A notable breakthrough for CATL (Contemporary Amperex Technology Co., Limited) has emerged as it forms alliances with five major automakers to produce a total of ten diverse vehicle modelsThis marks a significant step in their strategic ambitions, especially as they pivot towards expanding their services in the battery swapping sector, a move that has, until now, maintained a relatively low profile compared to their core battery production and energy storage operations.

On December 18, CATL unveiled transformative innovations in its battery swapping services, launching standardized battery units, specifically known as Battery 20 and Battery 25. These new swapping units cater to varying vehicle sizes and offer different ranges, enhancing the versatility of CATL’s offerings

Moreover, the company has initiated ambitious plans to construct a network of battery swapping stations, significantly contributing to the infrastructure necessary to support this growing sector.

According to Yang Jun, CEO of Times Electric, CATL is set to establish 1,000 battery swapping stations by 2025, extending its footprints into the markets of Hong Kong and MacauThe mid-term goal is to reach 10,000 stations, with a long-term vision of more than 30,000 installationsThis ambitious expansion signals a strong commitment to the battery swapping model, which many believe is pivotal for the future of electric vehicle infrastructure.

Building these swapping stations requires collaboration with numerous partners across the automotive and energy sectorsCATL has forged alliances with over 50 companies, including established names like Changan Automobile, FAW Hongqi, GAC Aion, BAIC, SAIC Maxus, and SAIC-GM-Wuling, as well as firms in the technology and insurance sectors like Didi and Pacific Insurance.

Additionally, the innovative Chocolate Battery Swap service has already partnered with several key players, including Changan Automobile and GAC Aion, to roll out ten new swapping-enabled vehicle models starting from the end of this year.

Recent statements from Changan representatives confirm that their collaborative swapping vehicles with CATL will soon commence operations in Chongqing, with the initial batch already set to hit the transportation market

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Notably, the urban area of Chongqing currently supports 16 battery swapping locations, laying the groundwork for this model's expansion.

However, for CATL's chairman, Zeng Yuqun, it's not solely about scale; the competition revolves significantly around standardizing the swapping systemWith the growing public awareness of the efficiency of battery swapping compared to the lengthy charging times required for personal vehicles, which can last anywhere from thirty minutes to an hour, the enticing prospect of recharging within five minutes is gaining traction.

The pilot testing phase for this swapping model took shape in October 2021, as China’s Ministry of Industry and Information Technology (MIIT) launched trials in eleven cities across the nation, including Beijing and ChongqingBy 2023, the MIIT and seven other ministries issued a notification urging the development of comprehensive electrification in public transport, underlining the importance of establishing a balanced and highly efficient charging and swapping infrastructure.

According to estimates from Founder Securities, battery swapping for passenger vehicles is expected to exceed 2.8 million units sold by 2025, with commercial vehicle sales surpassing 500,000 units

By then, the anticipated demand for battery swapping stations could reach approximately 28,000, contributing to a total industry valuation exceeding 330 billion RMB.

More crucially, these swapping stations function as comprehensive energy storage hubs, effectively accumulating power batteriesFor CATL, this strategy enhances battery throughput and fosters a closed-loop model for adjusting battery production and inventory.

In response to these emerging needs, CATL launched its EVOGO battery swapping service brand in 2022 alongside the innovative Chocolate Battery packsThis year, upgrades to the Chocolate Battery were implemented, introducing the 20 and 25 series of batteries with varying specifications to accommodate a broad range of vehicle types.

The 20 model battery is suited for A0 class vehicles, providing options between lithium iron phosphate versions with a capacity of 42 kWh for a range of 400 kilometers and ternary lithium versions with a capacity of 52 kWh for 500 kilometers

Meanwhile, the 25 model battery supports A and B class vehicles, offering a lithium iron phosphate version with a capacity of 56 kWh for 500 kilometers, alongside a ternary lithium version with a capacity of 70 kWh for 600 kilometers.

In terms of infrastructure, CATL also unveiled next-generation swapping stations designed to accommodate vehicles with a wheelbase of 2.55 to 3.1 metersThese state-of-the-art stations will include 14 to 30 battery packs, with a single swap taking about 100 secondsImpressively, these stations can achieve up to 822 swaps in one day, substantially improving operational efficiency.

However, beyond the improvement of products, CATL is keen on establishing a standardized ecosystem that will enhance its strategic position in the marketZeng Yuqun emphasized the importance of advancing battery swapping standardization.

This involves developing comprehensive safety standards, testing methods, and verification protocols for battery swapping systems, including electric vehicles equipped with swap technology and universal battery packs

The ongoing dialogue concerning electric vehicle battery standards and their interoperability will be crucial in shaping future developments in this industry.

As the battleground for industry standards unfolds, the size of one’s partnership network may play a pivotal role in securing influence over these crucial standards.

Fierce Competition: CATL versus NIO

The competition in the battery swapping market is intensifying, with multiple players vying for market shareNIO, which was one of the pioneers in this space, has already established over 2,800 swapping stations and aims to have 5,000 operational by the end of 2025.

In addition to the number of stations, NIO has strategically positioned itself in high-demand areas, including highway resources that are typically scarce

By the end of this year, NIO plans to interconnect a cross-country battery swapping network consisting of nine vertical and nine horizontal corridors, achieving more than 900 highway swapping stations, ensuring that there will be a swapping station approximately every 200 kilometers on major expressways.

Furthermore, NIO has adopted a partner-based strategy to push into county marketsTheir “County Connectivity” plan has already established new swapping facilities across 64 county-level administrative regions, with over 220 new swapping station agreements signedNotably, Jiangsu is set to have its county-wide swapping network completed within the year, accommodating all 95 counties within the province.

Beyond its own expansion, NIO has actively cultivated partnerships, integrating seven major automobile manufacturers into its battery swapping alliance, including Changan, Geely, and SAIC

Within this collaborative framework, the establishment of battery technology standards and the development of compatible swapping vehicles are key focuses.

On the resource management front, NIO collaborates with major players in the energy sector, such as Sinopec and Shell, to integrate swapping stations with existing refueling and charging stations to maximize user convenience.

Another notable contender in the battery swapping arena is Aodong New Energy, which has emerged as a dark horse in the marketAodong has developed a business model encompassing core technology research, commercial operation of swapping stations, distributed energy solutions, and battery lifecycle managementBy April 2024, Aodong plans to deploy over 10,000 battery swapping stations nationwide, aiming to serve over ten million electric vehicles

Their partner network extends to energy giants like BP and various automotive manufacturers.

While some companies thrive in this dynamic environment, others face challengesFor instance, GCL Technology, which entered the battery swapping sector in 2021, invested significantly in developing swap stationsHowever, in December 2023, the company announced that its expansion plans had fallen short of expectations due to changes in market conditionsThey projected a delay in operational timelines, eventually leading to a strategic retreat from the battery swapping business in 2024.

High investments coupled with a lengthy return on investment period posed significant challenges for GCL TechnologyThe cost estimation for each battery swapping station reached approximately 4.9 million RMB, requiring substantial ongoing operational expenses, including land leases and utility costs.

For CATL, accelerating development, enhancing alliances, and leveraging scale to reduce costs and seize advantageous resources will remain top priorities as the electric vehicle market continues to evolve.