In theory, one could have a standardized car battery that looks like a Tesla car battery but can be used by multiple brands of cars. The standard would define the mechanical structure (such as height, length and width), electrical connections and communications between the battery, car and swap station.

The cost of a single charge is determined by the cost of the device divided by the number of charges. When the number of charges is low, the cost of a single charge is higher. This is why the cost of fast charging is usually 3 times higher than that of slow charging at home. In addition, sometimes it is not convenient to charge an electric car, which is also the main reason why many electric car owners give up fast charging.

01 Fast charging faces power challenges

The biggest challenge for fast charging is power. If an electric car has a 50-kilowatt-hour (kWh) battery, it would take 100 kilowatts of charging power to fully charge it in 30 minutes, which is enough to support the daily electricity needs of about 80 American households. In other words, it is expensive to support a lot of power - especially when the hardware is not used very often.

Charging stations are usually built in places such as shopping malls and hotels, which often have strong power supply capabilities because they need to maintain the operation of the air conditioning system. The air conditioning system has different power requirements at different times. For example, at night or during non-peak hours, there is less traffic and the air conditioning system does not need to run at full capacity. At this time, the power originally used for air conditioning can be reallocated to the charging station, thereby improving the efficiency of power use. Because the power grid provides alternating current (AC), while electric vehicle batteries require direct current (DC), special electronic equipment is also required to charge electric vehicles.

To reduce costs, these charging devices are often small in size, which makes it take longer to charge the car battery, especially when multiple cars are charged at the same time. This makes "range anxiety" a challenge, as drivers often don't know how long it will take to fully charge their batteries, depending on the number of cars charging at the station and the air conditioning usage of the mall/hotel.

02 Replaceable standard battery

There is a solution to all the problems mentioned above, that is standardized plug-in and swappable electric vehicle batteries. At present, the world already has mechanical and electrical standards that define batteries, which allow us to power many products at a low cost.

In theory, people can have a standardized car battery that looks similar to the battery in Tesla cars, but can be used by multiple brands of cars. The standard will define the mechanical structure (such as height, length and width), electrical connections and communications between batteries, cars and swap stations.

At present, there are two main charging modes for electric vehicles - one is that the car has a built-in dedicated battery and is charged regularly, and the car needs to be stopped at the charging station frequently to charge; the other is to use a standard plug-in battery, that is, all cars use the same specification battery and can be replaced with a new battery in a few minutes. The owner will pay for the power consumed and the battery loss, and the owner will pay less when using a battery with a shorter range and lower cost.

For drivers who drive less than 100 miles (160 kilometers) a day, they can replace the low-cost, low-range battery and drive the car during the day and charge it at night. Because low-range batteries use fewer rare earth materials, this can reduce cost pressure. If a long-distance trip is required, the owner can switch to a high-cost high-range battery, or replace the battery pack more frequently. Multiple battery manufacturers will compete with each other to reduce the price of batteries, so the cost of the battery replacement model can also be reduced through commoditization.

In the home scenario, car owners can install a battery swap cabinet in their driveway, which can store multiple batteries. The batteries in the battery swap cabinet are charged by solar panels during the day and can provide electricity to the house at night. As needed, car owners can also use the batteries in the battery swap cabinet to replace the low-power batteries in the car, which provides a quick way to "refuel" and reduces the waiting time for electric vehicles to charge.

03 Facing the "chicken or the egg" dilemma

The battery swap model also faces the problem of "which came first, the chicken or the egg". Without a mature network of battery swap stations, automakers are often reluctant to participate, and without a certain number of compatible vehicles, investment institutions are reluctant to invest in battery swap stations.

NIO's battery swap model is an excellent example. They have built thousands of battery swap stations around the world, with annual revenue exceeding US$8 billion and annual production and sales of hundreds of thousands of battery swap-enabled vehicles. This is mainly due to China's policies supporting electric vehicles and the willingness of middle-class and above car owners to pay more for convenience.

04 Corresponding standards need to be formulated

If multiple electric vehicle manufacturers share batteries and battery swap stations, relevant standards will need to be developed. This requires solving the following three problems:

• How do batteries connect mechanically and electrically to cars and battery swap stations? 

• How do batteries communicate with cars? 

• How do cars communicate with battery swap stations?

Automakers will not be willing to invest in a battery swap model controlled by competitors. Therefore, the development of standards may require the participation of neutral entities, such as foundations or government agencies.

Governments are already investing in EV charging infrastructure and may be inclined to allocate a small portion of their funding to support the development of standards. More specifically, they may support R&D, prototyping and testing of:

• replaceable batteries; 

• battery swapping mechanisms; 

• battery swapping stations; 

• battery handling equipment; 

• battery transportation infrastructure.

To encourage widespread adoption, developed technologies can be freely and openly disseminated.

05 Economies of scale drive down the cost of battery swapping

Once the battery swapping standard is established, consumer demand will drive adoption of the model to some extent. The size of this demand may depend on the number of middle-class and above EV drivers who are willing to pay for convenience, combined with the number of high-mileage EV drivers who cannot wait at charging stations and the number of EV drivers who do not have convenient access to charging infrastructure.

Regions that import a lot of oil, such as China and Europe, may be the first to popularize EVs in this model because EVs can reduce dependence on foreign oil. In contrast, the United States, a major oil producer, has less interest in EVs. However, as EV penetration continues in China and Europe, economies of scale will drive down the cost of the battery swapping model, and the model may gain acceptance globally, including in regions that are major oil producers and initially less interested in EVs.

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