On a recent morning in an industrial zone near Hong Kong’s bustling cargo port, a white MG electric taxi glided into a narrow kiosk resembling a car wash. A hydraulic lift elevated the vehicle, allowing a guided mechanical system to slide out the taxi’s depleted battery and replace it with a fully charged one. There was no plugging in, no waiting around to recharge. The taxi was ready for the road in under three minutes. That battery-swapping kiosk is the first of a network of hundreds planned for Hong Kong by U Power, a little-known startup from Shanghai that aims to electrify the beating heart of the city’s notoriously antiquated taxi fleet. The opportunity is huge. In Hong Kong, electric vehicles make up just 4% of the city’s 119,000 commercial vehicles, including taxis, buses, and delivery vans. For taxis, the percentage of EVs is even lower. As of December 2024, Hong Kong had only 90 electric taxis, accounting for 0.5% of the city’s 18,163 licensed cabs. That’s a stark contrast to the 24% penetration rate among the city’s private auto fleet. Hong Kong is representative of a global phenomenon: Of the more than 400 million commercial vehicles worldwide, fewer than 1% are electric. Even in cities with high EV penetration rates—including San Francisco, Oslo, and Amsterdam—electric taxis remain a rarity. In theory, Hong Kong’s taxi owners have strong financial incentives to make the switch. Electric motors, with fewer moving parts than internal combustion engines, are cheaper to run and maintain. Several recent studies suggest fuel costs for EVs are more than 70% lower than for gas-powered vehicles, translating to annual savings of about $10,000 per taxi. The Hong Kong government offers further inducements: it has waived first-time registration taxes for electric taxis and granted a 45,000 Hong Kong dollar (about $5,750) subsidy per vehicle to operators who switch from gas to electric. Still, owners and drivers are wary. For commercial vehicles, especially taxis, every minute of downtime means lost revenue. Conventional EV charging is far too slow for high-utilization fleets. Hong Kong has more than 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 most drivers don’t have. Courtesy of U PowerAs Li points out, the average taxi driver earns 200 Hong Kong dollars (about $25) per hour: “You ask them to sit idle for two hours? No way. That’s 400 [Hong Kong] dollars gone.” On top of that, many public charging stations impose hourly parking fees, further eroding the economic case for EVs. Battery swapping stations could eliminate that downtime—but only if U Power can build enough of them across the city and persuade drivers to embrace the model. The company hopes to have four stations in operation in Hong Kong by the end of this year and ultimately envisions a citywide network of more than 200. Beyond Hong Kong Hong Kong is a high-profile testbed, but Li has global ambitions. U Power 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 particularly promising due to their large taxi fleets and high vehicle turnover. Bangkok, he notes, has 80,000 taxis; Mexico City has more than 100,000. In Thailand, U Power last year 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. (Disclosure: Fortune’s owner, Chatchaval Jiaravanon, is a member of the family that controls the CP Group, and he is one of U Power’s largest investors.) 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. And the company now says that it plans to move its operational headquarters from Shanghai to Bangkok in order to fuel its global expansion.In Mexico, the company 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.Notably, though, U Power 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 urban density, fragmented infrastructure, and an unpredictable regulatory landscape for Chinese tech companies. He’s also ruled out the Chinese mainland due to 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 are notable exceptions to the global dominance of gas-powered taxis. Electric vehicles account for more than 95% of the taxi fleet in Beijing, Shanghai, and Guangzhou. In Shenzhen, the sprawling metropolis just across the border from Hong Kong, authorities have mandated the conversion of the city’s entire taxi and bus fleets to electric vehicles as far back as 2018. A wild ride on the Nasdaq U Power’s plans for global expansion sparked one of the most explosive post-IPO rallies in Nasdaq history. When the company debuted in April 2023, shares shot up over 600% on opening day, triggering multiple trading halts. Retail traders piled in, lured by the promise of a disruptive Chinese EV infrastructure play. The stock, which trades under the moniker UCAR, peaked at $901 in June before speculative fervor collapsed. By year’s end shares had slumped to $18. Over the past 52 weeks, U Power’s share price has oscillated between $9.05 and $2.47, with day-to-day swings often exceeding 10%. The stock currently trades below $4.00, down more than 50% year-to-date. No major Wall Street analyst currently follows UCAR. U Power’s stock’s slump reflects investor skepticism about the feasibility of its “battery-as-a-service” model and frustration with its lackluster financials. Critics question whether a battery swap network—capital intensive, dependent on fleet adoption, and distributed across so many different markets—can scale profitably. The company, launched in 2013, remains unprofitable, posting a $7.7 million net loss on $6.08 million in revenue in 2024, according to documents filed with the U.S. Securities and Exchange Commission. Li insists the company will break even in 2025 and triple profits in 2026, thanks to expanding fleet contracts and growing subscription revenue in Southeast Asia and Latin America. Owners and drivers, hearts and minds To realize Li’s grand visions, U Power must secure hundreds of viable swap sites in some of the world’s most crowded cities. That’s an especially daunting proposition 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. Isaac Lawrence—AFP via Getty ImagesWhether Hong Kong’s notoriously unruly taxi sector will buy in remains to be seen. The city’s iconic red, green, and blue cabs—red for Hong Kong Island and Kowloon, green for the New Territories, and blue for Lantau—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 like Uber. 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. In 2023, when the city’s stock exchange opened offices in New York and London, it marked the milestone with a cheeky global ad campaign featuring then-CEO Nicolas Aguzin rolling through Manhattan and Mayfair—not in a black limo, but in the back of a classic red Hong Kong cab. 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. This story was originally featured on Fortune.com