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Why Tesla wants to get into the battery-swapping business that’s failing for everyone else

AP Photo/Ariel Schalit
Better Place isn’t in such a good place any more.
ChinaPublished This article is more than 2 years old.

So what will be Tesla Motors’ big reveal this week?

Elon Musk, the Silicon Valley electric car-maker’s boss, tweeted yesterday that an announcement about its Supercharger had been delayed until next week. (The Supercharger charges the battery-powered Model S sports sedan extra fast, adding 150 miles of range in 30 minutes.) “Something else this week,” he wrote.

Guessing Musk’s Twitter teases has become something of an online parlor game, and we won’t attempt to play it this time. But a clue to at least one forthcoming announcement can be found in a single line of the company’s latest quarterly financial statement. Among the factors that would influence sales of electric cars, Tesla said, was:

our capability to rapidly swap out the Model S battery pack and the development of specialized public facilities to perform such swapping, which do not currently exist but which we plan to introduce in the near future.

That would allow Model S drivers to trade a depleted battery pack for a fresh one in minutes at a robotic switching station. The idea is to make topping up an electric car as convenient as filling up the gas tank of a conventional vehicle.

Battery swapping is the business model of another Silicon-Valley-born electric car company, Better Place. It has raised more than a billion dollars to build network of battery switching stations. But Better Place has faltered as its initial projects in Israel and Denmark have failed to attract customers. Only one automaker, Renault, makes a battery-swappable electric car, and last week Renault’s CEO, Carlos Ghosn, declared that battery swapping was a dead end and said the future lies with fast charging.

So what’s with Tesla’s interest in what appears to be a bad business model? After all, Tesla drivers would seem to have little use for battery swapping. Most buyers opt for versions of the Model S that can go 200 to 265 miles or more on a charge—plenty sufficient for the daily commute or chauffeuring the kids to soccer practice.  And for those long road trips, Tesla’s growing solar-powered Supercharger network makes driving from, say, San Francisco to Los Angeles a breeze, even though battery swapping would cut “refueling” time. “If you have a supercharge network that is pervasive, battery swap starts to look redundant,” Tesla co-founder and chief technical officer JB Straubel told me last year in an interview.

But there’s another reason Tesla might want to delve into battery swapping: China.

The Chinese government has decreed that 5 million electric vehicles be on the road by 2020 and is the midst of a debate over whether to make battery swapping or fixed charging the national standard. Tesla hedged its bets years ago when it designed the Model S to be battery-swappable. “We’re watching it pretty closely,” Straubel said of China. “They obviously have the leverage to drive a standard throughout the whole country very quickly.”

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