Strategic investment in electric vehicle charging service: Fast charging or battery swapping

Abstract

With the increasing adoption of electric vehicles (EVs), there is a growing need for public charging infrastructure. As a result, significant investments have been made in charging services, particularly, fast-charging (FC) and battery-swapping (BS) services. This paper examines the impact of technical and operational factors, as well as market conditions, on the pricing and profitability of each service to explore whether and how EV charging service providers should invest in these emerging charging services. The analysis with benchmark to private-use slow-charging (SC) services reveals that if the valley electricity price is high and the potential market size is small, lowering service costs does not make BS services a viable option. When the valley electricity price is low, reducing battery loss will not give FC services an advantage. However, in such scenarios, BS services can gain an edge by decreasing service costs. Interestingly, even if both SC and BS services are negatively affected by higher valley electricity prices, the impact on the profitability of BS services is more severe. Our results provide implications for the development of public EV charging service infrastructure. We recommend that implementing energy storage solutions can help alleviate the negative consequences of escalating valley electricity prices and wider peak–valley electricity price differences on BS services and FC services, respectively.