The global battery swapping market in terms of revenue was estimated to be worth $1.7 billion in 2022 and is poised to reach $11.8 billion by 2027, growing at a CAGR of 46.9% from 2022 to 2027. Increased demand for efficient, long-range, and low-emission vehicles is expected to boost the battery swapping market. Countries around the world are undertaking efforts to reduce emissions from vehicles in the coming decades. Compared to battery charging, battery swapping offers a quick battery exchange option. Government policies in countries like India for battery swapping are expected to drive the market in the future. Similar incentives by different countries are expected to increase the demand for electric vehicles, specially E2Ws and E3Ws equipped with swappable batteries. Battery swapping increases the vehicle’s operational life while maintaining the majority of its value as a used vehicle.
Market Dynamics:
Driver: Increasing reliance on micromobility
The use of EVs in micromobility is becoming popular, with many nations supporting micromobility companies by providing infrastructure, allocating specific areas in cities for service trials, and working with these companies to establish micromobility in the country. The durability and safety of shared e-scooters have improved over the last several years. But there is still one issue that stands out: the issue of recharging. While the electric vehicle industry struggles with issues related to range, recharge times, and infrastructure, micromobility may have it much easier.
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Okai, an electric scooter manufacturer, collaborated closely with sharing service providers, especially Tier, to provide battery-swapping solutions for micromobility. Choosing a user-friendly swappable battery solution was the first step in this collaborative effort. At Okai, the engineers and designers were tasked with making “safe, simple, entertaining” battery swapping a reality. Okai created the ES400B Electric Scooter and the Okai EB100 Electric Bike, which employ the same swappable battery system, another distinctive innovation, to fit the hardware and software of Tier’s breakthrough in-store charging cabinet (through the PushMe acquisition). With the apparent advantage that it can be used for e-bikes and perhaps other vehicles in the future, Tier is implementing the system in all of the European towns where it operates. Since battery swapping is such an effective solution to a difficult problem and benefits users, sharing providers, and small businesses, it will soon be accepted as the industry standard.
Opportunity: OEMs plans on selling EVs without batteries will increase demand for batteries as a service
Battery-as-a-service (BaaS) enables users to lease batteries apart from the vehicle, eliminating the need for an upfront battery along with the vehicle’s purchase. The battery would be leased from a provider of charging infrastructure under the BaaS model, and every time the battery requires recharging, it would be swapped out at a station.
From the standpoint of the consumer, BaaS is an asset-light, low-cost, and quick-on-its-feet approach that enables the customer to swap the battery quickly, as compared to a fixed charging station where the charging of the batteries takes time and requires an expensive charging infrastructure. Due to the BaaS model, the upfront costs of EVs may fall significantly; for example, the expenses for two-wheelers may easily decrease by up to 20%. The model reduces the price of establishing a retail charging station and related infrastructure. BaaS providers can also grow their networks by working with organizations that have extensive networks of agents and charging infrastructure, similar to how banks use business correspondents to expand their banking services to the unbanked and underbanked areas.
The Asia Pacific region is estimated to be the largest market for battery swapping in 2022
Asia Pacific is the largest market for green technologies in the world. The governments in this region are setting renewable energy targets backed by favorable policies such as the Kyoto Protocol. The largest markets for battery swapping in this region are China, India, Taiwan, and Vietnam. Asia Pacific has been the dominant regional market for battery swapping since 2018 due to the increased demand for electric vehicles. Geely, the China-based automobile manufacturer, has set up 39 battery swap stations in China with ambitions to add 200 by 2023 and as many as 1,000 through existing arrangements. Geely’s head of battery swapping, Mr. Yang Quankai, claims that by 2025, there will be 5,000 battery swap stations operating throughout China.
To guarantee battery compatibility among the various cars in the ASEAN region, a regulation for swappable battery design is essential. Lack of regulation at this early stage might lead to a number of incompatible systems or technologies patented by foreign entities, which would prevent the local manufacturing of batteries, charging stations, or even automobiles that could use swappable batteries. Vehicles with swappable batteries will eventually need to use battery swapping protocols that are globally interoperable.
The Subscription segment to be the largest segment by service type during the forecast period
Subscription service in battery swapping is a more sustainable approach to the use of battery swapping. This allows users to swap batteries at much lower rates compared to the pay-per-use model. Most battery swapping providers offer this kind of battery swapping service as well as provide great offers to long-term users. An important aspect of the battery-swapping subscription service is the number of swaps available as part of the service per month. Most 2- and 3-wheeler swapping providers provide 12-18 swaps per month, depending upon the battery power capacity, number of batteries in the vehicle, and other factors. Four-wheeler battery swap providers on the other hand provide 4-6 swaps (e.g. NIO Power) as that much is usually sufficient for monthly EV usage.
While most users opt for monthly subscriptions, annual subscriptions and quarterly subscriptions are also available from top battery-swapping providers such as Gogoro and Immotor. Gogoro, for instance, charges around USD 10-30 per month for 2-wheelers in the Asia Pacific region. Immotor provides subscription services for battery swapping for around USD 5-10 per month for 2-wheelers. NIO Power on the other hand provides around 4-6 swaps as part of a USD 135 subscription.
Key Market Players:
The battery swapping market is dominated by players such as NIO Power (China), Gogoro(Taiwan), Immotor (China), Aulton (China), and Sun Mobility (India).
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