Optimal Capacity Planning and Battery-Charging Policy for an Electric Vehicle Battery Swap Station

Posted: 11 Nov 2016

See all articles by Zuo-Jun Max Shen

Zuo-Jun Max Shen

University of California, Berkeley - Department of Industrial Engineering & Operations Research (IEOR)

Bo Feng

School of Business Administration, South China University of Technology

Hailong Sun

South China University of Technology - School of Business Administration (SBA)

Date Written: November 8, 2016

Abstract

Battery swapping enables drivers of electric vehicles to exchange their drained batteries for recharged batteries at swapping stations. The business model for a swapping station involves several important decisions. For example, how many charging devices (fast devices vs. normal devices) and batteries should be stored onsite? How should different charging modes (fast charging vs. normal charging) be employed to charge drained batteries to provide satisfactory service with minimum cost? In this paper, we propose a two-stage stochastic optimization model to answer these questions. We derive an optimal charging-device portfolio and prove that the “two-threshold” charging policy is optimal. Extensive numerical studies that employ real-world data reveal several interesting observations. We show that fast charging devices are always needed and their optimal number is primarily determined by battery-aging costs. We also analyze the impact of progress in technology on capacity-planning decisions.

Keywords: electric vehicles, battery swapping, capacity planning, Markov decision process, L-convexity

JEL Classification: C61

Suggested Citation

Shen, Zuo-Jun Max and Feng, Bo and Sun, Hailong, Optimal Capacity Planning and Battery-Charging Policy for an Electric Vehicle Battery Swap Station (November 8, 2016). Available at SSRN: https://ssrn.com/abstract=2867793

Zuo-Jun Max Shen

University of California, Berkeley - Department of Industrial Engineering & Operations Research (IEOR) ( email )

IEOR Department
4135 Etcheverry Hall
Berkeley, CA 94720
United States

Bo Feng (Contact Author)

School of Business Administration, South China University of Technology ( email )

Wushan
Guangzhou, AR Guangdong 510640
China

Hailong Sun

South China University of Technology - School of Business Administration (SBA) ( email )

Wushan
Guangzhou
China

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