A boom in autonomous vehicles is expected to usher in fresh development opportunities for the battery swapping sector in China, throwing open a billion-dollar market in energy storage.

In May, Baidu unveiled its sixth-generation robotaxi services in Wuhan, Hubei province, with the autonomous vehicles operating using a battery swapping system, utilizing standardized battery packs and smart battery swapping stations from a subsidiary of GCL Energy Technology Co Ltd.

Each vehicle autonomously schedules visits to these stations based on service status, location data, and battery levels, completing a rapid battery swap upon arrival to maximize operational efficiency.

The rapid commercialization and deployment of autonomous ride-hailing and taxi services are expected to drive demand for battery swapping, CITIC Securities said in a report.

This method offers advantages such as unmanned operation, high efficiency and lower costs from reduced human workforce, and is particularly suited for fixed routes and scenarios without human intervention.

CITIC Securities has forecast that the number of battery swapping stations will reach 27,500 by 2026, with a compound annual growth rate of 93 percent from 2022 to 2026, and the market size for battery swapping equipment is expected to reach 30.5 billion yuan ($4.2 billion).

Baidu said the decision to use battery swapping for its robotaxis stemmed from its full automation compared to the manual handling required for battery charging services, resulting in savings on labor costs.

Additionally, while recharging via a charging pole takes at least half an hour, swapping a battery only takes three minutes, saving valuable time that can be devoted to better driving services, thereby enhancing operational efficiency.

Lu Jiamin, chief automotive analyst at Cinda Securities, said: "Baidu's latest sixth-generation robotaxi has reduced vehicle costs by 60 percent compared to the fifth generation. Operating and service costs have also fallen by 30 percent and 80 percent, respectively."

Robotaxi operation service platform Ontime has estimated that a robotaxi's cost per kilometer will undercut human-driven ride-hailing services by 2026, signaling a gradual mainstreaming of robotaxi services.

Baidu hopes to achieve financial balance in Wuhan by the end of 2024 and overall profitability by 2025 for its robotaxi services.

Against this backdrop, key players in the driving and battery charging/swapping sectors have stepped up collaboration to tap the surging market.

Baidu has collaborated with GCL Energy Technology's subsidiary for battery packs and swapping stations. Shandong Weida Machinery supplies swapping station equipment and services to NIO. CATL has partnered with automobile makers and ride-hailing services such as JAC Group, Didi and BAIC Motor in the battery swapping field. Automobile companies such as the SAIC Motor and Geely have also made significant strides in this domain.

CITIC Securities anticipates robust growth of the battery swapping sector, driven by proactive efforts throughout the supply chain and promising prospects for battery swapping in taxis and heavy vehicles.