The recent launch of Nio's BaaS (Battery as a Service) battery rental service in China has generated high interest in China's auto and technology circles. In the analysts' view, this indicates the coming wave of the battery swap model for electric cars.

China's EV battery swap is mainly driven by Nio, BAIC, and a few other car companies. This year, policymakers began to frequently mention and encourage the development of battery swap mode.

In April, the country's new energy subsidy policy encouraged the development of "battery swap mode". Electric vehicles over RMB 300,000 will no longer be eligible for subsidies, while vehicles using battery swap technology will continue to receive subsidies.

In May, the Chinese government work report for the first time to include charging and battery swap into the category of "new infrastructure".

August 12, BAIC New Energy, Nio led drafting of GB/T "Battery Swap Safety Requirements for Electric Vehicles" recommended national standard passed the review, this is the first national standard on "battery swap" up to now.

The "battery swap model" has significant advantages, said Li Zhe and Cui Yifan, analysts at Essence Securities, adding the "battery swap mode" has entered a period of accelerated penetration.

They believe the technology is relatively mature after several years of accumulation, and the policy level is more conducive to exerting scale effect.

By July 2020, Nio, Aulton New Energy, and Hangzhou Botann have a total of 457 battery swap stations. Some companies are the first to deploy battery swap equipment, taking the first-mover advantage.

Essence Securities estimates that the demand for battery swap equipment will reach RMB 1.54 billion in 2021.

In the medium and long term, with the continuous construction of battery swap stations, Essence Securities expects that the equipment market will generate 18 billion RMB in 2025.

The following is the full report of Essence Securities, translated by cnTechPost.

1. Accelerating the development of the "battery swap model" with policy support

Electric vehicles do not need to charge but directly through more battery swap pool to meet range targets, such a "car and battery separation" way to range mode, is called "battery swap".

From last year, China's Ministry of Industry and Information Technology and other departments began to frequently mention and encourage the development of battery swap mode.

In April this year, the new energy subsidy policy encouraged the development of "battery swap mode", no subsidy threshold of RMB 300,000 was set for the use of battery swap technology vehicles.

In May this year, the Chinese government work report for the first time will charge the battery swap into the new infrastructure construction category.

In early July, the National Energy Administration announced that it would actively support the innovation of the charging battery swap business model.

On July 23, at the press conference of the State Council Information Office, the Ministry of Industry and Information Technology further stressed that it will work with relevant departments to continue to vigorously promote the construction of battery swap infrastructure, and encourage enterprises to research and development of battery swap mode models according to the use of scenarios.

Xin Guobin, the vice-minister of MIIT, also revealed that the "new energy vehicle industry development plan (2021-2035)" planning has been submitted to the State Council, the next step will be to speed up the release.

On August 12, the automotive standards committee held a 2020 standards review, led by BAIC new energy, Nio drafted GB / T "electric vehicle battery swap safety requirements" recommended national standards passed the review. This is the first national standard on "battery swap" until now, and will provide guidance for the healthy and comprehensive development of battery swap mode.

Some local governments have also issued related policies to encourage battery swap policies.

In July 2019, the Beijing Municipal Finance Bureau issued a notice, planning to further accelerate the promotion and application of pure electric vehicles in Beijing's rental car industry, in terms of vehicle technical requirements, it is clearly required that the vehicle should have to charge battery swap compatible technology, to fast more battery swap pool mainly.

In July 2020, the Beijing municipal government released a plan to build 100 or so battery swap stations by 2022. Henan also plans to 2025, the province's cumulative total built centralized charging battery swap station 2000 or more.

2. "battery swap mode" to achieve a win-win situation for many parties

In contrast to the charging mode, battery swap mode can solve a series of problems caused by the difficulty of charging new energy vehicles, expensive batteries, batteries prone to spontaneous combustion, for car enterprises, consumers, battery operators, the national grid, the government, and other participants are greatly beneficial.

2.1 The battery swap model is consumer-friendly.

2.1.1 The battery swap model reduces the initial cost of purchasing a car.

According to the current price comparison between the new energy version of some models and the fuel car version, the new energy car price to be higher by about 5-130000.

The cost of the battery in new energy vehicles can reach 40 percent, if the battery swap mode, consumers do not buy the battery, will greatly reduce the initial cost of the car.

At present, if you buy BAIC EU300 by battery leasing, the initial purchase cost will be reduced by 50,000 RMB, and for Nio's models, the battery leasing method can reduce the purchase cost by 100,000 RMB.

2.1.2 Battery swap mode reduces charging time

The battery swap mode takes only three to five minutes, much faster than charging.

There are two main ways to charge an electric car, fast charging is generally high power DC charging, which can fill 80 percent of the battery capacity in half an hour.

After charging more than 80 percent in order to protect the safety of the battery, the charging current needs to be smaller, and it will take longer to charge to 100 percent. And slow charge means AC charge, the charging process takes 6~8 hours.

Aulton New Energy's new Guangzhou 4.0 battery swap station takes only 40 seconds for the whole battery swap, and 1.5 minutes for the whole process, plus the time for vehicles to enter and exit the station.

2.1.3. battery swap mode to solve the problem of insufficient charging stations

Charging battery swap equipment as a new energy vehicle power security infrastructure, greatly affecting the consumer's user experience and the development of new energy vehicles.

Although the construction of the charging pile continues to improve, in the past five years, the car pile ratio from 5.8:1 rapidly declined to 3.1:1, compared to the rapid growth of the new energy vehicle market, the number of charging piles is still far from enough.

For new energy vehicle charging, using the charging mode, a car fast charging also has to 40 minutes to be full. However, battery swap mode only takes 2-3 minutes, which greatly improves convenience and reduces the pressure on the construction of charging piles.

2.1.4 Reducing risk of spontaneous combustion

The essence of new energy vehicle safety accidents is the thermal runaway of batteries, and the largest proportion of spontaneous combustion accidents occur while charging pure electric vehicles.

At the 2019 China (Qinghai) Lithium Industry and Power Battery International Summit Forum, academician Ouyang Minggao, academician of the Chinese Academy of Sciences and vice president of the China Electric Vehicle 100 Association, pointed out in his speech that "negative precipitation of active lithium, internal short circuit, positive release of active oxygen" can explain more than 99 percent of the causes of battery thermal runaway accidents.

Through the statistical analysis of new energy vehicle accidents in 2018, it is found that most accidents occurred during charging, reaching 29 percent.

Spontaneous combustion during driving and stationary parking each accounted for 14 percent while wading in the water caused safety accidents also reached 10 percent. Another 33 percent were of unknown origin.

2.2 The battery swap model is beneficial to OEMs.

2.2.1 Providing a variety of marketing programs to promote sales

From the point of view of the current sale of new energy vehicles, BAIC, Nio, and other OEMs have provided two options with battery purchase and lease battery, battery swap charges are also more reasonable.

If the battery rental model is adopted, the purchase cost of the BAIC EU300 will be reduced by 50,000 RMB, and the battery rental price is 458 RMB/month.

All in all the three packages of battery swap, the charge per kilometer is about 0.35 RMB, assuming one kilometer of electricity for 5 kilometers, the charge is equivalent to 1.75 RMB/kWh, which is in the upper-middle position in the price range of local charging stations in Beijing.

Nio takes the way of leasing the battery to reduce the purchase cost of 100,000 RMB, the lease price of the battery is 1660 RMB/month, the battery swap is free for the first-time owners, for non-first-time owners the charging cost is in addition to the local charging station electricity charges plus a certain service fee.

2.2.2. It is convenient for car companies to monitor the battery and reduce the number of recalls and other issues arising from battery failure.

Power battery problems are an important reason for the recall of new energy vehicles.In 2019, the State Administration of Market Supervision and Administration of the recall of a total of 33,281 new energy vehicles, involving companies such as Tesla, BAIC New Energy, Nio, BMW (China), Chery, Zhengzhou Yutong, Nanjing Golden Dragon Bus, Harbin Tonglian Passenger cars and other nine car companies.

According to statistics, the number of new energy vehicles recalled for power battery problems is 6,217, accounting for 18.68 percent of the total number of new energy vehicles recalled in 2019, car recalls can cause huge losses to car companies.

The battery swap mode allows car companies to control the condition of the battery and test and replace the battery in time to prevent problems before they occur.

2.3 The battery swap model benefits battery manufacturers by.

2.3.1 Increasing battery consumption

The battery swap station requires a separate battery, which will create incremental demand for a power battery. The Nio, for example, went on sale on September 12, 2018, and all models released support battery swap mode.

According to the China Passenger Car Association (CPCA), Nio has sold a total of 45,000 Nios as of July 2020. As of July 2020, Nio has 141 battery swap stations.

At the Nio Power 2nd Anniversary "Face to Face Online Event", Nio Vice President Fei Shen revealed that the current generation of battery swap stations are equipped with five batteries.

Roughly, the Nio battery swap station is equipped with 705 (=141x5) batteries, considering Nio's To C mode, the B-cycle battery needs to be replaced more frequently and the demand for batteries will be higher.

2.3.2 Convenient for stepwise use and recycling

By implementing "battery swap mode", we can control the recycling channel of lithium-ion batteries for step-by-step utilization, laying the foundation for the operation of the energy storage system.

According to national standards, when the power battery reaches the end of its service life, it still has a considerable capacity and wide use space when it is removed from the new energy vehicle.

Step-by-step use can extend the life of the battery and increase the value of the whole life cycle.

2.4 The battery swap model is beneficial to governments.

From the national policy above, the battery swap model can promote the development of the new energy automobile industry.

(1) conducive to the development of high-tech industry, new energy vehicles from the industrialization of the above a great upgrade is our national auto industry can overtake the main factors.

(2) from the environmental protection point of view, new energy vehicles can slow down exhaust emissions.

(3) from the point of view of energy security, oil as an important component of China's energy, the promotion of new energy vehicles can reduce the dependence on foreign oil.

3. The market size of battery swap station equipment reached RMB 18 billion.

3.1 Current situation: There are only 457 battery swap stations nationwide, with three enterprises as the main driving force.

As of July 2020, there are 457 battery swap stations for new energy vehicles nationwide.

Regionally, Beijing has the largest number of battery swap stations (184), followed by Guangdong (59) and Zhejiang (48).

From the operator's point of view, there are three market participants, Aulton New Energy operates 222 battery swap stations (48.58 percent), Nio has 141 (30.85 percent), Hangzhou Botann has 94 (20.57 percent).

At present, only a few enterprises such as Aulton New Energy, Nio, and Botann Technology realize the scale of battery swap station operation.

At this stage, the construction of battery swap stations is basically the sole action of new energy brands.

BAIC's new energy battery swap is now focusing on the G-terminals market, targeting the taxi industry for battery swap layout, with Aulton's new energy as the battery swap operator.

Nio battery swap is aimed at the consumer end-users. It was designed from the beginning for battery swap mode, aimed at building the body and battery separation business model.

This is called by Li Bin "BaaS"--Battery as a Service, Nio himself is responsible for battery swap station operation, at present its battery swap Vehicles account for nearly half of the total.

Botann Technology uses a battery swap system to build the business model of "separating body and battery, mileage pricing", and the customers are capacity management companies and vehicle factories.

3.2 Chassis battery swap and separate box battery swap coexist in the same technology route

There are two types of battery swap modes, one is the chassis battery swap mode based on Nio and BAIC, and the other is the sub-cabinet battery swap mode based on Botann.

From the equipment point of view, the two battery swap modes are currently slightly different for the fully automatic route, the module sub-box battery swap mainly uses six-axis robots, and the chassis battery swap mainly uses RGV.

At present, most of the mainstream car enterprises use the chassis battery swap mode, in order to reach the requirements of the range of 300 kilometers above, usually the weight of the battery to do more than 400 kilograms, in order to weight reasonable, the battery can only be installed in the middle of the vehicle members of the seat at the bottom.

The core of the battery swap program is a double conveyer that can move in a single line to convey a fully charged battery and a low battery.

The equipment used includes car alignment devices, battery lifting and replacing devices, rail-based aisle stacker cranes, battery storage racks, battery handling devices, battery charging devices, and more.

Take Nio battery swap station equipment, for example, battery swap robot RGV is the essence of the Nio battery swap station, in the battery swap station total of nearly 300 patents, RGV robot accounts for a large share.

It is equipped with 10 unlocking devices, which are precisely positioned by the visual recognition device placed inside the battery swap platform, the unlocking device will rise to the 10 bayobolt bolts at the bottom of the vehicle, and start to rotate to unlock.

Bayobolt is an Nio patented technology, with the battery swap robot RGV can also float the base, combined with visual recognition, body positioning pins, can maximize the unlocking device and bolt accurate alignment.

3.3 Considering only BAIC, Nio, there will be a need for 930 million devices in 2021.

BAIC New Energy will build 182 battery swap stations in a year.

Assuming that the strategic cooperation between BAIC and State Grid Electric goes smoothly, and 100 battery swap stations will be built in the coming year, and the fundraising project is constructed smoothly, and the company puts in 82 battery swap stations, then BAIC New Energy will build 182 battery swap stations in the coming year. swap station.

On July 27, BAIC Group and State Grid Electric (a wholly-owned subsidiary of State Grid) signed a framework agreement to deepen strategic cooperation, taking the lead in piloting the separation of body and battery.

They strive to build 100 battery swap stations by the end of June 2021, serving no less than 10,000 battery swap vehicles nationwide.

The first battery swap station - Jinan No.1 battery swap station has been officially put into operation.

On August 3rd, BAIC blue valley released a non-public increase plan, raise the project "battery swap business system development" project to develop compatible with battery swap mode of the high-end flagship (B-class) pure electric car model (development code C71KB), positioned in the high-end products.

At the same time, the company intends to spend RMB 277 million to promote battery swap station construction with partners nationwide.

The company plans to put on their own battery swap station 82, the construction period is expected to be 1 year, the target market for Shandong, Hebei, Hainan, and other provinces.

Nio has built 142 battery swap stations nationwide, covering 61 cities.

According to our research, Nio will build battery swap stations on a large scale in 2021 to cover its key sales areas and meet the battery swap needs of car owners.

3.4. It is estimated that by 2025, battery swap stations will bring in 18 billion RMB market space.

With the rising number of new energy vehicles, the penetration rate of battery swap mode is gradually increasing, and in the medium and long term, battery swap mode will bring at least 18 billion equipment demand.

According to the China Association of Automobile Manufacturer's data, in 2019, new energy vehicle sales of 1.206 million vehicles, is expected to be affected by the epidemic in 2020, new energy vehicle sales remain at the level of 1.2 million vehicles.

With the rapid promotion of new energy cars, new energy vehicle sales gradually increased, driving the rapid increase in new energy vehicle ownership.

At the same time, battery swap models continue to be launched, it is expected that the penetration rate of battery swap models will increase at a rate of about 10 percent per year.

Assuming a battery swap station can support 300 cars' battery swap demand, the demand for battery swap stations in the next five years will be 1670, 4460, 9042, 16446, 28241, 46797.

Considering that there will be a gap between the supply and demand of battery swap stations for some time, it is assumed that by 2025, the construction of battery swap stations will be able to meet the battery swap demand of new energy vehicles.

The number of new battery swap stations in the next five years is 428, 1028, 2468, 5922, 14213, 22432.