As an important part of the energy revolution, new energy vehicles not only subvert the traditional fuel vehicle industry, but also give birth to a series of related industrial chains, including the bumpy fate of changing electricity.

When it comes to changing electricity, we have to mention a company, Better Place. As early as 2007, Better Place was established in California and became the first power exchange operation company in the world. Because the innovation has created the electric vehicle replacement and supplement solution, Better Place once became a trend leader in the new energy field, raising a total of US $850 million and valued at US $2.25 billion.

In 2010, Better Place came to China, first reached a cooperation with Chery Automobile to develop mass production version of the application of power exchange models; in April of the following year, it signed a strategic cooperation agreement with Southern Power Grid on the power exchange mode, and set up an exchange power station and experience center in Guangzhou. During this period, Better Place is in the limelight, and its power exchange business has covered Israel, Denmark, Australia, Canada, Japan and other countries.

However, after several years of operation, on May 26, 2013, Better Place faded out of the public eye in the form of bankruptcy liquidation.

However, the enthusiasm for the power exchange mode in the new energy vehicle market has not been extinguished. Less than a month later, the "successor" of Better Place arrived, which was then the star electric car company Tesla, Inc..

At the power exchange press conference on June 20, 2013, Musk personally explained the newly developed power change mode. "Tesla, Inc. 's car owners could only 'refuel' by charging, and the supercharging station took 30 minutes. The normal charging method takes hours. But today's power change mode can resurrect the electric car with blood for 90 seconds. "in just over 90 seconds, a Model S has completed the entire power change process, which is much faster than the refueling time of the fuel car.

When it comes to the future of power replacement, Mr Musk is confident that the system will be the first to be put into use on California's Imure 5 highway, followed by the construction of a power station along the road from Boston to Washington.

But dramatically, two years after Tesla, Inc. launched the power exchange mode, it was abandoned because of problems such as the business model, and Musk has devoted himself to super fast charging technology with his team since then.

Looking back to China, the power exchange mode has also encountered the dilemma of the pilot failure of the State Grid in cities. in 2013, it was proposed that the State Grid, which is mainly power exchange, turned to the "new route" of "leading fast charging, giving consideration to slow charging and guiding power change". Began to support the charging mode. Starting from 2014, high-level policies began to focus on encouraging the development of charging, and the power exchange mode gradually faded out of sight.

For quite a long time after that, the power exchange mode has been at a low ebb, while the charging mode has become the mainstream by leaps and bounds. Until 2020, the power exchange mode ushered in a new round of dawn.

From the early popularity of the market, to the subsequent silence, and then to the dawn, what has the power exchange mode experienced? Can we open up the space for growth as scheduled?

01 change power VS fast charge

[1] what is power change?

As the name implies, the electric car does not need to be recharged but is satisfied with battery life directly by replacing the battery. This mode of separating the car from the battery to replenish energy is called power exchange.

According to the different application scenarios, the power exchange technology is initially divided into chassis power exchange, sub-box power exchange, side power exchange and so on. After more than a decade of technological change, chassis power exchange has become the mainstream form of power exchange for passenger vehicles, representing enterprises such as BAIC New Energy, NIO Inc., etc., while commercial vehicles mainly adopt end and side power exchange.

[2] advantages of changing electricity

As the saying goes, the martial arts in the world can only be broken quickly, and the biggest advantage of the power exchange mode is that it takes only a few minutes to complete the whole journey, and the replenishment experience is equivalent to that of traditional fuel-fired cars, sometimes even faster. In addition, compared with charging, the power exchange mode is superior in prolonging battery life, maintaining and managing safety, reducing power grid load and so on.

The author combs the advantages of power exchange mode from five aspects:

1) for car owners, in addition to realizing fast energy replenishment, the power exchange mode can better solve the problems of power battery depreciation and second-hand car depreciation that make every car owner have a big head. In addition, most of the battery spontaneous combustion occurs in the charging process, and the power change mode avoids the most dangerous link for the car owner and makes the main use of the electric vehicle more at ease.

2) for car companies, since batteries alone account for 30% of the total vehicle cost of electric vehicles, the overall cost of electric vehicles is greatly increased, so it is difficult to compete with fuel vehicles in terms of performance-to-price ratio; while the separation of cars and electricity in the power exchange mode significantly reduces consumers' initial purchase costs and lowers the purchase threshold for consumers, which means a bit like housing mortgage.

3) for battery enterprises, the power battery in the replacement station is controlled and managed by professionals, and compared with individual consumer management, the battery life of the former can be extended by 30%, 60%; and once there is a battery problem, it is found in the exchange station, which can greatly reduce 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 generally for the fast charging 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 slow charging with low power, which can not only reduce the load of the power grid, but also avoid the peak and balance the peak and valley to a certain extent.

5) for the society, the change of power station is like a gas station, except for the queuing time, the vehicle basically does not spend extra time to stay, and the exchange of electricity has a higher utilization rate in the same space. Especially in the modern society where time is money, the time saved by changing power stations is to improve social efficiency.

Figure 4: comparison of power exchange with slow and fast charging modes, data source: "Research on charging service mode of electric vehicles", Guosheng Securities

02 origin and extinction

Since changing electricity is as good as you say, why is it that, as mentioned at the beginning, this model has experienced quite a long trough at home and abroad?

[1] there were high hopes

Since the national launch of the "Ten cities and Thousand vehicles" demonstration project in 2009, electric vehicles have sprung up all over the country. However, the early electric vehicles were unfriendly to users, especially commercial vehicles and taxis, because of the limited battery technology, which led to long charging time and short battery life. On the other hand, because of the high cost of batteries, the purchase cost of electric vehicles is much higher than that of fuel vehicles of the same class, which also restricts the promotion of electric vehicles. At that time, the deficiency of the battery was determined by the nature of the material itself, and it was difficult to see a significant change in the short term.

After a comprehensive balance, the power exchange mode has naturally become the focus of attention in the industry. Compared with the charging mode, changing electricity can relieve the pain points of electric vehicles better and faster. In fact, electric buses in the Beijing 2008 Olympic Games and the 2010 Shanghai World Expo all adopt the battery replacement mode.

Therefore, we also see that in the early stage of the development of electric vehicles, State Grid first carried out research on power exchange technology in the field of new energy vehicles, and put forward the business model of "power exchange, power insertion as a supplement, centralized charging and unified distribution". From 2009 to 2012, the State Grid has successively completed the relevant technical reserve and taxi power exchange pilot.

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 China" was hotly discussed in the industry. As an important document to guide the development of electric vehicle charging facilities in China, the report also determines the charging service mode of "power replacement, combination of charging and replacement, various forms and market orientation".

[2] fall into a trough

However, just a few years later, the business thinking of the State Grid in the field of recharging power has made a "sharp U-turn". By 2013, the State Grid has made a major adjustment to the technical route of recharging electricity. "leading fast charging, giving consideration to slow charging, guiding power change, economical and practical". To say that it is dominant is basically to give up changing electricity.

At the national policy level, since 2013, the national policy has continued to encourage the construction of new energy vehicle charging infrastructure, the policy does not involve support for power exchange, and the power exchange mode has been neglected at the policy level.

It is worth mentioning that in 2014, State Grid opened the market for recharging facilities to social capital, and then private enterprises such as Star charging and Special calls began to enter, and the charging market ushered in the rapid development in the following few years. Charging mode has gradually become the absolute mainstream of the market.

The reasons for the rapid failure of power exchange are mainly due to the high investment cost, few replacement vehicles, imperfect standards, immature business model and so on.

1) the investment cost is high. Compared with the investment of thousands to tens of thousands of charging piles, the construction cost of a single replacement station is more than 2 million, which does not include the backup battery, so the investment of each replacement station is millions of yuan. What is more difficult is that in order to support the normal operation of power exchange vehicles, it is often necessary to build multiple power stations in a pilot area to form a power exchange network.

2) battery standardization is not uniform. The battery packs of different brands and different models of electric vehicles have a low degree of standardization and great differences in size, so it is difficult to share power stations, just like the mobile phone charging interface at that time.

3) the popularization rate of changing trams is low. First of all, there are few electric vehicles, and the base of the overall electric vehicles at that time is still relatively small, not to mention the low utilization efficiency of the two trams and the low utilization efficiency of the power station, which increases the return cycle; secondly, there are few power exchange models, and if you want to popularize the power exchange mode on a large scale, it is necessary to develop in the power exchange mode from the time of the whole vehicle design, which needs to have a certain scale of vehicle ownership, so it is essential for a certain number of vehicle factories to participate in the support.

4) the business model is not perfect. In the early days, the third parties represented by Better Place and State Grid proposed the commercialization model of power exchange to purchase their own power batteries and play the role of "battery operators". Although consumers no longer need to pay for batteries, which can greatly reduce purchase costs, for vehicle companies, once accepting this plan, it is equivalent to losing control over the core part of new energy vehicles. The production of electric cars is only for the third party to do wedding clothes, naturally not many car companies are willing to respond.

To sum up, the "failure" of the power exchange mode is never a simple problem of technology and investment, but a comprehensive result of business model, industrial policy, industry ecology, market recognition and so on.

Figure 5Rom 2013-2016 charging related policies, source: government website

03 Dawn reappearance

[1] the policy spring breeze starts first.

Through the previous analysis, we can see that power exchange has always been a model that requires multi-party coordination, and policy as a forerunner is destined to be the best indicator for ice-breaking observation.

In the Government work report issued by the State Council in May 2020, the content of new infrastructure has been expanded from "building charging piles" to "increasing charging piles, replacing power stations and other facilities". This is the first time that power stations have been included in the government work report. it is also the first time that power stations have been included in the ranks of new infrastructure and become one of the seven important areas of new infrastructure in China. Since then, a number of government documents have proposed to vigorously develop the power exchange mode.

Until October 2021, when the power exchange mode really ushered in the policy inflection point, the General Office of the Ministry of Industry and Information Technology issued the Circular on starting the pilot work on the Application of Power Exchange Mode for New Energy vehicles, and decided to start the pilot work on the application of electricity exchange mode for electric vehicles. Accelerate the development of electric vehicle power exchange mode, and 11 cities such as Beijing, Nanjing, Wuhan, Sanya and Chongqing will be included in the first batch of pilot projects.

A month later, the national standard of "Power Exchange Safety requirements for Electric vehicles" was formally implemented, which is the first basic general national industry standard in the field of power exchange in China's automobile industry. The introduction of the standard document can be said to solve the problems in 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 and so on. This means that a new stage of power exchange mode is just around the corner.

Figure 6: sorting out the important policies of the power exchange industry since 2020, source: various ministries and commissions, brocade research institute

[2] forces from all sides enter the arena

Since 2020, with the release of the power exchange policy and the outbreak of the new energy market, the capital that has been waiting for a long time has poured into the field of power exchange one after another.

• In August 2020, NIO Inc. officially launched the BaaS car electric separation battery rental scheme.

• In April 2021, China Petroleum & Chemical Corp and NIO Inc. signed a strategic cooperation agreement to carry out the construction and operation of power stations.

• In October 2021, Geely Automobile launched a new power exchange travel brand-Ruilan.

• In January 2022, Ningde Times released the EVOGO power exchange brand and combined power exchange overall solutions and services. In the future, EVOGO will select ten cities to start the first power exchange service, and release more brands of electricity exchange models.

In addition, operators of Olympic Power Station, Bertan and Xiexin Energy Co., Ltd. are also speeding up the construction of the exchange power station and actively cooperating with the main engine factory.

Figure 7: NIO Inc. BaaS operation mode, data source: NIO Inc. official website

[3] Terminal demand cooperation

As the saying goes, "before the troops move, food comes first." in the future, only by establishing a mature network of charging and changing electricity, will it be possible for the automobile industry to fission from 1 to 10.

Looking back in history, the power exchange mode has been faced with the so-called "chicken or egg first" problem, that is, consumers are unwilling to buy power exchange models when the replacement power station is not perfect, and the mainframe factory is not willing to promote electric vehicles on a large scale without the support of a perfect exchange power station, and power exchange operators are even more unwilling to invest on a large scale in the absence of a large amount of market demand for electric vehicles. As a result, all parties are caught in an endless cycle of "chickens and eggs".

With the deepening of electrification transformation and the improvement of end-consumer acceptance, this strange circle is gradually broken. Nowadays, mainstream car factories have launched power-exchange models one after another, and there are more and more power-exchange models, the most typical of which is NIO Inc..

At the same time, in 800V high voltage fast charging: new highlands that electric cars must capture from 1 to 10, we find a new weakness of electric vehicles-charging anxiety. Battery life is no longer the core selling point of electric vehicles, and the new contradiction in industrial development has been switched to the speed of energy replenishment. as one of the solutions, changing electricity will theoretically be a useful supplement to fast charging.

Figure 8: mainstream automobile factories have launched power exchange models (incomplete statistics). Source: Autohome Inc, Gao Gong Li Dian, 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 heaven for a living". In the article "Power upheaval: UHV, Energy Storage and Smart Grid" released last year, we observed the urgency and importance of developing a new power system, one of which is the energy storage system.

We had a good chat by changing the electricity, why did you suddenly cut to the energy storage? This is because in the previous article, the author did not mention that an important reason for everyone's pursuit of power exchange is that the exchange power station is actually a small energy storage power station. Imagine that you have a replacement power station. Naturally, you can complete the charging when the electricity consumption is at the bottom and the electricity price is cheap, and then sell the battery to the customer at the peak of electricity consumption. The end result is: the electricity price difference is earned by changing the power station, the owner shortens the replenishment time, and the load pressure of the power grid is reduced.

Therefore, the power exchange can cut the peak and fill the valley, reduce the power grid load and realize the function of energy storage by adjusting the charging time. This is also the "super ability" that the fast charging mode does not have.

How big is this superpower? To make a rough calculation, suppose 10 million electric vehicles join the power exchange mode, assuming that each car consumes 10 kilowatt-hours of electricity, that is, it will consume 100 million kilowatt-hours of electricity a day, which is basically equivalent to the electricity generated by two Gezhouba.

04 trillion starting gun sounded

Finally, when it comes to the topic that readers are most concerned about, it is the space for the growth of the industry brought by the power exchange mode.

The calculation method is not complicated, that is, according to the current demand gap of vehicle-pile ratio, and then taking into account the continuous improvement of the permeability of subsequent power exchange models. According to the forecast of Guosheng Securities, the space for changing power stations is on the scale of hundreds of billions of dollars.

Figure 9: market space calculation of China's power exchange industry in 2030 (unit: 100 million yuan), source: Guosheng Securities

In terms of quantity and scale, according to the current planning of several leading enterprises, NIO Inc., Geely and China Petroleum & Chemical Corp alone have more than 14000 exchange power stations during the 14th five-year Plan period. coupled with the planning of Ningde era, Olympic New Energy, Bertan Technology and other enterprises, the total number will far exceed 20, 000. according to the millions of investment scale of each exchange power station, it is also an investment of about 100 billion.

With the follow-up improvement of the sales of new energy exchange models and the catalysis of the exchange policy, the construction of the exchange station is expected to enter the acceleration, and its role in infrastructure construction is comparable to that of the traditional gas station. There is no doubt that the power exchange mode has become another big tuyere after energy storage and fast charging, and hundreds of billions of space may be just the starting point.

Figure 10: planning of several major enterprises, source: public information

Undeniably, there is still a debate in the field of new energy vehicles today about whether passenger cars should take charging mode or changing electricity mode. after all, the advantages and disadvantages of the two routes are very prominent, including our doubts about changing electricity at the beginning 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 in which charging and recharging complement each other in the future. on the contrary, too much debate has become an obstacle to the development of the new energy industry.

With the re-sounding of the starting gun for this change of electricity, there was a sudden uproar on the 100 billion track, passing through the fog of the route dispute, and the focus for the future is to see who is taking the lead and who is overtaking in the corner.