On Monday, electric vehicle (EV) services company Better Place demonstrated a fleet of 3 EV taxi cabs with batteries replaceable in about 2 minutes. The taxis will operate in Tokyo, utilizing Better Place’s battery swapping stations. The stations currently cost around $1 million each for the equipment to automate the process.

Urban taxis are a suitable application for battery swapping because they:

• take frequent, short trips
• usually stay within a close geographic area
• need to be kept on the road for as much of the time as possible
• they idle frequently

These are good reasons for driving an EV instead of a gasoline vehicle. Centralized recharging and need to keep the cabs in operation point towards battery swapping. If cabs are waiting to be refueled or charged, they aren’t making money. Maximizing up time is crucial.

A large price tag means battery swapping stations require a significant concentration of EVs to service to make sense. Gasoline is much more expensive in Japan ($5.50 per gallon), but then again so is electricity (about 28 cents per kwh, compared to about 11 cents in the U.S.).

It’s likely that it will be necessary to service roughly three dozen taxis per day to get a get a three year payback on your investment in savings on fuel. That includes the extra cost of the EVs ($10K per vehicle for arguments sake) and some extra batteries to keep on hand. Government incentives (as in Japan, where the government is sponsoring the taxi fleet) can make the economic argument more favorable. Battery swapping might also work in geographically small and philosophically opposed to oil country like Israel, where Better Place is planning its initial rollout.

However, most cars don’t drive like taxis, so battery swapping may not be a natural fit for consumer vehicles, especially in the U.S.. They go more places, won’t fully expend the batteries more than once a day, and getting back on the road in an instant isn’t a requirement. Most EV owners are expected to charge at home overnight because it will be cheap and convenient. Standard charging (Level 1 or Level 2) at home or the office is sufficient for most folks because vehicles aren’t in use for more than a few hours per day.

In Asia, fewer people have garages to store their vehicles so there is more of a need for public charging. However, most people would be able to plug in for the 2-4 hours needed at work, a parking garage, or at their flat/condominium parking space. Battery swapping’s most direct competition is from fast (aka Level 3) charging, which uses a DC-to-DC charger to fully replenish batteries within 5 to 15 minutes. The Tokyo Electric Power Company (TEPCO) has developed a rapid charging standard which is gaining ground around the world.

Better Place’s promotional materials take a few swipes at fast charging:
“The battery is a critical element of the EV and how it is managed and charged is crucial to its optimization. For heavy use vehicles such as electric taxis, the need for repeated rapid (5 minute fast) charging will degrade the lifespan and performance of the battery… The industry is proposing various solutions to address extended range, but battery switch is the only feasible option—from the perspective of cost, flexibility (with the ability to manage charge time to less than 5 minutes), and technology—that will work in the near term…”

Fast charging (using the batteries to supply power to the grid, or V2G) can shorten the battery life, but it is an issue that is being furiously worked on. I have spoken with several of the top battery companies and EV charging equipment vendors (some of which that have had dealings with Better Place) who say that improvements in battery chemistry being tested in labs today indicate that fast charging won’t be a problem for long. Fast charging won’t work in homes (most places won’t allow the high power equipment needed) and it is also expensive (starting at around $50,0000 just for the equipment).

Better Place has not had much success in getting battery and car companies to share their vision of battery swapping stations. Better Place partner Nissan has even said that battery swapping won’t work in the U.S. The company did sign up China-based Chery Automotive to co-create vehicles with swappable batteries, the second company (after Renault) to design a vehicle with their battery swap requirements in mind.

In the likelihood that fast charging can be done safely and without significantly diminishing battery life, the potential market for battery swapping stations would get much smaller. Betting against that seems risky today.