From power to profit: CATL turns EV batteries into financial assets with “Choco-Swap”

The value of a power battery goes far beyond its price tag.

At a “Choco-Swap” station in Xiamen, Fujian, a power battery is experiencing its third ownership transfer—yet it remains in excellent condition. This is thanks to an asset management system known as the “battery bank,” designed to maximize the utility of every single battery.

This concept aims to elevate batteries from being mere accessories to premium assets, unlocking a new business model. Traditionally, a power battery serves just one vehicle. In contrast, the battery bank system employs professional management and flexible allocation, allowing the same battery to generate significantly more value over its lifespan.

Key to this innovation is the system’s use of digital management tools, which monitor each battery’s functionality in real time to ensure safety and reliability. Through smart scheduling, the system optimizes resource allocation, addressing pressing challenges like cost, safety, and recycling in the new energy vehicle (NEV) industry.

By reimagining batteries as assets, it also forms the foundation for a new business ecosystem.

The company leading this transformation? Contemporary Amperex Technology (CATL), the world’s largest power battery manufacturer.

When batteries become financial assets

Power batteries occupy a unique category, blending the characteristics of industrial products and financial assets. Their distinct nature stems from three core attributes: cost significance, lifecycle dynamics, and potential for value creation.

In electric vehicles, batteries contribute 30–40% of the total cost. For instance, in a car priced at RMB 200,000 (USD 28,000), the battery alone accounts for RMB 60,000–80,000 (USD 8,400–11,200). This hefty expense can impose a financial strain on consumers.

Moreover, battery depreciation doesn’t follow conventional patterns seen in other automotive components. Used EVs typically retain over 50% of their battery capacity during resale, making these batteries viable for further use. However, vehicles subjected to heavy usage may experience premature battery degradation before reaching their intended service life.

Even when a battery’s capacity declines to the point where it is unsuitable for automotive use, its value isn’t lost. The metals within—copper, aluminum, nickel, cobalt, and manganese—retain substantial recycling potential. National standards in China mandate recycling rates exceeding 98% for these materials, while critical elements like rare earth metals require a composite recovery rate of no less than 97%.

Batteries also evolve with time and environmental conditions, necessitating professional management. Proper oversight is crucial—similar to handling liquid capital—where efficient management generates value, and mismanagement incurs losses.

These qualities make batteries inherently suited for leasing. Much like renting cloud computing services or office spaces instead of outright purchasing, leasing batteries enables more efficient allocation and enhances returns on investment.

For example, Nio’s ET60 rear-wheel drive model, priced at RMB 206,900 (USD 28,966), offers a battery-as-a-service (BaaS) option. This reduces the base vehicle price to RMB 149,900 (USD 20,986), saving RMB 45,000 (USD 6,300)—enough to cover nearly eight years of battery leasing fees.

Professional management further optimizes battery utilization. A single battery can serve various purposes across its lifecycle: powering high-frequency users like ride-hailing operators during its peak performance phase, catering to regular drivers during its stable phase, and being repurposed for energy storage as its capacity diminishes.

Despite its promise, several challenges must be addressed to fully establish batteries as financial assets:

These challenges necessitate a robust asset management system. This role demands technical expertise to establish standards, influence to coordinate stakeholders, and financial strength to sustain long-term investments.

As the global leader in power batteries, CATL is uniquely equipped for this role. Powering one in three vehicles globally—and one in two within China—CATL has the technical and financial resources to redefine the market.

From asset management to value innovation

The evolution of CATL’s battery bank began with groundbreaking advancements in standardization. At its December 18 ecosystem conference, CATL unveiled two standardized Choco-Swap battery modules: #20 and #25. These modules are akin to the automotive industry’s adoption of 92- and 95-octane gasoline standards, enabling EVs from various brands to share a unified swapping system. This standardization lays the foundation for battery-swapping adoption.

Building on this standardized platform, CATL is accelerating its deployment efforts. Partnering with leading manufacturers such as Chang’an Automobile, GAC, BAIC, Wuling Motors, and FAW, CATL is set to introduce ten new swapping-enabled vehicle models by the end of 2024.

To support this ecosystem, CATL has an ambitious network expansion plan. By 2025, it aims to independently construct 1,000 swapping stations, co-develop an additional 10,000 with partners, and reach a total of 30,000 stations through collaborations. This infrastructure is expected to capture one-third of the energy replenishment market by battery swapping, marking a significant milestone in EV energy solutions.

To accommodate diverse customer preferences, CATL is offering flexible subscription plans:

CATL’s battery bank introduces a framework for managing and maximizing battery value:

Together, these innovations establish a new value system for battery assets. Standardized modules and digitized management ensure precise measurability, while diversified financial services improve liquidity. Batteries transition from consumables to sustainable financial assets, fundamentally reshaping the industry’s business model.

Automakers, operators, and other stakeholders stand to gain significantly from this transformative approach. For automakers, the elimination of independent battery pack development reduces costs by an estimated RMB 40–50 million (USD 5.6–7 million) per project. Additionally, standardized battery interfaces simplify production processes, enabling manufacturers to focus on competitive strengths like chassis platforming and intelligent systems. This separation of vehicle and battery not only cuts costs but also enhances design flexibility, allowing automakers to prioritize innovation and differentiation in their core areas of expertise.

For leasing companies and taxi fleets, the ability to purchase vehicles without batteries removes a major financial hurdle. Instead of bearing the upfront battery cost, operators can adopt a manageable subscription model. This shift not only lowers entry barriers but also allows operators to direct their resources toward improving service quality and operational efficiency. Maintenance and replacement responsibilities are transferred to the battery bank, creating an asset-light model that significantly enhances capital efficiency and return on investment.

The data transparency provided by CATL’s battery bank addresses longstanding challenges in the industry, such as inflated premiums and fraudulent claims, which previously arose from unreliable assessment methods. With full lifecycle battery data now available, insurers can accurately evaluate risks and provide fair pricing.

In the used car market, standardized data assessments bring clarity to transactions. The separation of the car and battery simplifies residual value evaluations, with specialized platforms dedicated to battery appraisals. This streamlined division of responsibilities enhances efficiency and opens up significant opportunities for growth in the used vehicle sector.

CATL’s battery bank financial model is growing beyond swapping services into new energy infrastructure. Its plan for 30,000 swapping stations goes beyond supporting EVs, forming a vast distributed energy storage network. These stations act as “bank branches,” enabling battery swaps while serving as hubs for energy storage and distribution.

This network of 30,000 stations integrates storage, charging, and swapping functions, while also enabling battery-to-grid (B2G) operations. Together, they effectively form a distributed energy storage system capable of managing up to 33.6 million kilowatt-hours of energy, with each station housing 14–30 batteries. These stations can service up to 20 million vehicles, generating an additional throughput of 1.12 billion kWh.

CATL’s cloud-based dispatching platform acts as the “brain” of this system, connecting stations to the power grid and local photovoltaic systems. This integration supports grid operations such as peak shaving and frequency regulation, delivering responses at millisecond-level precision. The result is optimized energy usage, reduced consumer costs, and enhanced grid stability.

The battery-swapping network also offers a scalable and controllable energy model, efficiently absorbing renewable energy like solar and wind with each swap. Integrated with green energy systems, these stations can act as city-level virtual power plants, promoting sustainable energy use and turning users and businesses into contributors to environmental sustainability.

By bridging energy producers, storage systems, and users, CATL’s new system can elevate the renewable energy industry to a higher standard of development. This marks not only a testament to its capabilities but also a significant milestone in the company’s global energy strategy.

KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Xiao Xi for 36Kr.

...