When should capital-constrained swap service providers partner with battery lessors?

Battery swapping provides a quick electric vehicle (EV) replenishment solution to time-sensitive consumers. To meet the growing demand, a significant investment in establishing swap stations is needed, and fund shortage becomes a bottleneck for swap service providers. To cope with this issue, a swap service provider may partner with a battery lessor, and such a new financing strategy deserves a close look. Compared with traditional bank credit as the benchmark strategy, asset leasing through battery lessors is more flexible and less burdensome. This study establishes a game-theoretical model of a three-tier market comprising one battery supplier at the producer level, one battery lessor and one swap service provider at the vendor level, and heterogeneous end-users at the consumer level. The model compares the swap service provider’s profit across bank credit and asset leasing strategies to determine when the battery lessor should be involved. It also examines the impacts of asset leasing on swap station establishment, other stakeholders’ profits, consumer surplus, and social welfare. Numerical analyses assess the effectiveness of asset leasing strategy together with four types of incentives: swap operation, station establishment, battery procurement, and battery recycling. Concerning the sustainable development of the EV market, the findings yield managerial implications for supply chain members as well as helpful insights for policymakers.