Battery as a Service Market Size, Share & COVID-19 Impact Analysis, By Vehicle Type (Two-Wheeler, Three-Wheeler, Passenger Vehicle, and Commercial Vehicle), By Service (Battery Subscription and Pay-Per-Use) and Regional Forecast, 2023-2030

The global battery as a service market size was valued at USD 1.14 billion in 2022. The market is projected to grow from USD 1.37 billion in 2023 to USD 5.30 billion by 2030, exhibiting a CAGR of 21.4% during the forecast period.

Automotive battery as a service (BaaS) is a relatively new business model within the automotive industry that offers an alternative approach to owning and maintaining electric vehicle (EV) batteries. In a traditional EV ownership model, the battery is included as part of the vehicle's purchase price. However, with automotive BaaS, consumers have the option to lease batteries or subscribe to the EV battery separately from the vehicle itself. This model aims to address some of the common challenges associated with electric vehicle adoption, including high upfront costs, concerns about battery degradation, especially for electric cars, and the need for convenient charging infrastructure. A range of companies is active in this market, including automakers, battery manufacturers, energy service providers, startups, and tech giants. Tesla, for instance, has introduced BaaS options for its electric vehicles.

This market has emerged in the automotive industry, reshaping the way consumers access and use electric vehicle (EV) batteries. This market is poised for significant growth as the global transition to electric mobility accelerates. It aligns with the automotive industry's shift toward sustainable transportation solutions and addresses consumer concerns about EV affordability and convenience. With ongoing advancements and growing consumer interest, this market is poised to reshape the automotive industry in the years to come.

COVID 19 IMPACT

Pandemic Negatively Impacted the Market Due to Supply Chain Disruptions

The COVID-19 pandemic had several significant impacts on this market. These effects were a result of the pandemic's widespread economic disruption, changes in consumer behavior, and shifts in government policies. Many consumers faced financial uncertainty during the pandemic, which led to decreased consumer spending on big-ticket items, including electric vehicles. This could have affected the adoption of BaaS models, as they may have been perceived as less of a priority compared to necessities. Moreover, the pandemic disrupted global supply chains, leading to shortages of critical components needed for electric vehicles, including batteries. These supply chain disruptions affected the production of electric vehicles, which, in turn, impacted the availability of BaaS offerings. In addition, the delays in battery production and EV manufacturing slowed down the growth of BaaS models.

However, in spite of the initial obstacles posed by the pandemic, the automotive BaaS model remains an attractive solution for addressing long-term sustainability and affordability concerns in the electric vehicle market. As the global economy recovers and electric vehicle adoption continues to grow, this market is anticipated to rebound and expand particularly as governments and industries prioritize clean energy and emission reduction goals.

LATEST TRENDS

Development of Advance Battery Technologies to Drive the Market Growth

Advancements in battery technology have significantly enhanced energy density, reduced costs, and extended the life of batteries, making BaaS a more compelling and practical choice for consumers and businesses. Energy density is the amount of energy that a battery can store in a given volume or weight. Advances in battery chemistry and design have led to substantial increases in energy density. This means that modern batteries can store more energy in the same physical space or weight, resulting in longer-lasting performance and extended driving ranges for electric vehicles (EVs). In the context of BaaS, higher energy density batteries provide greater flexibility, as they can deliver the same or even more energy in a smaller, lighter package. This is particularly important for EVs, where reducing battery size and weight can lead to improved vehicle efficiency and handling.

DRIVING FACTORS

Increasing Adoption of Electric Vehicles to Propel the Market Growth

This market is experiencing a robust growth trajectory, primarily propelled by the increasing demand for electric vehicles. Governments worldwide are implementing stricter emissions regulations to reduce air pollution and greenhouse gas emissions. Electric vehicles, which produce zero tailpipe emissions, are a crucial part of meeting these regulatory requirements. The rapid adoption of electric vehicles is a primary driver of this market. As governments worldwide impose stricter emissions regulations and consumers seek eco-friendly transportation options, automakers are introducing more EV models. BaaS offers a solution to the high upfront cost of EVs by separating the battery cost from the vehicle's purchase price. The increasing penetration of electric vehicles is indirectly driving the battery as a service market growth.

RESTRAINING FACTORS

Limited Availability of Battery Swapping Infrastructure May Restrain the Market Growth

Battery as a service offerings are not universally available for all EV models. The availability of BaaS may be restricted to specific vehicle brands or models, limiting consumers' choices and potentially slowing down EV adoption. One of the key restraints that the market is facing is the limited availability of BaaS offerings across all-electric vehicle (EV) models. BaaS, which separates the cost of the battery from the vehicle's purchase price, has gained traction as an attractive option for consumers seeking more affordable EV ownership. However, this innovative approach is not universally accessible. All these factors are expected to potentially hinder the broader adoption of EVs.

SEGMENTATION

By Vehicle Type Analysis

The Two Wheeler Segment Dominates the Market Owing to the Increasing Adoption of Electric Two Wheelers

Based on vehicle type, the market is segmented into two-wheeler, three-wheeler, passenger vehicle, and commercial vehicle.

The two-wheeler segment dominated the market in 2022. The expansion of the two-wheeler market directly and significantly influences the market. With the rising demand for two-wheelers, the prospects for the BaaS model also expand accordingly. The global shift toward electric two-wheelers due to environmental concerns and government incentives is driving the demand for batteries. BaaS can make electric two-wheelers more affordable and convenient by eliminating the upfront cost of the battery. It makes electric two-wheelers more affordable because consumers do not need to purchase an expensive battery up front. Instead, they can pay for the battery on a subscription or pay-as-you-go basis.

The three-wheeler segment is also expected to witness to steady market growth during the forecast period. In densely populated urban areas, three-wheelers, particularly electric auto-rickshaws, provide a practical and efficient mode of transportation for short distances. As cities continue to grow and face traffic congestion issues, the demand for three-wheelers as a last-mile transportation solution remains strong.

Moreover, passenger and commercial vehicles are also gaining traction in the market as many of the manufacturers are launching models for battery swapping, which is able to swap the battery of the vehicles in a fraction of a minute. The increasing popularity of battery-swapping services is anticipated to boost the overall market growth.

By Service Analysis

Adaptability of Battery Subscription Model in Allowing Drivers Change Battery Capacity to Spur Segment Growth

Based on service, the market is divided into battery subscription and pay-per-use.

The battery subscription segment held the largest battery as a service market share in 2022. Electric vehicle (EV) battery subscription services often eliminate the need for a substantial upfront investment in the battery. This makes electric vehicles more affordable and attractive to a broader range of consumers who may be deterred by the high cost of purchasing a new battery along with the vehicle. In addition, battery subscription models offer flexibility to consumers who can select from the various subscription plans based on their driving needs. This adaptability allows drivers to change their battery capacity or subscription terms as their requirements evolve. As the global focus on sustainability and reducing carbon emissions intensifies, more consumers are opting for electric vehicles. Battery subscription services align with this trend by promoting the use of EVs and sustainable transportation.

The pay-per-use battery model is also gaining demand. Pay-per-use offers a cost-effective way for consumers to own and operate EVs. Consumers paying only for the energy they use can potentially lower their overall transportation costs compared to trsaditional gasoline-powered vehicles. The growing focus on sustainability and environmental responsibility is driving interest in EVs, thereby driving the growth of the pay-per-use segment.

REGIONAL INSIGHTS

Asia Pacific Dominated the Market Share due to Increasing Adoption of Battery Electric Vehicles

Regionally, this market is segmented into North America, Europe, the Asia Pacific, and the rest of the world.

Asia Pacific market for battery as a service is dominated the market. The Asia Pacific region is experiencing a surge in electric vehicle adoption, both in terms of passenger EVs and commercial electric vehicles. As EVs become more popular, the demand for BaaS grows in parallel, as it offers a cost-effective solution to address range anxiety and reduce upfront costs for consumers and fleet operators. Moreover, many countries in the Asia Pacific region are implementing policies and incentives to promote electric mobility and reduce emissions. These policies include subsidies for EVs, tax incentives, and regulations that encourage the development of charging and battery-swapping infrastructure, creating a conducive environment for BaaS models to thrive.

Europe and North America also hold potential share in this market. Europe is witnessing a significant increase in electric vehicle adoption, driven by environmental concerns, government incentives, and stringent emission regulations. As the EV market expands, BaaS models gain traction as convenient solutions for consumers.

North America is witnessing a steady increase in electric vehicle adoption, supported by consumer interest in sustainable transportation, government incentives, and advancements in EV technology. BaaS models are perceived prominence as a means to address the cost barriers associated with EV ownership.

KEY INDUSTRY PLAYERS

NIO Power to Emerge as a Prominent and Influential Player Due to Consistent Innovation

NIO Power offers a battery as a service model, which allows NIO vehicle owners to purchase a vehicle without a battery, reducing the initial purchase cost. With ongoing advancements in research and development and a commitment to constant innovation in the BaaS model, NIO is acting as an important player in the market.

Moreover, NIO Power is involved in the development and deployment of charging infrastructure for electric vehicles. This includes fast-charging stations strategically located in cities and along highways to facilitate convenient and quick charging for NIO electric vehicle owners. One of the unique aspects of NIO Power is its battery-swapping service. It has developed a battery-swapping technology that allows NIO EV owners to replace their depleted battery with a fully charged one in a matter of minutes. This service aims to address the issue of range anxiety and provides a quick alternative to traditional charging.

LIST OF KEY COMPANIES PROFILED REPORT:

• NIO Power (China)


• Gogoro (Taiwan)


• Immotor (China)


• SUN MOBILITY PRIVATE LIMITED (India)


• Upgrid Solutions Private Limited (India)


• Numocity (India)


• Ample (U.S.)


• Bounce Infinity (India)


• Esmito Solutions Pvt Ltd (India)


• Octillion (India)

KEY INDUSTRY DEVELOPMENTS

• In July 2023, Nio introduced an upgraded battery leasing program, enabling drivers to exchange their battery packs for higher energy-density ones on a daily basis, a departure from the previous practice of waiting for months or years. In addition, the company expanded its recharging network.


• In July 2023, Kia Corporation, based in South Korea, revealed plans to collaborate with multiple local firms to initiate a trial electric vehicle (EV) battery subscription program.


• In April 2023, Gogoro initiated its six-second battery swapping services in India and introduced a new smart scooter designed for the B2B (business-to-business) market.


• In February 2023, Magna and Yulu jointly introduced YUMA ENERGY, a battery-swapping network tailored for electric two-wheelers. This battery-as-a-service network is designed to support Yulu's fleet and is open for use by other OEMs (Original Equipment Manufacturers) and mobile operators.


• In March 2022, the electric mobility startup Yulu, headquartered in Bengaluru, significantly expanded its battery-as-a-service network. With over 3 million battery swaps completed to date, Yulu has become India's largest BaaS operator. Furthermore, the company aimed to increase its fleet to 100,000 units by the end of 2022.

REPORT COVERAGE

The report provides a detailed market analysis and focuses on key aspects such as leading companies, services, and product applications. Besides this, it offers insights into the market trends and highlights vital industry developments. In addition to the factors above, the report encompasses several factors that have contributed to the market growth over recent years.

Report Scope & Segmentation