Chinese carmaker NIO, the world’s newest electric vehicle unicorn, has a big idea: battery swapping. In theory, the process is quicker and more convenient than a fast charge. A driver rolls into a battery swap station, and a robot replaces the drained battery with a fully charged spare. But even though NIO’s battery swapping stations are already deployed in major cities across China, retail investors don't seem to be taking NIO’s swap network seriously.

WIRED OPINION ABOUT Levi Tillemann is the author of The Great Race: The Global Quest for the Car of the Future. He is managing partner at Valence Strategic. Colin McCormick is a physicist, technologist and energy policy expert who works with Valence Strategic on computer vision and autonomous vehicles.

Perhaps that’s because Chinese electric vehicle hype has often outpaced performance (See: CODA, BYD, and Faraday Future.) Or perhaps it's the shadow of an earlier battery-swap unicorn, Better Place—arguably the most spectacular EV flameout in history. There’s also the fact that NIO is billed as a challenger to Tesla—a claim that strains credulity. Elon Musk continues to crush automakers like BMW and Audi in the EV market. So, it’s no great surprise that investors are skeptical. When NIO set a target price for its IPO between $6.25 and $8.25 last month, it barely scraped the floor, debuting at $6.26.

Still, NIO's battery swapping business may be worth far more than Wall Street realizes.

There’s a lot to like about battery swapping. For one, it reverses the standard time tradeoff between EVs and gasoline-powered vehicles. Many EV owners plug-in overnight and charge for hours. In general, fast chargers are now able to charge a battery to 80 percent in a little under half an hour. But in that time, some battery swap stations could charge dozens of cars to 100 percent. In 2013, Tesla swapped out two EV batteries in the time it took to fill an Audi's tank with gas. Today, a company called BattSwap says it can change out a battery in less than a minute. “It requires no user interaction," says Bert Robbens, BattSwap's Chief Technical Officer. "You can do the swap from within your vehicle.” And swapping a 500-mile EV battery won’t necessarily take longer than one with a 100-mile range.

But ever since the downfall of Better Place in 2012, battery swapping has been widely regarded as a technological dead end. Nonetheless, a number of innovative companies, including Tesla, are still quietly developing battery swap ecosystems. That’s because as EV ranges get longer and batteries get bigger, fast-charge technology is fighting physics. Each of Tesla’s newest Super Chargers provides up to 135 Kilowatts of power—twenty-seven thousand times more than an ordinary iPhone charger. (Some EV companies are already testing “ultra-fast” chargers that will provide up to 350 Kilowatts.) These power levels are so high that powerful cooling systems are required to keep vehicles from overheating. Tesla has even experimented with liquid-cooled cables. That’s because systems aren’t 100 percent efficient and the remaining percentage points of lost energy are converted into heat. For a 95 percent efficient 135 kilowatt system, that energy loss is like having half a dozen industrial-grade heat guns on full blast.

Pulling that amount of power from the electrical grid is also a major headache for local utilities. Distribution lines and transformers need to handle enormous spikes of electrical demand when cars plug in; many systems will have to be replaced or upgraded. The user pays for these upgrades in the form of “demand charges,” based on their peak consumption of electricity. Demand charges can make or break a business—significant spikes in demand can mean fees that are higher than the cost of electricity provided.

Battery swapping flips this liability on its head. Empty batteries that are swapped out can be charged when electricity is cheap or demand is low. Whoever owns those batteries can then sell that electricity to motorists at a premium, or even sell it back into the grid when prices are high and supplies are tight. This arbitrage is particularly important in a world of renewable energy. When the sun shines bright or the wind blows hard, renewable energy sources may produce more electricity than the grid needs; at other times renewables may not produce enough. Banks of batteries waiting to be swapped can soak up extra energy and sell it at a profit, thus balancing supply and demand.

If utilization is high enough to defray capital costs, battery swapping is a compelling economic proposition. And it can also benefit consumers. EV batteries lose range over the years. But with a swap system, users pay for electricity and batteries as they are used. That could mean lower upfront vehicle costs and increased driving range, as batteries improve.