I’ve been watching electric taxis and ride-hailing fleets with a mix of excitement and skepticism. On one hand, EVs promise lower operating costs, zero tailpipe emissions and a quieter urban environment. On the other, high purchase prices, battery degradation and downtime for charging can kill margins—especially in dense city centres where vehicles must be available around the clock. That’s why the idea of modular battery leasing and swapping is so intriguing: could it finally make e-taxi fleets profitable in high-demand urban cores?
What do we mean by modular battery leasing?
When I say "modular battery leasing," I refer to a model where the vehicle owner (or fleet operator) leases removable battery modules instead of buying a fixed, integral battery pack. Batteries are standardized into modules that can be swapped quickly at depots or automated swapping stations. Leasing means the battery ownership, maintenance and lifecycle management stay with the provider, while the taxi operator pays a recurring fee linked to energy used, uptime guarantees or a simple monthly subscription.
Why this model could address the main pain points of e-taxi fleets
From my conversations with fleet managers and my own observations in cities like London and Paris, the biggest barriers to EV taxi profitability are:
- High upfront cost: New e-taxis with large integrated packs can be far more expensive than ICE equivalents.
- Charging downtime: Fast charging takes time, and slow charging can render vehicles unavailable during peak hours.
- Battery degradation: Taxis accumulate mileage fast, so battery replacement becomes a real recurring expense.
- Range anxiety in peak duty cycles: Constant short trips with high energy demand (AC, heating) reduce effective range.
Modular battery leasing can mitigate all four: lower capital expenditure, faster "refuel" via swapping, professional lifecycle management that reduces operators’ replacement risk, and the possibility to match module capacity to shift patterns (smaller modules for short urban runs, bigger ones for longer shifts).
What are the operational advantages in practice?
Here are practical benefits I’ve seen or been told about by industry contacts:
- Near-zero downtime: A swap can take 2–5 minutes where infrastructure exists, compared with 20–60 minutes for fast charging sessions.
- Predictable running costs: Leasing converts a large capital cost into predictable operational expenditure, which simplifies cashflow for taxi operators.
- Battery as a service (BaaS): Providers can guarantee state-of-health (SoH) and replace degraded modules without interrupting operations.
- Energy optimisation: Centralised charging and grid-friendly schedules allow batteries to be charged off-peak, lowering electricity costs and enabling V2G or grid services where regulation permits.
Lessons from existing players and pilots
We already have commercial examples to learn from. NIO’s battery swapping network in China demonstrated that users will accept swapping when it’s convenient and reliable. Gogoro popularised modular battery swapping for electric scooters in Taipei and other cities, with success thanks to a dense swap station network and a consumer-friendly subscription model. On the other hand, early attempts like Better Place for cars failed due to unrealistic capital intensity and low station density.
For taxis, pilots from companies such as Volta, TESLA-adjacent projects, and smaller startups experimenting with modular packs have shown promise—but the economics hinge on deployment scale, station density and the capital backing for the swapping infrastructure.
Key economic variables that determine profitability
When I model fleet profitability, these variables matter most:
- Leasing fee per kWh or per swap: If the fee is too high, the OPEX advantage disappears.
- Station density and utilisation: High utilisation of swap stations spreads infrastructure costs and reduces unit costs.
- Battery lifecycle management: How many cycles the modules can deliver and how the provider handles end-of-life.
- Electricity tariffs: Access to low-cost, off-peak power or dynamic pricing makes a big difference.
- Downtime cost per minute: In high-demand centers, every minute offline is lost revenue; faster swapping multiplies revenue potential.
Simple cost comparison (illustrative)
| Cost item | Traditional EV purchase (per vehicle) | Modular leasing + swapping (per vehicle equivalent) |
|---|---|---|
| CapEx vehicle (incl. fixed battery) | £35,000 | £25,000 (smaller onboard battery) |
| Battery replacement over 5 years | £6,000 | Included in lease |
| Energy & charging operations (annual) | £4,000 | £3,500 (centralised charging efficiency) |
| Downtime losses (annual) | £8,000 | £2,000 (fast swaps) |
| Total 5-year cost (approx.) | £77,000 | £65,000 + leasing fees |
These numbers are illustrative—not universal. But they show how converting battery cost to a leasing fee and slashing downtime can tilt the TCO toward profitability.
Operational challenges and friction points
I’m cautious about the hype. Modular battery leasing isn’t a magic bullet. Key challenges include:
- Standardisation: Different OEMs must agree on module dimensions, connectors and safety protocols. Without standards, swapping networks fragment.
- Infrastructure cost and siting: Swapping stations need prime real estate in city cores—expensive and often hard to secure.
- Grid impact: Concentrated charging for swap stations requires grid upgrades or smart charging controls.
- Capital intensity of providers: Battery asset owners need deep pockets to buy, cycle and manage large fleets of modules before leasing revenue flows in.
What a realistic rollout looks like
In my view, the most credible path is gradual and partnership-driven:
- Start with targeted high-utilisation corridors and taxi hubs (airport shuttles, central business districts).
- Use pilot partnerships between OEMs, swap providers and cities to test standard interfaces and business models.
- Leverage existing fleet operators to ensure high station utilisation from day one.
- Incentivise swap station siting through local policy—priority parking, reduced fees or land use concessions.
When does modular leasing make sense?
From my analysis, modular battery leasing and swapping become compelling when several conditions are met:
- High vehicle utilisation (typical of taxi fleets in major city centres).
- Good density of swap infrastructure so downtime is minimal.
- Leasing fees set below the avoided costs of battery ownership and downtime.
- Regulatory or commercial support for standardisation and station siting.
Where those align, fleets can increase daily uptime, reduce unexpected capital spending, and convert uncertain battery replacement costs into manageable operating expenses—improving margins and making electric taxis more profitable than their ICE predecessors.
My final thoughts while on the road
I still believe the future of urban mobility will be electric and increasingly modular, but success will be uneven. Cities that foster standards, provide space for swapping infrastructure, and support pilots will see the biggest gains. For fleet operators, the question isn’t whether modular battery leasing is theoretically sound—it’s whether a leasing deal and swapping network in your city actually lowers total cost per available-hour compared with existing models. That’s the number I watch most closely when evaluating profitability.
