CATL on Wednesday unveiled a comprehensive plan to promote the large-scale adoption and use of battery swapping, including the launch of 10 electric car models with automakers featuring swappable batteries, two standardized battery packs for different use cases, and an affordable battery leasing program.
“Choco Swap is the first battery-swapping ecosystem that applies to multiple brands and models. This is a milestone for a market-wide standardization to take place in China,” Yang Jun, chief executive of CATL’s battery swapping arm CAES, said at a press conference in the eastern province of Fujian, where the company is headquartered (our translation).
The push by CATL is the latest example of China charting its own path in the electric vehicle transition, as major economies such as Germany grapple with a near-term global slowdown for EVs. ”Consumers want a cheap, reliable solution, and fully electric vehicles are considered unreliable in terms of ease of charging,” said Daniel J. Kollar, deputy managing director of Greater China at business development consultancy Intralink.
CATL also announced a goal to build 1,000 battery swap stations independently in China next year, and create an inclusive ecosystem to ensure a worry-free experience throughout the life cycle for future EV owners. This could position CATL as another major player alongside NIO in the heavy-asset but theoretically sound and sustainable business.
Battery swapping has long faced skepticism. Tesla abandoned the concept and smaller companies have struggled, with Better Place, a pioneer in battery swapping, declaring bankruptcy in 2013. NIO has since been the only player for years in the space, incurring significant losses after nearly a decade of operation.
However, it is increasingly becoming a mainstream option for owners to replenish their EVs in China, a vision shared by NIO’s chief executive William Li, and now CATL’s founder Robin Zeng. “NIO has proven battery swapping can work and now it is CATL’s turn,” said China auto market analyst Lei Xing.
Below are the key details about how CATL’s emerging business would operate going forward, and experts’ outlook on where the industry might be headed.
Key details
CATL revealed two new battery packs in a size and configuration Yang described as “the greatest common denominator” between CATL and its car clients.
The #25 batteries measure 1.6 meters in length, 1.3 meters in width, and 120 millimeters in height, based on Yang’s presentation. CATL did not reveal the exact size of the #20 batteries, which looked a bit narrower than the #25 offering.
Both the #25 and #20 batteries, named similarly to gasoline grades in China, have two variants that use nickel cobalt manganese (NCM) and lithium iron phosphate (LFP) cathodes, respectively.
The cobalt- and nickel-based variant could provide A-class and B-class vehicles with a range of up to 600 kilometers (373 miles), while the iron-based, more affordable counterpart gives tiny EVs a driving range of between 400 km and 500 km on a full charge.
The company also announced that 10 EV models with swappable batteries will be available within the next 12 months from Chinese automakers such as Changan and GAC, as well as SAIC-GM-Wuling, a compact-car joint venture of General Motors in China. Both Changan and GAC have also partnered with NIO for battery swapping and the first model jointly developed between NIO and a partner is undergoing winter tests, CEO William Li told reporters last week in Shanghai.
Additionally, CATL said it will begin offering flexible leasing with its battery service package, dubbed Choco, for a monthly fee starting at RMB 369 and RMB 499 ($50.60 and $68.40) for the LFP variants of the #25 and #20 batteries, respectively.
For comparison, NIO in March cut the monthly rental fee for its entry-level battery packs to RMB 728 from RMB 980, which uses mixed cathode materials of NCM and LFP and allows NIO cars to travel about 500 km per charge.
CATL and NIO also differ in their approach to building battery swap facilities. The battery maker said each of its swap stations holds up to 30 battery packs, offers a maximum of 822 swaps per day, and is compatible with vehicles featuring a wheelbase of between 2.6 meters and 3.1 meters. NIO’s newer facilities meanwhile can offer up to 480 swaps with a capacity of 23 packs per day and accommodate cars with wheelbases of 2.8-3.3 meters, while integrating NVIDIA’s advanced chips, enabling vehicles to pilot themselves to the stations.
What to expect
For now, at least, CATL is entering the market with a different approach: targeting ride-hailing drivers and cost-conscious owners with its more affordable service, while NIO has been offering more premium, intelligent swaps to affluent EV buyers since 2019. A supplier to NIO, CATL has also been a partner to the EV maker, with the two companies forming a battery asset management company in 2020 as part of NIO’s battery-as-a-service (BaaS) business model.
Some experts believe that while competition and cooperation both exist, the ultimate outcome depends on which company holds more leverage. Kollar sees “massive” standardization and logistical issues that need to be figured out before battery swapping for passenger vehicles can be implemented at scale for the industry as a whole, but CATL could manage these challenges independently, with several automakers aligned to the company’s strategy.
“I think CATL will definitely have a leading role in the wider rollout of battery swapping,” Kollar told TechNode. “NIO needs to become a bigger car company with much better sales and greater influence, or it needs to spin off its battery swapping business so that it can develop on its own independent of NIO’s automotive products,” added Kollar.
The comments come as a Chinese media report said on Thursday that NIO might consider usingCATL’s battery swap solution for its upcoming small EV brand. The EV maker remains the biggest player in the battery swapping market, operating over 2,800 facilities as of Dec. 16, mostly in big cities and along highways. That number could surpass 5,000 if it builds swap stations in every one of the 2,300 counties in China by the end of next year as planned.
CATL said it has signed deals for its battery rental service that involve 107,500 packs with 30 companies, including ride-hailing platform Didi and JD Auto, a car after-sales service provider affiliated to e-commerce giant JD.com. Customers can also opt for separate battery insurance at RMB 500 with its insurance partners, a 75% cut from existing offerings, Yang said.
Others believe there could be several major players or even a duopoly in the market. “I think it is going to be a two-way race in the Chinese battery swapping space,” Xing said. “The only wild card is whether CATL would work with NIO on smaller batteries for the Firefly brand. That’s something interesting to watch.”
A consensus is emerging that battery swap could be the key remedy to the issue of range anxiety – fear of an EV running out of power, when a growing number of customers are favoring plug-in hybrids (PHEVs) over battery EVs (BEVs).
“If these companies can increase battery pack standardization in the market and prove that battery swapping can be relied upon by consumers, then it could become a viable way to increase BEV adoption, especially for the entry and mid-market,” said Kollar.
Either way, huge efforts will be needed. Yang estimated China could ultimately have 30,000-40,000 battery swapping stations to fullfil the needs of over 20 million EVs, with CATL pledging to expand its network with partners to more than 10,000 in the mid-term.
“The rest of them will rely on the efforts of the whole society,” Yang said.
