Yes! EV Drivers with Choice & Time Downgrade Their Batteries!

I just wrote about ONVO President Shen Fei torching the idea of extended-range electric vehicles (EREVs). He’s not a fan. However, he had something else much more interesting to say in the interview with The Paper, a Chinese media outlet.

ONVO, like its parent NIO, offers battery swapping to owners who choose that route instead of fully buying the battery pack with the car. Its battery swapping network keeps growing fast, despite claims for years that it couldn’t work. Many NIO and ONVO drivers appreciate having the ability to quickly swap out a battery rather than charge it up. But this offers another unique opportunity — drivers can switch from a smaller battery to a larger one at any time and pay a bit more monthly if they so choose, or they can do the opposite and switch from a larger battery to a smaller one in order to save money. A big chunk of those people are deciding they don’t actually need so much battery.

It turns out that a lot of ONVO drivers are deciding they don’t actually need such large batteries, and are downgrading their battery size. “Interestingly, in the interview, Shen Fei mentioned that the ONVO L90 originally came standard with an 85 kWh battery pack, but about 40% of owners would proactively request to ‘downgrade’ to a 60 kWh battery as a Service (BaaS).” This is partly because the annual rental fee can be reduced by 3,600 yuan, and partly because people just don’t need that much battery! Why drive around with a bunch of extra weight (and cost) if it really doesn’t even change your driving patterns?

This is something I’ve been arguing for almost a decade. Yes, EVs need to get to a certain base range, especially for mass-market buyers who are more risk averse. However, people think they drive much more than they do, and people think they need much bigger batteries than they do. Once they get used to driving EVs, many will realize they don’t need so much range.

Interestingly, the number of battery swap stations it has in the ground is about to skyrocket. The network battery pack capacity is going to be doubled in about one month, going from about 7,000 battery packs at about 2,300 swapping stations to about 15,000 battery packs by mid-January! The company is adding 8,000 battery packs to its swap network in the next month or so. However, part of the reason for that is to buy and sell electricity at a profit. “Shen Fei revealed that the company will profit from the daily difference between peak and off-peak electricity prices. He provided some data to explain this: For example, in regions like Zhejiang, each battery in a battery swapping station can generate a profit of approximately 1.2 yuan per kilowatt-hour. Based on an average usable capacity of 50 kilowatt-hours per battery, this translates to a daily profit of 60 yuan under reasonable conditions, resulting in a profit of approximately 20,000 yuan per year. Nationwide, this figure is roughly 12,000 to 13,000 yuan, which is quite profitable considering the battery’s entire lifespan.”