Cooperation or Competition? Optimal strategies for the construction of Battery-Swapping stations in competitive markets

Battery-swapping offers a rapid refueling solution for electric vehicles (EVs) but faces prohibitive infrastructure costs, creating a strategic dilemma between proprietary monopoly and alliance formation. We develop a game-theoretic model to examine the optimal infrastructure deployment and cooperation incentives for a battery-swapping innovator (BVM) and a charging-based rival (CVM). Our base model reveals that cooperation primarily drives infrastructure consolidation, resulting in fewer stations than competition due to the elimination of redundant investments. However, we find that incorporating station congestion triggers a strategic reversal: specifically in large-scale markets with moderate consumer preference, the negative externality of queuing compels the alliance to expand capacity beyond competitive levels to maintain service quality. Surprisingly, cooperation is not universally optimal: the CVM is deterred by retrofit barriers in nascent markets, while the BVM guards monopoly rents in mature markets. Consequently, a "win-win" equilibrium is conditional, achievable only under moderate market scale and consumer preferences. Furthermore, we demonstrate that the credible threat of the rival's independent entry acts as a strategic catalyst, forcing the incumbent to embrace cooperation to preempt a destructive infrastructure arms race. These findings provide a strategic roadmap for balancing efficiency and service quality in the EV ecosystem.