U Power Aims to Electrify Hong Kong Taxis with Battery Swapping

In an industrial zone near Hong Kong’s bustling cargo port, a white MG electric taxi smoothly entered a narrow kiosk resembling a car wash. A hydraulic lift elevated the vehicle, allowing a guided mechanical system to swiftly replace the taxi’s depleted battery with a fully charged one. This process, completed in under three minutes, showcased the efficiency of U Power’s battery-swapping technology, a solution aimed at electrifying Hong Kong’s notoriously antiquated taxi fleet.

U Power, a startup from Shanghai, plans to establish a network of hundreds of battery-swapping kiosks across Hong Kong. The city’s commercial vehicle fleet, which includes taxis, buses, and delivery vans, has a mere 4% electric vehicle (EV) penetration. For taxis specifically, the percentage is even lower, with only 90 electric taxis out of 18,163 licensed cabs as of December 2024. This stark contrast to the 24% penetration rate among private auto fleets highlights the significant opportunity for EV adoption in the commercial sector.

Globally, the phenomenon is similar: fewer than 1% of the more than 400 million commercial vehicles are electric. Even in cities with high EV penetration rates, electric taxis remain rare. The financial incentives for taxi owners to switch to EVs are substantial. Electric motors, with fewer moving parts, are cheaper to run and maintain. Recent studies suggest that fuel costs for EVs are more than 70% lower than for gas-powered vehicles, translating to annual savings of about $10,000 per taxi. Additionally, the Hong Kong government offers inducements such as waived first-time registration taxes for electric taxis and a 45,000 Hong Kong dollar subsidy per vehicle for operators who switch from gas to electric.

However, taxi owners and drivers are hesitant due to the downtime associated with conventional EV charging. For high-utilization fleets, every minute of downtime means lost revenue. Hong Kong has over 11,000 public EV chargers, but only about 2,000 are quick or fast chargers, capable of restoring batteries to 80% in 30 to 60 minutes. The rest can take several hours to fully recharge a vehicle, time that most drivers cannot afford. The average taxi driver earns 200 Hong Kong dollars per hour, making two hours of idle time economically unfeasible.

Battery swapping stations could eliminate this downtime, but only if U Power can build enough of them across the city and persuade drivers to embrace the model. The company aims to have four stations operational in Hong Kong by the end of this year and envisions a citywide network of over 200 stations.

Beyond Hong Kong, U Power has global ambitions. The company has launched pilots in Singapore and China Macau and is actively rolling out swap stations in Thailand, Mexico, Portugal, and Peru. Thailand and Mexico are seen as particularly promising due to their large taxi fleets and high vehicle turnover. Bangkok has 80,000 taxis, and Mexico City has over 100,000. In Thailand, U Power has signed a strategic partnership with SAIC Motor–CP Co., a joint venture between one of China’s largest automakers and CP Group, Thailand’s largest conglomerate. The venture aims to integrate battery-swapping technology into MG taxis and ride-hailing vehicles.

U Power has also formed a joint venture with SUSCO, a Thai oil and fuel retailer, to install kiosks at its network of 200 gas stations and teamed up with Japan’s Sumitomo Mitsui Auto Leasing & Service to deploy a fleet of swapping-compatible MGs in the island province of Phuket. The company now plans to move its operational headquarters from Shanghai to Bangkok to fuel its global expansion. In Mexico, U Power has partnered with fleet operator Vizeon New Energy to develop swap-compatible EV taxis, buses, and trucks, and install pilot swap stations in three major cities. Similar efforts are underway in Lisbon and Lima, where U Power is targeting midsize fleet operators and delivery platforms.

U Power has no plans to enter the world’s two largest markets: the U.S. and China. The U.S. is considered an EV laggard due to low urban density, fragmented infrastructure, and an unpredictable regulatory landscape for Chinese tech companies. China, on the other hand, has fierce competition, entrenched EV incumbents, and a power grid so advanced that ultra-fast charging is widely available, making battery swapping largely unnecessary. China’s largest cities, such as Beijing, Shanghai, and Guangzhou, have already achieved over 95% EV penetration in their taxi fleets. In Shenzhen, authorities mandated the conversion of the city’s entire taxi and bus fleets to electric vehicles as far back as 2018.

To realize its global vision, U Power must secure hundreds of viable swap sites in some of the world’s most crowded cities. This is a daunting proposition, especially in Hong Kong, where land is expensive, and each location will require zoning approvals, grid connectivity, and all-hours vehicle access. So far, U Power has identified just ten potential sites in the city. The bigger challenge may be cultural. Winning over Hong Kong’s 17 major taxi fleet owners and some 46,000 fiercely independent drivers means reshaping deep-seated habits and suspicions. U Power’s model requires operators to give up battery ownership, retrofit vehicles with the company’s proprietary UOTTA interface, and pay monthly subscription fees tied to battery use—terms that may not sit easily with a sector long allergic to centralized control.

Li insists the economics will win out. By decoupling batteries from vehicles, he argues, taxi owners can reduce up-front costs by as much as 40%. U Power, meanwhile, assumes responsibility for charging logistics, battery health monitoring, and end-of-life recycling. As batteries degrade, they’re rotated into less demanding uses—like stationary energy storage—or recycled outright. To sweeten the deal, Li has floated a blockchain-based incentive system. Each battery contains a chip that logs usage, charging behavior, and wear. Drivers who follow optimal patterns—avoiding peak-hour swaps, returning batteries in good condition—can earn digital tokens redeemable for energy discounts or services. The goal: a transparent, self-regulating marketplace that reduces strain on the grid while rewarding smart usage.

Whether Hong Kong’s notoriously unruly taxi sector will buy in remains to be seen. The city’s iconic red, green, and blue cabs are instantly recognizable symbols of the city. They’re also famously idiosyncratic. Most drivers still accept cash only and have long attracted complaints of rude service, overcharging, and reckless driving. Reform efforts have repeatedly hit walls: A proposed fee hike in 1984 triggered citywide riots; drivers staged mass strikes in 1991 and 2008; and just this February, the drivers’ union threatened another unless the government cracked down on unlicensed ride-hailing services.

At U Power’s Hong Kong launch ceremony in June, the chairman of the Hong Kong Taxi Drivers & Operators Association attended and signed a memorandum of understanding pledging to promote the adoption of the UOTTA system. Notably, though, no representatives of the Hong Kong Taxi Owners Association, which represents the interests of taxi license holders—and is generally considered the more politically powerful of the two major taxi unions—attended the event.

Still, the symbolism of electrifying Hong Kong’s taxis is potent. If Li Jia has his way, the next time one of those taxis makes an international cameo, it’ll be running on swappable power—a symbol not only of the city, but of the future of electric mobility.