Battery Swap – solution with added value?

With NIO, again, a company wants to establish the rented swappable batteries and is welcomed by two groups of people. The first group hates the breaks for charging the battery and prefers the typical „splash’n’dash“ as known from cars running on fuels – and this can be made possible with swappable batteries. The second group understands swappable rental batteries and the batteries in stock in particular as a major chance to stabilize the grid. With the difference between the very low buying price during the period of excessive energy in the grid and following the sale of this energy either back into the grid or to the customers of swappable batteries the much higher prices results in a very welcome profit. The keyword being „cross-sectoral energy management“. However, both concepts require further investigations.

Re-fueling takes less time than charging – swappable batterie could be the ideal solution

We undertook several tests with different vehicles with cars designed particularly for long distance travelling. One with a Diesel engine, the other was an electric car with large battery and good efficiency, and the third was a NIO ET5 with rented swappable battery which was capable and allowed (through the rental contract) to using the swap stations.

The first and fundamental finding was: re-fueling the Diesel car was a quick task, significantly compromised by the filthy and Diesel covered nozzle (single-use gloves often were out). With several clients waiting in line at the cashier – sometimes just waiting for the grilled sandwich being made by the cashier for the client in front of us – paying the fuel often took an awful time longer than the re-fueling, we lost most of the time in the shop (this applies to Germany and many other European countries, payment procedures in other countries have not been taken into account).

We usually drove about 300km (about 180 miles) or two and a half hours, respectively and planned for a break to get some food and drinks, espresso in my case. Similar procedures are recommended by health professionals (less espresso, though) and visiting the toilet was also foreseen. In many cases we needed to go to the bathroom anyway for the person having re-fueled the Diesel car in order to get the hands cleaned. As a result, the re-fueling and payment procedure took 9 minutes on average, with getting the espresso between 12 and 15 minutes. With the additional 15 minutes we planned for stretching the legs the break usually took about half an hour. During this time, the electric car was charged to a capacity allowing it to drive the next leg. For the following break the ICE car would not have needed to stop but we kept the distance and time driven between the breaks for heath and comfort reasons. Thus, the people in the Diesel car did not have to re-fuel their car but they enjoyed a few minutes more relaxation anyway.

With the NIO we were not able to use the swap stations throughout the whole test due to the lack of such on our route, thus we measured the swap time and added it to our comparison. Battery swaps took about 7 to 9 minutes including the autonomous movement of the vehicle into the swap station and the driving out by the driver. During the swap the driver had to stay inside the NIO, but with the battery disconnected there was nothing to do since the car is without power during the process. The swap itself took about 6 minutes (NIO is working on reducing the time needed). With an average of 8 minutes, we spend slightly less than with re-fueling the ICE car which was compromised by the slow payment procedure. With the NIO and the other electric car, payment always is part of the swap or the charging procedures, thus it needs no additional time. However, time usually wasn’t an issue since we had an espresso and went for stretching the legs. The NIO and ICE drivers were welcomed by the driver of the electric car already waiting for them.

This test was not scientifically made and should be understood as giving an idea about real life. The driving happened in mild spring weather at the recommended speed (130 km/h = about 80 mph) or at the respective max speed. We’ve chosen Autobahn, country roads, and little city driving. In winter, the electric car would have required somewhat longer charging times, thus the break might have taken a couple of minutes longer. The NIO with swapped batteries would have not been compromised by this small delay. The swapped batteries are charged up to 90% only, thus not all of the indicated range is available after the swap. This, however, is not critical since electric cars usually are not charged much above 90% (charging the last 10% usually is rather slow), thus no difference here.

Our findings were there is not much difference in travelling time among the three technologies we tested, if we go for a health and comfort break and use vehicles designed for long distance travelling. However, this certainly varies among the vehicles, models, driving styles, roads used, and the charging situation: with an electric car a slight later arrival can happen while the others rarely face a delay. If there were a couple of thousand swap stations all around Europe, NIO would be a few minutes faster on long distance, particularly when we have to wait for the grilled sandwich being made by the cashier for the other client. However, we are talking about a few minutes: the differences of the total travel time is small and is much more influenced by other circumstances during the ride.

In 2025 we will see the first electric cars equipped with 6C batteries and they allow for higher charging speeds to shorten charging times. With those, the differences among the tested technologies become even less relevant. Fun fact: after the test the crew in the ICE car stated they will plan more and slightly longer breaks in the future even if there is no need for re-fueling the car. They were much less tired over the long distances we covered and said they will travel respecting the sequence we’ve chosen and will not immediately hit the read after re-fueling.

Swappable batteries: additional benefits and additional businesses

The concept of the swappable batteries allows NIO to have a second business model: all batteries stored at the swap station can be connected to the grid and if not needed for a swap can form a battery storage system – the trade of electric power offers revenue and profit. The more batteries at a swap station, the more money can be made.

This is no future talk; NIO is doing this since 2024 in Denmark and uses the stored battery capacity through the Power Grid Service to stabilize the grid – and to buy inexpensive power for their batteries. However, it makes more sense to quickly re-charge batteries arriving form a NIO for swapping them into another NIO (or, in future, with ONVO, the non-premium brand NIO will introduce soon). The core business model includes the monthly battery rent, the energy (kWh) sold with the swapped battery, and – from those wanting more battery swaps than foreseen in the rental contract – also a fee for swapping the battery. At the battery swap station, the focus lies on the battery utilization management: there should be just as many batteries stored as needed for the day. Based on my calculations I expect to see three to five batteries of each capacity (75 kWh and 100 kWh, soon 150 kWh) waiting at the swap station, at least in Europe. The capacity of the swap station is 23 batteries which probably will be fully used in Chins at very busy stations, for now. With the calculated number of batteries, NIO will have most of their batteries in the cycle for the next use in a car, which seems to be the most sensible way to manage. With the different contracts for grid services in each country I expect NIO to execute the Power Grid Service differently.

The unsaid about rented swappable batteries

Swappable rented batteries and rented batteries in general face a fundamental challenge which is not much talked about: the uncertainties and high losses when reselling the car. A typical example is the Renault Zoé of the earlier years which was available with rented batteries only. Later and with the facelift Renault added the option to buy the battery, they have learned their lesson. Used Zoé are a challenge to sell and face huge losses – if they find a customer at all. With the Zoé, the monthly rental rate for the battery is on par with the leasing fee for an all-new Renault Twingo Electric (or a Renault Clio ICE). My research unveiled a large number of Renault Zoé not sold for months and even years: in Germany, I found well over 100 Zoés with rental batteries waiting at the dealers for half a year up to two years, this on just one of the many used car platforms. This is the definition of "lot rot". And we are talking about those cars being put online, only. In other words, a rental battery electric car is nightmare in resale.

This situation is depicted in the graphic aside. The figures given are simplified for easier understanding, but they relate vaguely to the NIO ET5 Touring, a very attractive electric station wagon. The monthly rent for the battery – it stays the same over time – causes a conflict of goals with the age of the car, the amount paid (leased) for the car has to cover whole loss in resale value for the car including the battery. Due to the rent, the battery does not participate in the drop of the resale value of the car, thus the resale value of the car without the battery is dropping like a rock.

People often are telling me with swappable rental batteries you always have a well-maintained high-capacity battery in your car, thus resale value must remain high. In my experience and from research, the opposite is the case, we see the Zoé-thing happening, too. First, batteries of recent electric cars easily live 250'000km (150'000 miles) with new designs and LFP variants one million kilometer (600'000 miles) are within reach. With a SOH document battery health no longer is an issue. Second, the used car market neither does understand rented batterie, nor is it interested in it. Furthermore, a car in a certain segment, milage, and age has a certain resale value. If a car does not meet this price, selling becomes a huge challenge. The sum of the leasing for the used NIO plus the battery rent stands against the leasing fee of similar cars without a battery rent – which at the end usually will be cheaper. The older the car gets the higher stays the battery rent in relation to the remaining value of the car itself and now, the Zoé effect is kicking in. It is the manufacturer and the swap station operation making the money since you must pay the battery rent in order to keep your car running. Those not planning to sell the car at all are the only ones benefiting form a rental battery. This applies to used car dealers as well, they have to pay the battery rent while the car is standing at their facility waiting for a customer.

See the offerings of NIO ET5 on one of the used car platforms in Germany in the image aside: two similar NIO ET5 but the loss in resale value after just one year of ownership compared to a similar car with battery included is €2.000. Keep in mind, these are asking prices. From a former NIO owner I learned his loss was much higher as in this example, with his car being a nearly new NIO ET5. His advice was very clear: “The NIO ET5 is a great car, I fully recommend it also in comparison to the offerings from the German premium brands, it exceeded my expectations on many levels. But make sure to buy the battery, for your own sake!”. Thus, the swappable battery concept wins people over, but the rental battery concept is much more expensive than it might seem on first sight. Thus, make the math before signing the contract if you plan to sell the car one day.

#electriccar #batteryswap #ICE #energy #energystorage #resale #rental #Tesla #NIO