Electric cars with swappable batteries: A success model?
Swappable batteries for e-cars could make fast charging stations redundant. A Chinese manufacturer is leading the way. Is Europe following suit?
Even before fast-charging stations for e-cars are available nationwide at service stations in Germany and neighboring countries, other solutions are already being worked on in Asia. The Chinese companies Nio and CATL are increasingly relying on an exchangeable battery technology, and Tesla has also experimented with it. umlaut company founder Thomas Prefi talks to battery experts Philipp Wunderlich and Hartung Wilstermann about this.
Thomas Prefi: What is behind the concept of ‘Battery-as-a-Service’ (BaaS)?
Hartung Wilstermann: In principle, you can imagine it like this: A car is sold without a battery, and the battery is treated like a fuel that must be added. However, the battery is not permanently installed. Instead, it can be replaced quite easily. There is something like a gas station where the energy is sold in the form of a charged battery. Empty batteries are returned there and recharged before the next sale. Car manufacturers can be behind the exchange battery service - but also completely different operators.
Philipp Wunderlich: The batteries currently make a great value in e-vehicles, even if manufacturing costs continue to fall. Who will have batteries as assets on their balance sheet in the future?
Hartung Wilstermann: By leasing and buying the vehicle, we already have two options today. And: The value does not disappear with a battery - not even when it ages.
Thomas Prefi: Is the aftermarket already on the radar of car manufacturers?
Hartung Wilstermann: There are ways to reuse them, be it Second Life or recycling. Currently, however, recycling costs money and is not a highly profitable business model. But that will change. Now, the focus is more on being able to meet the skyrocketing demand in the first place. Only now are the first vehicles coming back from the field that need a replacement battery.
Philipp Wunderlich: In BaaS, the battery asset is usually held neither by the OEM nor by the end customer, but by a third party. In the case of Nio, for example, it is the Battery Asset Company. The result: Nio is worth less on paper and therefore, the Nio share price slipped for a short time. In the meantime, it has probably recovered.
Another question: Would the typical customer even have any interest at all in owning the rest of the vehicle, or will he or she only be interested in the battery in the future?
Hartung Wilstermann: Are we talking about a private customer or a fleet? I think for a private person it’s not about the value of the battery or the car. It’s more about the practicability in the utilization phase. It’s important what you want to do with the car. Is it a status symbol? Do I want to move it? Do I just want to use it as a cheap, comfortable, and individual transportation?
Another key issue is how to get rid of range anxiety. There is still the myth that it takes forever to charge a car on the road, which is no longer true: Between five and ten minutes is easily achievable.
Philipp Wunderlich: This means that in the near future, the time required for high-performance charging will no longer be far from replacing the battery. Charging has the huge advantage that I don't have to actively take care of it. I plug my vehicle in at home in the evening and the battery is fully charged the next morning. That's a huge time saver. However, fast charging has the disadvantage that I put a lot of stress on my battery. This has a negative impact on the battery's service life.
Hartung Wilstermann: Here, the exchangeable battery would have an advantage: The customer would no longer have to worry about the running costs of the battery. Maintenance, warranty, repairs if necessary - that's taken care of by someone else.
However, it becomes difficult in both cases when the warranty expires. In my opinion, today's vehicles do not yet have an adequate and affordable replacement for old batteries but that will be sorted out. Later, there will be special after-market batteries, i.e., batteries that go into the same installation space but no longer have anything to do with the original battery.
Thomas Prefi: How should the investments in a changeover model be evaluated? For cost reasons, battery replacement can only be highly automated. Suppliers would have to invest in robots to do the job?
Hartung Wilstermann: I don't see any problem with that. I'm much more concerned on the deployment side. Swap batteries will always be related to a vehicle because they differ according to vehicle size or manufacturer. This means that different fully charged batteries must be in stock at each exchange station. This makes the investment so huge that, in my opinion, it is no longer competitive compared to charging stations.
Philipp Wunderlich: What would it be like instead if manufacturers opened their "Audi" or "Tesla" store in the same way as Apple stores? The charging stations would then be available exclusively for their own customers.
Hartung Wilstermann: That's what Tesla did with its charging stations but that also meant Tesla had to bear the investment alone, whereas the investments for setting up a non-proprietary charging infrastructure would be shared amongst many.
Thomas Prefi: Would car manufacturers be more likely to start offering their own services or would they agree on common standards for BaaS with their competitors?
Hartung Wilstermann: I think there will be a pioneer. It will take years for the others to come along, and then the switching technology will have to be a real advantage. Because so far there is one serious disadvantage: at least in battery-powered electric cars today, the battery is a fully integrated component. This affects lightweight construction, the crash structure, and the overall rigidity of the vehicle. Alternating concepts are technically achievable, but they generate additional design effort, weight, and cost. As a result, they worsen range and efficiency.
Thomas Prefi: Does battery-swap technology even make sense then?
Hartung Wilstermann: I see a suitable application area for BaaS more for fleet operations, such as trucks, in delivery traffic or for cab companies. There, I only have one type of vehicle that represents my fleet, so I can adapt to that type. In addition, clearly defined routes are driven. This allows me to plan precisely when and where I need how many batteries.
Philipp Wunderlich: What could be an advantage is if you have the option of flexibly swapping batteries. This means that innovations will come more quickly to the market, which would be a competitive advantage.
Thomas Prefi: This is a strong argument in favor. Of course, you must avoid the effort that you have to manage several generations of technology side by side. This business cannot get overcomplex. Regarding the integration in the vehicle, there cannot exist just one German standard battery, but surely more, right?
Hartung Wilstermann: In this way, I wouldn’t have to wait until I buy a new car, but instead could make sort of an upgrade by swapping batteries. This however means, that different batteries would have to be made available at charging or swapping stations. This would be an extra effort in terms of logistics.
Philipp Wunderlich: In addition, there is the price point and the willingness to pay for this service.
Hartung Wilstermann: Right now, for fast loading customers pay eight euros for a full charge and wait ten minutes. The swapping technology must be of the same order and bring the advantage of shortened time, otherwise there will be no acceptance at all.
Thomas Prefi: If the exchangeable batteries are not needed now, they are stored and wait for the next vehicle. Are there any useful utilization concepts for this period?
Hartung Wilstermann: The question here is: At what point do I have a predictable storage capacity that I can use accordingly? At peak times it's zero, at off-peak times it's suddenly 100 batteries that I have in the grid as storage batteries. However, we would need to have a predictable stability of the available storage for stationary applications.
Philipp Wunderlich: It would be conceivable to use new concepts such as "charging on demand" at the exchange stations. A networked vehicle communicates with the exchange station, reserves a battery, then comes by in three hours and only before that is the battery gently and fully charged.
Thomas Prefi: To sum it up, will the Battery-as-a-Service fail or be successful?
Philipp Wunderlich: There are still some obstacles that need to be overcome, but if it is possible to remove a relevant cost component from the purchase price by means of a switching concept, then that would be attractive. Whether this is sufficient to achieve a relevant advantage against the ramp-up of the fast charge infrastructure and to overcome the obstacles of cross-manufacturer standardization remains to be seen in the near future.
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