Against the backdrop of China's efforts to achieve the 'dual carbon' goal at an early date, developing new energy vehicles is a strategic measure to address climate change and promote green development. Currently, there are two methods for refueling new energy vehicles: charging mode and battery swapping mode. Battery swapping technology has significant advantages in areas where charging stations cannot be installed and in scenarios requiring rapid refueling, especially for commercial vehicles such as taxis and online car-hailing services, as well as commercial vehicles in enclosed environments. In the future, through technological innovation, multi-party cooperation in the industrial chain, policy support, and market demand promotion, China's battery swapping industry is expected to achieve more efficient, intelligent, and sustainable development, further promoting the popularization of new energy vehicles and the development of green transportation.
Frost & Sullivan (Frost & Sullivan, abbreviated as "Frost & Sullivan") has been continuously monitoring the China battery swapping industry and has officially released the 'Innovation and Collaboration in the Battery Swapping Industry - A White Paper on the Development of China's Battery Swapping Industry'. The report aims to analyze the current development status, characteristics, driving factors, and future development trends of China's battery swapping industry against the backdrop of the accelerating growth of the new energy vehicle market scale.
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Overview of China's Battery Swap Market
Battery swapping: enabling rapid vehicle energy replenishment
The energy replenishment methods for new energy vehicles are divided into two types: charging mode and battery swapping mode. The battery swapping mode refers to the centralized storage, charging, and unified distribution of a large number of batteries through centralized charging stations, as well as the battery replacement service for electric vehicles within the charging station. By replacing the batteries of new energy vehicles, the battery swapping mode meets the vehicle owners' range requirements, separating the vehicle from its battery for energy replenishment. Unlike the charging mode, the battery swapping mode can reduce users' initial purchase cost and save them time on energy replenishment.
Classification of New Energy Vehicle Energy Sourcing Methods
Source: Analysis by Frost & Sullivan
The battery swapping mode for new energy vehicles can be mainly divided into whole-pack swapping (i.e., chassis swapping) and sub-pack swapping (i.e., side swapping and split-box swapping). Split-box swapping uses modular standard batteries, which enables compatibility between various vehicle models and standardization of battery swapping. Battery swapping stations that use split-box swapping have a relatively lower cost, but the swapping process is longer, mainly involving battery replacement at the front and rear ends. Whole-pack swapping is faster than split-box swapping, but it is more difficult to standardize due to the issue of inconsistent battery pack shapes and sizes.
China's battery swapping industry is riding on the wave
China's battery swapping model was officially introduced in 2011. During the new energy bus battery swapping demonstration project at the 2008 Beijing Olympics, China began its first attempt to use the battery swapping model for energy replenishment. From 2011 to 2014, many places successively launched demonstration projects in the field of public transportation battery swapping. After 2014, B-side passenger vehicles began to participate in battery swapping. With the successful exploration of demonstration projects and the clarification of the national new energy strategy, the new energy vehicle industry erupted. With the progress of battery swapping technology, the market entered a period of rapid expansion. In 2020, the new energy vehicle industry entered a period of rapid development, with rapidly growing demand from both B-side and C-side passenger vehicles, further increasing the overall demand for the battery swapping model. In the future, China's battery swapping industry will lead the new energy vehicles to gradually overcome anxiety about energy replenishment, assist in the gradual maturity of basic hardware systems, achieve the integration of hardware and software intelligence, and determine product competitiveness.
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Analysis of the Advantages of Battery Swap Mode
New energy vehicle battery swapping technology has significant advantages in areas where charging stations cannot be installed, as well as in scenarios requiring rapid energy replenishment. It is particularly suitable for commercial vehicles such as taxis and ride-hailing services, as well as for commercial vehicles operating in enclosed environments. The specific advantages are as follows:
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Rapid endurance increase
Through battery swapping, electric vehicles can replace their battery packs in a very short time, thereby achieving a rapid increase in range. Compared to the several hours required for traditional charging, battery swapping can be completed within minutes, saving users' waiting time.
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flexibility
The layout of battery swapping stations is more flexible than that of charging piles, allowing them to be installed in more locations and even quickly set up in temporary scenarios. This is very beneficial for areas where charging piles cannot be installed or for scenarios with temporary energy replenishment needs.
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Increase vehicle utilization
Commercial vehicles such as taxis and ride-hailing cars can reduce charging time through battery swapping technology, thereby increasing vehicle utilization and thus revenue and efficiency.
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Solve the problem of long-distance high-speed driving endurance
For commercial vehicles operating at high speeds and over long distances, battery swapping technology can provide a solution that rapidly increases driving range, enhancing the operational capability and economic benefits of the vehicle.
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Opportunities for the development of China's battery swapping industry
With policy support and changes in consumer concepts, China's new energy industry has entered a period of rapid development. The sales volume of new energy vehicles has been continuously increasing, but there are still some problems with traditional charging models that urgently need to be solved.
Compared with fuel vehicles, the power system of pure electric vehicles is subject to greater constraints, which are mainly reflected in range anxiety and charging difficulties. Although the energy density of power batteries continues to improve and their energy consumption per 100 kilometers decreases, according to Frost & Sullivan statistics, the actual range of mainstream pure electric models in the market is currently between 450 and 600 kilometers, indicating that the range anxiety of pure electric vehicle users has not been eliminated. In the future, with advancements in battery technology, the range of pure electric vehicles is expected to increase to around 1,000 kilometers, but technological breakthroughs take time and the cost issue of long-range electric vehicles remains a challenge. In addition, due to the unstable performance of batteries, such as being greatly affected by temperature, the range of electric vehicles will also significantly reduce as temperatures drop.
Currently, the network layout and charging speed of charging piles are far from reaching the same density and efficiency as gas stations, and the vehicle-to-charging pile ratio is still far below national expectations. On the premise that power batteries have not yet matured, increasing the layout density of charging stations and battery swapping stations is a very effective measure. The investment in charging infrastructure layout is substantial, and with government support, charging infrastructure will gradually develop towards scale, but there will still be no significant improvement in the short term, especially in low-tier cities and rural areas. Although China's charging pile ownership has experienced rapid growth in recent years, most public charging piles are currently concentrated in developed coastal areas and first- and second-tier cities inland. According to Frost & Sullivan statistics, as of the end of 2022, the total number of charging piles in Guangdong, Jiangsu, Shanghai, and Fujian exceeded 950,000, accounting for nearly 50% of the country's total.
Currently, many old residential communities in China did not have supporting new energy vehicle charging infrastructure at the beginning of construction. Later, installing charging piles requires overcoming multiple 'difficulties'. For instance, some old communities do not plan for dedicated parking spaces and lack fixed parking spots, making it difficult for residents to install charging piles. In addition, due to weak basic infrastructure, inconsistent resident willingness, cost issues, and charging safety concerns, there are also significant resistance to installing public charging piles in these communities, which further hinders the penetration of new energy vehicles.
Pain points in the development of China's new energy vehicle industry
Source: Analysis by Frost & Sullivan
Since 2020, China's battery swapping industry has entered a period of policy dividends. Multiple departments such as the State Council, the National Development and Reform Commission, and the Ministry of Industry and Information Technology have successively introduced relevant policies to guide and support the development of new energy vehicle battery swapping industries. They have formulated industry target plans and regulatory requirements, established a battery swapping vehicle supervision platform, improved the battery swapping technical standard system, formed a battery swapping industry ecosystem, and constructed a battery swapping policy support system. In the future, the pain points of the battery swapping industry will eventually be resolved.
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Current Development Status of Battery Swap Industry in China
Currently, China's new energy vehicle industry is developing at a high speed, with the number of new energy vehicles in use continuously increasing. Although the domestic new energy vehicle charging mode is currently dominant, the battery swapping mode has maintained rapid growth in the new energy market due to its advantages such as quickly and efficiently solving range anxiety, improving operational revenue, and reducing purchase costs.
According to different uses, battery swapping electric vehicles are divided into commercial and private use types. Commercial battery swapping electric vehicles refer to those used for commercial and operational scenarios, mainly engaged in profit-making road transportation activities. The main types include online car-hailing services, taxis, trucks, buses, vans, passenger cars, shared cars, or rental cars. Private use battery swapping electric vehicles are primarily used for daily travel within households and individuals.
The different application scenarios bring about differences in consumer demand for commercial vehicles compared to private vehicles. Private vehicles focus more on experience, such as ride comfort, driving experience, convenience, and design concepts. Commercial vehicles, due to the need for frequent long-distance driving, pay particular attention to timely and efficient energy replenishment and product cost-effectiveness. The higher frequency of battery swapping highlights the emphasis on operational costs for commercial vehicles. At the same time, commercial battery-swapping electric vehicles are widely used, and the requirements for energy replenishment and scenario needs vary across different sub-sectors. Therefore, the development of commercial battery-swapping electric vehicles will be more targeted compared to private ones, with broad prospects for development.
Number of China's battery swapping stations
Since 2019, local governments in China have frequently introduced corresponding supporting policies and industry standards for battery swapping solutions in the electric vehicle market, driving a rapid increase in the number of electric vehicle battery swapping stations in China. In 2021, the number of battery swapping stations in China was 1,406. With the strong support of the Chinese government and the establishment of a series of industry standards, it is expected that the construction of battery swapping stations in China will accelerate in the coming years. From 2022 to 2026, the number of battery swapping stations in China is expected to increase from about 1,950 to 69,500 stations, with an annual compound growth rate of 144.3%. A complete battery swapping infrastructure network will lay the foundation for the development of the battery swapping model.
Number of charging stations in ChinaForecast for 2019 - 2026
Source: Analysis by Frost & Sullivan
China's electric vehicle ownership for commercial use
Compared to private vehicles, commercial vehicles operate on relatively fixed routes and are typically located far from areas with high rents. This results in lower construction costs and higher utilization rates. The application of battery swapping models in the field of commercial vehicles has become a focus of industry development. As the battery swapping model for commercial vehicles continues to be validated, it is expected that battery-swapping commercial vehicles will enter a stage of high development in the future.
In 2021, the total number of electric vehicle (EV) fleets for carpooling was about 93,000, accounting for 49.0% of all commercial EVs. This was followed by battery-powered taxis (42.3%), battery-powered trucks (6.9%), and other types of battery-powered vehicles (1.8%). In May 2021, the Ministry of Industry and Information Technology of China issued the 'Action Plan for Promoting the Electrification of Vehicles in Public Areas', proposing that by 2035, all vehicles in public areas will be fully electrified, and fuel cell vehicles will be commercially available. This provides opportunities for the application of battery swapping in commercial and operational vehicles.
China's electric vehicle ownership for commercial use
Forecast for 2019 - 2026
Source: Analysis by Frost & Sullivan
In the future, it is predicted that the total number of battery swapping electric vehicles for commercial use will increase from about 403,000 in 2022 to about 2.969 million in 2026, with a compound annual growth rate of 64.7%. Among them, the growth rate of battery swapping network vehicles is the fastest, reaching 73.6%, followed by other battery swapping electric vehicles (66.6%), battery swapping trucks (61.2%), and battery swapping taxis (46.1%).
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Development Prospect of Battery Swap Industry in China
In the future, China will promote the battery swapping industry through technological innovation, multi-party cooperation, policy support, and market demand, enabling it to develop more efficiently, intelligently, and sustainably. This will continuously drive the popularization of new energy vehicles and the development of green transportation.
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Large-scale construction of battery swapping networks
With the popularization of new energy vehicles and the growth of market demand, the battery swapping industry will continue to advance the construction of large-scale battery swapping networks. More battery swapping stations will be deployed in urban areas and highways to meet users' charging needs. This will promote the popularization of new energy vehicles and improve their convenience of use.
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Technological innovation and equipment upgrading
With continuous technological progress, battery swapping devices will become more intelligent and efficient. For example, automated battery swapping systems, remote monitoring and management systems, etc., will be continuously upgraded and improved to enhance users' battery swapping experience and service efficiency.
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Diversified service models
In addition to traditional commercial and operational vehicles, the battery swapping industry will gradually expand into the personal consumer market. Battery swapping operators will offer more service models such as membership systems, scheduled battery swaps, and mobile battery swapping cars to meet the needs and habits of different users.
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Circular Economy and Sustainable Development
The battery swapping industry will focus on battery recycling and reuse to promote the development of a circular economy. By establishing a comprehensive battery recycling system, waste batteries can be regenerated and reused, reducing resource waste and environmental pollution, and achieving sustainable development goals.
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Cross-industry cooperation and integration
The battery swapping industry will further collaborate and integrate with industries such as energy companies, charging pile operators, and automakers. This helps to form a more complete industrial ecosystem, provide one-stop energy services, and jointly promote the development of new energy vehicles.
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Policy Support and Regulatory Norms
The government plays an important role in promoting the development of new energy vehicles. Policy support and regulatory norms will provide a stable development environment and market guarantee for the battery swapping industry. The government will introduce more policies to support the battery swapping industry, including measures such as grid access, subsidy policies, and land use support.
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Intelligence and digitization
With the development of technologies such as artificial intelligence, the Internet of Things, and big data, the battery swapping industry will develop in the direction of intelligence and digitization. Intelligent management systems will be able to monitor and optimize the operation of battery swapping stations in real time, improving energy utilization efficiency and user experience. At the same time, digital technology can also provide more detailed data analysis and prediction for optimizing the layout and operational strategies of battery swapping networks.
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International development
Battery swapping technology and service models will also be promoted and applied in the international market. Some new energy vehicle companies have already started battery swapping operations overseas. In the future, with the rapid growth of the global new energy vehicle market, the battery swapping industry will face broader opportunities for international development.
