Is the SBMC Disintegrating?

The Need for a Consortium

It was 2021, and everyone was still figuring out batteries. Cell prices were high, and the business case for a battery scooter to be sold with the battery billed to the customer was shaky. Also, everyone was in kindergarten when it came to batteries.

On the other side of the world, Gogoro was at its peak. It had already raised over USD 500m in funding and was the social-media-business-case-darling of electric mobility for the masses. The company was heading for a Nasdaq listing; everyone wanted to be them.

The idea of battery-swapping with swapping stations every half a mile was profound on paper; everyone and their strategy departments looked at Gogoro and said, "We could do the same."

But they also realized that with a great network comes a large CAPEX, which no one had the pockets for. The appetite for destruction was even less in incumbents. Heavily profitable ICE players like Honda, Yamaha, or Piaggio found no sense in deploying money to set up a swapping network.

Actually, apart from Honda and maybe a Yamaha, the others didn’t even have the money.

Then someone said, "Let’s form a consortium for battery swapping and spread the coverage and share the risk."

The business case was sold across boardrooms as finding a common battery standard that could power electric scooters and motorcycles across brands and a wide-spanning swapping network that would support everyone.

In reality, it was commoditizing the battery as none of the participants had the appetite to work on meaningful battery innovation.

Everyone had to take into account the inevitable trade-offs. For instance, if the battery is standardized, you must design all the vehicles around the same pack. Portable/swappable batteries restrict the design and are not as integral as fixed batteries. Cramming a swappable battery into the floorboard of a scooter is not easy and is rarely done.

There are obviously exceptions to this, like KTM‘s Emotion Project, which placed the portable batteries inside the floorboard. However, Emotion is a concept and is unlikely to get into production anytime soon.

There are other scooters with portable batteries inside the floorboard, like the ones from Segway (right), but these are portable and not swappable.

Consortium – EMotion

EMotion

The other constraint is the physical dimension and the energy capacity of the battery, which are both correlated. Eventually, the previous generation swappable batteries like the Gogoro or the Honda MPPs have settled around 1.3-1.5 kWh and a weight of about 8.5 - 10.0 kgs. Newer ones, especially the ones targeted at Africa, want to pack in more energy and end up heavier.

Even though there were constraints with swappable batteries, the theoretical gains from a consortium-deployed battery network were compelling. Every manufacturer-participant in such consortiums was confident they could design a vehicle around a standardised battery but still make it look and feel like it belonged to the brand. It helped that the commuter scooter and commuter motorcycle buyers are some of the least demanding customers in terms of seeking brand experience.

So yes, the consortium made much sense on paper. Companies would pull their resources and deploy an extensive network of swapping stations, which would service different brands. Essentially, it was replicating the Gogoro swapping model, worldwide. In Taiwan, the Gogoro network supports at least seven more brands apart from itself.

The Formation of Gachaco...

Within 2021-22, two prominent consortiums were formed. The first was the Replaceable Battery Consortium for Electric Motorcycles (RBCEM), active since 2019 but with a not-so-clear agenda. They woke up in March 2021 and announced that they would standardise swappable batteries and replacement systems, allowing battery sharing to improve the adaption of electric motorcycles in Japan.

Further, in March 2022, RBCEM changed into Gachaco Inc. with ongoing participation from the Japanese big four players - Honda, Suzuki, Kawasaki, and Yamaha. The other partner in Gachaco is ENEOS Holdings Inc., an Oil, Gas, and Metals conglomerate.

ENEOS holds 51% of the company, Honda has 34%, and the remaining 15% is split equally between Suzuki, Kawasaki, and Yamaha. Today, Gachaco is operational in Japan and deploys the Honda Mobile Power pack (MPP) across its swapping network.

...and SBMC

Across the globe, another prominent consortium was taking shape - the Swappable Batteries Motorcycles Consortium (SBMC). The core idea was to roll out a swapping network across major European cities. The continent was already primed - major municipalities had already started handing out licenses to moped-sharing operators. A swappable battery network would have been a good fit.

SBMC started with four core members: Honda, Yamaha, Piaggio, and KTM. The idea was to develop a common standard for swappable batteries.

Then...Slow Progress!

The SBMC consortium aims to develop a standard battery format that all the OEM participants agreed to use. Suppliers and service providers participate in the consortium to follow the guidelines set and create consortium-wide harmony of norms.

Even though the large Chinese factories and the Indian manufacturers are not part of SBMC, it still represents one of the biggest consortiums in the electric two-wheeler space.

That was 2021; we expected a prototype battery in a year. That's how long a startup would take to do so. That didn’t happen - SBMC is not in a hurry.

This is what the SBMC reported as progress in September and November 2022, a full year after it came into being.

In one year, SBMC was still setting the theoretical requirements. That approach reflects a government-appointed fact-finding committee in a developing country, not an industry consortium that aims to change the continent.

Then, a Battery Prototype Appeared

In October 2023, SBMC finally came out with a prototype of a swappable battery and a battery-swapping cabinet. This is what it looked like:

We found it surprisingly underwhelming. Europe is the global center of cutting-edge product design. It leads the world. That's where the Chinese set up their design studios. Our expectations were high. This did not set any benchmarks for product design. With their pop-out battery cabinets, Gogoro, Honda MPP, and many more were a generation ahead.

Membership - Growth and Slump

Formed in September 2021 by the four founding members, the initial response to SBMC was overwhelming as everyone wanted to join a consortium that would standardize batteries across Europe.

Within a year, membership had reached 40 members. However, some reshuffling had started happening within the consortium. KTM was no longer a core member; it was just an ordinary member.

We never found out what differentiated Core members from Regular and Associate members.

Within a year, the landscape had changed again. In July 2024, this (above) was what SBMC looked like. There was a thinning of ranks. Some manufacturer-players like Triumph Motorcycles had exited.

We couldn't quite fathom why Triumph had joined the consortium in the first place.

However, the most critical exits were CF Moto (a partner of KTM) and Niu. Since Niu is synonymous with portable (but not swappable) battery-energized commuter scooters in Europe, leaving SBMC was a big red flag.

Also leaving during this period was Segway-Ninebot, another manufacturer targeting the European market aggressively with portable-batteries-energized scooters.

But between Nov 2024 and today, another significant upheaval has happened.

As evident above, Honda and Yamaha have left the consortium. Kawasaki has also departed, and it seems Suzuki did not get the all-Japan-we-only-Gachaco memo; it still hangs in there.

A notable recent addition to SBMC is Acciona, the energy major and owner of Silence. Notably, Silence already has its very distinct, trans-portable, standardized battery format.

SBMC was never Gachaco

SBMC was never as rigidly structured as Gachaco, which is one reason it's not reaching anywhere in a hurry. The Japanese organisation is a 'for-profit' company with a well-defined shareholding, a purpose, and a business plan. They are not 'working' on a battery; Honda has already developed the MPP, which is the Gachaco battery.

The roles of each participant in Gachaco have been well-defined:
ENEOS: Create and bankroll a battery-swapping network to be rolled out across Japan in the initial stages. ENEOS will also be responsible for real estate by deploying this network at its fuel stations. The eventual battery disposal and recycling is also ENEOS’s responsibility.
Honda: Honda would create the swappable battery format with the Mobile Power Pack (MPP). The Honda MPP would be adapted as the default standard by Gachaco. Honda would further create the swapping stations for the batteries as well. The swapping network would be branded as Gachaco.
Suzuki, Yamaha, and Kawasaki: Develop products that use these swappable batteries.

As of writing this report, Gachaco has already set up swapping stations across 54 locations in Tokyo and Osaka. Users can download the Gachaco app, subscribe to a contract to enable battery swapping and get charged to their credit card.

This is a company going somewhere.

Mind you, there is very little likelihood that Gachaco would go beyond Japan in any form. Kawasaki and Suzuki are yet to show much commitment. Kawasaki has two motorbikes with portable batteries, but they did not use the MPP. Instead, Kawasaki went with France-based Forsee Power, a founding member of SBMC. To be fair, the MPP would have been too big with its square profile for the battery bay of the Ninja e-1.

The World is not Short of Swappable Batteries

...and it's not difficult to make one.

Some of the brands above are, or were, members of the SBMC. In the high-cost electric two-wheeler world, optimising costs and commonising components is primary. Portfolios are global - Suzuki Address and Access are sold all over, so are Honda SHs and Yamaha Fascino/ Fazzio. In such an environment, it is difficult for a manufacturer to develop and deploy two different swappable batteries in different geographies.

Europe is not the world

If Honda plans to sell four million E2Ws per year by 2030, we expect 3.8m to be in India, ASEAN, and LatAm. Europe is not the world and there is very little reason for Honda to be a part of a separate swappable battery infrastructure if they have already committed to MPP.

It is logical to say that Honda only joined SBMC in the first place so that it could move the entire consortium to the MPP. When that didn't happen, there was no point in sticking around.

The same is true with KYMCO which is a part of SBMC (for now) but also has its own iONEX EV League with Felo and SuperSoco. If iONEX gathers momentum, it would be a tough decision for KYMCO.

KYMCO’s iONEX battery-swapping network is the second most popular in Taiwan. The manufacturer plans to roll it across in other geographies. However, the presence is quite small as compared to homegrown rival Gogoro.
The company is trying to push iONEX into mainland China with the help of its partners. In May 2021, KYMCO teamed up with FELO Technologies and Super SOCO to roll-out iONEX in China. It already has joint product development partnerships with both manufacturers.
With FELO, KYMCO has co-developed the KYMCO F9/FELO FW-06 sports scooter. With Super SOCO, KYMCO has developed the i-SK, a small scooter that uses iONEX batteries.

Major Problem - The Biggies have left the room

Together, the remaining participating manufacturers still account for a little more than 18.5% of sales in Europe. THAT IS, if we assume that everything coming out of the factories is electric and ICE is already dead. This volume is not great to sustain a continent-wide swapping network, unless more manufacturers join.