For EVs to Work at Scale, We Need to Revisit Battery Swapping

California’s plans to require all new vehicles sold in the state by 2035 to be electric or hybrid has garnered global attention. And rightly so, the goal of going from 18% to 100% of cars sold being EVs in 13 years seems almost too audacious to work.?

There are significant challenges in making EVs work at this scale. One is making EVs affordable for more than the upper class. The average price for a new EV today is $65,291 , according to Kelley Blue Book! The second big problem is figuring out how to charge all the new battery-powered cars hitting the streets in a way that eliminates range anxiety for EV drivers.?

The solution to these future challenges might be found in the past. I believe we need to look towards the ashes of once $850M-backed Better Place and its plan to solve these same problems. Founder Shai Agassi had the right idea in 2007 to focus on battery swapping. However, he was ahead of his time as EVs weren’t quite ready to cross the chasm into the mainstream. Furthermore, the company’s narrow focus on consumer vehicles and getting OEMs to change designs was probably misguided.

However, in the footsteps of where Better Place failed, a new generation of startups is at work using deep tech innovations to make battery swapping succeed. For instance, San Francisco-based Ample is utilizing autonomous robots and modularizing EV batteries into moveable pieces to deliver battery swapping to nearly any vehicle. Meanwhile, SUN Mobility , a Bangalore-based startup that we, MFV Partners , have invested in, is utilizing new technologies to make battery swapping so simple that the drivers of two and three-wheeler delivery vehicles can do it themselves through self-service kiosks .?

Here are the main reasons I think this iteration of battery swapping will succeed and how it will solve the biggest challenges of making EVs work at scale.?

Cutting Out the Battery Cost of an EV

Battery costs are the primary reason EVs’ sticker prices hover above their gas-powered counterparts. That price continues to be driven up by the cost of the minerals that go into batteries, such as lithium and nickel, which are increasingly in high demand. The result is skyrocketing prices, and data from the Institute for Energy Research illustrates that EV batteries account for 30-40% of the cost of EVs today.?

Converting the battery cost from an upfront capital investment to a pay-as-you-go significantly reduces cost of an EV! To get a sense of what cheaper, battery-less purchasing of an EV would be like for U.S. consumers, we should look towards Chinese EV maker Nio . Nio is the first company to prove battery swapping works at scale - with over 10 million swaps. The company sold 90,000 vehicles in 2021, and around 40% of those were sold without a fixed battery. Instead, car buyers entered into Nio’s Battery-as-a-Service (BaaS) program, paying about $150 per month to lease a battery and gain access to free charging and swapping services.

As a result, buyers could purchase their EVs for about $10,000 less than what it would have cost with a battery. Sun Mobility has taken this type of battery service model even one step further in India by allowing its customers to simply pay-as-they-go for battery usage in their EVs versus having any upfront monthly payment. This type of innovation is needed to make EVs attainable for everyone.

An Electric ‘Refill’ that Matches the Time You Spend at the Pump

The other big benefit of battery swapping is the ability to reduce charge times to nearly the same amount of time it takes to fill up on gas. Ample’s use of modularized, moveable batteries rather than trying to swap the 1,000-plus pound battery found on most four-wheel EVs means delivering a 100% charge in under 10 minutes. On the two-wheel and three-wheel EV vehicles that Sun Mobility is rolling out battery swapping for, the smaller battery means changing for a fully charged battery is nearly instantaneous.

Even the fastest level 3 charging stations can’t produce a full charge as quickly. And those types of fast-charging stations aren’t practical in most areas. You typically only find level 3 charging stations around major interstates, given the safety requirements needed for higher voltages and direct currents. Comparatively, battery swapping stations only need to run as level 2 charging facilities, which means they could be located across a much wider range of roadways and areas.?

The asynchronous charging of battery swapping also significantly benefits commercial vehicle fleets as it drastically reduces downtime. Therefore, it's not surprising that Ample’s first major partner is Uber , which is piloting swapping stations across the Bay Area. Meanwhile, Sun Mobility has worked closely with Amazon to integrate its technology into its delivery fleet in India.

Going Greener to Power 5X Vehicle Electrification Needs

The reason, of course, for deploying EVs at a mass scale is decarbonization and the dire state of our climate crisis. EVs reduce the amount of carbon dioxide admitted into the atmosphere compared with gas-powered vehicles – but just how much of a reduction we can make will be based on if we can supply enough electricity and how that electricity is produced. Electricity needs could be 5X of current production as more electric vehicles roll out to our streets.

Battery swapping may also provide some inherent advantages here. Since battery swapping stations are not focused on fast charging, they can be proactive in choosing when to charge and what energy to use. This enables them to acquire electricity during cheaper non-peak hours and opens the door to using clean or renewable energy sources.

There will be no magic bullet for solving the electrification needs for EVs at scale, and there isn’t any one-size-fits-all approach for delivering the best charge to every vehicle. But I firmly believe battery swapping is a piece to solving the puzzle – especially when it comes to democratizing EV sales and ensuring electric fleets' commercial success.?