Electric mobility is leading the decarbonisation of India’s transport sector. The country’s EV revolution is expected to be driven by the two-wheeler and three-wheeler segments. Of all private vehicles, over 70-80 per cent are two-wheelers. Meanwhile, three-wheelers are crucial for public transport, last-mile connectivity and freight, and are witnessing a mass migration to electric. Till now, EV adoption has met with certain challenges such as lack of charging infrastructure, high costs and long refuelling times. These challenges can be resolved to some extent with battery swapping, which allows the de-linking of EV charging and batteries. Simply put, discharged batteries can be quickly exchanged at battery swapping facilities for charged batteries.
Innovative models such as battery-as-a-service (BaaS) allow consumers to purchase an EV with or without the battery, thus helping address some of the concerns associated with EV uptake. During the Union Budget 2022-23, the government announced its intent to launch a battery swapping policy. Subsequently, NITI Aayog drafted a battery swapping policy which is open for inputs from until June 5, 2022.
Objectives, incentives and features
The draft policy aims to boost large-scale adoption of EVs by creating a battery swapping ecosystem that ensures minimal EV downtime while lowering costs and space requirements. As per the policy, battery swapping would fall under the BaaS model, wherein customers can pay a regular subscription fee at fixed intervals to service providers for battery services throughout the vehicle’s lifetime. Only batteries using advanced chemistry cells, with performance that is equivalent or superior to EV batteries supported under the FAME-II scheme, would be considered under the policy. The policy also seeks to provide incentives for greater adoption of swappable batteries in EVs. It has recommended that the GST Council consider reducing the differential across the tax rates on lithium-ion batteries and EV supply equipment. At present, the tax rate is 18 per cent on the former, and 5 per cent on the latter. The same incentives available to EVs that come pre-equipped with fixed batteries will also be available to EVs with swappable batteries. The size of the incentive is likely to be determined based on the kWh rating of the battery and the compatible EV. The state governments are also required to ensure that public battery charging stations are eligible for EV power connections with concessional tariffs. Such stations are proposed to be brought under existing or future time-of-day tariff regimes, to allow swappable batteries to be charged during off-peak periods when electricity tariffs are low.
As data sharing will play a crucial role in ensuring interoperability, major battery providers will be encouraged to sign data sharing agreements to provide information on battery health and performance, and to enable more flexibility for consumers through peer-to-peer roaming networks.
Furthermore, to ensure seamless and streamlined tracking and monitoring of swappable batteries throughout their life cycles, the policy proposes to assign a unique identification number (UIN) to each battery at the manufacturing stage. A UIN will also be assigned to each battery swapping station. Battery swapping stations are proposed to be set up at multiple, diverse locations such as malls, retail fuel outlets, public parking areas and local general stores. Moreover, to ensure battery safety, swappable batteries will be equipped with advanced features such as internet of things-based battery monitoring systems and remote monitoring and immobilisation capabilities. A rigorous testing protocol will also be adopted to avoid any unwanted temperature rise at the electrical interface. Further, the policy covers steps for recycling of batteries at the end of their life cycles. Once finalised, the policy will be implemented for the development of battery swapping networks in all metropolitan cities with a population of more than 4 million under the first phase, and major cities, such as state capitals, with a population of more than 0.5 million under the second phase.
Promoting battery swapping for EVs is a welcome step in India’s journey to net zero emissions. Battery swapping offers key advantages over traditional batteries: it is time efficient and costs less. Yet, as the industry is still at a nascent stage, several challenges lie ahead. As the demand for EVs is rising, different business models and battery designs are being explored. Therefore, achieving standardisation may be a time-consuming process and a “one-size-fits-all” approach may not be fruitful. Also, as the demand for EVs is not yet fully established in the market, the initial cost of investment in battery swapping technology and stations may be very high. Without adequate and appropriate financial and regulatory incentives, private players may not be willing to take the initial risk involved.
Nevertheless, with the right implementation of the draft policy, there is immense potential for establishing a full-fledged battery swapping ecosystem in India, especially given the rising penetration of electric three-wheelers across metropolitan cities.