On a latest morning in an industrial zone close to Hong Kong’s bustling cargo port, a white MG electrical taxi glided right into a slender kiosk resembling a automotive wash. A hydraulic elevate elevated the car, permitting a guided mechanical system to slip out the taxi’s depleted battery and change it with a completely charged one. There was no plugging in, no ready round to recharge. The taxi was prepared for the highway in beneath three minutes.
That battery-swapping kiosk is the primary of a community of tons of deliberate for Hong Kong by U Energy, a little-known startup from Shanghai that goals to affect the beating coronary heart of the town’s notoriously antiquated taxi fleet.
The chance is big. In Hong Kong, electrical autos make up simply 4% of the town’s 119,000 business autos, together with taxis, buses, and supply vans. For taxis, the share of EVs is even decrease. As of December 2024, Hong Kong had solely 90 electrical taxis, accounting for 0.5% of the town’s 18,163 licensed cabs. That’s a stark distinction to the 24% penetration fee among the many metropolis’s non-public auto fleet.
Hong Kong is consultant of a worldwide phenomenon: Of the greater than 400 million business autos worldwide, fewer than 1% are electrical. Even in cities with excessive EV penetration charges—together with San Francisco, Oslo, and Amsterdam—electrical taxis stay a rarity.
In principle, Hong Kong’s taxi house owners have robust monetary incentives to make the swap. Electrical motors, with fewer transferring components than inside combustion engines, are cheaper to run and keep. A number of latest research recommend gas prices for EVs are greater than 70% decrease than for gas-powered autos, translating to annual financial savings of about $10,000 per taxi. The Hong Kong authorities gives additional inducements: it has waived first-time registration taxes for electrical taxis and granted a forty five,000 Hong Kong greenback (about $5,750) subsidy per car to operators who swap from fuel to electrical.
Nonetheless, house owners and drivers are cautious. For business autos, particularly taxis, each minute of downtime means misplaced income. Typical EV charging is much too sluggish for high-utilization fleets. Hong Kong has greater than 11,000 public EV chargers, however solely about 2,000 are fast or quick chargers, able to restoring batteries to 80% in 30 to 60 minutes. The remainder can take a number of hours to totally recharge a car—time most drivers don’t have.
Courtesy of U Energy
As Li factors out, the common taxi driver earns 200 Hong Kong {dollars} (about $25) per hour: “You ask them to sit down idle for 2 hours? No method. That’s 400 [Hong Kong] {dollars} gone.” On high of that, many public charging stations impose hourly parking charges, additional eroding the financial case for EVs.
Battery swapping stations may remove that downtime—however provided that U Energy can construct sufficient of them throughout the town and persuade drivers to embrace the mannequin. The corporate hopes to have 4 stations in operation in Hong Kong by the top of this yr and finally envisions a citywide community of greater than 200.
Past Hong Kong
Hong Kong is a high-profile testbed, however Li has international ambitions. U Energy has launched pilots in Singapore and Macau and is actively rolling out swap stations in Thailand, Mexico, Portugal, and Peru. Li sees Thailand and Mexico as notably promising resulting from their massive taxi fleets and excessive car turnover. Bangkok, he notes, has 80,000 taxis; Mexico Metropolis has greater than 100,000.
In Thailand, U Energy final yr signed a strategic partnership with SAIC Motor–CP Co., a three way partnership between one in every of China’s largest automakers and CP Group, Thailand’s largest conglomerate. The enterprise goals to combine battery-swapping know-how into MG taxis and ride-hailing autos. (Disclosure: Fortune’s proprietor, Chatchaval Jiaravanon, is a member of the household that controls the CP Group, and he’s one in every of U Energy’s largest buyers.)
U Energy has additionally shaped a three way partnership with SUSCO, a Thai oil and gas retailer, to put in kiosks at its community of 200 fuel stations and teamed up with Japan’s Sumitomo Mitsui Auto Leasing & Service to deploy a fleet of swapping-compatible MGs within the island province of Phuket.
And the corporate now says that it plans to maneuver its operational headquarters from Shanghai to Bangkok in an effort to gas its international enlargement.
In Mexico, the corporate has partnered with fleet operator Vizeon New Power to develop swap-compatible EV taxis, buses, and vans, and set up pilot swap stations in three main cities. Comparable efforts are underway in Lisbon and Lima, the place U Energy is concentrating on midsize fleet operators and supply platforms.
Notably, although, U Energy has no plans to enter the world’s two largest markets: the U.S. and China. Li calls the U.S. an EV laggard, hampered by low city density, fragmented infrastructure, and an unpredictable regulatory panorama for Chinese language tech corporations. He’s additionally dominated out the Chinese language mainland resulting from fierce competitors, entrenched EV incumbents, and an influence grid so superior that ultra-fast charging is extensively accessible—making battery swapping largely pointless.
China’s largest cities are notable exceptions to the worldwide dominance of gas-powered taxis. Electrical autos account for greater than 95% of the taxi fleet in Beijing, Shanghai, and Guangzhou. In Shenzhen, the sprawling metropolis simply throughout the border from Hong Kong, authorities have mandated the conversion of the town’s total taxi and bus fleets to electrical autos way back to 2018.
A wild trip on the Nasdaq
U Energy’s plans for international enlargement sparked probably the most explosive post-IPO rallies in Nasdaq historical past. When the corporate debuted in April 2023, shares shot up over 600% on opening day, triggering a number of buying and selling halts. Retail merchants piled in, lured by the promise of a disruptive Chinese language EV infrastructure play. The inventory, which trades beneath the moniker UCAR, peaked at $901 in June earlier than speculative fervor collapsed. By yr’s finish shares had slumped to $18. Over the previous 52 weeks, U Energy’s share value has oscillated between $9.05 and $2.47, with day-to-day swings typically exceeding 10%. The inventory at the moment trades under $4.00, down greater than 50% year-to-date. No main Wall Road analyst at the moment follows UCAR.
U Energy’s inventory’s stoop displays investor skepticism in regards to the feasibility of its “battery-as-a-service” mannequin and frustration with its lackluster financials. Critics query whether or not a battery swap community—capital intensive, depending on fleet adoption, and distributed throughout so many alternative markets—can scale profitably. The corporate, launched in 2013, stays unprofitable, posting a $7.7 million web loss on $6.08 million in income in 2024, in accordance with paperwork filed with the U.S. Securities and Alternate Fee.
Li insists the corporate will break even in 2025 and triple income in 2026, due to increasing fleet contracts and rising subscription income in Southeast Asia and Latin America.
Homeowners and drivers, hearts and minds
To comprehend Li’s grand visions, U Energy should safe tons of of viable swap websites in a few of the world’s most crowded cities. That’s an particularly daunting proposition in Hong Kong, the place land is pricey, and every location would require zoning approvals, grid connectivity, and all-hours car entry. Up to now, U Energy has recognized simply ten potential websites within the metropolis.
The larger problem could also be cultural. Successful over Hong Kong’s 17 main taxi fleet house owners and a few 46,000 fiercely impartial drivers means reshaping deep-seated habits and suspicions. U Energy’s mannequin requires operators to surrender battery possession, retrofit autos with the corporate’s proprietary UOTTA interface, and pay month-to-month subscription charges tied to battery use—phrases that won’t sit simply with a sector lengthy allergic to centralized management.
Li insists the economics will win out. By decoupling batteries from autos, he argues, taxi house owners can cut back up-front prices by as a lot as 40%. U Energy, in the meantime, assumes duty for charging logistics, battery well being monitoring, and end-of-life recycling. As batteries degrade, they’re rotated into much less demanding makes use of—like stationary vitality storage—or recycled outright.
To sweeten the deal, Li has floated a blockchain-based incentive system. Every battery incorporates a chip that logs utilization, charging conduct, and put on. Drivers who observe optimum patterns—avoiding peak-hour swaps, returning batteries in good situation—can earn digital tokens redeemable for vitality reductions or providers. The objective: a clear, self-regulating market that reduces pressure on the grid whereas rewarding good utilization.
Isaac Lawrence—AFP by way of Getty Photographs
Whether or not Hong Kong’s notoriously unruly taxi sector will purchase in stays to be seen. The town’s iconic crimson, inexperienced, and blue cabs—crimson for Hong Kong Island and Kowloon, inexperienced for the New Territories, and blue for Lantau—are immediately recognizable symbols of the town. They’re additionally famously idiosyncratic. Most drivers nonetheless settle for money solely and have lengthy attracted complaints of impolite service, overcharging, and reckless driving. Reform efforts have repeatedly hit partitions: A proposed price hike in 1984 triggered citywide riots; drivers staged mass strikes in 1991 and 2008; and simply this February, the drivers’ union threatened one other until the federal government cracked down on unlicensed ride-hailing providers like Uber.
At U Energy’s Hong Kong launch ceremony in June, the chairman of the Hong Kong Taxi Drivers & Operators Affiliation attended and signed a memorandum of understanding pledging to advertise the adoption of the UOTTA system. Notably, although, no representatives of the Hong Kong Taxi Homeowners Affiliation, which represents the pursuits of taxi license holders—and is mostly thought-about the extra politically highly effective of the 2 main taxi unions—attended the occasion.
Nonetheless, the symbolism of electrifying Hong Kong’s taxis is potent. In 2023, when the town’s inventory alternate opened workplaces in New York and London, it marked the milestone with a cheeky international advert marketing campaign that includes then-CEO Nicolas Aguzin rolling via Manhattan and Mayfair—not in a black limo, however behind a basic crimson Hong Kong cab. If Li Jia has his method, the following time a kind of taxis makes a global cameo, it’ll be working on swappable energy—an emblem not solely of the town, however of the way forward for electrical mobility.
