Abstract
A proposed strategy for facilitating the introduction of electric-drive vehicles calls for vehicle purchasers to own the vehicle but to lease the battery from a third party to help reduce the first-cost hurdle to consumers. A further extension of this concept for all-battery electric vehicles (EVs) would include the ability for consumers to exchange their discharged batteries for charged ones at battery swap stations. This factor would extend the driving range for EV service subscribers but with increased costs to build and operate the stations. This analysis centers around a base-case scenario from 2012 to 2027 that includes a set of assumptions about subscriber membership levels, gasoline and electricity prices, corporate level expenditures, and the capital costs of batteries, charging stations, and battery swap stations. The base-case set of assumptions is then systematically varied, and a few combinations are explored to determine whether and how such a service might be economically viable. Key sensitivities include buildup of the number of subscribers, the price of gasoline, capital costs of the batteries, distribution of total annual driving mileage of subscribers, and the number of corporate employees needed to operate and manage the subscription service business. Focusing on a network in the San Francisco Bay Area, California, the analysis suggests that, with current gasoline prices and the base-case scenario assumptions, the economics of this business model are challenging.
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