As an important part of the energy revolution, in addition to subverting the traditional fuel industry, new energy vehicles have also spawned the development of a series of related industrial chains, including the fate of the bumpy - power exchange.
When it comes to changing electricity, we have to mention a company, Better Place. As early as 2007, Better Place was established in California, USA, becoming the world's first power exchange operation company. Because of the innovative creation of electric vehicle replacement solutions, Better Place once became a tide in the field of new energy, raising a total of 850 million US dollars and a valuation of 2.25 billion US dollars.
In 2010, Better Place came to China, first reaching a cooperation agreement with Chery Automobile to develop a mass-produced version of the power exchange model application plan, and in April of the following year, it signed a strategic cooperation agreement with China Southern Power Grid on the power exchange model, and set up a substation and experience center in Guangzhou. During this period, Better Place was in the limelight, and its power exchange business has covered Israel, Denmark, Australia, Canada, Japan and other countries.
However, after several years of operation, by May 26, 2013, Better Place faded from the public eye in the form of bankruptcy liquidation.
Figure 1: Better Place launched the power exchange model, source: Better Place, Guolian Securities
However, the enthusiasm of the new energy vehicle market for the power exchange model has not been extinguished. Less than a month later, the "successor" of Better Place came, that is, Tesla, the star electric car company at that time.
On June 20, 2013, at the power exchange conference, Musk personally explained the newly developed power exchange mode, "Tesla owners could only "refuel" by charging, the super charging station took 30 minutes, and the ordinary charging method took several hours. But today's power exchange mode can make the electric car 90 seconds full of blood resurrection. "In just over 90 seconds, a Model S completes the entire power exchange process, which is much faster than the refueling time of the fuel car.
When it comes to the future of power exchange, Musk is full of confidence, saying that the power exchange system will be the first to be put into use on the I-5 highway in California, and then the replacement station will be built next to the highway from Boston to Washington.
But dramatically, two years after Tesla launched the power swap model, it was abandoned due to business models and other issues, and musk led the team to devote himself to super fast charging technology.
Figure 2: Tesla shows the power exchange process in 2013, source: Tesla power exchange conference
Looking back at the mainland, the power exchange mode also encountered the dilemma of the failure of the State Grid City Pilot, in 2013, the State Grid, which had proposed to replace the main power, turned to the "new route" of "leading fast charging, taking into account slow charging, and guiding power exchange", and began to support the charging mode. Since 2014, high-level policies have begun to focus on encouraging the development of charging, and the power exchange mode has gradually faded out of sight.
For a long time after that, the power swap mode has been stuck in the trough, and the charging mode has become the mainstream all the way. Until after 2020, the power exchange mode ushered in a new round of dawn.
From the early highly sought after by the market, to the later silence, and then to the dawn, what has the power exchange mode experienced? Can we open up the growth space as scheduled?
01 Power exchange VS fast charge
【1】What is power exchange?
As the name suggests, electric vehicles do not need to charge but directly by replacing the battery to meet the endurance, this mode of separating the car and the battery for energy replenishment, called power exchange.
According to different application scenarios, the power exchange technology is initially divided into chassis power exchange, sub-box power exchange, side power exchange and other forms. After more than ten years of technological change, chassis power exchange has become the mainstream form of power exchange for passenger cars, representing enterprises such as BAIC New Energy and Weilai; commercial vehicles mainly adopt end and side power exchanges.
Figure 3: Schematic diagram of chassis power exchange, source: Orient Securities
[2] Advantages of power exchange
As the saying goes, the world's martial arts are only fast and not broken, the biggest advantage of the power exchange mode is that it takes a very short time, the whole process only takes a few minutes, and the energy replenishment experience is comparable to that of traditional fuel vehicles, and sometimes even a step faster. In addition, compared to charging, the power exchange mode is better at extending battery life, maintaining and managing safety, and reducing grid load.
The author sorted out the advantages of the power exchange mode from five aspects:
1) For car owners, in addition to achieving rapid energy replenishment, the power exchange mode can better solve the problems that make each car owner's head bigger, such as the depreciation of power batteries and the depreciation of second-hand cars. In addition, most of the battery spontaneous combustion occurs in the charging process, and the power exchange mode avoids the most dangerous links for the owner, so that the main user of the electric vehicle is more at ease;
2) For car companies, because the cost of electric vehicles, the battery alone accounts for 30%-40%, so that the overall cost of electric vehicles is greatly increased, it is difficult to compete with fuel vehicles for cost performance; and the separation of vehicles and electricity in the power replacement mode significantly reduces the initial purchase cost of consumers, reduces the purchase threshold of consumers, and has a bit of housing mortgage;
3) For battery companies, the power battery is controlled and managed by professionals in the replacement power station, compared with the management of individual consumers, the battery life of the former can be extended by 30%-60%; and once the battery has a problem in the replacement power station, it can greatly reduce the battery failure;
4) For the power grid, because the fast charge is a large current, it will bring a certain impact to the power grid, so in general, for the fast charge point, it is required to configure a special transformer to isolate the impact on the low-voltage power grid. In the power exchange mode, the battery is generally low-power slow charging, which not only reduces the load of the power grid, but also avoids the peak of electricity consumption to a certain extent and balances the peaks and valleys;
5) For society, the substation is like a gas station, in addition to the queuing time, the vehicle will not spend extra time to stay after entering, and in the same space, the replacement has a higher utilization rate. Especially in the modern society where time is money, the time saved by changing power stations is to improve social efficiency.
02 Dependent arising and extinction
Since the power exchange has you said so well, then why does the opening paragraph say that this model at home and abroad has experienced a long period of lows?
[1] High hopes were placed on them
Since the state launched the "Ten Cities and Thousand Vehicles" demonstration project in 2009, electric vehicles have sprung up across the country. However, the early electric vehicles were too long to charge and short in battery technology due to limited battery technology, which was not friendly to users, especially commercial vehicles and taxis. On the other hand, the high cost of batteries leads to the purchase cost of electric vehicles being much higher than that of fuel vehicles of the same level, which also restricts the promotion of electric vehicles. At that time, the short board of the battery was determined by the nature of the material itself, and it was difficult to see obvious changes in the short term.
After comprehensive trade-offs, the power exchange mode has naturally become the focus of attention in the industry. Relative to the charging mode, the power exchange can better and faster alleviate the pain points of electric vehicles. In fact, electric buses at the 2008 Olympic Games in Beijing and the 2010 Shanghai World Expo all used battery replacement.
Therefore, we also see that in the early stage of the development of electric vehicles, the State Grid first conducted research on power exchange technology in the field of new energy vehicles and passenger vehicles, and proposed a business model of "power exchange as the mainstay, plug-in as a supplement, centralized charging, and unified distribution". From 2009 to 2012, the State Grid has successively completed relevant technical reserves and taxi replacement pilots.
In addition, at the 2011 Conference on Electric Vehicles, Charging Devices and Energy Storage Technology, the "Research Report on the Development of Electric Vehicle Charging Facilities in Mainland China" was hotly discussed in the industry. As an important document guiding the development of electric vehicle charging facilities in China, the report also determines the charging service model of "mainly power exchange, combination of charging and replacement, various forms and market orientation".
[2] Falling into a trough period
However, just a few years later, the State Grid's business ideas in the field of charging and replacing came to a "sharp turn", and by 2013, the State Grid made major adjustments to the technical route of charging and replacing, proposing "leading fast charging, taking into account slow charging, guiding power exchange, and being economical and practical". Saying that it is dominant, in fact, it is basically giving up the power exchange.
At the national policy level, since 2013, the national policy has continued to encourage the construction of charging infrastructure for new energy vehicles, and the policy does not involve support for power exchange, and the power exchange model has suffered a cold reception at the policy level.
It is worth mentioning that in 2014, the State Grid opened the charging and replacement facility market to social capital, and then private enterprises such as Star Charging and Special Call began to enter, and the charging market ushered in rapid development, and in the following years, the charging model gradually became the absolute mainstream of the market.
The reason for the rapid failure of power exchange is mainly due to the high investment costs, fewer vehicles for power exchange, imperfect standards, and immature business models.
1) High investment costs. Compared with the investment of thousands to tens of thousands of charging piles, the construction cost of a single substation is more than 2 million, which is not added to the backup battery, and the investment in each substation is millions of yuan. What is more difficult is that in order to support the normal operation of the power exchange vehicle, it is often necessary to establish multiple power stations in a pilot area to form a power exchange network;
2) Battery standardization is not uniform. Different brands and different models of electric vehicle battery packs have a low degree of standardization, large differences in size, and it is difficult to share a replacement power station, just like the mobile phone charging interface of that year;
3) Low penetration of tram changes. First of all, there are fewer electric vehicles, the base of the overall electric vehicle at that time is still relatively small, not to mention the replacement of the trams, the use efficiency of the power station is low, which increases the cycle back; secondly, the power exchange model is less, and if you want to promote the power exchange mode on a large scale, you need to develop the power exchange mode from the time of the whole vehicle design, and you need to have a certain scale of vehicle ownership, so a certain number of OEMs are indispensable to participate in support;
4) The business model is not perfect. In the early days, a third party represented by Better Place and the National Grid proposed a commercial model for power exchange by purchasing power batteries themselves and playing the role of "battery operators". Although consumers no longer need to pay the cost of purchasing batteries, which can greatly reduce the purchase cost, but for vehicle companies, once they accept this plan, it is equivalent to losing control of the most core part of new energy vehicles, and the production of electric vehicles is only for third parties to make wedding clothes, naturally not many car companies are willing to respond.
To sum up, the "failure" of the power exchange model has never been a simple technical and investment problem, but a comprehensive result of business model, industrial policy, industry ecology, market recognition and other aspects.
Figure 5: Charging and swapping policies for 2013-2016, Source: Government website
03 Dawn reappears
[1] The spring breeze of policy began first
Through the analysis of the previous article, it can be seen that power exchange has always been a model that requires multi-party coordination, and the policy as a precursor is destined to be the best indicator to observe and break the ice.
In the "Government Work Report" issued by the State Council in May 2020, the content of new infrastructure was expanded from "construction of charging piles" to "increasing charging piles, substations and other facilities", which is the first time that the substation has been written into the government work report, and it is also the first time that the substation has been included in the ranks of new infrastructure, becoming one of the seven important areas of new infrastructure in the mainland. Since then, a number of government documents have proposed to vigorously develop the power exchange model.
Until October 2021, the power exchange model really ushered in a policy inflection point, the General Office of the Ministry of Industry and Information Technology issued the "Notice on Launching the Pilot Work on the Application of the New Energy Vehicle Power Exchange Model", decided to start the pilot work of the application of the power exchange mode, accelerated the development of the electric vehicle power exchange model, and included 11 cities such as Beijing, Nanjing, Wuhan, Sanya and Chongqing into the first batch of pilots.
A month later, the national standard of "Safety Requirements for Electric Vehicle Power Exchange" was officially implemented, which is the first basic general national industry standard in the field of power exchange in the mainland automotive industry. The introduction of the standard document can be said to solve the problem of the power exchange industry, and help to improve the safety level of electric vehicles using power exchange technology in terms of mechanical strength, electrical safety, environmental adaptability, etc., which means that the power exchange mode is just around the corner.
Figure 6: Sorting out the important policies of the power exchange industry since 2020, source: Ministries and commissions, sorted out by The Brocade Research Institute
[2] Forces from all sides entered the scene
Since 2020, with the release of the power exchange policy and the outbreak of the new energy market, the capital of all parties that have been waiting for a long time has poured into the power exchange field.
In August 2020, NIO officially launched the BaaS vehicle-electric separation battery rental program;
In April 2021, Sinopec signed a strategic cooperation agreement with NIO to carry out the construction and operation of the substation;
In October 2021, Geely Automobile launched a new power exchange travel brand - Ruilan;
In January 2022, CATL released the EVOGO power exchange brand and the overall solution and service of the combination power exchange. In the future, EVOGO will select the first ten cities to start the power exchange service, and release more brands of power exchange models.
In addition, Aodong, Botan, GCL Energy and other substation operators are also accelerating the construction of substations, and actively cooperate with OEMs.
Figure 7: NIO BaaS operating model, Source: NIO official website
[3] Terminal requirements to cooperate
The so-called "soldiers and horses have not moved, grain and grass first", only by establishing a perfect and mature charging and replacing network in the future, the automobile industry may be fissioned from 1 to 10.
Looking back at history, the power exchange model has actually been facing the so-called "chicken or egg first" problem, that is, consumers are reluctant to buy power replacement models in the case of imperfect power station replacement, and the main engine factory is unwilling to promote electric vehicles on a large scale without the support of perfect power station replacement, and the power exchange operator is even more unwilling to invest in large scale in the absence of a large number of electric vehicle market demand. As a result, the parties are caught in a "chicken and egg" cycle.
With the deepening of electrification transformation and the improvement of end-consumer acceptance, this strange circle has gradually been broken. Nowadays, mainstream automobile factories have launched power replacement models, and the number of power replacement models is also increasing, the most typical of which is Weilai Automobile.
At the same time, in "800V high-voltage fast charging: a new highland that electric vehicles must conquer from 1 to 10", we found a new weakness of electric vehicles - charging anxiety. Endurance is no longer the core selling point of electric vehicles, the new contradiction of industrial development has been switched to the speed of energy replenishment, power replacement as one of the solutions, in theory will be a useful supplement to fast charging.
Figure 8: Mainstream automobile manufacturers have launched power replacement models (incomplete statistics), source: Autohome, Gaogong Lithium Battery, Changjiang Securities
[4] Power system assistance
Over the past decade, China's wind power and photovoltaic power generation capacity has increased significantly, but these are intermittent energy sources, usually "relying on the sky to eat". In the article "The Great Power Change: UHV, Energy Storage and Smart Grid" released last year, we observed the urgency and importance of developing new power systems, one of which is the energy storage system.
The phone change chatted well, how did it suddenly cut to the energy storage? This is because in the previous article, the author did not mention that an important reason for everyone to pursue the replacement of electricity, is that the replacement power station is actually a small energy storage power station, imagine that you have put down a replacement power station, that can naturally be completed by the bottom of the electricity valley, when the electricity price is cheap, and then sell the battery to the customer at the peak of electricity consumption, the final result is: the replacement power station earns the difference in electricity price, the owner shortens the time to replenish, and the power grid reduces the load pressure.
Therefore, the power exchange can realize the function of energy storage by adjusting the charging time to cut peaks and valleys, reduce the load of the power grid. This is also a "super power" that the fast charging mode does not have.
How big is this superpower? A rough calculation, assuming that 10 million electric vehicles join the power exchange mode, assuming that each vehicle consumes 10 degrees of electricity, that is, 100 million degrees of electricity will be consumed a day, which is basically equivalent to the power generation of two Gezhou dams.
04 100 billion starting gun
Finally, the topic that readers are most concerned about is the growth space of the industry brought about by the power exchange model.
The calculation method is also not complicated, that is, according to the current demand gap of the vehicle-to-pile ratio, and then consider the continuous improvement of the penetration rate of subsequent power replacement models. According to the forecast of Guosheng Securities, the space of the substation is in the scale of 100 billion.
Figure 9: 2030 mainland power exchange industry market space measurement (unit: 100 million yuan), source: Guosheng Securities
From the perspective of quantity and scale, according to the planning of several leading enterprises at present, only Weilai, Geely, and Sinopec have more than 14,000 construction targets for substations during the 14th Five-Year Plan period, plus the planning of Ningde Times, Aodong New Energy, Botan Technology and other enterprises, the total number will be far more than 20,000, according to the investment scale of millions of a replacement power station, it is also an investment of about 100 billion.
With the increase in sales of subsequent new energy power exchange models and the catalysis of power exchange policies, the construction of power exchange stations is expected to enter acceleration, and its role in infrastructure construction is comparable to that of traditional gas stations. There is no doubt that the power exchange mode has become another big outlet after energy storage and fast charging, and the hundreds of billions of space may only be the starting point.
Figure 10: Planning of major enterprises, Source: Public information
It is undeniable that today's new energy vehicle field is still playing a debate on whether passenger cars should take the charging mode or the power exchange mode, after all, the advantages and disadvantages of the two routes are very prominent, including we also once questioned the power exchange in the early stage of the industry. But at present, with the rapid development of the industry, from the perspective of the energy revolution, we believe that sustainable electric vehicles will eventually evolve into a pattern of complementary charging and replacing in the future, and too much debate has become an obstacle to the development of the new energy industry.
With the starter gun of this power change sounding again, the 100 billion track is suddenly full of people, through the fog of route disputes, the future focus, when on the power exchange track, to see who is leading, and who is overtaking in the corners.