The Indian government, like most countries, has been proactively campaigning its goals to combat climate change. With the aim to achieve net zero emissions by 2070 and a 100 per cent shift from internal combustion engine vehicles to electric vehicles (EVs) by 2030, the government has taken various steps to promote mass electrification of transportation.

In order to enhance the demand, manufacturers of EVs and its components have been trying to make EVs affordable, easy to charge and economically viable.

Reportedly, batteries consist of 40-50 per cent of the EV cost and a switch to an EV without a battery would eliminate this cost substantially, thereby making battery swapping a viable solution.

After the government introduced the draft battery swapping policy in the 2022-23 Budget, the NITI Aayog published the policy on April 20.

The policy’s key features

The Policy focuses on two-wheelers, three-wheelers, light electric power train vehicles and E-Rickshaw/E-Cart and is intended to promote swapping of batteries with advanced chemistry cells.

The swapping stations have been planned to be set-up in urban areas in two phases spread across a period of three years.

The Policy is valid from the date of its public notification till March 31, 2025, post which the Ministry of Power may review, revise, and extend its validity.

Some of the key features of the Policy are: (i) batteries will be equipped with advanced features like Internet of things-based monitoring system; (ii) a unique identification number will be assigned to batteries and battery swapping stations; (iii) existing incentives for purchasing EVs will be extended to batteries covered under this Policy; (iv) providing technical guidelines, standards and principles required to establish a battery as a service model (“BaaS ”); (v) concerned ministries and state governments to provide electricity to swapping stations at concessional rates; and (vi) land required to set up swapping stations to be provided by both government and public entities on a revenue sharing basis.

Swapping vs charging 

Based on the above-mentioned key objectives of the battery swapping ecosystem, here are the pros and cons of swapping vs. charging, as a service:

Time: Reports suggest that it takes a minimum of an hour or two to charge an EV. Battery swapping is a quick alternative as replacement of discharged batteries with pre-charged batteries only takes a few minutes.

Cost: Battery swapping eliminates the upfront cost incurred while purchasing an EV, by providing battery on a subscription basis. The government has been providing various incentives to both manufacturers and consumers to make EVs affordable.

Space: The plug-in chargers used at charging stations are slow and capable of charging only one vehicle at a time. On the other hand, charging batteries and swapping the discharged batteries requires lesser space as discharged batteries can be stacked up together and charged. This makes swapping stations more effective and less capital-intensive.

Range anxiety: The primary fear of a vehicle owner is that they might run out of charge before reaching the destination, also referred to as ‘range anxiety’. This arises due to lack of proper charging infrastructure. Battery swapping stations are easier, faster, and more convenient to establish and swapping of batteries is a less time-consuming process. However, this issue will only be resolved when swapping stations are successfully set-up.

The hurdles in swapping

While the Policy is considered as a move in the right direction by industry experts and stakeholders, it has its own set of challenges.

One of the issues in introducing swappable batteries is standardisation of batteries. In order to swap discharged batteries with a charged one at any swapping station, it is important that all EVs use a standard battery pack and connector to charge the battery. In the absence of standard batteries or battery modules adapting to all size and models, swapping stations will be able to cater to vehicles only with a specific type of battery pack. Further, the Policy currently does not extend to four-wheelers. However, it is important to note that the BaaS ecosystem in India covers the mass market of two-wheeler and three-wheeler batteries which captures the bulk of the EV market share and in comparison, to four-wheelers are easier to swap. The applicable GST for BaaS is around 18 per cent which in a developing sector may be substantially higher. The government may consider having parity with battery charging and reduce it to the applicable GST chargeable on electricity in case of battery charging.

Even with the current challenges, the battery swapping industry is growing fast both in India and globally. Various BaaS models are prevalent in the Indian battery swapping industry. For instance, Sun Mobility, a leading electric energy infrastructure and service provider based in India, is both a battery manufacturer and network provider as it offers both smart batteries and swapping services.

Bounce Infinity, a swapping service provider, on the other hand, recently launched its own range of electric two-wheelers.

Battery swapping is globally seen as the ultimate solution to overcome the shortfalls of the traditional EVs. It allows for replacement of the discharged batteries for charged ones thereby providing flexibility to recharge the batteries faster and separately.

In order to promote the implementation of the Policy, the Ministry of Road Transport and Highways had on August 12, allowed registration of EVs without pre-fitted batteries. Ease in registration requirement fosters mass production of battery swappable EVs and swappable batteries.

The Policy coupled with government incentives, strong coordination between multiple players, detailed standards on interoperability has the potential of helping India achieve its long-term climate goals.

Further, increased purchase incentives and awareness about the benefits of battery swapping will attract more consumers, leading to large scale switch to EVs.

The writers are with IndusLaw

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