Start your EV Battery Swapping Business: Complete Business Model

The EV revolution is redefining energy sources for global transportation and mobility. As a more sustainable and reliable energy source, EVs ensure a low-carbon future and have gained unwavering trust from global governments. These governments also announced numerous policies and incentives to advance the growth of the EV industry and launched various EV infrastructure development programs. As per statistics, the entire EV industry was worth  $603.45 billion in 2022 and is expected to reach 1.38 trillion by 2031, growing at a CAGR of 9.68%.

One sector of the EV industry that is capable of bringing a paradigm shift in how the entire EV infrastructure operates is the battery-swapping model. The model holds immense business potential for entrepreneurs and is backed by impressive growth statistics, a CAGR of 46.9% in the projection period 2022-2027, with the industry capturing almost $11.8 billion in the next three years. Thus, for entrepreneurs strategizing to enter the EV industry, launching a battery-swapping business holds immense potential. 

Through this article, you will understand the scope of the battery-swapping business and its entire business model in great detail. Additionally, we have also created a roadmap to help you build your own online EV battery-swapping business.

Key Growth Factors Behind the EV Battery Swapping Sector

In the EV industry, the battery-swapping model brings insurmountable benefits to both B2B and B2C customers. In the B2C sector, battery swapping applies to eBikes and cars, and in the B2B sector, commercial fleet and public transport vehicles, such as delivery vehicles, buses, tuk-tuks, and more benefit from the battery swapping model. 

The diverse applications of EV battery swapping provide the industry with multiple growth factors:

1. Highly Cost-Effective in Comparison to Purchasing New Battery

In comparison to ICE (Internal Combustion Engines) vehicles, EVs are very costly. The added cost of the battery is one of the primary reasons behind the price surge as the battery unit in itself amounts to 50% of the overall vehicle cost. Thus, repurchasing the battery puts a financial strain on the EV owner. In contrast, the battery swapping option where the owner can easily swap drained batteries with fully recharged batteries is more cost-effective. The owner can also access a never-ending supply of charged batteries. 

2. Reduce Downtime for Both Consumers and Commercial Fleet

The EV charging infrastructure is quite slow. Even with fast DC chargers, it can take up to 60 to 80 minutes to achieve a full charge. This downtime leads to several disadvantages for EV owners. On the other hand, battery swapping is quick and efficient, providing owners with immediate charge to go the extra mile. For commercial fleets, this reduced downtime also helps in providing a satisfying customer experience and prevents loss. 

3. Reduce Delivery Costs for Commercial Fleet

Another way battery swapping is cost-effective for commercial fleets is because swapping batteries at external stations is more affordable than investing in electric infrastructure and charging vehicles. Nevertheless, commercial fleets can also sign exclusive contracts with battery swapping companies to provide them with replaceable batteries at special pricing or monthly contracts. 

4. Eliminate Range Anxiety

In the EV industry, range anxiety refers to the conscious anxiety of EV owners about their EV batteries depleting without reaching the designated destination. Due to this range anxiety, EV owners feel less confident while taking their EVs on long routes. The challenges in setting up new charging stations further exacerbate this problem. However, battery-swapping stations do not require any reinvestments in the electrical infrastructure and thus can be set up easily. These stations help expand the EV network across wide geographical areas and reduce range anxiety.

5. Direct Relation with EV Sales

The demand for battery swapping business and EV sales are correlated with each other. By expanding the EV network, battery-swapping stations have a profound impact on the demand for electric vehicles, primarily in the B2C sector. As the EV demand increases, more people realize the benefits of EV battery-swapping stations and prefer them over the existing time-consuming EV charging stations.

6. Recyclable Batteries

Investing in EV batteries is profitable for entrepreneurs in many ways. First, they can invest in EV batteries in bulk to maximize the utilization of their capital. This way, they can keep higher profit margins and reach a breakeven point faster. However, EV batteries are also recyclable. Meaning, that once their charging lifespan is over, they can resold to manufacturers for recycling purposes, providing an additional benefit to battery-swapping business owners.

7. No Additional Load on Power Grids

One of the key challenges in expanding the EV network by installing charging stations was the added load on the electric or power grids. Due to limited power supplies and distribution policies, it was a huge challenge for companies to set up their EV charging stations both inside and outside cities. In most cases, companies were required to invest in microgrids as well. In contrast, the battery swapping stations do not put additional load on power grids. The batteries can be charged at a primary warehouse, connected to a single or dedicated power grid and fully charged batteries can be transported to scattered swapping outlets. 

How Does the Battery Swapping Business Model Work – Complete Operational Workflow 

The battery-swapping business model primarily involves 3 to 4 entities or user types depending on your target audience. Additionally, to streamline operations, you need a battery swap operations management software. This software will be used to maintain the inventory log, manage swapping stations, generate invoices, and oversee all operations. 

For a complete overview, we have explained the operational workflow inclusive of both B2B and B2C customers.

User Types in The Battery Swapping Business Model

1. The Battery Swapping Service Provider or the Admin: This is the primary user type and refers to the business owner and administrative representatives. The admin is completely responsible for overseeing the entire operations through a centralized platform.

2. The Swapping Station: These can be independent companies and contractors providing battery swapping services under your business name, just like the different franchises of a business. Or, you can also hire your own staff to maintain the swapping stations. The key responsibilities of these stations are to exchange batteries and keep a log of inventory and customers. Maintaining this log is important to keep proper track of swapped batteries and generate consolidated invoices.

3. Corporate Businesses with Commercial Fleets (B2B Customers): These are the corporates that purchase eBikes and batteries from you in bulk. For example, restaurants, MNCs, hotels, courier companies, laundry companies, logistic companies, and other companies that have their own commercial fleet for delivery operations.  

4. B2C Customers: These are individual customers who purchase electric vehicles with batteries compatible with your swapping service operations. 

Workflow of a Battery-Swapping Business

The following is the exemplary workflow of a battery-swapping business. You can also make changes to it depending on your business requirements or technical limitations.

• Step 1: The battery swapping business owner or the admin transports fully charged batteries from the warehouse to different swapping stations.
• Step 2: The delivery agents of corporate brands (B2B customers) and B2C customers visit the swapping station.
• Step 3: The swapping station swaps the batteries and scans the QR code on both the batteries and the electric vehicle to maintain a log in the battery swapping software system. 
• Step 4: The system generates an invoice depending on the percentage charge of the returned batteries, eg. 100% charge – percentage charge returned. 
• Step 5: In the case of B2B customers, the invoice amount is saved in the account receivables log in the system. The entire due amount is paid by the corporate by the end of the month.
• Step 6: In the case of B2C customers, the EV owner pays the invoice amount right after battery swapping.
• Step 7: The admin collects the drained batteries on a routine basis and takes them to the warehouse for charging.

Revenue Generation Model 

The battery swapping business model includes some recurring revenue streams, which makes it easier to make money. Basically, after selling an electric vehicle or partnering with an EV manufacturer, you can create your monopoly for battery swapping in the market. Meaning, the customer will need to revisit your swapping stations, resulting in recurring revenue. 

However, the diversification of revenue generation streams is also important. It will help your business bring in stable and sustainable returns. To maximize revenue generation, the following revenue generation operations are feasible in a battery swapping business. 

• Battery Swapping Charges (Recurring Revenue): These are calculated based on the battery percentage purchased by the customer and invoiced to B2B clients every month. 
• Monthly Subscription (Recurring Revenue): Additionally, a monthly subscription with a limited number of swappable batteries can be offered to B2C customers.
• Renting Electric Vehicles (Recurring Revenue): As shared in our previous insights, 78% of consumers prefer rental as their primary mode of EV adoption. Thus, battery swapping businesses can also benefit from renting electric vehicles. 
• Sale of Recyclable Batteries: Batteries that reach their end of life can be resold to manufacturers for recycling purposes. 
• Add-on Services and Products: In battery swapping stations, you can provide other value-added services, such as cleaning services, repair services, software upgrades,  nitrogen for tires, and even put vending machines for soft drinks and eatables.

Battery Swapping Businesses to Take Inspiration From

The battery swapping business model has already been adopted by several entrepreneurs. Their businesses have been successful in bringing an EV revolution in their respective markets and invoking a positive response from customers. A few such major players are:

• Gogoro
• NIO
• Aulton
• Sun Mobility
• Oyika

Things to Consider while Starting Your Battery Swapping Business

Preparing your battery swapping business will require your interest in four directions, which are partnering with an EV manufacturer, finding a warehouse for charging batteries, setting up swapping stations and investing in a battery swapping software solution for managing business operations. Let’s discuss these four in more details:

1. Partner with an EV Manufacturer

Before building a battery swapping station, you need to invest in the EVs whose batteries you would be replacing. There are two ways to do that:

• Manufacture your own EVs
• Partner with existing EV manufacturers 

While the first option is highly capital intensive and is a separate business on its own, the second option is more feasible. Your selected EVs can be eBikes, cars, trucks, tuktuks (public transport vehicles), etc. After finding a manufacturer for these EVs, you can send them a proposal to be their battery swapping partner and help them in expanding their entire EV network. If your proposal is accepted, you can procure batteries and even EVs from the manufacturers in bulk.

2. Set Up a Warehouse or Charging Station

To increase returns and become profitable, the battery swapping business includes transporting batteries from a warehouse to swapping stations. This also eliminates the need to set up micro power grids and reduces the financial burden on infrastructure and legal work. Thus, you can rent or purchase a warehouse in a well-connected region with abundant power supply, or simply set up a single micro grid for your warehouse. In the warehouse, you can charge all batteries and transport them to the different swapping stations. 

3. Set Up Swapping Stations

Swapping stations will be the customer-facing touchpoints for your business. Either you can rent out space and designate your own employees to run these swapping stations or rely on a franchise type structure as well where different contractors will partner with you to enable battery swapping stations. Along with swapping batteries, you can provide additional services on these stations as well. For example, EV repair and maintenance services or just keep a food vending machine. These will help you in maximizing your revenue generation. At the end of the day, you can collect all the drained batteries from these swapping stations and take them back to your warehouse for charging. 

4. Set Up an Online Battery Swapping Management System

To manage all operations, you need to invest in a battery swapping software solution. The solution can have the following interfaces:

• Admin Interface: The admin interface will be the primary interface to manage operations. From the admin dashboard, you can view all orders, users, track inventory, access revenue generation reports, manage the front-end interface, set up payment gateways, generate monthly invoices for corporates, and do more.

• Front-end Interface: The front-end interface will act as the official website for your business and help you establish a brand. Users or even corporates can visit the front-end interface to collect more information about your business and reach out to you. Additionally, you can upload entire eBike catalogs so that customers can find out about products and purchase them directly from your online store. For the latter part, you may need to provide a checkout functionality on the front-end and set up payment gateways. 

• Swapping Station Interface: This interface will only be for the swapping personnels so that they can mark real-time updates on the exchanged batteries. The swapping station interface will include a QR code scanner so that the personnels can scan both drained and fully charged batteries and save records, such as battery number, exchange date and amount due on the online system. 

• Corporate Interface: The access to the corporate interface is given to the different brands who become your customers. Via this interface, they can link different delivery agents with electric vehicles and view their swapping history. At any time, they can also check consolidated invoices and the amount due by every month. Either they can make payment directly through the corporate interface or do bank transfers as well.

• Sub User Interface: The sub user interface is used by the delivery agents. The sub user account is created by corporates and shared with the EV riders. Through this interface, the delivery agents can view their swapping history and cross check details such as battery percentage returned and any amount paid to the charging station. 

How to Develop your Online Battery Swapping Management System?

There are two approaches to develop a battery swapping management system:

1. Custom Development

The first approach includes custom development from scratch. For this approach, you will need to hire a software development firm, discuss your business model with them, prepare a Software Requirement Specification (SRS) document, select the technology stack and begin the development. However, there are a few downsides to this approach:

• The entire development process is too costly, involving hourly development costs and business analysis costs
• The development process can take up to 2 years. In this time, any other entrepreneur or competitor can capitalize on your business and take the first-mover advantage
• The end-product will still not be tried and tested for the market

2. Using a Low Code Software as Base

The low-code software refers to the readymade solutions that come with all essential features to help you launch your platform. Many low code solutions are customizable and will require some customizations to support the battery swapping model. This approach is better than the custom development approach because of the following reasons:

• Low code software are highly cost effective in comparison to the custom development approach
• The overall time-to-market is faster, so that you don’t lose any competitive edge
• You get an MVP solution that comes with all essential features and interfaces

Note: As of now, the availability of 100% readymade software for managing battery swapping operations is sparse. Due to the low availability, selecting a low-code solution as a base remains the only option to develop a reliable battery swapping management system.

How Yo!Rent (FATbit) Helped a Major Player in the South African Market Transform its Battery Swapping Business

In the past few months, Yo!Rent, a rental software solution by FATbit, collaborated with a major battery swapping player of the South African market and provided them with a robust battery swapping management system. Yo!Rent already had several essential features that aligned with the battery swapping business model. To perfect the final build, our team of business experts analyzed the model in detail and added more features to Yo!Rent. As a result, the provided solution effectively encompassed the client’s battery swapping business model and delivered high performance.

Key Features Deployed by Yo!Rent to Launch a Battery Swapping Management System

Before using Yo!Rent, the client was manually managing battery swapping operations, which was not only a time consuming and cost-intensive process, but also risked the efficiency and productivity of the business. Yo!Rent streamlined the client’s business with a wide range of features. While some of the features were already present in Yo!Rent, we added some additional features to provide the client with complete support for his desired business model. 

Some of the Existing Features of YoRent (Base Product) that Helped The Client

• Rent plus Sell: Along with battery swapping operations, the client also sold and rented electric bikes. Yo!Rent had the rent plus sell functionality in the base product and did not require any additional customization. 
• Booking Calendar: To ensure accurate rental bookings, Yo!Rent has an advanced booking calendar. This calendar accepts rental date inputs from corporates or individual customers and prevents double booking.
• Request for Quote (RFQ) Module: B2B operations can be very complex. To help the client manage such orders, Yo!Rent comes with an RFQ module. This module helps the client receive price quotation requests and negotiate the same along with business terms. All the negotiation details are saved on the system itself.
• Rental Security Management: For ensuring electric bikes’ safety, Yo!Rent has a rental security management option. During checkout, the business owner can collect a rental security amount and use it to reimburse any unexpected damages. 
• Agreement Management: To further encourage the safe use of electric bikes and batteries, Yo!Rent comes with an agreement management module. Through this module, the client is able to upload their terms and conditions and sanction them with an eSign option. 
• Bulk Duration Discount: For corporate clients who are renting out electric bikes in bulk, the client can create bulk duration discounts. These will be automatically applied at checkout.
• Rental Duration Discount: Similar to bulk duration discounts, the client can create several discount options for corporates renting out bikes for long-term operations.

New Features that We Added to Support Battery Swapping Operations

• Battery IDs: While exchanging batteries, the vendor can search and save important exchange information, such as exchange date, time, battery percentage, vehicle number, user and more in dedicated Battery IDs.
• QR Code Scanner: To increase speed and efficiency of swapping, vendors can simply scan the QR Code and automatically load the Battery ID. This saves time on manual inputs and eliminates the scope for human error. 
• Charge Based Invoicing: To provide accurate invoicing, we deployed a charge based invoicing algorithm. Under this type of invoicing, customers only need to pay for the additional charge they get in the swapped batteries. Thus, they are charged on the basis of 100% battery – battery percentage returned.
• Custom Product Catalogue Fields: To help the client prepare accurate listings for the electric bikes and batteries, we also created custom product catalogue fields.
• Corporate Registration Forms: To onboard corporate customers with large fleets, we integrated a custom registration form with all required fields. These fields help the client procure essential information to conduct safe and legally compliant business operations.
• Corporate Profiles: For providing corporates with complete control over their battery swapping operations, we integrated corporate account profiles into the system. After creating a corporate profile, companies can access the corporate interface and view delivery agents, swapping history, invoices, messages, notifications and more. 
• Corporate Sub User Accounts: For managing delivery agents and other employees, we integrated the corporate sub user profiles into the system. The corporate can create unlimited sub user accounts and also link every delivery agent with an eBike. Both delivery agents and the employer (corporate) can access and view the agent’s complete swapping history. 
• Inventory Tracking: With the help of Battery IDs, the client can keep complete track of the inventory. He can find which battery has been fitted in which eBike and also the user linked to the bike. Additionally, the client can check a battery’s usage history, swapping history, its swapping station location and more. 
• Centralized User Data: To ensure seamless battery swapping operations across  locations, we provide centralized data access in Yo!Rent. Meaning, a delivery agent can swap a battery at any swapping station managed by the client. 
• Monthly Consolidated Invoicing: For large corporates, we integrated a special consolidated invoicing module that consolidates all invoices and calculates the total amount due every month for the batteries swapped by delivery agents.
• M-Pesa Integration: For quick and hassle-free payments, we integrated the target region’s one of the most reliable payment gateways M-Pesa into the client’s Battery Swapping Management System. 
• Pay Later: The system supports multiple payment methods for a better user experience. One of them is the pay later option.

Steps to Build a Battery Swapping Platform with Yo!Rent

Yo!Rent has shown proven capabilities to develop a viable battery swapping management platform. Not only the solution can support battery swapping operations but comes with rent-centric and sales features right out of the box. This makes Yo!Rent a highly reliable base to develop your battery swapping platform. To get started, you are required to follow these steps.

Step 1: Obtain a Yo!Rent License

Get Yo!Rent’s lifetime license by getting in touch with our team. The license is available at a one-time cost and will state all necessary customizations that you want in the platform.

Step 2: Development and Installation

Our team will carry out all the customizations to meet your business requirements. Once developed, the solution will be tested and installed on your server.

Step 3: Configure the Platform

Configure the primary settings of your battery swapping platform, such as the payment gateways, bank details, admin accounts, swapping station accounts, and more. Also start adding battery IDs to track inventory and add other inventory such as ebikes and accessories.

Step 4: Promote and Manage your Business

Market your battery swapping business to attract clients. Once onboarded, you can use Yo!Rent’s in-built options to manage your battery swapping business. 

Conclusion

With the battery swapping industry aimed at redefining the entire EV infrastructure, investing in a battery swapping business is a profitable business proposition. It primarily targets the B2B clients, such as corporates with personnel delivery fleets and helps them reduce operational costs and decrease the overall downtime. Because of these advantages, several corporates throughout the globe have already invested in an EV fleet. By capitalizing in the industry, you can tie up with EV manufacturers and provide corporates with your own EV fleets. With the electric vehicles powered by swappable batteries, you can create monopolies in several cities that still remain untouched by EV businesses.