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Plugged cars charging in a station

The construction and operation of battery swapping stations

Photo by Shutterstock

The construction and operation of battery swapping stations

Compare IOA
Country
China
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Renewable Resources and Alternative Energy
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Alternative Energy
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
10% - 15% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
> USD 1 billion
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
> USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Climate Action (SDG 13)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Industry, Innovation and Infrastructure (SDG 9)

Business Model Description

Battery swapping of electric vehicles: centralized charging stations that include centralized storage, centralized charging, unified distribution of a large number of batteries, and battery swapping at the station. The stations can charge vehicle owners of battery rental and swapping fees. (5) (6)

Expected Impact

Battery swapping stations can promote new energy vehicles, reduce emission, extend the service life of batteries, and mitigate environmental pollution

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Disclaimer

UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.

The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.

Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the website are not an offer to sell or a solicitation of an offer to buy any investment, security, or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
China
Region
  • China: Zhejiang
  • China: Inner Mongolia
  • China: Jiangsu
  • China: Hebei
  • China: Henan
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Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Renewable Resources and Alternative Energy

Development need
China's current energy structure dominated by fossil energy. Fossil energy resources are limited and can release large amounts of carbon dioxide when burt, accelerating global climate change and extreme weather events. Thus, renewable energy is crucial to China's green transformation and energy security. (1)

Policy priority
The proportion of non-fossil energy in total energy consumption should be increased to about 20%. State Council's action plan for carbon peaking stated that wind and solar power generation, biomass power generation and heating should be developed. By 2030, the total installed generation capacity of wind and solar power will reach above 1200 gigawatts. (1)

Gender inequalities and marginalization issues
Renewable energy employs about 32% women, compared to 22% in the energy sector. (2)

Investment opportunities introduction
The IOAs in the renewable energy sector center around the utilization of solar energy, wind energy, and biomass energy.

Key bottlenecks introduction
The energy endowment and demand don't match. Hydropower generation is centralized in southwest China, while wind and solar energy are centralized in northern China, which is far away from the centers of consumption in the eastern and coastal areas. The instability of renewable energy poses a challenge to the consumption and stable operation of the grid.

Sub Sector

Alternative Energy

Development need
The transportation industry accounted for 10% of China’s total energy consumption and 11% of the total carbon dioxide emissions in 2020. The development of new energy vehicles is important to a clean and low-carbon transportation industry and battery technology is a key factor. Batteries directly impact the driving range and even the quality and cost of electric vehicles.

Policy priority
It is specifically mentioned in the "Planning for the Development of the New Energy Automobile Industry (2012-2020)" that breakthroughs should be made in battery technology, establishing an efficient battery recycling system, and speeding up the construction of charging and battery replacement infrastructures. (3)

Gender inequalities and marginalization issues
Most buyers of new energy vehicles are from the first- and second-tier cities in China, accounting for more than 80% of the total. Buyers from the first- and second-tier cities account for 46% and 37%, respectively, and buyers from the third- and fourth-tier cities take up 11%. (4)

Investment opportunities introduction
The IOAs in this sector center around the construction and operation of battery swapping stations and the recycling of traction batteries.

Key bottlenecks introduction
Relevant policies, regulations, and mechanisms need further improvement.

Industry

Fuel Cells and Industrial Batteries

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Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

The construction and operation of battery swapping stations

Business Model

Battery swapping of electric vehicles: centralized charging stations that include centralized storage, centralized charging, unified distribution of a large number of batteries, and battery swapping at the station. The stations can charge vehicle owners of battery rental and swapping fees. (5) (6)

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Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Market Size (USD)
Describes the value in USD of a potential addressable market of the IOA.

> USD 1 billion

CAGR
Describes the historical or expected annual growth of revenues in the IOA market.

> 25%

It is expected that the number of battery swapping stations will reach 22,000 by 2025, with the market size of station operation being 263.1 billion and the swapping station equipment market size being 69.3 billion. These correspond to the CAGR of 80%-107% for swapping station construction, operation, and equipment from 2021 to 2025. (9)

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

10% - 15%

According to GCL Energy Technology Co., Ltd.'s announcement, the internal rate of return (after-tax) of a single passenger car battery swapping station is 10.74% and the overall internal rate of return (after-tax) of a battery swapping station is 13.90%. (7)

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Medium Term (5–10 years)

According to GCL Energy Technology Co., Ltd.'s announcement, the payback period (after tax) of a single passenger car battery swapping station is estimated to be 5.14 years, and that of a single heavy truck battery swapping station is estimated to be 4.92 years. (7)

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

> USD 10 million

Market Risks & Scale Obstacles

Capital - CapEx Intensive

The pain points of battery swapping mainly include high preliminary investment in the construction of the battery swapping stations. There's a great financing need. (10)

The low standardization of battery swapping makes it hard to form a scale effect and promote the application of the technology. Cooperation should be strengthened between vehicle companies and battery companies. (11)
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Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

Because of the long charging time, electric cars aren't as convenient as traditional petrol-powered vehicles. Popularity of electric vehicles are limited by the short service life of batteries and pollution that arises from manufacturing and scrapping process.

Gender & Marginalisation

For now, battery swapping stations are mainly located in economically developed coastal or central cities in China and are rarely seen in the third- and fourth-tier cities and towns. (21)

Expected Development Outcome

Promoting battery swapping stations can help improve the penetration of new energy vehicles, contributing to carbon emission reduction in the transportation industry. The battery-swapping model can also extend the service life of batteries while mitigating environmental pollution.

Gender & Marginalisation

The establishment and development of battery swapping stations in non-Tier one cities can help increase the penetration of new energy vehicles in these regions.

Primary SDGs addressed

Climate Action (SDG 13)
13 - Climate Action

13.2.2 Total greenhouse gas emissions per year

Current Value

China's greenhouse gas emissions is around 15 billion tons of CO2 equivalent in 2020.

Target Value

China strives to achieve carbon peaking before 2030 and carbon neutrality before 2060.

Secondary SDGs addressed

9 - Industry, Innovation and Infrastructure

Directly impacted stakeholders

People

New energy vehicle owners can have a better driving experience. More people will be able to own new energy vehicles at a lower price.

Planet

Promoting battery swapping stations can help improve the penetration of new energy vehicles, contributing to carbon emission reduction in the transportation industry.

Indirectly impacted stakeholders

People

Battery swapping stations can create more energy-related employment opportunities.

Outcome Risks

There exist safety risks of batteries and the risk of personal information leaking, given the IoT model of the battery swapping stations.

Impact Risks

In the absence of regulation, the blind development and repeated construction of battery swapping stations can lead to a waste of resources and potential safety risks.

Impact Classification

C—Contribute to Solutions

What

The development of battery swapping stations can help reduce charging time, promoting new energy vehicles.

Risk

The blind development of battery swapping stations can lead to a waste of resources and potential safety risks.

Impact Thesis

Battery swapping stations can promote new energy vehicles, reduce emission, extend the service life of batteries, and mitigate environmental pollution

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Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

The application of the battery-swapping model should be encouraged. The R&D of new charging technologies such as smart orderly charging, high power charging, wireless charging should be strengthened to improve charging convenience and product reliability. (3)

NDRC's policy document promotes battery-swapping model, with the focus being on short-haul, high-frequency, and heavy-duty scenarios, and supports the construction and layout planning of battery swapping stations and shared battery-swapping for rental. (13)

(Policy document): In October 2021, MOIIT announced the decision to launch the pilot projects. 8 cities in the comprehensive application category (Beijing, Nanjing, Wuhan, Sanya, Chongqing, Changchun, Hefei, Jinan). 3 cities in the heavy truck special category (Yibin, Tangshan, Baotou). (22)

Financial Environment

In 2020, MOF issued subsidy policy to support innovations like "vehicle-electric separation". In order to promote battery swapping, these vehicles are not subject to the regulation that "pre-subsidy selling price should be 300,000 yuan or less (including 300,000 yuan)". (16)

In May 2021, NDRC and NEA drafted implementation opinions to promote the establishment of unified standards for battery swapping in major application areas and optimize financial and tax support policies for charging and battery swapping infrastructure. (17)

Regulatory Environment

The State Administration for Market Regulation issued the "Safety requirements of battery swap for electric vehicles" to improve the safety level of electric vehicles using battery-swapping technology in terms of mechanical strength, electrical safety, environmental adaptability. (14)

In April 2019, the "Urban public facilities—Specification for operation management and service of electric vehicle charging/battery swap infrastructure" was published, which specified the requirements for the operation of batter swapping stations. (15)

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Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

Private Sector

Important investors include Softbank, Weilai Holding Co., Ltd., Contemporary Amperex Technology Co., Ltd., and internet companies such as Tencent and Huawei.

Government

Local governments have started to provide financial subsidies and policy support for the operation of battery swapping stations, especially in coastal areas, such as Beijing, Shanghai, Chongqing, and Hainan. (18) (19) (20)

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Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map

China: Zhejiang

The target locations were identified according to the comparison of policy index and development need index of Fuel cells & industrial batteries, utilizing natural language processing (NLP) to show key regions with stronger political will and greater development need.

China: Inner Mongolia

The target locations were identified according to the comparison of policy index and development need index of Fuel cells & industrial batteries, utilizing natural language processing (NLP) to show key regions with stronger political will and greater development need.

China: Jiangsu

The target locations were identified according to the comparison of policy index and development need index of Fuel cells & industrial batteries, utilizing natural language processing (NLP) to show key regions with stronger political will and greater development need.

China: Hebei

The target locations were identified according to the comparison of policy index and development need index of Fuel cells & industrial batteries, utilizing natural language processing (NLP) to show key regions with stronger political will and greater development need.

China: Henan

The target locations were identified according to the comparison of policy index and development need index of Fuel cells & industrial batteries, utilizing natural language processing (NLP) to show key regions with stronger political will and greater development need.
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References

See what sources were used to establish the investment opportunity’s data and find resources that could be consulted to explore more.
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