Strategic matching for battery swapping service: Balancing customer satisfaction and resource utilization

As electric vehicles (EVs) thrive, battery swapping is increasingly recognized as a faster alternative to conventional plug-in charging services for such vehicles. However, the adoption of battery swapping poses distinct challenges. For instance, the owner of a new car might receive a degraded battery at a battery swap station, leading to customer dissatisfaction. In addition, assigning new batteries to older cars leads to under-utilization of battery resources and potential loss. In this paper, we explore a battery matching strategy aiming to better match batteries to vehicles. We develop a two-period game-theoretical model that takes into account the uncertainty of customer arrivals and the battery swapping service provider’s evolving understanding of this market demand. We show that implementing a battery matching strategy can directly boost a service provider’s profitability by enhancing the accuracy of battery allocation, although the service provider might not always adopt it. By updating the understanding of customers’ arrival rate, the service provider might sometimes adopt a matching strategy and subsequently abandon it. The acquisition of new batteries tends to hinder the adoption of a battery matching strategy, whereas battery aging and service rate improvements tend to promote it. We further indicate that if battery matching is adopted, the service provider tends to reduce its investment in battery maintenance and cut back on new battery purchases. Interestingly, if the service provider initially invests in battery maintenance technologies, the adoption of battery matching in subsequent period might counterintuitively undermine the service provider’s expected revenue. The findings provide battery swapping service providers with insights on balancing operational behavioral and market factors to optimize battery allocation decisions and enhance customer satisfaction and promote widespread adoption, contributing to social benefits.