To Swap nor not to Swap. That is the Question

A Battery Electric Vehicle battery can either be charged on board (the way we charge our mobile phones) or replaced with another charged battery, also known as Battery Swapping. While Battery Swapping is a century-old concept, it was brought to fore by an Israeli start-up, BetterPlace in 2008. BetterPlace raised USD 836M to create a network of battery swapping stations.

Battery Swapping entered the mainstream in India as recent as May 2017 post the launch of the report titled India Leaps Ahead by Government Think-Tank, NITI Aayog. Among many thought provoking ideas, it proposed to create standardized, swappable batteries for 2-and 3-wheelers through a pay-per-use business model. This was followed by an ET article, highlighting a contrarian approach to electrifying public buses through Battery Swapping. The arguments in favor of Swapping have largely been the same across time periods and geographies:

  1. Reduction in upfront purchase cost since BEVs are 40-60% expensive than tradition vehicles

  2. Reduce charging time from hours to 3-4 minutes (even Tesla Supercharger takes 20-30 minutes), equivalent to Internal Combustion (IC) vehicle refuelling. This challenge is compounded for India for the lack of parking space to charge.

Ceteris paribus, the first challenge can be resolved by selling battery separate from the vehicle on a lease. The second challenge worries me more. We truly don't have space. And an ultra-fast charging solution (isn't Battery Swapping another fast charging solution?) could make sense for some segments.

Credit Suisse in its Aug 2017 equity research compared the per KM cost of an IC car, BEV car with Swapping, and BEV car with Level-1 DC Fast charging for fleets; similar analysis was carried out for 3-Wheelers and Buses too, with 3-Wheelers also shown viable. (I have my reservations with inputs, but sharing from a modelling perspective)

While swapping may seem viable on paper for some segments, there are multiple implementation barriers:

  1. Batteries are heavy: 85KWH Tesla Model S battery weighs 540 KG; 324KWH BYD K-9 Bus battery could be ~ 2,000 KG

  2. Distorts network effects: It is hard to imagine that manufacturers will work together to ensure battery packs are swappable across brands

  3. Limitations on battery pack design: Vehicle and the battery pack must be designed to account for ease of swapping

  4. Dubitable economics: Swapping entails capital investment in standby batteries (say ~1.5X) and the charging infrastructure (2,000 KG battery will probably need robots). It needs to be demonstrated that system costs for battery swapping will be lower than traditional charging infrastructure

Battery Swapping will probably not deliver a utopia. Nor it could be out rightly shot down, at least for a few segments. However, instead of pushing it as part of BEV policy, its better left to the market to tinker with and adopt. Let's just create the standards for swappable batteries (that too if required) and leave it at that.

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