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Lack of Charging infrastructure and Growing Sales of Electric Two-and Three-Wheeler Have Provided Opportunities for Battery Swapping Niche to Emerge

Lack of Charging infrastructure and Growing Sales of Electric Two-and Three-Wheeler Have Provided Opportunities for Battery Swapping Niche to Emerge

Published: September 2020

Charging infrastructure is the most crucial enabler in the entire electric vehicle (EV) value chain. The limited availability of the charging infrastructure, as well as a lack of adequate business and financing models, is considered to be one of the biggest obstacles to the widespread adoption of EVs by customers, who still suffer from “range anxiety”. The three key roadblocks associated with EVs are as follows:

High cost of batteries
High charging time at stations, compared to refueling diesel/petrol
Range anxiety

The acceptance of EVs is obstructed due to their high ownership cost. EVs are expensive, particularly because of the battery, which constitutes around 30–50% of their total cost. Currently, Li-ion battery prices are about $250/kWh, and even if they decline to $100/kWh in the coming years, as projected, the battery will still lead to the high cost of an EV.

In swapping-enabled vehicles, drivers are not required to own the battery; it is owned by the swapping service provider or other operators. By separating the vehicle from its battery, the upfront cost of the EV comes down to levels competitive with or below that of its internal combustion engine (ICE) counterparts, thus enabling higher adoption. Due to these factors, the EV battery swapping for two- and three-wheeler market is expected to grow significantly during the forecast period (2020–2030).

Three-Wheeler Vehicle Type Bifurcation To Grow at Higher CAGR throughout Forecast Period

The EV battery swapping for two-and three-wheeler market is classified into two-wheeler and three-wheeler, on the basis of vehicle type. Of these, the three-wheeler classification is expected to grow at the higher pace during the forecast period. The three-wheeler market is highly unorganized and dominated by local players. Lead–acid batteries are mostly used in these vehicles, and their cost is comparatively lower. Overnight charging is the preferred solution among its users for charging the batteries. However, with the growing adoption of Li-ion-battery-based electric three-wheelers, the share of the three-wheeler is expected to increase in the coming years. Furthermore, the growing preference for and policy support for e-autos, especially in the Asia-Pacific (APAC) region, would further support the growth of this category in the coming years.

The EV battery swapping for two- and three-wheeler market, on the basis of service type, is categorized into the pay-per-use and subscription models. The subscription model is expected to grow at the higher CAGR during the forecast period and remain the preferred mode of service in the market. The high cost of Li-ion batteries, lack of charging infrastructure, and growing demand for two-wheelers in shared mobility applications (where their utility is high) are the major factors behind the preference for this service among customers.

Globally, the Rest of the World (RoW) and European EV battery swapping for two- and three-wheeler market are two of the fastest growing region during the forecast period. The ongoing development in and adoption of battery swapping services in Africa and booming scooter sharing business in Europe are the major factors supporting the growth of the market in these two regions.

The COVID-19 pandemic has resulted in lost earnings and unemployment for many potential buyers, thus reducing their purchasing power, and a slump in the consumer confidence. The crisis has prompted many industry stakeholders to re-examine their strategies and prepare for the industry's medium– and long–term growth, by accelerating the transformation and upgrade of the industry.

Partnerships Are Strongest Strategic Measures Taken by Players in Market

Players in the EV battery swapping for two- and three-wheeler market are consistently focusing on strategic partnerships and business mergers, to remain competitive. For example, in February 2020, Grab Holding Inc.’s new mobility business, GrabWheels, announced that it has secured $30 million in fresh funding from Taiwanese EV firm Kwang Yang Motor Co. Ltd., as part of a strategic partnership to invest in and develop electric two-wheeler solutions, to accelerate the adoption of EVs in Southeast Asia.

In January 2020, EVI Technologies Pvt. Ltd. (EVIT) entered into a partnership with Bharat Sanchar Nigam Ltd. (BSNL) for installing battery swapping and charging stations. Under this 10-year memorandum of understanding (MoU) signed between the two companies, EVIT would set up the charging infrastructure at 5,000 locations of BSNL in major cities across the country. EVIT will make the entire upfront investment on the services, operations, and maintenance of the battery swapping and charging infrastructure. On the other hand, BSNL would be responsible for providing the necessary power connections and space for installing the battery swapping stations.

Some of the major players operating in the global EV battery swapping for two- and three-wheeler market are Kwang Yang Motor Co. Ltd., Ola Electric Mobility Pvt. Ltd., Exicom Tele-Systems Ltd., Gogoro Inc., Lithion Power Pvt. Ltd., NIO Ltd., Powerswap AB, and SUN Mobility Pvt. Ltd.