the total population in
home during the night. For the early adaptors and relation to numbers of NEVs, China is under-perform-
early pioneers that may well have been the case, but ing in installing new charging piles when compared
as the market grows and new customers enter the with western countries. As a result of these practical
NEV market, new solutions will be expected. and regulatory issues, battery-swapping systems are
perceived as a favorable solution.
Imagine a customer buys an NEV for $85,000, with a
50-65% cost of the NEV attributed to the integrated Thus, for the reasons given, the new emerging busi-
battery. The battery has a price of $40-60,000. Will ness models involving the basic separation of vehicle
the customer be willing to swap that new expensive from battery and charging will receive attention from
battery for something they know nothing about? To customers.
give away a new battery and receive an older one?
66
Power and control perspectives

The transformation from the fossil-fuel-based econ- After separation of vehicle and battery, the vehicle
omy and ICE automobiles to renewable energy and OEM manufacturer becomes a car frame and body
electrically powered new energy vehicles mean that maker. The technical content of the vehicle is greatly
the relationships between the old stakeholders are reduced and there will be a loss of bargaining power
being questioned, shaken-up and disordered. The vis-à-vis battery manufacturers who are becoming
old power relationships are changing and new ones the major supplier to NEVs. The brand differentia-
are emerging. tion between different NEVs is already considerably
reduced with the shift to NEVs. The old mechanical
For more than a hundred years, the old brands have solutions are being replaced by commodity-based
established their reputation and powerful position in electric solutions. This explains why many traditional,
the market and society. The required technological particularly premium large car companies, are reluc-
and engineering skill represent a huge barrier to new tant to go down the battery-swapping route. At least
entrants into established markets. for the time being, Tesla, Mercedes Benz, Volkswa-
gen, BMW and BYD, and other premium car compa-
Now, with the advent of NEVs, the power relation- nies, are not choosing battery-swapping. At the same
ships are being questioned, changed or are likely to time, there is a huge interest dispute. Who would
be changed. The old OEMs are used to controlling be willing to give up their profits during the transfor-
their product architecture and making money based mation stage of the entire industry for the benefit of
on the entire vehicle system. Adopting battery- other organizations?
swapping systems is based on the assumption that
the old manufacturers can change their mindset, their The separation of vehicle and battery first requires
way of operating and their business model in order standardization of battery, battery management
to attract new customers, adopt to new technologies system, interface and software management. The
etc. electric vehicle, like a mobile phone, is a product that
changes rapidly from generation to generation. There
So far, we have not seen successful exploitation of are upgrades almost every year. The separation of
battery-swapping systems. Only new market entrants vehicle and battery requires strict standardization of
are choosing the swapping system and it is only they battery and software and the solidification of control
who are developing the new business model based management software. New models must achieve
on decoupling vehicle, battery and charging. software and hardware compatibility with the first
generation, second generation and Nth generation of
If a traditional OEM manufacturer chooses this new batteries, which will greatly hinder and constrain the
business model and new product architecture, it is a innovation of electric vehicle technology.
reasonable assumption that they will not feel totally
safe about the decision. This transformation might look like a technological
issue, but we believe that the most important aspect
is control and power in the automotive industry.
67
National energy supply perspectives

There is also a national energy supply perspective in to the voltage and energy of dozens of slow charging
respect of battery-swapping systems. piles. With the development of the new energy vehicle
industry, the energy supply bottleneck could well
If the battery-swapping system were introduced in erode development of the whole industry.
Beijing with its 35-40 million citizens, and all vehicles
used battery-swapping systems, their daily storage Seen in this light, battery-swapping systems can
capacity would be equivalent to the daily power support the adjustment and improvement of the
operation of the city. That would means doubling the whole energy structure and create an overall energy
required energy. What does this mean? If EVs charge storage system making the variation in the production
during valley periods, they will contribute to peak based on renewable energy less critical and the
shaving and valley filling, i.e., balancing supply and overall system more robust. Battery-swapping based
demand, but if NEVs charge during the peak period, EVs can provided distributed energy storage through
it could cause a blackout of the entire transmission centralized charging, and absorb wind energy, solar
system. The impact of fast charging mode is espe- energy, hydropower, etc., helping to promote the
cially high because a fast-charging pile is equivalent whole energy structure reform.
Multi-aspect readiness analysis of battery-swapping in China

When the USA decided to go to the moon, NASA There were many questions in the case of the moon
needed an analytical tool to analyze and compare landing project, but politics society and citizens all
different technologies based on their maturity levels, supported the project. Moreover, money was availa-
in terms of whether a particular technology was ble, and the main outstanding issue was that of tech-
available in the lab, at testing level, prototyping level nological readiness and when the needed technology
or ready for full scale commercialization. The model would be ready to be exploited. When it comes to the
NASA developed used Technology Readiness Levels electrification of transportation all of those aspects
(TRL) with nine different levels. This was to provide cannot be put in place so easily.
NASA with a systematic comparison tool, although
these kinds of comparison are not easy and are To put a technology in place, politics needs to accept
subject to judgments, estimations and assumptions. and support implementation of the technological
solution. However, there are many competing solu-
In our previous work on the exploration of inductive tions. Also, when it comes to societal aspects, people
charging development in China in 2018 we developed may have different opinions and probably, would
a model using basic TRLs. Our analysis identified make different choices depending on the economy,
that there are at least three other aspects where it user friendly solutions etc.
was important to understand and to explore how and
why they look as they do. Those were political readi- Based on the four main aspects that we developed
ness, economic readiness and societal readiness, in in 2018, we are using this approach to consider the
addition to the classic technology readiness levels. readiness of the battery-swapping system in the
Chinese context.
68
working for several years. Hundreds of thousands

In this model we estimate how the battery- of swaps and operational systems indicate that the
swapping can be positioned according to those technology is operationally ready.
four aspects.
Technology
One challenge is that battery-swapping needs to be
Readiness Level integrated with the product architecture to enable full
(TRL)
connection between the swapping of old and new
batteries. Several independent brands use different
solutions and therefore the battery-swapping system
needs to be brand matched. This lowers the usability
of the system. There is an obvious lack of standardi-
Economic
Political zation in respect of the interface between NEVs and
Readiness
Readiness
Level (PRL) swapping stations.
Level (ERL)
Societal readiness level (SRL)

The business model which has been put in place,
separating the cost of the car from the battery,
ownership from renting, charging from take-and-pay
Societal solutions, means that the business model appeals to
Readiness Level
(SRL)
customers that feel NEVs are too risky, prefer cheaper
NEVs that are perceived to be lower in quality, and
Figure 24: Multi-aspect analysis of battery-swapping
system (Own construct). increases the level of trust of Chinese suppliers
instead of consumers favoring western high-status
brands.
Political readiness level (PRL) The availability of swapping stations also supports
As the Chinese government has put the batery- the willingness to shift for swapping system solutions.
swapping technology on the national strategic list of
technologies of high importance, the estimation is The safety of electrification, battery and swapping
that this technology has got highest recognition pos- systems seems to be acceptable, and customers
sible. The next step is to put in a number of imple- appear to learn from experience in the taxi area and
mentation situations. This indicates that investments apply it to the private sphere.
will be directed to the development of technology and
that industry working in this chosen direction. Economic readiness level (ERL)
Here the economic refers to two perspectives, one
The separate vehicle and battery model influences relates to the operators of swapping stations and the
property ownership, taxation, insurance, etc. for other relates to customers/consumers of services.
consumers and other stakeholders. Different Chinese This is the area in which the battery-swapping model
government agencies have taken action to update faces the most challenges.
regulations and procedures according to the require-
ments of the new battery-swapping model. In 2021 Our information indicates that NIO is losing money
national congress and entrepreneur delegations have from its business selling NEVs and battery-swapping
submitted further proposals in this direction to the solutions. However, it is difficult to identify differenc-
Chinese government. es between the losing areas, whether it is the NEVs
themselves or the swapping systems. Nevertheless,
Technological readiness level (TRL) companies need to find the right balance between
Battery-swapping is no longer an immature technol-
ogy. All the established systems show that technol-
ogy works in fully automated systems and has been
69
charging for swapping solutions and charging fees. customers. Each brand establishing its own station
For customers the business model enables them to serve their own brand vehicles is not economical
to find the most economical solution that fits their for the company and involves waste for society as
needs; the flexibility and freedom from problems well. Sharing battery-swap stations among different
means that customers will be willing to pay more brands is the best solution for reducing costs for each
for the higher value. brand and customers as well. Shared stations require
standardization of batteries and open battery man-
To make the battery-swapping model attractive to agement systems. To achieve those goals requires
customers, price and convenience are the key. To difficult negotiations and compromise, otherwise,
make the solution convenient to customers, the it will be difficult to secure the long term economic
stations need to reach a certain density level. feasibility of the battery-swapping route.
However, stations themselves are expensive to build
and operate. The battery-swapping price is currently Based on this multi-aspects model, there are some
more expensive than the charging solution for obvious improvements, however, we do not think that
there will ever be one solution that is a solution for all
aspects all of the time.
70
BATTERY-SWAPPING GOING INTO CHINA

AND GOING OUT FROM CHINA
Dynamics of innovations - from abroad to China

New-incoming players in China are Geely and SKI of But sometimes we need to listen to visionary entre-
South Korea, who are quickly developing battery- preneurs with insight, experience and a sense of the
swapping systems in the eastern part of China. The future. One such voice is:
establishment is new and it is too early to consider it
in detail. Bearing in mind that Geely owns Volvo and ”In the next 5-10 years, the number of commer-
the new Polestar, it is worth speculating that they cial vehicles with potential demand for battery-
might introduce battery-swapping solutions to Europe swapping will reach 4 million. We believe that
or the USA. by 2025, the number of battery-swapping NEVs
will reach 1.24 million, with 12,370 battery-swap
The latest newcomer is the South Korean company, stations needed.”
SK Innovation, one of the world largest battery manu- Zhang Feng, deputy general manager of Blue Park
facturers. The battery-swapping business is receiving Smart Energy (Beijing) Technology, speech at 2020
international attention and is growing with the support China International Battery Switching Mode Industry
Summit Forum, December 2020, in Shanghai.)
of the Chines government as a strategic technologi-
cal direction. Some analysts stated that Zhang’s forecast for
China’s NEV battery-swapping market is conservative.
The future is not yesterday, nor is it where we are (Dandan, 2021).
today. The future is ahead of us and few can estimate
correctly what the future will be. Few could have pre- Finally, in 2020 all of the forces necessary for driving
dicted the success of the iPhone and few can predict battery-swapping solutions came together: politics,
the future of battery-swapping for NEVs. institutions, policy, electricity producers, trans-
mission system and electricity distributors, automo-
tive manufacturers, and battery-swapping operators
and in their symbiotic relationship jointly pushed for
large-scale diffusion of battery-swapping systems.
71
Dynamics of innovation - From China to international business

We also aware of the establishment of Japanese Although the idea of battery-swapping is not new, the
NEV manufacturers who develop complete systems timing is now right for large scale commercialization.
for battery-swapping and focus on small NEV cars The future will reveal all.
suitable for other Asian markets such as Thailand
and Indonesia. We are also aware of a rapidly grow- The success of Chinese developers also shows the
ing interest in battery-swapping in India focused on importance of controlling the swapping technology
three wheelers and small NEVs. and the overall ecosystem of car design, car manu-
facturing, energy supply and energy distribution need
It is interesting to note that these battery-swapping to be integrated in a coherent technological system
system solutions are emerging in the fast-growing and business ecosystem. This demonstrates the
Asian markets with mainly Asian manufacturers. With success of the Chinese swarm approach in which
a strong footprint in their home markets and oper- many players combine and complement their efforts
ationally effective solutions it is not impossible that to create and operate the large-scale systems needed
their solutions might diffuse to the rest of the world. to develop/explore and commercialize/exploit the new
battery-swapping technology and systems.
The future will reveal all.
The fact that Chinese consumers might be able to
As is also apparent in the computer and apps age, buy the car and its batteries separately according to
consumers are renting and buying based on a sub- their needs, could also help expand the growth and
scription model. In the shared economy, it may be development of the EV market in China. Whether or
that cars remain private while batteries and charging not westerners think EV battery swaps are a good
become just as simple as using gasoline to fill a car. idea, the Chinese Government likes it. China’s
Thus, the reduced prices might push the demands Ministry of Industry and Information Technology
down the economy scale to lower income groups. issued a statement:
As we have seen from other areas business models
might be more important than the technology itself. “We will actively promote the demonstration
Battery-swapping technology combined with a sub- application of battery-swap mode and improve
scription business model introduced by new entrants the system and standardization. As the next
to the automotive industry in China might very well step, we will optimize the development environ-
be the game changing solution that attracts a new ment, guide enterprises to improve battery-swap
generation of electric vehicle owners and drives the technology, promote the formation of a more
separation solution so that it becomes a new stan- mature business model, and further improve the
dard. In early 2021 we can see at least three Chinese convenience of new energy vehicle usage.”
brands actively introducing battery-swapping and
also that the interest in battery-swapping is booming Given that the Chinese government has expressed
in India. Now with Europe going through an electric its attitude in this clear way, it is highly likely that they
car boom and Chinese brands becoming established will strongly support the further development of the
in Europe, such as NIO in Norway, it is not impossi- technology, entire technical systems and eco-
ble that they will become game changers in the old environment to make this a viable and usable
fashioned European automotive mass market focus- solution in China. The outcome is more than tech-
ing on young middle-class customers used to differ- nology. The outcome is a new evolution of industry,
ent subscription business models. It is a question of an emerging new ecosystem and a strong domestic
the right timing! market for the new industry to establish a strong
footprint. Now there is evidence of the first interna-
tionalization of Chinese NEVs exploiting solutions
developed in the domestic market.
72
Battery-swapping triggers automotive industry transformation in manufacturing

We have noticed that the introduction of battery- The core competences of the automotive industry are
swapping was led by the companies in the new and changing from mechanical engineering to electronics
emerging electric vehicle segment of the automotive and software engineering, design and branding of
industry. In doing so, they are challenging the estab- basically standardized systems. Very much like mod-
lished relationships and positions of players focused ern personal computers, laptops etc.
on the ICE market. As mentioned earlier, in China
there are at least 200 electric vehicles brands and However, what we now see is that there is a systemic
providers. Some are pure technology developers and separation between electric companies focusing on
some are both developers and manufacturers. NIO is development, sales and branding while others focus
one example of an electric vehicle developer target- on large-scale manufacturing. This was traditional in
ing the premium EV segment with a battery-swapping the electrical industry and is now also being applied
system, but without their own manfacturing capacity. to the automotive industry. NIO is just one example.
They rely on collaborative partners for the There are other illustrations of this dynamic in the
manufacturing. emerging electric vehicle automotive industry.
This is breaking the traditional value chain and the • Foxconn is one of the largest manufacturers of
perception that developers and manufacturers need electronic products in the world. They have
to be one and the same company, which has been the become a major assembler of Apple products and
dominant business logic in the automotive industry. are well-known for flexibility and fast adaptation to
This highlights the emerging new business logic of dynamics.
separating development and manufacturing, aside
from decoupling vehicle from battery, in the new • Foxconn and Fisker, a start-up company esta-
fast-developing electric vehicles market. blished in 2005 in the electric vehicle sector and
taken over in 2014 by Chinese company Wanxiang,
This raises new questions about the identity and has reached an agreement to jointly produce more
understanding of who is the electric vehicle brand than 250,000 electric vehicles per year. That makes
owner, developer and manufacturer, besides who are Fisker a clear developer while Foxconn is entering
the technology providers? The main historical solu- the electric vehicle manufacturing sector. The man-
tion has been integration of those roles. The tradition- ufacture of high-tech smartphones and computers
al approach and expectations are being questioned seems to be more similar to the manufacture of
and revised as part of the electrification process. electric vehicles that you might at first think.
We are used to seeing China as the factory of the
world, meaning that development is located in the • Foxconn has invested 750 million US $ in esta-
west and manufacturing located in China to achieve blishing manufacturing capacity in Wisconsin, US.
economies of scale and take advantage of lower
salary levels. The thinking behind economies of scale • Foxconn is also collaborating with Fiat Chrysler
is based on assumptions that there is a relation and Geely in the manufacture of electric vehicles.
between large volumes and manufacturing econo-
mies of scale. • Foxconn has also launched new projects that can
be used to develop electric and autonomous
A different business logic applied to traditional ICE vehicles - providing customizable basic technology
vehicles than the logic we see in the emerging elec- kits. This indicates that in the future electric
tric vehicles that have a lot fewer mechanical parts vehicles may well become commodities, custom-
but a lot more electrical and electronic parts, soft- ized products based on standardized subsystems
ware and batteries. Modern electric cars are more and components and that variation will come more
like hundreds of interconnected computers placed in through software engineering and control than
a body on four wheels. through mechanical engineering.
73
”The last thing an electric car startup should do However, the rapid electrification of vehicles is
is to build its own factory. Frankly speaking, speeding up this transformation and separation
I think this is a very stupid idea.” between vehicle developers and manufacturers.
CEO of Fisker
“The new collaboration between Foxconn and
Fisker´s luxury sport utility vehicle ”Ocean” is expected Fisker will revolutionize the automotive industry
to be launched in 2022 and will be manufactured by model by introducing ICT capabilities – which
Foxconn. Magna Steyer in Austria has for some time help automakers accelerate their transition to
being manufacturing the BW X3 as sub-contractor. new, innovative, and efficient manufacturing
Magna is expected to start building the Fisker Ocean processes and business models. The collabo-
electric SUV by the end of 2022. ration between our firms means that it will only
take 24 months to produce the next Fisker vehi-
“The Fisker and Foxconn partnership brings cle -- from research and development to produc-
together two global leaders in innovation that will tion, reducing half of the traditional time required
join forces to unlock the potential of the electric to bring a new vehicle to market,”
vehicle industry.” Foxconn Technology Group Chairman Young-way
Fisker and Foxconn joint press release Liu in Fisker and Foxconn joint press release.
“Foxconn’s participation in the electric vehicle Although global collaboration is an old phenomenon,
industry delivers a refreshing thrust into the the rapidly increased electrification of the automotive
Information and Communication Technology industry and transportation will have a major impact
(ICT) industry that is already focused on this on the global business set-up and we will see new
exciting sector. The key success elements of combinations and recombination of players.
electric vehicle development include the electric
motor, electric control module and battery. Manufacturing is the new core competence in
We have two major advantages in this regard, those times of transformation to transportation
with an exceptional vertically integrated global electrification
supply chain and the best supply chain
management team in our industry. Coupled
with our accumulated engineering capabilities,
Foxconn has been critical to the success of
many ICT companies over the past 40 years and
we look forward to extending this success with
Fisker.”
Fisker and Foxconn joint press release
74
Conclusions and final comments

The transformation to electric vehicles is right at the in the national strategic listings and became a high-
start of the energy, transportation and technology priority development route. This recognition
revolutions. This transformation process started encouraged new entrants into the area, and we can
twenty years ago and is now growing exponentially. see growing interest in this direction. The success
The anticipated 250 million electric vehicles in ten of this approach is also due to a cluster initiative
years from now will impose great demands on transforming joint understandings and a new ecosystem
formational changes, from the capture of renewable of complementary interests and capabilities which
energy, to the transmission system and energy pro- overcomes disputes and self-interest among stake-
vision to electric vehicles as we currently recognize holders. The success is also due to the timing of
them, that is mainly battery-driven for at least the technology maturity and establishment of a new busi-
next 5-10 years. ness model that can utilize the potential of battery-
swapping.
From the initiation of this research in the Sweden-
China Bridge Project the aim has been to deepen In this case, we can also see the necessity to have a
our understanding of the dynamics of the develop- system perspective for developing integrated system
ment of electrification of transportation, focusing on solutions (both societal, social, technology and busi-
China. The choice of China for this research is due ness perspectives) for energy production, electricity
to the speed and scale of the transformation in China distribution and vehicle charging systems based on
in respect of renewable energy and electrification of users’ different needs and expectations. In addition,
transportation. it can be seen that the new technology is opening up
new opportunities for improving the transformation
In a short period, China has become the largest towards a sustainable world and improving the living
producer of electric vehicles and the largest market conditions of people. We have seen that is it only
for electric vehicles, and has also established the through joint efforts, collaboration and dialogue, early
largest charging infrastructure and taken the lead in experiments and trial & error, with visionary people
establishing a large number of companies focusing and the efforts of partners and competitors, is it pos-
on electric cars. The Chinese city Shenzhen has sible to develop new solutions for the benefit of many.
become the most electrified city in the world with
100% electric taxis, buses and a high proportion We need to keep in mind that the electrification of
of electric logistic vehicles, based on stationary transportation is at the start of its diffusion and we
fast-charging infrastructure. However, although this is have yet to see which technologies will form the
promising, the fast-charging system as we know it main future development path. We see new alterna-
today, will not be sufficient to support the fast- tive technologies emerging, for example hydrogen
growing electrification of transportation. New solu- technology is in the early stage of commercialization.
tions are needed and battery-swapping has emerged It is likely we will see several parallel development
as one such new solution. Now in 2020, it can be processes.
seen that China has developed battery-swapping
technology from the discovery and exploration phase We live in times of transformation and times of tech-
to large-scale commercialization, diffusion and nological and societal revolution. We have experi-
innovation implementation. enced steam power, fossil-fuel driven industry and
society, and now we are facing a new revolution in
This paper shares the experiences of developing renewable energy and the electrification of the whole
and establishing the battery-swapping technology of society.
in China through the entrepreneurial activities of a
number of stakeholders, transmission system opera- We have seen how digitalization transformed
tors, OEM manufacturers, swapping station operators photography, how smart phones communications and
and green investors. Based on a dialogue between now we are seeing the beginning of a new energy
industry and politics, battery-swapping was included revolution transforming the old energy industries and
75
the mechanical engineering-based vehicle industry technology will be supported by central government
into renewable energy industries, and electronically with new industry entrants developing new solutions.
and digitally interconnected new energy vehicles. Addition to the national strategic list is a very
Some industries will become obsolete and new important indicator of what is important and where
industries will arrive. Old technology will be discarded the support will be directed. From 2020-2021 we will
and new technology will take over. The new inno- see many more players entering the battery-
vation stands in front of us and we are right in the swapping system.
middle of a new big wave. We are in the middle of the
transformation and we can influence it. To achieve this introduction of battery-swapping we
will see the establishment of a new ecosystem of
It makes no sense investing in the electrification of players in the new energy sector. Key players are
transportation and the introduction of electric vehi- complementary and cover the entire energy system
cles if the energy sourcing and distribution still relies and value chain, from energy producers and energy
on fossil-fuel energies such as coal and oil. We need providers, transmission system operators, battery
to have a system perspective and ensure that the producers, OEM vehicle manufacturers, third party
whole of industry has the same target of zero CO2 swapping station operators through to investors. That
emissions from operation of the entire transportation is complemented by a new business model in which
system. We see that up-scaling of vehicles will to a the vehicle is separated from the battery, and charg-
large extent require more energy. A main question is ing is offered on a buy-rent-subscription model, as
where the new energy will come from. The second well as charging being offered via alternative sub-
is how we can create a balance between energy scription models. In this way, the entrance price level
production and energy consumption across the entire for consumers is significantly decreased, sometimes
energy system. The third key question is how to by more than 50% of the car price, and customers
design the charging system to manage the challenge can chose an operational cost level based on their
of the growing number of electric vehicles. Global needs. Flexibility and adaptability to customer require-
charging of almost 300 million EVs by 2030 will be a ments are increased in comparison with a customer
great challenge. buying an integrated system solution. The influence
from digital business models is substantial.
For this reason, China has made strategic decisions
to establish another technology route to ensure EV The traditional vehicle business logic is mixed with
charging, the battery-swapping system. Battery- new business logics from the digital, software and
swapping is seen as complementary to stationary IT-business sectors to form a new flexible model
cable-based systems. Battery-swapping was placed focusing on servitization rather than hardware and
on the national strategy list in 2020, and thus the functionality, based on decomposition and customer
choices.
76
APPENDIX
THE HISTORY OF BATTERY-SWAPPING IN CHINA
77
Introduction
As mentioned, China has become the world’s largest and one global. It is possible that the major growth
market for electric vehicles. To really understand the of NEVs will be in the central parts of China, in those
differences with the past and to compare its situation cities referred to third or fourth tier cities, which are
with the rest of the world, we need to consider the still multi-million-citizen cities with a growing middle-
size of the population, the general income of class population, as a main development engine
population etc. and in the eastern part of China as a transformation
instrument for replacing ICE vehicles. This might also
Taking into the consideration that diffusion of NEVs in reflect the Chinese success of smaller and cheaper
China is to a large extent located in the eastern parts NEVs suitable for lower income regions.
of China, the future development of the rural part of
China will probably increase demand for NEVs in the The Chinese NEV market is larger than the European
central and western parts. This is likely to be sup- and US markets combined. Taking into consideration
ported by the new strategy for development of China the size of India and the growth of the Indian economy
introduced by the 14th five-year plan focusing on dual and increase in demand for electrified solutions, it is
circulation development processes, one domestic not difficult to see where the future main markets for
NEVs might be. The answer is very probably in Asia.
Nothing is new under heaven
The idea of battery-swapping was introduced in Large-scale electrification creates challenges that the
China as early as 2002 by Chinese national trans- operators of the transmission system and electricity
mission system operators. This was the beginning producers have to overcome. The NEV manufactur-
of the electrification of vehicles. Some pioneering ers focus was on the vehicles and quick scaling-up of
transmission system operators saw the opportunity of the manufacturing of NEVs, the management of stiff
battery-swapping from the electricity production and competition, survival in the new landscape, and not
the transmission system operators’ perspectives and at all on the overall system extending from production
tried to develop and put it into practice solutions with to the consumption of electricity.
the vehicle manufacturers. The electricity producers
and transmission system operators quickly realized The old ICE energy system was a centralized solu-
that large scale electrification of vehicles and trans- tion, from gasoline/diesel production/import to
port would have a huge impact on the consumption distribution via gasoline stations to ICE vehicles. It
of electricity and the transmission system. They also was separate from the electricity production, distribu-
quickly realized that the large-scale electrification tion and consumption system. The emerging electrifi-
of transportation required the redevelopment and cation of transportation, and the transformation from
restructuring of the transmission system in order to gasoline/diesel to electrical energy, demanded other
support large numbers of electric vehicles charged solutions that were also complicated. There was a
using the emerging static, individual and decen- need for a decentralized system solution that was
tralized charging stations in huge volumes all over independent of the old centralized system of electric-
China. Energy is difficult to store after it has been ity production, distribution and consumption. It was
produced. The balancing issue is crucial, and the this situation that built awareness of battery-swapping
stability of the transmission system is important. solutions.
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APPENDIX
However, neither the battery-swapping technology, solutions to the overall electrification of transporta-
nor the timing for commercialization was in place and tion. Nevertheless, although vehicle electrification
political ambition for the exploitation of battery- technology developed very quickly, there were no
swapping was missing in that early phase. reliable and economically feasible swapping solu-
tions in place in 2002.
The automotive industry at the beginning of electri-
fication was struggling to develop basic solutions to Gradually the technology was developed and
capture the market and introduce new electric vehi- matured to a level at which vehicle manufacturers
cles to the market. They were focusing on proprietary could see the opportunities ten years later. Also, the
solutions and their own brands that could give each political awareness and acceptance did not exist in
manufacturer easy and profitable solutions and which 2002, which was not the case ten years later when
meant they could differentiate themselves from other the large-scale development and exploitation of
manufacturers. There were no coordinating powers battery-swapping began.
or forces at that time. The dominant technological
and economic interest among electricity producers, Some early initiators of the battery-swapping
transmission system operators, swapping system system never gave up. One such player is Aulton
operators and vehicle manufacturers was not aligned, New Energy Automotive Technology that today is
and thus they could not find a common understand- one of the largest nationwide battery-swap station
ing of the long-term development nor develop joint operators in China.
Battery-swapping is an old idea

Despite the current increasing interest in battery-
swapping, the idea of battery-swapping is quite
old. Different projects appreciated the prospects of
battery-swapping and tried it out before then giving
up on it. Back in the 1970s Mercedes-Benz (MB)
explored battery-swapping solutions using specially
constructed MB small buses (Sandru, 2009). MB built
about 40 electric buses to test the approach. Their
testing used a system with a horizontal swapping
solution as shown in the photo. These experiments Figure 25: Mercedes-Benz battery-swapping solution in
were conducted with the battery technology available the 1970s (Sandru, 2009).
at that time and MB found that the swapping system
This was an overestimation of the technology’s matu-
was not reliable and safe - mainly due to battery
rity and underestimation of the technical barriers and
design, cable based connections, and lack of stand-
MB without doubt underestimated the business
ardized system solutions. At the time, MB estimated
implications involved in introducing battery-swapping
that it would take about 10 years before the system
in a commercial context. It would take almost
was ready.
50-years before battery-swapping saw technological
and business solutions that enabled viable operation.
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APPENDIX
Commercialization started in Israel …

Although several NEV manufacturers tried a small- the heart of its vehicle or telling it how to design its
scale battery-swapping approach for experimental cars in order to optimize swapping. It is analogous to
and learning purposes, none succeeded in creating a the buyer of a BMW accepting the engine from a Fiat
commercially viable solution that could be considered or Skoda.
an innovation. The modern story of battery-swapping
started in Israel with a company called Better Place The French car manufacturer Renault tried to make
in 2007. By 2013 they had succeeded in producing the solution practical in collaboration with Better
500 operational NEVs. Better Place also established Place, however, they made only one car compatible
a test-facility in Quanzhou city in the Quandong with the solution. The Better Place solution took five
province. minutes to exchange a battery compared to at least
one hour of static cable-based charging. Better Place
ceased trading in 2013 after losing more than
$800 million.
Better place developed a solution during the early

days of vehicle electrification. Their focus was small
cars, not heavy trucks or buses. They did not control
the entire value chain and their ecosystem was
underdeveloped. Their business model was to sell
the solution to car manufacturers who would have to
change the design of a car to make it suitable for the
technology, to develop a new ecosystem for diffusion
Figure 26: Better Place battery-swap station and develop a new business model to scale up the
(Beedham, 2020). concept and make it profitable. The swapping tech-
nology was the least of their worries compared with
After initially focusing on Israel, a small country with the other issues. Unfortunately, Better Place failed
high gasoline prices, it quickly rolled out its market- in commercializing this great idea at the time, but
ing in Australia, Japan, Denmark, and US/California. the baton was to be taken up by other players as will
Better Place established operations in large cities become apparent.
such as Tokyo and Yokohama hoping that customers
would like their solution. However, they did not The former CEO of Better Place, Mr. Shai Agassi,
succeed in persuading vehicle manufacturers to argued that battery-swap stations would cost
adopt their solution and design cars to fit their $500,000 to build. That is also the cost of today’s
swapping solution. Chinese battery-swap stations, but they are smaller
in size, can handle more operations and have higher
Better Place failed to attract a broad group of auto- capacity thanks to their advances in design, including
makers to participate in its program. At that time, the fully automated swapping capacity - an improvement
battery was seen as the core IP of the vehicle and on the Better Place design, some 8 years later.
most carmakers rejected a third party interfering with
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APPENDIX
… and moved to the USA to become an

invention
The first modern and successful electric car was the Tesla states that the battery-swapping process takes
US-based Tesla that when it came on the scene took approximately three minutes, noting that “time is
the world by surprise. The Tesla car was a game needed to remove the titanium and hardened alumi-
changer at that time, and to a large extent, still is. num ballistic plates that now shield the battery pack.”
Tesla become the role-model providing a blue-print The company says that swap time “could be reduced
for the modern electric vehicle with the most ad- to less than one minute, even with shields,” given
vanced electronics, infotainment system, internet- further automation to the swapping process and
upgradable software systems, autonomous driving refinements to the design of the vehicle undercar-
capabilities (although to limited level), leading riage.
battery-based technology, and fully developed infra-
structure for charging the cars. Many laughed, and “Battery-swapping is Tesla’s second innovation.
many more were skeptical, but not anymore. After the Model S drives to a designated spot
at a Supercharger station, the transformation
Not many people know that at the start Tesla designed magic begins in the car’s shadow. The floor
a fully modular car ready for battery-swapping. opens, computer-controlled tools unscrew the
39 fasteners that attach the 61-by-100-by-4-inch
They joined the market before the time for vehicle battery pack to the car, and a fixture lowers the
electrification had arrived. Tesla started with a high- 1300-pound box containing more than 7000
end car design focusing on premium customers cells into a pit. A fully charged replacement
willing to pay more for new technology and a new battery is hoisted into place, and all power,
approach in 2013. Tesla designed its Model S to be cooling, and battery-diagnostic connections are
compatible with a battery-swap system—boasting a restored. Automatic screwdrivers spin the fas-
fresh, fully charged battery in as little as 90 seconds. teners to their factory torque spec, completing
the swap in a minute and a half.”
Figure 27: Tesla battery-swapping solution.
Figure 28: Tesla battery-swapping solution. (Owano, 2017).
There is no service mechanic working under the

car. The Model S was designed for rapid, automated
(US Patent 20170259675, Owano, 2017).
battery changing with quick-release hydraulic and
electrical connections. From the start, Elon Musk’s
Also, Tesla tried to develop swapping technology. It engineers were smart enough to realize that hours
developed one patented solution as the picture on spent recharging is a kill-joy for anyone hoping to use
the left below illustrates. Tesla initiated this technol- an electric car for long trips. Tesla’s battery-swap ser-
ogy with its services in the U.S. in 2013 when Elon vice uses the same assembly equipment in place at
Musk showed off Tesla’s battery-swapping technology the Model S plant in Fremont, California. Supercharger
base on its Model S. stations up and down the West Coast’s Interstate 5
and from Washington, D.C., to Boston should begin
offering this convenience by the end of this year. That
was the plan and the dream but it never became a reality.
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APPENDIX
”We built the pack swap into the car because we

weren’t sure if people would want to choose the
pack swap or not. We thought people would
prefer Supercharging, but we weren’t sure, so
that’s why we built the pack swap capability in.
And, you know, based on what we’re seeing
here, it’s unlikely to be something that’s worth
expanding in the future, unless something
changes.”
Smith, 2015
Figure 29: Operation of Tesla battery-swapping.

(Luxury Perspective, 2014). After that trial, Tesla closed down the chosen
approach in 2015. Their focus came to be a large-
The original plan was to establish both fast charging scale roll-out of rapid charging systems widely
stations and battery-swap stations all over USA, as spread across all of their markets. Subsequently,
the picture below shows. However, the swapping Tesla also went for a fast charging solution for heavy
stations never were established nationwide. .
”We’ve invited all the Model S owners in the

area to try it out, and of the first round of 200 invi-
tations, only four or five people were interested,”
Musk said at the meeting. ”Clearly it’s not very
popular.”
“We have, basically, the L.A.-to-San Francisco

pack swap capability in place, and I believe
all Model S owners in the California area have
been invited at this point to try it out. And what
we’re seeing is a very low take rate for the pack
swap station. So, we did an initial round of invi-
Figure 30: Distribution of Tesla charging stations in US.
tations, where we did basically, like, 200 invita-
tions, and I think there were a total of four or five
After two years on trial, the plan for introducing
people that wanted to do that, and they all did it
battery-swapping wasn’t working well. Only 2% of
just once. So, like, okay, clearly, it’s not very
200 invited Model S owners who were invited to try
popular. And then we said, okay, let’s expand
the technology and service were interested. Tesla got
that invitation to all customers, but I would
into the battery-swapping idea and patented one
expect that all customers behave roughly like
solution and opening its first and only — battery-
that initial sample group.”
swap station in Harris Ranch, on the high-way
Sorokanich, 2015: Musk at Tesla´s
between San Francisco and Los Angeles in California
shareholder meeting in 2015
(a distance of 617 km), in 2013.
We must keep in mind that the focus was on the tech-
nology as such and not a specific business model
focused on value adding elements. In those early
days, the early adopters were more interesting in the
car itself than on battery-swapping solutions. From
the beginning, Tesla was focused on its own car and
battery design and technology. Therefore, the com-
pany tightly controls inventory and warranty claims.
Also, in the early days the quality and capacity of
Figure 31: Elon Musk tweet.

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APPENDIX
contemporary batteries were important issues. What we also need to reflect upon is that Tesla
Tesla also decided to establish Gigafactory’s to created a business model for their new cars. They
design and manufacture high-capacity and high- sold the car at a very expensive price and offered a
quality batteries for their own use. Tesla was also life-long free-of-charge electricity charging system.
well aware of the cost of the batteries and wanted the For many people, particularly those that could make
profits to go to Tesla rather than the battery suppliers. a company pay for a company car, they got a car that
Put together, Tesla wanted to control as much of the was convenient, did not need gasoline, traditional
value chain as possible. Their main headache servicing and was free of charge to use. Just plug-
became manufacturing quality and manufacturing in, have a coffee and charge the car. Why would this
capacity, which took many years to solve but does kind of customer choose battery-swapping that was
not form part of the scope of this paper. as expensive as filling the car with gasoline?
There are no plans to standardize batteries soon, The car design, the business model Tesla developed
because each drivetrain requires a different energy and the dominant class of customers, helped Tesla to
and power ratio. Therefore, battery-swap stations outline a dominant business model. Nowadays, Tesla
need to be tightly controlled by the automaker to no longer offers free charging. Now the Tesla solution
manage inventory and swapping technology to has become a dominant business model. Sell the car
operate fast and smoothly. with a huge battery, the bigger the better the car, the
longer distance you can drive the better car, price
We also need to consider that during those early does not matter because the premium already pays for
days of new electric vehicles, Tesla was an outsider the status, access to cities via government licenses,
coming up with radically new ideas. Tesla did what free parking in the city for NEVs etc. The time has not
Toyota did some years earlier when it invented the yet arrived in the western world for swapping systems
hybrid Prius. It was the world’s first hybrid-car, and and a new business model. Maybe not yet. Maybe
everybody in the automotive industry was laughing. is it just around the corner. Maybe it will be Chinese
Today nobody is laughing at Toyota’s visionary manufacturers that demonstrate the alternative way
approach and determination to make the hybrid of launching NEVs in the future.
successful. Toyota created the market, developed the
hybrid car and seized the market share before any- We will see later that most of the ideas created by
body else woke up, and when they did it was too late. Better Place and Tesla were further developed and
Tesla is also similar to Apple when they launched the put into large-scale practice in China. The major
iPhone. Everybody laughed at Apple and their difference was that Chinese suppliers integrated the
iPhone, a smart phone without a keyboard. Today technology into a new ecosystem design integrated
nobody is laughing any more, including Ericsson, with a new business model for a new segment of
Nokia and Motorola. Today, most of the automotive customers, the urban middle class living in large
companies are developing hybrids and almost all Asian cities that cannot afford expensive premium
are developing pure electric cars, buses and trucks. model western NEVs. Tesla had ideas but no busi-
Thanks are due to Tesla (the inventor) and Tesla the ness model capabilities at the time and the Chinese
company. market developed later in a different way. The market
and the business logic in China were not aligned with
a western approach.
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APPENDIX
From Tesla to Siemens in Germany

The cable-based charging solutions came to be the In the Siemens case the technology works very well.
dominant solution for all the subsequent brands that However, Siemens is only the technology provider, it
adopted electric cars, either through manual handling does not design and manufacture vehicles and nor
of cables from the charging pile to the vehicle, or via does it control the entire ecosystem of transportation
automatic charging solutions with contacts app- electrification.
roaching the vehicle from above or below.
Thus, the possibilities for influencing decision-making
among vehicle manufacturers and transmission
system operators is limited.
The Tesla approach to battery-swapping was a brilliant

technical idea, but businesswise it was a failure. Also,
Tesla did not provide a total system solution that was
practically usable and customer friendly with an eco-
system approach that would appeal to customers.
It was in reality just one technology demonstrator that

did not attract customers. Similar conclusions can be
drawn about Siemens’s technology.
The advantage with this Siemens solution, which

serves as just one illustration of many similar actu-
ally old-fashioned tram solutions, is that buses can
be made cheaper because they only need smaller
battery packages as these can be recharged during
running. However, there are disadvantages as well.
The flexibility is lower; the system is designed for
fixed routes and requires expensive investments
every-time you want to change the routes. What is
important at the end of the day, is the driving cost per
mileage km.
Figure 32: Bus undergoing conductive charging.
(Electric Vehicle News, 1014). This system is also less flexible in respect of tech-
nological upgrades as the vehicles become more
The picture above shows one automatic solution advanced and form elements of the interconnected
developed by Siemens in Germany that is actually a city and need to interact with many other functions.
wired charging system for buses but which can also The technical inflexibility becomes more important as
be used by trucks, although not for small cars such the technology moves towards digitalization and the
as taxis or private cars. interconnectivities of the entire transportation system.
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APPENDIX
… to innovation in China
China is the largest EV market in the world, with 3.1 The diffusion of modern e-scooters was also support-
million electric vehicles in active use in 2020. As part ed by the growth in e-commerce, where they were
of its ”Made in China 2025” plan, the world’s second- used for large scale distribution of purchased goods
largest economy vows to become a global leader in etc., as local distributors for a fast-growing online
new energy vehicles (NEVs), which also includes plug- market. Several manufacturers developed battery-
in hybrids and hydrogen fuel cell vehicles. China has swapping as small-sized systems for scooters that
set a target for NEVs to account for a fifth of its total were user friendly, had a modular scooter design and
auto sales by 2025. Those targets are also reflected in allowed battery recharging by connection to an average
the fourteenth five year plan introduced at the family’s electrical system.
beginning of 2021.
In the main, charging of small two-wheelers is largely
performed using normal home chargers.
There were about 300 million electric two-wheelers in

China in 2019. Growth is estimated as an additional 70
million units in 2019.
The fleet of three wheelers in China is the largest in

the world with about 50 million units in 2019. And the
total number is still growing.
When the large-scale electrification of transportation

Figure 33: Two-wheeler with battery-swapping. started in China about twenty years ago, e-scooters
were a role model and provided a learning back-
Two and three wheelers have been highly dominant in ground, very different to the situation in the west.
China and Asia for a long time because of economic
reasons and the density of cities. Car use started to Some entrepreneurs also saw battery-swapping as a
grow in China after 1980. Modern large-scale battery- possible large-scale business and technology solution
swapping was initiated in China due to its simplicity in for NEVs that had stared to emerge at that time. This
design, its suitability as an environmental solution, and was the birth of the modern battery-swapping solutions
because of the ease of charging in average people’s for NEVs in China. A similar situation can be seen in
homes. India and other Asian countries.
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APPENDIX
BAIC takes the lead in battery-swapping

In 2010, one of the China’s largest producers of NEVs,
the Beijing Electric Vehicle Marketing Co. (BEIC JEV
or BJEV), founded in the same year as part of the
BAIC Group, developed and established the first
battery-swap stations in China. In 2010 BAIC also
started R&D on battery-swapping. To begin with, they
used the Better Place technology but then gradually
developed their own solutions. The first BAIOC battery-
swapping system was launched in 2021.
The initial focus was on b2b solutions, in particular,

taxi systems in the Beijing area. This was a strategic
target because it is possible to approach the taxi
system collectively and possible to fully cover its
operating area with suitable solutions.
Figure 34: Taxi in BAIC battery-swapping station
The first batch of ten battery-swap stations commenced (www.baic.com).
operation October 29 2016 offering services across
in 2020. BJEV itself currently offers three models that
eight urban districts in Beijing. In 2016, 50 EV battery
support battery replacement – including the EU260
charging and swap stations were put into operation
and EU300 sedans.
in Beijing to meet the battery-swap needs of at least
6,000 EV taxis. BAIC intends to establish battery-swap
This illustrates the speed of electrification in China as
stations in 19 cities in China for 16,000 electric taxis.
a whole.
As a company, BAIC ranks 160th among the Fortune
500 listed companies.
”The control of air pollution is one of our current
priorities and we are focusing on reducing
”In 2016, 50 EV battery charging, and switch
pollution caused by vehicle emissions through
stations will be put into operation in Beijing and
boosting the adoption of EVs. As a forward-
are expected to address the battery-swap needs
looking company, BAIC Group has a long track
of at least 6,000 EV taxis. Taxi drivers will be
record of research and practice in the field.”
able to remove the battery once it starts running
out of power and replace it with a fully charged Zhou Zhengyu, director of the Beijing Municipal
Commission of Transport
one at the nearest station. The station locations
have been planned so that drivers will not need
to travel more than five kilometers for swap- The stations look like car wash units and mainly serve
ping battery. By the end of 2017, Beijing will be the company’s taxi fleet.
home to 200 EV battery charging and swapping
stations, which will meet the requirements of BAIC BluePark New Energy Technology Co., which
30,000 EVs. In preparation for the 2022 Olympic was the entity established by BAIC for commerciali-
Winter Games in Beijing and Zhangjiakou, BAIC zation of the solution, provides the service and op-
BJEV will replace 50,000 existing taxis with EVs erations. The BAIC Group, and its various entities,
equipped with switchable batteries,” including BAIC JEV, has become the second-largest
Xu Heyi, chairman of BAIC Group.
manufacturer and seller of electric vehicles in China.
Here there are some important differences in compar-
The statement was made in 2016. In 2019, BAIC ison with the early Israeli, French and US approaches.
announced plans for an additional 3,000 swap stations, BAIC is a large scale electric vehicle manufacturer,
enough to supply half a million electric vehicles by the full system integrator of vehicles and battery-swapping
end of 2022. A further 20,000 vehicles are to be added systems, system developer and system commerciali-
zation business player.
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APPENDIX
They developed the original battery-swapping solu- necessary to have a proper developed ecosystem with
tions, developed practical solutions, and developed car manufacturers, technology development partners
their own cars that could utilize the solution. Then they and state transmission system providers to ensure
set up their own entity to commercialize the product adequate electrical capacity for charging stations and
and also developed a new business model ensuring charging piles.
both business success and customer satisfaction. The
initial focus was large taxi customers who were operat- ”We plan to invest more than 10 billion yuan
ing taxis in tough conditions and for whom a one-hour ($1.4 billion) to build 3,000 battery swap stations
battery charge was a problem. Understanding of the capable of serving 500,000 electric vehicles by
market and customer combined with appropriate sys- the end of 2022.”
tem solutions ensured market success. It was a very Ma Fanglie, president of BJEV,
at an industry forum in early September.
different solution to the earlier pioneering solutions.
Under the agreement, BAIC and State Grid EV will
“This will make cars much more affordable,” create an in-depth collaboration in businesses such as
Ma Fanglie, president of BJEV, the sale of complete vehicles and packages of charg-
at an industry forum in 2020, China Daily.
ing services, battery power packs, battery-swapping,
green power, the smart energy service, and capital
Recently BJEV revealed a new version of its budget investment. BAIC BJEV and BAIC Mobility will promote
EV300 small car, priced at the equivalent of about the charging service packages offered by State Grid
$11,700, with unlimited battery swaps allowed for a EV and cooperate on the connectivity and operation
monthly battery subscription of about $64. Scaling up of charging piles, the EV community charging busi-
of the system is now taking place with a new business ness, and new technologies such as plug-and-play,
model based on energy subscriptions, very similar to high-power charging and the automatic charging, in
the new approaches in the smartphone area of appli- order to jointly form an ecosystem and a marketing
cation subscriptions. model integrating complete vehicles, charging piles
and charging service.
In 2018 BJEV sold the EV300 compact car for about
$12,000. It included an all-you-can-swap deal for about BAIC become the third largest stakeholder in Daimler
$60 a month. in 2019. BAIC Group acquired a 5 percent stake in
Daimler AG, providing reassuring group profitability in
BAIC’s electric cars are not well known outside China. a dynamic market. With the German automotive giant
They are small and affordable, with prices targeted at having a new leader at the helm, it is seeking further
middle class Chinese consumers. Making battery- success in China, and Europe. The partnership with
swapping available in those models could represent a Daimler has been profitable. BAIC 2018 profits grew
real opportunity for greater EV adoption in China. 4.2 percent year-on-year to 37 billion yuan and were
primarily the result of increased sales from the joint
The goal of BAIC is to supply half a million electric venture with Mercedes-Benz.
vehicles with battery-swapping by the end of 2022.
”It has been a long-term wish to deepen the
“BJEV wants to decouple the costs for the partnership with Daimler through investment.
batteries from the purchase price of the electric We have joined hands for more than a decade
cars through the battery exchange principle and the partnership has yielded remarkable
against the background of falling subsidies in results.”
China – by leasing the batteries.”
BAIC’s ambition is to expand in both NEV and
BAIC Group and the State Grid Electric Vehicle charging infrastructure and particularly in battery-
Service Co., Ltd. (called “State Grid EV” for short) swapping. BAIC/BJEV is working on decoupling the
signed a framework agreement on July 27, 2020, to costs of batteries from the purchase price of electric
cement their strategic cooperation to promote the cars based on the battery-swapping system, by
development of the NEV industry. To achieve fast leasing out the batteries.
development of a battery-swapping system, it is
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APPENDIX
”We will separate the batteries from vehicles and In 2020 BAIC battery-swapping systems, vehicles and
lease them to car owners, making the cars much swapping stations, reached their fourth generation.
more affordable”. The 4.0 generation requires only 75 square meters
Ma Fanglie, president of BJEV, at an industry forum, compared to 150 in earlier systems. By the end of
September 2020. 2020, BAIC had set-up 187 battery-swap stations and
sold 18,000 battery-swapping vehicles,
In preparation for the 2022 Olympic Winter Games covering 19 cities.
in Beijing and Zhangjiakou, BAIC BJEV is to replace
50,000 existing taxis with EVs equipped with swappable A total of 4.8 million battery-swapping operations have
batteries. been performed, equivalent to a total 690 million kilo-
meters. The BAIC solution is the largest battery-
In the new vehicle models, EU220 to EU260, EU300 swapping system in the world.
and EU5, all models will use the same battery-
swapping system in respect of sizes and formats thus
enabling all vehicles to use the same swapping system
solutions. All vehicles now have a standardized modu-
lar design based on the same ideas.
NIO launches “Battery-as-a-Service” to make EV ownership even easier

The transformation from old solutions to new battery- NIO is developing a wide range of e-scooters,
swapping technology has technical, economic and e-motorcycles and e-micro mobility solutions, all the
psychological aspects: way up to modern small cars. All are based on the
idea of flexible battery-swapping solutions.
”I was actually unwilling to change the battery in
the first month when I got my new car,” … Financially NIO is facing some trouble with a $390
”I didn’t want to give away my battery. It was million loss in the first quarter of 2019, cancelled plans
new!” for its own factory and the postponement of a new
NIO ES6 owner. model. NIO cars are manufactured by JAC, another
Chinese car manufacturer. This is a quite normal situa-
NIO is one of the newest and one of smallest Chinese tion for many Chinese NEVs. They own the design and
EV manufacturers. Some consider NIO to be one of the brand; they develop business models but the man-
the most innovative EV companies in China. NIO had ufacturing is outsourced to a few large manufacturers.
about 9,000 employees in 2020.
Figure 36:
Figure 35: NIO scooter (www.nio.com) NIO board (www.nio.com)
88
APPENDIX
NIO has introduced a new series of EVs and provides The system solution is standardized and fully auto-
lifetime free battery-swapping services for those who mated. From driving in to driving out takes less than
buy brand new cars. Batteries are the most expensive three minutes during which the battery is automati-
portion of an electric vehicle. By removing what is cally exchanged. People in the car can remain inside
essentially a large mass of chemicals sitting in the during the battery-swapping process; it is similar to an
vehicle from the sticker price, NIO is addressing the automatic car wash. Of course, the payment system
higher-price pain point of EVs. is automatic as well. Each station has five places for
swappable batteries.
The performance of the new NIO ES6 is such that

a driver has up to a 400 km range and if travelling
between Beijing and Shanghai (about 1,400 km)
drive all the way while taking advantage of up to five
battery-swap stations on the way. At most, each pod
contains five batteries, enough to serve up to 70
customers every day, when operated 24/7. The ES6 is
all-wheel-drive and available with either a 70 or 84kWh
battery providing 536 bhp and delivering 0–100 km/h
in 4.6 seconds.
Figure 37: New NIO ES8 EV car suitable for According to NIO, 50.1% of its customers used its
battery-swapping (www.nio.com).
battery-swapping services in 2020.
This approach is a reminder of the early days of Tesla
offering life-time free charging for the Tesla EV. NIO
customers can either buy a new car with a battery as
one purchase and then pay for their own charging or
the customer can buy the car separately from the bat-
tery which is then rented from NIO. In this way the pur-
chasing price is reduced and the cost is distributed over
the lifetime of the car. NIO has introduced a battery-
swapping plan that makes the price of an electric car
$10,000 cheaper.
A third solution is that customer buys the car and rents

battery and charging using subscription-based solu-
tion fitting the driving needs of the customer. Figure 38: NIO ES6 at a battery-swap station.
(www.nio.com).
89
APPENDIX
NIO has already completed more than 700,000 battery swaps in 58 cities by 2020
By the end of 2020 NIO had installed 35,000 NIO

chargers for static charging.
In addition, NIO is setting-up “NIO’s Power Mobile

team” offering an impressive 40-60kW mobile charging
service wherever the electric vehicle might be. These
mobile vans can supply a charge to any brand of Figure 39: The principal model of the NIO battery-
electric vehicle for both emergency charging and as a swapping system (Tianyu, 2020).
white glove valet charging service.
NIO’s battery-swapping technology has been available

since 2014. NIO built its first battery-swap station in
May 2018, and, as of June 2020, the company had
completed more than 700,000 battery swaps.
A relatively unknown supplier of EVs, NIO has no less

than 143 battery-swap stations in 64 different cities in
the eastern part of China, and these have been oper-
ating for about three years.
The NIO business model lowers the initial car- Figure 40: A standardized and fully automated NIO battery-
purchasing investment by $10,000 while customers swap station, in Beijing, China, August 3, 2020
(Tianyu, 2020).
take out a battery subscription package to match their
needs. The more battery swaps, the higher the price.
Renting a 70-kWh battery with six swaps a month
costs about $23-$26.
In June 2020, 40 percent of the 452 battery-swap

stations in China were found in its capital Beijing, and
the rest along the eastern coast where the economy
is stronger. At the time of its creation, NIO had 141
stations across the country. NIO planned to build an
additional 300 new stations during 2020.
Figure 41: Distribution of NIO’s battery-swap stations in

eastern China (Tianyu, 2020).
90
APPENDIX
Illustration of the impact of battery-swapping

Let us illustrate some consequences of battery- • Driving the same distance in an ICE vehicle would
swapping systems: cost the owner about $4,000 annually which is $330
per month (Swedish price level). Based on Chinese
• An average NEV/ICE vehicle owner drives 20,000 gasoline prices it would be $150.
km annually.
• Customer prices for renting batteries from NIO and
• An average NEV/ICE vehicle owner drives about subscription on six battery swapping per month is
400 km per week annually. about $30 in China.
• That means an average NEV owner need to make One possible conclusion is that, at first glance, the
50 battery swaps annually, which is one battery battery-swapping solution might be cheaper for
swap per week. customers at first glance. Of course, other aspects
relate to the variation in gasoline prices, government
taxes, local salary costs, real-estate and operating
labor costs for swapping stations etc.
Figure 42: Distribution of NIO swapping-stations along two

highways (Randall, 2019).
The figure shows battery-swap stations and their density

along two major highways in eastern China, Beijing-Shang-
hai and Beijing-Shenzhen. There are eight battery-swap
stations between Beijing and Shanghai (156km between
stations on the 1,250 km route) and 14 stations between
Beijing and Shenzhen (157 km between stations on the
2,200 km route).
For comparison, the distance between Copenhagen in

Denmark and Rome in Italy is about 1900 km and between
Stockholm in Sweden and Rome in Italy is about 2550 km.
91
APPENDIX
In 2020, a 70.0-kWh pack with six swaps per month ”Sorry, but the reason Tesla abandoned battery-
was priced at about 180 RMB/$28. For those who swapping is because it doesn’t work financially.
don’t want to swap batteries but still need the pack,
the rental cost for the battery pack was about 150 Think about the number of Tesla supercharging
RMB/$23 a month. stations in the world today: about 11,000. Now if
Nio has similar sales success that means there
There has been speculation in China that NIO is will be at least 11,000 additional batteries out
working on plans to set up a battery asset manage- there tying up Nio’s capital for One Swap Per
ment company in August 2021 to drive separation of Station Per Charge Time. That is, the depleted
the car from the battery - more specifically in collabo- battery is not able to be used again until it is
rative agreements with some of China’s largest auto- fully charged, so the longer it takes to charge
motive lithium-ion battery makers as investors. the more batteries Nio must own. So it’s in Nio’s
interest to charge those batteries as quickly as
“With the support of our partners, we’ve dedi- possible, like supercharging them, right?
cated ourselves to deploying our battery swap Well if you can supercharge a battery outside of
network in order to offer users a worry-free the car, then you can supercharge it inside the
driving experience on China’s highways. The car, too. So, why do you want to swap a battery
deployment of our battery swap network on the out in the first place??? This doesn’t make
G4 expressway is the beginning of providing a economic sense, and I haven’t even made the
charging experience beyond refueling,” argument about battery packs stacking up in the
NIO co-founder and president, Lihong Qin. wrong swap stations while other stations run out
of fully charged batteries. Sigh. And people think
In 2020 NIO announced that: these Nio guys are smart.
Elon Musk,
“All ES8 Founders Edition owners, as well as https://electrek.co/2018/11/01/nio-battery-swap-
owners who have put down a deposit on the station-next-tesla-supercharger/
ES8 Standard Edition, will be able to enjoy 12
free battery swaps every year at any service That may be so, but times are changing. The ideas
station across China.” are persistent. The solutions when Tesla tried them
and the solutions now at the time of NIO and BAIC are
During 2020, NIO delivered more than 4,000 ES8 technically similar but business-wise very different.
model fully electric SUVs to the Chinese market. What we saw in the Tesla battery-swapping solution
was technical invention but what we see in the NIO
To support the diffusion of the NIO battery-swapping and BAIC solution is a new business model enabling
solutions, there will be an additional 1,100 battery- commercialization and what it looks like is market
swap stations by 2021. success and rapid growth in China.
92
APPENDIX
NIO is expanding the ecosystem for growth

As we have seen in the BAIC case, NIO is expanding densities, and there is a huge challenge in installing
its ecosystem with big national transmission system large numbers of private individual charging piles that
companies. In December 2020, NIO reached an can charge NEVs over-night as is common in smaller
agreement with the State Grid EV Service for coop- western cities where wealthy people live in large
eration in a large-scale charging and battery-swap houses and can afford expensive Tesla cars and have
stations project. an individual private charging station outside their
house.
The motivation for this collaboration is based on the
core elements of the NIO business model. This is typically a major issue in the big and densely
populated Chinese cities, and many other Asian cities.
The increasing relative prices of batteries, in relation This is another driver towards the development of
to the entire car, the separation of the prices for cars, swapping systems and the growth of the new business
batteries and charging solutions makes sense to model which is suitable for both the middle and low-
more people in the fast-growing Chinese NEV market. er-classes living in big-cities that want to own a car but
Chinese cities are very large with very high population do not have access to a personal charging spot.
93
APPENDIX
FROM NICHE TO LARGE SCALE, DIFFUSION OF

Geely enters battery-swapping
The BAIC group and NIO have demonstrated similar
solutions over the last years. The strategic collabo-
ration with national transmission system operators
illustrates the strong partnership between industry
and national strategic interest. This direction receives
strong political support. (Zhenhuan, 2021).
In late 2020 Geely (owner of Volvo Cars) (founded

in January 1986 and headquartered in Hangzhou)
announced it was entering the battery-swapping busi- Figure 43: Geely new battery-swapping station
(Zhang, 2022).
ness by establishing operations in Chongqing.
an area of about 126 square meters. It has 39 built-

Its new battery-swap station has 39 charging posi-
in charging bins, vehicles can battery swap at great
tions. The station can support nearly 1000 battery
speed in the station, a single station daily service to
swaps per day. It takes 90 seconds to finish a battery
reach nearly 1,000 car times.
swap and the users do not need to get out of their
vehicles during the process. Geely is planning to build
”A car can be battery swap from driving into the
35 battery-swap stations in Chongqing by the end of
battery swap station, to the vehicle intelligent
2020 rapidly growing this to 100 stations during 2021
identification, inspection, and then to the chas-
and to 200 by 2023.
sis battery replacement, intelligent payment,
the vehicle leaves the battery swap station and
”We have established intelligent battery-swap
other aspects of the process is very smooth”.
stations in Chongqing, Hangzhou (in Zhejiang
province), and Jinan and Zibo (in Shandong
”The battery swap station is based on high
province),”
modularity, high compatibility, high security,
Yang Quankai, head of battery-swapping at Geely high intelligence of the battery swap technology
platform, developed with battery swap, charging,
By 2025, Geely Technology Group will have 5,000 monitoring, fire, intelligent temperature control,
battery-swap stations across China. battery maintenance and other functions as one
of the intelligent energy replenishment terminal,
Geely announced the progress of going the battery- can to new energy Car users to provide safe,
swapping route at the 2020 China International Intelli- convenient, efficient and reliable replenishment
gent Industry Expo, which showcased its dual- service.”
compartment smart battery swap station, covering Zhang, 2020.
94
APPENDIX
South Korean SKI enters the Chinese battery-swapping market

Early in 2021 it was announced that the South Korean in South Korea is looking to expand its operations in
company SK Innovation is expanding its strategic S Korea with battery exchange stations and energy
collaboration with BAIC that started in 2013 by enter- storage systems.
ing the battery-swapping business in China. This has
been made possible by a strategic investment by SKI
in Blue Park Smart Energy (BPSE), a subsidiary of the
BAIC Group (Hampei, 2021). This joint venture aims to
expand swapping technology and provide access to
high-quality batteries from the South Korean company,
which is one of the main battery suppliers to major
NEVs in the world including those of Ford and VW.
SKI being one of the largest battery suppliers in the

Figure 44: BAIC new Blue Park Smart Energy swapping
world and also a large operator of gasoline stations
station (Hampei, 2021).
95
BATTERY-SWAPPING GOES GLOBAL …
Battery-swapping in India …
We are used to talking about standard four-wheel journeys under 8 kilometers. In the west people use
cars when we talk about NEVs. Both in China and their cars even for short trips. In the USA many cities
in the rest of Asia two- and three-wheelers are both are built around the car as the main transportation
popular and sold in large volumes. They are also solution. E-scooters and e-bikes are a fast-growing
being electrified and one solution is battery-swapping system solution, and shared e-scooter trips are
for two- and three-wheelers. This micromobility has expected to grow from 230 million in 2019 to 850
developed very quickly and meets very important million in 2028.
demands for short distance transportation, particularly
in densely populated and very large Asian cities. The figure below shows the proportion of trips under
15 kilometers in the USA and suitable mobility trip
The two- and three-wheeler segments are large. distances.
By 2019 the entire segment had a level of about 300
million units. And it is expected to grow to 400 million We need to bear in mind that this is based on the
by 2030, which is about 33% growth in ten years. USA context, history and transportation traditions. In
This segment comprises 40% of the entire global Asia the context is different and as we have seen the
NEV market. likelihood of micromobility being used is higher. This
is due to the sizes of cities in China and Asia, the
In China and in the rest of Asia, as well as in Europe population density of cities, and traffic density.
and USA about 50% of passenger kilometers are
Figure 45: Trips under 15 kilometers in the USA and suitable mobility trip distances (IEA, 2020).
96
APPENDIX
Two- and three-wheelers

Electric two and three wheelers represent the major However, some important distinctions exist in the
share of the total vehicles in use. This market is also Indian market making it different to many other
easier to electrify from a technical and regulatory countries. India has almost the same population size
point of view and has more customer-friendly charg- as China but is smaller which means a much higher
ing solutions. This is true for China and India as the population density. Compared to China, India is
largest economies in Asia but also for another 10 lagging behind in terms of economic development.
countries in the ASEAN area. Two and three-wheelers dominate the Indian auto
market, and over 80 per cent of total vehicles in India
China is taking the lead in the two- and three-wheeler are two-wheelers. This will impact the development
market as well as for standard four-wheelers. There of electric vehicles in India.
were about 300 million electric two-wheeler vehicles
in China in 2019. It is expected that this market will Another important aspect is the economic situation of
grow by 33 million in 2020 and 36 million in 2021. the population and the affordability of high-priced
electric vehicles as is the case in the rest of the world.
The fleet of three-wheelers in China is the largest in The high upfront cost of EVs is due to the high price
the world comprising about 50 million units in 2019. of the battery pack, which constitutes 40-60 per cent
And the total number is growing. of the value of an EV. In the case of battery-swapping,
the battery packs are often separated from the
India has rapidly become another fast-growing elec- vehicle and owned by energy operators. Therefore,
tric vehicle market, that is comparable to China in its the end-user will only need to pay when they swap a
early phases. India had 600,000 electric two used battery for a charged one.
wheelers in 2018, and the growth is estimated to
about 55,000 extra electric two-wheelers in 2018 The Indian government has been exploring different
which is expected to increase to 126 thousand in technologies and different approaches to the electri-
2019. India had about 1.5 million electric three- fication of transportation due to environmental issues
wheelers in 2019 and sales are increasing with new and is learning from the fast development of the
domestic brands. world in this area.
Figure 46: Illustration of battery-swapping in India on popular two- and three-wheelers (EVReporter, 2021).
97
APPENDIX
Thus, to develop India’s electric car industry, the One driver in this direction is that oil companies are
government will, bearing in mind the local conditions, working on new plans for establishing 20 battery-
also have to recognize ‘battery-swapping’ alongside swap stations in Chandigarth and more stations in
the other charging models if it wants to kick-start a Amritsar and Bengaluru. Gradually this development
fast deployment of EVs in India’s domestic market. will take off.
Thus, battery-swapping technology may well undergo Although India is lagging behind, when India starts
faster adoption in the electric two-wheeler and three- this process of electrification based on local condi-
wheeler mobility segment. In this segment (small tions, the growth is expected to be high and fast.
vehicle), battery-swapping technology represents A recent report suggests that India’s EV battery-
a leapfrogging opportunity for India’s EV dreams swapping market is projected to reach $6.1 million by
because it offers cost-effectiveness for consumers 2030, registering 31.3% growth during 2020-2030.
and several comparative advantages over dedicated The Indian battery-swapping market is predicted to
charging infrastructure and fossil-fuel approaches in generate a revenue of $6.1 million by 2030, during
terms of ease of use. the forecast period (2020–2030). Considering service
type, the market is divided into a subscription model
In all instances, the conversation revolves around the and pay-per-use model, with the subscription model
deployment of EV charging points because a lack of division predicted to grow at a faster pace in the
charging infrastructure is hindering the expansion of years to come, because the growing utilization of
EVs. If India envisages a break-out on the electric battery-swapping technology in commercial vehicles
mobility front in the coming years, then it will be would result in the growing adoption of the subscrip-
crucial to create an EV charging ecosystem along- tion model.
side this expansion.
On the basis of vehicle type, the Indian electric
In 2020 there were several companies working on vehicle battery-swapping market is sub-divided into
battery-swapping solutions, primarily focusing on commercial vehicle, two-wheeler, and three-wheeler,
two- and three wheelers. One example of this fast as per a report by P&S Intelligence. The three-
development is that in 2021 100 electric vehicle wheeler category is expected to dominate the market
battery-swap stations are to be installed in Bengaluru and is predicted to capture more than 90.0% of the
in India. market in 2020. This can primarily be ascribed to the
fact that the daily operating hours of these vehicles
The lack of clear government policies, lack of stand- are rising, and that their batteries need to be
ardized systems and technology solutions are some recharged/exchanged quickly for further use.
key barriers to further development of battery-
swapping solutions in India.
98
APPENDIX
Battery-swapping in Europe …
Technology development is a dynamic process. Sometimes ideas from one industry influence
As it spreads from one part of the world to another, it another industry. The fast development of smart-
is transformed and adopted to local conditions, and phones and the business models in high-tech
later when it comes back it might be very different, business are diffusing to other areas, especially
and hopefully will have been developed further. It is when the traditional automotive industry is based
a mutual learning process. Where this process starts on intensive collaboration between new players
and ends depends on the observer. and software, electronics, electrical systems and
machinery are all integrated together. The future
The experience from China on battery-swapping automotive industry will be more like the smart-
solutions and experience of successful implemen- phone industry than we might currently envisage.
tation and commercialization is influencing develop- The flow of ideas across industries will probably be
ment in Japan, the US and also in Europe. Who and even more important in the future.
where ideas originate from is not easily pinpointed.
Battery-swapping in Italy
Fiat
Maybe the most advanced car solution coming to What we also see is the influence from the smart-
the market is the Italian Fiat Centoventi. This new phone market and the business model becoming
Fiat model has a modular design giving the customer dominant in this rapidly changing market, the use of
many options to suit its wishes (Beedham, 2020). separation between hardware, software and function-
ally, the emerging subscription model, giving the con-
As the battery in an electric car is one of the most sumer a high level of freedom to choose and adopt to
expensive items, and the item causing most cus- new demands. The downside is locking in customers
tomer worries about quality and durability as well as in a supplier trap with business model lock-in.
the item that drives secondhand prices down, the
new Centoventi will give customers an opportunity to
flexibly select a battery capacity from short range to
500 km driving range after purchasing the car, and
probably battery-swapping solutions that make this
possible. Fiat’s dream sees the Centoventi with a
modular battery pack which has a starting range of
about 100 km (about 62 miles) with the potential to
increase this up to 500 km (about 310 miles).
Fiat’s design comes with one factory-fitted battery

but could be expanded with an additional three.
Each battery would increase the vehicle’s range by
100 km (about 62 miles). Additional batteries could Figure 47: Fiat Centoventi with battery-swapping
be bought when a driver’s needs change. The energy (Beedham, 2020).
packs could even be rented if a driver needed a little
temporary extra range. Fiat is claiming that changing Once you chose one supplier it becomes more com-
batteries would be as simple as swinging by a local plicated to switch to another particularly when new
Fiat dealer or service station and having them fit the smart vehicles are fully interconnected with outside
new power packs. The batteries would mount into business, smart and intelligent cities and communi-
the floor pan of the car on sliding rails, to make fitting ties, customized functions etc. This is what both BAIC
them relatively easy. In principle, it would only take and NIO has developed and demonstrated in prac-
a few minutes. tice. Whether this will be a main path for the diffusion
of battery-swapping remains to be seen.
This Fiat could be the first large-scale battery-
swapping system solution, outside China.
99
APPENDIX
Logo Flymove
Logo Flymove is another Italian automaker focusing
on super-sport car design, with its sights on the
development and manufacture of electric cars based
on fully integrated battery-swapping systems.
They have plans to go commercial in Europe, China

and US with their proprietary swapping system,
starting in 2021.
Figure 48: Logo Flymove with battery-swapping

(Source: https://www.flymovedianche.com/en/).
Battery-swapping in Germany
In Germany one approach to developing and putting
battery-swapping into practice is shown by Adaptive
City Mobility. Here the focus is on small city-
oriented vehicles, based on manual swapping of
modular battery designed solutions placed in a quite
simple vehicle design as demonstrators.
The ACM car concept is designed for a 60-80 km/h

driving speed, with a normal driving range of up to
160 km per charged system. Automatic swapping
stations will be developed.
Figure 49: Adaptive City Mobility battery-swapping.
Battery-swapping in Finland
In Finland too, there are examples of prototyping and
the demonstration of vehicle and battery-swapping
system solutions - the Tank-Two company with
operations in Finland, USA and Germany.
In the Tank-Two solution the traditional battery is

replaced by a new kind of smart and intelligent bat- Figure 50: Tank-Two alternative energy.
tery, the string battery. The Tank-Two is not a typical
swapping technology but rather is based on
exchanging the used and empty small string
batteries with charged ones from a central system.
100
APPENDIX
Battery-swapping in Sweden
In Sweden too there is one company working on
prototype battery-swapping solutions, Powerswap.
Powerswap has developed and demonstrated a fully
automatic battery swap system solution for electric
vehicles. With Powerswap you can swap the battery
pack in 3 minutes. Powerswap’s business model
is based on sales of battery swap equipment and
licensing agreements with OEMs and battery makers.
Power Swap do not make vehicles to go alongside

their new system solution nor do they develop and
install distributed swapping stations.
Their business model looks very much like the Better

Place solution. Power Swap is dependent on vehicle
OEMs adopting this system, totally redesigning their
vehicles to match this modular designed battery- Figure 51: Powerswap battery-swapping
swapping system and building the battery-swapping (https://powerswap.se/).
infrastructure.
Figure 52: Powerswap battery-swapping in detail

(https://powerswap.se/).
101
APPENDIX
New battery-swappig in USA

A new company in battery-swapping in USA is the pack design, can exchange a spent battery for a fully
start-up Ample. Ample opened its first electric vehicle charged one in less than 10 minutes. Ample can
battery swap stations — in the San Francisco Bay replace a few modules in a pack or all of them,
Area in 2020 focusing on Uber drivers with electric depending on how much of the battery was drained
vehicles as Ample’s first customers. and how far it needs to go before returning home
for an overnight recharge. Companies trying battery
Ample now operates five battery swap stations in the swaps in the past exchanged the entire pack, not
San Francisco Bay Area specifically for Uber drivers. individual modules within them.
Participating drivers with supported electric vehicles
can exchange a spent battery for a fully charged one From the start, the stations have a maximum capacity
in less than 10 minutes. of 90 cars per day.
Participating drivers in the Ample program, with sup- “Battery swapping has massive challenges in
ported electric vehicles with Ample modular battery terms of capital requirements,” he said. “Just like
bike-sharing, it’s not evenly distributed. It might
make sense to have stations along a particular
route, but demand can spike around travel, like
at Thanksgiving time. They will have to move
heavy batteries from place to place to make this
work.”
“But there are some risks that are kind of low

tech if you’re going to be taking batteries out of
your vehicle over and over again, like dealing
with dirt and grime from the road that can get
introduced into your system.”
Figure 53: Ample’s modular electric vehicle batteries. Scott Case, CEO of Ample in Kolodny, 2021.
102
APPENDIX
Battery-swapping in Japan … goes international

In Japan too several new approaches to develop
and commercialize battery-swapping solutions are
emerging.
The Japanese electronic manufacturing company

Sony has announced a new car, Vision-S concept
based on flexible system solutions and battery-
swapping, Tesla has demonstrated a new Cybertrack
model that also has flexibility in design and uses
battery-swapping solutions.
Another commercial example is the startup Japanese

EV maker Fomm and the established technology
supplier Fujitsu who have entered an alliance aimed
at developing what it calls a Battery Cloud Service; it
Figure 54: Fomm new car for battery-swapping
would give users the choice between charging batteries (Halvorsson, 2018).
at home or exchanging a depleted one for a fully
charged pack at a service station in just five minutes. At charging-station kiosks, users will be able to
The partnership will start with a battery solution that exchange their battery instantly for a fully charged
provides a very small four-wheeled urban EV, to be one. This is another effort to develop new technical
initially sold in Thailand, with a 150km driving range solutions with supportive business models.
(Halvorsson, 2018)..
It is interesting to note that the large Japanese manu-
Another Japanese manufacturer, Honda, earlier this facturers joint the battery manufacturers to jointly
year revealed the Mobile Power Pack World—intended develop and commercialize vehicles and batteries in
for a wider ecosystem that could be used to power an integrated modular design suitable for battery-
a home in a power outage, a work site, or a camp- swapping aiming at emerging Asian markets and not
site. Its partner in the venture is Panasonic, which is the mature markets of US and Europe. This might be
also the official supplier of lithium-ion cells for Tesla an indication of the dynamics in the rapidly growing
vehicles and Tesla’s partner in the Gigafactory that Asian markets and also that Asian customers care
manufactures them. more about smart, practical and economically feasible
solutions than prestigious brands from the USA and
In 2021 Honda announced a first “research experiment” Europe.
with the Mobile Power Pack in Indonesia, where it will
be given a market test in electric motorcycles and Very probably we will see battery-swapping system
other mobility products. solutions from other manufacturers in the future.
103
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Collaborative Academic Platform for the

ELECTRIFICATION OF THE TRANSPORTATION SYSTEM IN CHINA

Funded by: The Swedish Transport Administration (Trafikverket, TRV).

Exploratory approach Expected value creation

3. We also intend to explore the management of

Academic partners in China

Urban and Rural Construction and Transportation

Magnus Lindgren (TRV) Qiu Xiaoping (SJU)

PART ONE - Electrification of transportation in China............................................. 14

PART TWO - Exploring battery-swapping development in China............................ 28

The Chinese development approach for the battery-swapping system................. 49

Battery-swapping going into China and going out from China............................... 71

APPENDIX The history of battery-swapping in China.............................................. 77

From niche to large scale, diffusion of battery-swapping in China......................... 94

Battery-swapping goes global …................................................................................ 96

Abstract To understand the development and implementation

The development of NEVs is both fast and slow,

Our research purpose

Electric vehicle sales are taking off

Global electric car stock, 2010-2019

Figure 2: Global sales of electric vehicles 2010-2019 (Source: IEA, 2020).

Figure 3 shows the estimated expansion from 2018

If this is really to happen, we face step changes both

Figure 3: Anticipated growth of electric vehicles from 2019

China takes the lead in developing electric vehicles

Figure 5: Key numbers in the development of NEVs (IEA, 20202 b).

China starts to export electric vehicles

Top automakers in China in 2020

Tesla has become the premium

Of the top 20 brands sold in 2020,

According to figure 7, Tesla is the

Some indicators show it is pos-

China takes the lead in developing the charging infrastructure

After the entire automotive industry switched to

This is one of the motives in searching for other

Battery-based NEVs need to be charged with

Figure 11: The figure shows the global distribution of

Nevertheless, irrespective of the leading position, there

Battery-swapping progress in China by 2020

SKI & BAIC joint venture

Picture and video of NIO battery-swap station

Figure 13: Demonstration video of NIO battery-swapping.

Photograph of Geely battery-swap station

Figure 14: Geely battery-swap station.

Aulton New Energy Automotive Technology

• Aulton has more than 1200 international and

• More than 7.5 million battery-swapping operations

• Aulton battery-swapping is a sharing platform for

Source: Aulton president and vice president speeches at

From cable charging to battery-swapping

From exploration to exploitation, from technology to business

The main players in battery-swapping in China

Energy & electricity Grid system operators Swapping-station Battery manufacturers

IT providers, Service & OEM automotive Gasoline station Investors

Six main development phases

Figure 17: Key phases in the develop-

Between 2016 and 2019 – Growth