The world's largest battery corporation, China's CATL, has initiated the construction of battery factories and expanded battery exchange services to target the European electric vehicle market. Korean automakers and battery corporations are being passive due to the lack of business viability, raising concerns about whether the battery exchange services will take root in the market.
Jiang Li, CATL's vice president and board secretary, noted in a recent interview with the Financial Times that "the battery exchange, where electric vehicle drivers replace a depleted battery with a fully charged one, has immense potential to make batteries cheaper and last longer in Europe." He also mentioned, during an event held in London, that "discussions were held with automakers regarding battery exchange technology in Europe."
The battery exchange that CATL envisions utilizes technology developed by the Chinese electric vehicle manufacturer Nio. According to Nio, the battery exchange takes place in just a few minutes. Electric vehicle buyers can significantly reduce initial purchase costs by not owning the battery, which accounts for about 40% of the electric vehicle's cost.
CATL aims to target the European battery exchange market based on its experiences gathered in China. Currently, CATL operates 34 battery exchange stations in Chongqing, China, with plans to establish 1,000 exchange stations by the end of this year and to build 10,000 within the next three years. CATL has signed battery supply contracts with more than 12 truck manufacturers in China, laying the groundwork for the installation of up to 300 battery exchange stations along major trucking routes.
To establish battery exchange services, battery exchange stations similar to gas stations are necessary. Due to issues with securing sites and construction expenses, the expansion outside of China has been slow. However, with growing interest in battery exchanges in Europe, Nio currently operates 60 exchange stations in Germany, the Netherlands, Sweden, and Denmark. Stellantis, which ranked fifth in global sales last year, has also introduced battery exchange services for the 'Fiat 500' electric vehicle through its car-sharing service, Free2move, in Spain.
The battery exchange business in Korea is still in the trial stage. The Ministry of Land, Infrastructure and Transport granted exceptions for two years last October to address the difficulties in separately replacing or selling batteries mounted on electric vehicles by allowing the ownership of vehicles and batteries to be registered separately, but there are reports of opposition.
A representative of the Battery Industry Association said, "If the ownership of the vehicle and battery is separated, opportunities for battery exchange or diagnosis services may open up, but the scrap industry is opposing, causing delays in the battery exchange business."
Battery manufacturers are also not actively pursuing the battery exchange business. The lack of standardization for electric vehicle batteries is the main reason why the exchange business is unlikely to become popular. A representative of a battery company stated, "Every electric vehicle has different batteries, and to exchange batteries, we would need to stock batteries by type, leading to site acquisition and management issues. It's an opportunity to sell a lot of batteries, but whether it's realistic is questionable."
So far, the battery exchange businesses conducted outside of China have not been successful. Better Place, an electric vehicle battery exchange company established in Israel in 2007, operated battery exchange services in Israel and Denmark after attracting $1.07 billion in investments.
However, after struggling to secure support from automakers and consumers, it went bankrupt in 2013. Tesla also announced at that time that it would begin battery exchange services in Los Angeles, San Francisco, Boston, and Washington, D.C., but scaled down the services two years later and has since ceased operations.
Another representative from a battery company remarked, "The mobile phone battery market has also evolved toward increasing charging speed rather than exchanges. If the charging speed of electric vehicle batteries improves, there will be no need for battery exchanges," adding that there are doubts about the feasibility of the battery exchange business.