Battery-as-a-Service (BaaS) is an electric vehicle (EV) ownership model which, at its core, seeks to divorce the costly battery component from the vehicle. Instead, BaaS provides an EV infrastructure solution whereby users subscribe in exchange for the ability to swap a depleted battery for a fully charged one at a swapping station.
The principal benefits of this approach are twofold. Firstly, it introduces a level of convenience and speed that EV users have not previously enjoyed through traditional charging methods. This ultimately means less time off the road. Secondly, it means that the upfront cost of each EV is significantly reduced as the integrated battery is the single most expensive component of many EVs.
Though it may sound novel, the underlying concept of BaaS has been around for some time. A similar model, where consumers leased the battery as a separate lease to the vehicle itself, was first introduced in 2007. Ultimately, the idea did not gain traction at the time, arguably because of the lack of maturity in the EV market. However, with the recent boom in EV uptake and ownership, owed in large part to disruptors like Tesla, a refined BaaS model is now being rolled out and is attracting consumer engagement, particularly in China.
What is the potential for BaaS?
When we consider just a handful of the key challenges impacting EV uptake – particularly in the UK – the BaaS model is well placed to provide a potential solution. These key issues, and BaaS’s solutions include:
- Reducing issues around range anxiety, given the ability to swap a depleted battery for a fully charged battery in a matter of minutes.
- Reducing the upfront cost of an EV, and granting greater consumer flexibility, through the battery subscription approach.
- Offering a solution for inner city charging where homes do not have access to at-home plug-in chargepoints.
In addition to these consumer benefits, the BaaS model presents further advantages across the mobility value chain, including:
- Offering flexibility for the electricity network, by allowing unutilised batteries to be discharged onto the electricity network at swap stations during peak hours.
- Offering battery recycling and reuse opportunities, such as using second life swappable batteries in an onsite storage facility at swap stations.
Despite the opportunities presented by the BaaS model, there are many challenges that need to be overcome to make it a viable and successful model in the UK. These include:
- Overcoming limitations owing to a lack of battery standardisation across EV manufacturers. Without a significant level of battery standardisation, battery swap stations cannot be scalable, and each swap station would only service a specific make or model of car. It is unlikely that any one manufacturer would have the appetite, or the capital investment required to develop, deliver, and service the technology and infrastructure required.
- A potential lack of relevance as the overall declining upfront cost of EVs reduces the savings benefit presented by the BaaS model.
- Continued access to supplies of the raw materials required to manufacture batteries. The UK does not have extensive indigenous supplies of the necessary raw materials and battery production is therefore at risk from unstable geo-political relations with the raw mineral source countries.
- Consumer choice lock-in for other EV charging models, which may weaken market entry for BaaS.
- Uncertainty over the ownership of the battery, particularly when the BaaS EV is re-sold, and consumer confidence and engagement with the BaaS model.
Despite these challenges, the BaaS model could work with the right investment and business collaboration. It could be a viable option for specific areas, such as EV fleet cars (e.g., taxis or car rental companies). A business-to-business BaaS proposition would have a slightly different set of economics and would not need widespread battery swapping infrastructure as they tend to operate in specific areas or specific routes with a controlled density of vehicles.
The BaaS model provides an alternative to EV chargepoints and more work needs to be done by central government and local authorities to fully quantify the advantages and challenges of the BaaS model and its role alongside EV chargepoints, rather than rushing ahead with largescale EV charging infrastructure rollout as the sole ‘solution’ to EV charging. If the BaaS model were to take off, particularly in the UK, partnerships between the government, technology companies, distributors, car manufacturers, and original equipment manufacturers would be key. Specifically, support from government could help to boost investment into BaaS; a more supportive regulatory framework including enhanced R&D incentives. A more encouraging environment for collaboration between relevant industry stakeholders is also critical at this stage.
