Why some companies want you to rent the battery in your EV

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I seem to be constantly signing up for new subscriptions these days. Netflix, Paramount+, and of course I’m glued to the latest season of Succession, so now I’m back on HBO Max too. 

And soon, I might have another subscription to consider adding to that list: an EV battery. Instead of owning the batteries that power our EVs, some companies want to rethink our relationship and are pushing batteries as a service. Pay a monthly subscription fee, and you could consistently change out the nearly-spent batteries powering your vehicle for fresh ones in swapping stations. 

Some companies are working to make battery swaps a reality, and I wrote about their progress in a story that you should check out here. And for the newsletter this week, I want to dig in on an issue raised by these companies’ vision for the future that I can’t get out of my head: Should we own our own batteries? 

The vision

Picture this: It’s 2030, you’re on a road trip, and your EV battery is getting low. You stop in a city you’ve never been to before, and instead of plugging in, you pull into a battery-swapping station. You press a button on an app and the station platform raises the car, unscrews the battery powering your EV, and installs a new one in its place. In less than five minutes, you go from almost empty to 100% charged, ready to continue on your way. 

The battery you’ve picked up to power the next leg of your road trip isn’t yours. But then again, neither was the one that you dropped off. 

This is the vision for some companies, including Nio, an automaker based in China. Nio has about 300,000 vehicles on the road and about 1,400 of its own battery-swap stations up and running. 

If you drive a Nio, you do have the option to purchase the battery outright when you buy the car. Alternatively, you can get access to the battery-swapping network by basically subscribing to the company’s pool of batteries.

Nio recently expanded its operations into Norway, so let’s take that as an example of what the financials might look like here. (I’ve converted everything to US dollars here, using May 2023 conversion rates.) 

Say you decide to purchase a Nio ES8 in Norway, and you want to opt for the smallest battery, which has a capacity of 75 kilowatt-hours. 

If you want to own that battery, and you don’t want to visit swap stations, your vehicle will cost you roughly $58,500. If, on the other hand, you prefer to lease the battery, you’ll pay just under $50,000 up front, plus a monthly fee of $135. (The costs are all a bit higher if you opt for the 100 kWh battery, but the idea is the same.) For that monthly fee, you get a couple of swaps or a set amount of rapid charging. 

It would take you just over five years to start paying more in the monthly fee than you would have paid with the up-front option, and most EVs on the roads today have battery warranty coverage for eight to 10 years. 

The implications

I’m fascinated by this potential shift in ownership for batteries, and I think if the vision turns out to be the reality, there are a lot of potential upsides.

The ability to rent batteries could mean less stress about battery degradation for drivers, according to Fei Shen, the VP of power management at Nio. “It’s not necessary for them to worry about it at all, because they can swap this battery at any time, whenever they want,” he says. 

And for the company, it’s easier to track and service batteries. “If we find some potential problems, we can keep this battery in our swap station and do the maintenance,” Shen says. The same goes for reclaiming batteries for recycling at the end of their lifetime, he adds. 

Then there’s the possibility of customization: drivers could opt for a smaller-capacity battery and upgrade only before longer trips, for example. That could cut costs and even reduce the total quantity of materials needed to build batteries for EV fleets.

But on the flip side, some EV experts aren’t so sure the battery-swapping picture would turn out quite so rosy. 

It might be harder to keep consistently high-quality batteries in stock than companies are letting on, says Gil Tal, director of the plug-in hybrid and electric-vehicle research center at the University of California, Davis. “So when you swap a battery, you may get a worse battery or a better battery,” depending on what’s available, he says. 

He’s also skeptical that people will be willing to take a chance on availability. “It’s not going to work—everyone will ask for the big battery at the same time,” Tal says. Have you ever tried to rent a car at an airport during a storm, or find a spot for your Citi Bike at a big event? Those logistics can be tough for companies to figure out. 

There are a lot of fascinating dynamics at play for EV battery swapping, and it’s not just about the possibility of changing the relationship we have with batteries. Check out my story for so much more on this technology and what it might take to really make it happen. 

Related reading

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→ Yes, we have enough of the materials we need for the energy transition. (MIT Technology Review)

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