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[Original] Switch or charge: the "new infrastructure" battle for new energy vehicles

Date: 2020-05-18
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Jeffrey West once mentioned in his book 'Scale: Simple Laws of a Complex World' that everything is energy. Traditional fossil fuels will plunge us into a closed system paradigm, while renewable energy will bring us back to a truly sustainable open system paradigm.

 

For a sovereign country, energy is the lifeblood of the country ’s economic development and an important pillar of the country ’s development strategy. Petroleum is one of the most important fossil fuels. Most Asian, European and American countries including China are heavily dependent on oil imports from OPEC + countries. For China, over 70% oil is dependent on import, and other countries above are also high. Energy replacement of oil has become the consensus of most countries in the world. As the most important application field of oil, the car accounts for more than 50%. Under the pressure of sustainable development and energy security, these countries have begun to replace oil with new energy in cars.

 

With the continuous breakthroughs in motor and battery technology, electric vehicles have become the most promising new energy vehicles to replace fuel vehicles. Although the current electric vehicles have not yet broken through the limits of fuel vehicle mileage and energy supply, they have basically met daily needs, and the development of new energy vehicles (with no special instructions below, new energy vehicle refers to electric vehicle) has been raised to the strategic level of many countries.

 

The current market situation of new energy vehicles

China's new energy vehicle industry has been experienced government subsidies for nearly 10 years and a number of enterprises have been cultivated. With the decline of government subsidies, the industry has gradually changed from policy-led to market-led, and the development of the industry is more dependent on market-oriented choices.

 

However, driven by marketization, the contradiction between supply and demand of new energy vehicles is deepening. On the one hand, car companies whether it is a large global car company group or a domestic independent brand, stimulated and constrained by policies, have formulated a clear plan for the production of new energy vehicles within the next 5-10 years. On the other hand, due to the high cost and inconvenient use of new energy vehicles, few users are willing to pay for it. The contradiction between the 'radical' production plan and the weak market demand has put the development of the new energy vehicle industry into a deadlock. In addition, the development of new energy vehicles has also spawned a series of problems that have restricted the industry's popularity.

 

I Higher cost than fuel vehicles

Generally speaking, the purchase cost of new energy vehicles can be more than 30% higher than that of fuel vehicles. Although the policies in the past have granted special rights such as tax reductions and exemptions, no license restrictions, and subsidies for electric vehicles, the advantages of electric vehicles once have basically disappeared due to the decline of subsidies and restriction of license. Many buyers are 'deterred'.

 

Short mileage and long charging time, leading to low efficiency.

At present, the mileage of electric vehicles is generally around 300km except some high-end models, while the range of fuel vehicles can generally reach more than 700km. Besides the mileage, long charging time is also an important restricting factor. Slow charging generally takes 8-10 hours, even fast charging generally takes 2 hours, greatly reducing the efficiency of use.

 

In order to improve the mileagein addition to the clear policy tendency of the high-energy battery cell, car companies accelerate to adopt high-energy density batteries, which causes many accidents of battery burning. In terms of current technology, the relationship between safety and mileage is like 'fish and bear paw'. So the healthy development of the industry can only be achieved by 'sacrificing' mileage.

 

Life cycle mismatch of several core components

The current battery life is 1.5-3 years, and the body is generally 8 years, and core components such as motors and electronic controls can even be as long as 20 years. The current battery technology is not enough to match the effective life cycle of the remaining core components. So in the life cycle of an electric vehicle, the battery will inevitably be replaced. The battery cost accounts for about 40% of the total cost, and changing the battery will bring higher cost. 

 

The growing contradictions have slowing down the growth of new energy vehicle in recent years, and even declined in 2019, contrary to the government's goals. At present, in addition to the high cost of new energy vehicles, the development of battery technology has also fallen into a certain bottleneck. If battery technology cannot be broken through, it is necessary to have feasible technologies and models to solve contradiction.

 

 

The development of any industry is inseparable from the support of a strong 'infrastructure'. For new energy vehicles, its energy supply network is 'infrastructure'. Only by solving the problem of energy supply at different technical stages new energy vehicles can be widely promoted.

 

Switch or charge?

Since 2014, the charging mode has been regarded as the mainstream choice for energy supplements, but the trend is changing. The Ministry of Industry and Information Technology and other government department have introduced policies to encourage the replacement of power since 2019. The governments attitude of supporting the battery-change mode is very obvious.

 

The reason why the power exchange model has been included in the top-level design is that within a few years of the rapid development, the government and enterprises have invested a lot in charging piles, which cant match its yield. Charging pile companies have suffered financial loss due to the restriction of the charging pile section; many charging piles have being scrapped and idle due to the high maintenance costs in the later period; some unattended charging parking spaces are often occupied by fuel vehicles, which greatly reduces the efficiency of charging pile utilization.

 

The construction and use of charging piles dont seem to support the large-scale development of new energy vehicles, but the power replacement model can solve the core pain points.

 

First of all, in the power exchange mode, the buyer does not need to pay the cost of the battery, which can save the cost about 40% when buying.

 

Secondly, car owners no longer need to pay a long time waiting for charging, just spend 3-5 minutes to replace the battery in the power station. Similar to fuel vehicles, the power exchange efficiency of new energy vehicles is improved.

 

For a car-hailing driver or private car owner, cost and convenience are two main factors when buy electric vehicles. Especially for car-hailing driver, the car needs to be charged on average twice a day, at least one of which will be charged during the day. Even the fast charging technology requires about 2 hours to fully charge. At present, Shenzhen, Foshan and other places have introduced a policy of 'new car-hailing must be pure electric vehicles'and it seems to be promoted nationally. The car-hailing companies and drivers who have voted with their feet have chosen the model of power exchange.

 

In addition to cost savings and efficient power exchange, the battery change mode has the following advantages over the charging mode:

 

1) Long battery life.

Car owners basically use the fast charging model for saving time, which causes great damage to battery life. The battery under replacement model is usually charged in slow-charging model, which can protect the battery and thus extend its life.

 

2) High battery utilization and recovery rate.

In the charging mode, the battery belongs to vehicle owner, which will leave the problem of resource waste and environment damage. In the power exchange model, the battery belongs to the power exchange station, which has ability and economic motivation to make full use of the battery.

 

3) Facilitate the construction of power grid distribution

If charging piles are scattered among various communities, parks, and buildings, it will has a great demand impact on the grid. However the power exchange stations are more concentrated, which is convenient for the distribution network and effectively relieves the pressure on the power grid.

 

4) Save land and space resources

The construction of charging piles generally requires exclusive parking spaces. In cities with high land costs, it means a higher cost of charging service. However under batter-change model, the requirment of parking space is reduced, which is more suitable for China's first- and second-tier cities.

 

5) Saving expenses of household charging piles

In contrast to the building structure of suburban houses in United States, Chinese citizens usually live in high buildings and large mansions, which is not convenient for installing charging piles. Costumers are required to spend more time on seeking charging stations, which causes bad influence on popularization of household new energy vehicles. However, users only cost a few minute to exchange battery, which can completely replace household charging piles and reduce the cost of using.

 

6)Achieve the real new energy

Although the new energy vehicles are driven by electricity, which currently generated by consuming coal resources, resulted in a failure of achieving the goal of new energy. Under the charging mode, a firm power grid is required to maintain charging process, which can only be guaranteed by coal fuel. At the same time, government is considering the sustainable development of society, which leads to cutting down on coal power supply and promoting new energy in the future, consequently push forward the renewable energy sources. Under switching mode, switching stations are concentrated and energy storage of battery is managed unifiedly by switching stations. Thus the renewable energy resources can be linked by facilitative distributed energy storage mode and finally the dependence on coal power can be reduced.

 

The superiorities revealed by switching mode are capable of effectively solving existing contradiction in this industry. Nowadays, switching mode has been verified by the market, more and more car manufacturers are participating in the rank and they are going to write a good chapter for the new energy automobile industry together.

 

 

Summary

At the present stage, the relationship between electric switching network and NEVs is similar to petroleum and petrol vehicles, mobile network and smartphone. The former would be the footstone of the massive production of the latter. Under the circumstances of limitations of charging mode are gradually exposed, while the technique of switching mode is basically mature, either mode could break the ice and become the 'new infrastructure construction' of long-term development of NEVs, would be the obvious answer in future.

 

 


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