I have recently been taking a look at the electric vehicle industry and in so doing have been giving some thought to a solution to one of the biggest drawbacks to choosing an electric vehicle over a traditional one; the time it takes to recharge a battery. As it currently stands an electric vehicle can take up to 8 hours to charge when the battery is depleted. This means large downtimes for the driver which not only put a limit on the driver’s mobility, but also necessitate that the driver take long charge times into consideration when planning one’s travel. Much discussion has taken place revolving around the investment in fast charge stations which could provide a fast enough charge to travel roughly 40 miles off of 10 minutes of charging, but the drawback to this solution is that it is expensive and would still require a downtime of 10 minutes or more depending on how depleted the battery is.

An alternative to this that I take a look at today is the possibility of simply swapping out a depleted battery altogether in favor of a fully charged one at a battery swap station; sort of the electric vehicle equivalent of the gas station that traditional vehicles utilize. Some basic research tells me that this method is in fact already being utilized by a taxi business in China as well as being taken into consideration by Tesla, Inc. It has been reported that the battery swap done in China can be done in as little as four minutes. This is comparable to the downtime from driving one takes for fueling up a gas powered car that most drivers are familiar with now.

So today I analyze some of the potential costs and benefits of implementing this solution before taking a look at what an implementation model might look like as well as addressing some of the complications in implementation that could come up. Lastly I make some recommendations on how this solution might best be utilized based on this analysis. Today’s post is not as quantitatively rigorous as much of my work posted here is, but hopefully it will still be an interesting examination on a topic that I intend to publish more in-depth content on soon.

Benefits:

The primary benefit of implementing battery swap-out stations for electric vehicles over the alternative is the time savings for transitioning from a nearly depleted battery to a fully charged one. While plugging into a charging station can take anywhere from 10 minutes to over 8 hours depending upon the speed of the station and amount of charge needed, a battery swap can be done in less than 5 minutes and will always result in a full charge rather than potentially having to settle for a partially charged battery due to time constraints. Not only does this saved time mean getting back on the road sooner, it also benefits the driver by meaning that their vehicle is always available; if something comes up last minute a driver’s ability to hit the road on demand will not be impeded by long charge times. Assuming that swap stations were plentiful, longer trips would not need to be meticulously planned around the charging needs of the vehicle either.

An additional benefit of this approach becoming widespread is that if the equipment necessary to perform the actual swap requires a technician on hand to utilize (which seems plausible) then these stations could create a wealth of semi-skilled employment opportunities. As of 2016 there were over 121 thousand gas stations in the U.S. If the entire auto market were to make the switch to electric (an unlikelihood in the near future) and a similar amount of swap stations were needed to meet service needs of the electric fleet, and assuming an additional staff of 9 technicians were hired per station (the amount needed to have 3 on hand during daytime hours and 1 during the night) this would create over a million new 40 hour per week jobs.

Costs:

The biggest direct cost associated with this solution would be in building the swap stations themselves, which would require the acquisition of real estate upon which to place the station as well as the infrastructure investment needed to build the equipment to change out the battery and to charge the old batteries to be swapped back into other vehicles. One solution to cut down on the real estate component of the cost would be to either incorporate swap stations into existing gas stations, or if we did see a widespread replacement of traditional vehicles with electric vehicles, to refit existing gas stations into battery changing stations.

The next large cost associated with this approach would be the cost of producing additional batteries. In order for this concept to work manufacturers would have to produce not just enough batteries to power all of the electric vehicles on the road, but also enough to have on hand to switch out at stations. A conservative estimate would be that batteries and vehicles would have to be produced at a 2:1 ratio, so that for every vehicle on the road there is one battery in the vehicle and another waiting for it at a charge station to be traded. If the average cost of a replacement battery is around $3,500 then it would cost an estimated $2.8 billion to manufacture the extra batteries to cover the electric vehicles on the road today. The likelihood however is that this ratio may be much higher as stations would have to keep enough batteries on hand to account for potential demand for swaps.  In order for this system to work drivers would have to be confident in the reliability of having a battery on hand when needed, or else the advantage of having no downtimes while waiting for a charge would disappear, and this means that each and every station would be required to keep a large enough inventory to ensure that there were not runs on the supply. This affect would be mitigated somewhat if there were enough stations in close proximity for drivers to easily divert overflow demand to a nearby station. Battery charge time could again come into the equation if cars demanded swaps more frequently than a station could recharge the incoming batteries, which would mean yet more batteries would need to be kept on hand to meet demand. With these factors in consideration it is not difficult to see where the ratio of batteries to cars produced could be 4:1 or higher. Since the battery is already one of the most costly components of an electric vehicle to produce, this is another potentially heavy cost of utilizing this approach at between $2.8 and $11.2 billion, or higher.

A potential issue would be with the ability of a battery to retain consistent charge over time. As batteries age, this could become an issue, and in order to ensure that a driver is given a battery with a consistent amount of charge, periodic testing would likely be a necessity.

Another cost that would arise as a result of the necessity of hiring technicians would be technicians salaries as well as the cost of training new workers to safely handle the machinery involved. There could be very low tolerance for mishandling machinery in a way that would result in damages to the vehicle or else this could impose another heavy cost to this approach, which would likely mean extensive training to ensure that workers were certified to perform replacement procedures both safely and timely.

To maximize the effectiveness of this approach batteries would be standardized across the industry. This would reduce the cost to manufacturers by minimizing the variety of battery designs and therefore streamline mass production, and also minimize inventory at stations by foregoing the need to hold on to duplicate inventories. For example stations would not have to keep adequate supply of Tesla batteries in addition to Nissan batteries etc. This would likely require legislation to enact which in turn would incur a one time cost.

So now that we’ve looked at some of the major benefits and costs of this approach let’s take a look at what a model of this solution might look like if implemented.

One cost that I don’t make mention of above is the cost to recharge batteries that have been swapped to in turn be swapped back into the working battery population. This is because this would be a necessity whether it happened at a charge station or by a swap station while outside of the vehicle, therefore this cost would be incurred whether this solution was implemented or not. This consideration does tell us something about what these swap stations might look like from a business standpoint. These stations can be thought of as providing a charging service for drivers; swap your battery now and drive on another one while we charge it for you. A swap station would therefore likely set prices based on the cost to charge the battery being placed into the vehicle, a labor component to cover the salaries of the swap technicians as well as some sort of a surcharge for the service of providing the convenience of not having to deal with charging the battery on your own.

Swap stations might compete on a number of factors including price, amenities such as convenience stores, and possibly quality of batteries. This last point may be more complicated to implement; if a station offers several battery options with different capacities at different price rates this may limit drivers to returning the battery to the same station or chain of stations that they received their last swap from. This would be inconvenient to drivers but may be attractive to swap businesses as a way to promote brand loyalty among stations.

One issue that this model brings about is that of battery ownership. If a driver who owns their vehicle rather than leases goes to a station and swaps out their battery, they could technically be thought of as having ownership rights to that battery. This would have to be overcome either by an agreement that by participating in the swap services, the vehicle owner gives up ownership of that specific battery, possibly in lieu of ownership rights to a battery, which would hinge on the assumption that all batteries are of equal quality and value. Since this may not be the case due to the way that these batteries may wear over time,a better model may be that a battery is leased with the purchase of the vehicle in the first place; a policy that sidesteps the ownership dilemma altogether.

So given these various benefits, costs and complications, how should this solution to the charging dilemma be implemented, if at all? Given the high cost of manufacturing batteries for EVs this solution is not likely to be the most cost efficient model to implement on a large scale. This may change in the future when the cost of producing batteries comes down significantly, but in the short term fast charging stations and driver pre-planning for long charge times may be the most practical solution for commuters, as impractical as that can sometimes be. In the short term I believe this solution is one better suited to niche groups on the road.

From what I have read about this strategies implementation in China, it has thus far been primarily utilized for commercial vehicles, specifically taxis. This is where I believe that this approach can be a more feasible option in the short term. Taxi companies would be ideal candidates for this approach. With a limited number of vehicles and the ability to gather usage data from drivers, planning and logistics should be fairly easy to accommodate.  Other local services that could benefit from this approach might include the public sector such as with metro buses, emergency vehicles such a police or maintenance vehicles.

The other industry for which I see this technology being immediately viable is the long haul trucking industry. Several companies including Tesla are currently investing in the prospect of electrifying commercial trucks, and again with limited numbers of vehicles with predicable routes and potentially long charge times, this solution seems like it could go hand in hand with the electrification of commercial trucking.

If this solution were implemented for the general driving public down the road, I don’t envision it being the sole answer. Likely what we would see is a combination of charge stations and swap stations. Those drivers who could charge their vehicle at home or while at work would do so while others pay a premium to have their batteries charged for them at swap stations. Of coarse all this assumes that electric cars will become much more prevalent in the coming years, which signs seem to point to, but in the tech industry nothing is a certainty; only time will tell.

In researching writing this article I looked at material posted from fueleconomy.gov, statisticbrain.com, howstuffworks.com, chinamoneynetwork.com, insideevs.com, and electrek.co