DiDi enters the electric vehicle battery swapping track

Author: Liu Baodan

Editor: Huang Yu

After giving up on car manufacturing, DiDi has opened up a new path for itself in the field of new energy vehicles.

Recently, DiDi and its subsidiary Xiaoju Power announced the establishment of a joint venture company for battery swapping. DiDi's Chairman and CEO Cheng Wei and CATL's Chairman Zeng Yuqun both attended the signing ceremony, indicating the importance they attach to this partnership.

This is not the first time DiDi has entered the field of energy supplementation. Xiaoju Power has previously established multiple businesses including charging. By the end of 2023, Xiaoju Power's charging services had covered more than 190 cities, providing charging services over 680 million times.

With DiDi's entry into the battery swapping field, it now covers both charging and swapping in the field of energy supplementation for new energy vehicles. This means that DiDi has comprehensively laid out its strategy in the energy supplementation sector of the new energy vehicle industry.

Entering the battery swapping field and expanding its presence in the energy supplementation sector aligns with DiDi's current focus on its core business.

Compared to its previous expansion in areas such as food delivery and community group buying, DiDi has recently shifted its focus to the ride-hailing business. Insiders at DiDi have stated that the company places great importance on the synergy with its core business in its strategic layout, and businesses with high synergy will receive priority investment.

Under this strategic direction, DiDi sold off assets and research and development capabilities related to its smart electric vehicle project last year, ending its foray into the car manufacturing field. By entering the battery swapping field, DiDi aims to leverage the synergy with its core business.

DiDi's entry into the battery swapping field aims to provide efficient battery swapping services for a large number of new energy vehicles, starting from the ride-hailing scenario. With DiDi's operational advantages and CATL's technical strength in batteries, the joint venture company is well-positioned to establish a presence in the battery swapping field.

DiDi has high expectations for the battery swapping industry. In DiDi's view, the public transportation market has the characteristics of a large user base, high frequency of energy supplementation, and strong requirements for timeliness, making it one of the most valuable application scenarios for battery swapping services.

According to the plan, the joint venture company will rapidly scale up the deployment of battery swapping stations, promote the use of battery swapping models, and improve the operational efficiency of the public energy supplementation market. "Both parties will lead the industry in terms of service and technology standards."

DiDi's opportunity lies in the fact that the future market prospects for battery swapping are promising, and it is still in the early stages of development.

China's automotive market is accelerating its transition to electrification. According to the latest statistics from the Ministry of Public Security, by the end of 2023, the total number of new energy vehicles in the country reached 20.41 million, of which pure electric vehicles accounted for 76.04% with a total of 15.52 million vehicles.

In contrast, there is a rapidly growing demand for energy supplementation. According to data from the Charging Alliance, from January to December 2023, the increment of charging infrastructure in China reached 3.386 million units, a year-on-year increase of 30.6%. By December 2023, the cumulative number of charging infrastructure nationwide reached 8.596 million units, a year-on-year increase of 65%.

The main method of energy supplementation for new energy vehicles in China is charging, but with more and more people becoming aware of the advantages of battery swapping, coupled with policy support, the battery swapping market is expected to enter a rapid development stage. Compared to the charging mode, battery swapping achieves energy replenishment by directly replacing the battery of the electric vehicle, which greatly improves the replenishment speed and enhances battery safety. What's more attractive is the "vehicle-battery separation" model, which can reduce the cost of purchasing a car, as consumers can rent batteries as needed.

On November 13, 2023, the Ministry of Industry and Information Technology and other eight departments officially issued the "Notice on Launching the Pilot of Comprehensive Electrification of Public Sector Vehicles in the First Batch of Pilot Areas". The notice mentioned the expansion of new technologies such as fast battery swapping and support for innovative business models such as battery swapping.

The pilot period mentioned in the above notice is from 2023 to 2025, and the plan is to build 7,800 battery swapping stations during this period. Guotai Junan Securities believes that the landing of the first batch of pilot cities for comprehensive electrification in the public sector will help drive the growth of charging and battery swapping demand.

According to data from the Head Leopard Research Institute, as of the end of 2022, the number of battery swapping stations in China has increased from 258 in 2018 to 1,973. It is estimated that the number of battery swapping stations will reach 34,822 by 2027. The institute believes that the battery swapping industry will enter a period of rapid development.

Opportunities and risks coexist. Although the prospects for battery swapping are promising, the industry still faces significant challenges even with the entry of DiDi.

One of the main obstacles to the development of the battery swapping industry is the lack of standardized power batteries. If battery swapping stations cannot stockpile a sufficient number and variety of batteries, it will result in limited service coverage. This is also the fundamental reason why the joint venture company proposed to lead the technological standards. In addition, high investment costs can make it difficult for companies to achieve profitability.

Fortunately, the battery swapping track is just getting started. DiDi's partnership with CATL allows them to preemptively position themselves and avoid intense market competition. However, whether DiDi can ultimately succeed in the new energy vehicle track still needs to be verified over time.