In telecommunication, India lagged to adopt newer technology. Once the technology entered India, it disrupted the market, making India the world’s largest and cheapest telecom market. India, today, is amongst the largest telecom markets with over a billion subscribers and more than 80 percent mobile penetration.
Similarly, electric vehicles (EVs) picked up in India from 2021, with catapultic support from FAME II. The second phase of the scheme, Faster Adoption and Manufacturing of Hybrid & Electric Vehicles in India, was implemented in 2019.
On average, India accounts for more than 1.5 million new two-wheeler retail sales every month, which is around 80 percent of overall automotive sales. Two-wheelers are responsible for around 62 percent of total petrol demand in India. Therefore, it is of paramount importance to transition to clean mobility.
With policy interventions and emerging technologies in the space of EVs, innovative business models will lead the transition and disrupt traditional markets. Fixed and removable battery vehicles will co-exist and lead to the accelerated adoption of electric two-wheelers.
Of all the electric vehicles sold in the country currently, battery-swappable vehicles, new vehicles and not retrofitted ones, are limited. Hence, this is the right time to bring in synergy and provide a level-playing field to accelerate the proliferation of battery swapping in the automobile market.
Battery swapping simply means that vehicle and battery ownership is decoupled.
What does it mean for the consumer?
Battery swapping drastically reduces the upfront cost of the vehicle, almost by half. Consumers will have a wider portfolio of models to pick from, one that suits their style and needs.
The risk of technology obsolescence is eliminated. Safety is ensured, as batteries shall be charged in a controlled environment with a regular check on all their health parameters.
Advanced battery technology is still evolving. Hence, consumers will get the upgrade, quite similar to the way sim-cards are upgraded to 3G, 4G, 5G, etc. It would ensure increased power and life in the same battery without incurring extra cost or risk.
A subscription-based model provides flexibility to the consumer to opt for the best technology being offered at the best price, similar to telecom services where a user chooses a service provider on the basis of connectivity and has the option to switch as per the quality of service.
It is a time-saving proposition, as it reduces the time to charge the vehicle. The battery swapping ecosystem will also enable access to finance with the shared responsibility of assets amongst the consumers, battery service providers, and original equipment manufacturers.
What does it mean for the industry?
Currently, this industry is almost non-existent and fragmented. The Indian consumer and conditions are totally different in behavioural terms i.e., driving, range requirement, and gig workers requirement, as well as operational terms. Therefore, its success is unsure unless local testing is extensively done, and learning is developed accordingly.
What does it mean for the government?
It is a golden chance to do the following:
Rural, tier-1 and tier-2 cities can be provided with green transportation, which has minimal maintenance requirements and becomes inexpensive without batteries.
Solar and wind power can be used in a decentralised manner for swapping stations to charge these batteries i.e. as and when power is available. Thereby, dependence on fossil fuels will decrease.
Leveraging time of the day, discoms can alter the power supplied to swapping stations, as batteries are always getting charged, thereby balancing the peaks.
Since each and every battery will be tracked and these will be returned to the CPOs, it will ensure that there’s not a single automotive advanced battery which ends up in the landfill.
Promote the innovative Battery as a Service (BaaS) business model, which will provide new avenues for the startup ecosystem, and boost employment.
In case of emergencies, the power stored in batteries at swap stations can be utilised (vehicle to grid concept like in California, US).However, all of this would be possible only if the swappable batteries are interoperable at the discharge stage.
What is interoperability?
Let us try and understand the case of interoperability by simple reasoning. For instance, a consumer who lives in Noida buys a vehicle without a battery and takes a battery subscription from an OEM/CPO. If the consumer shifts to another city and is unable to find a battery-swapping station of his/her subscribed service provider, the consumer is left with the option of selling the vehicle or waiting for the operator to start services in that area. So, no interoperability will lead to limited flexibility for the consumer to choose between battery swapping operators.
Also, since the consumer is stuck with one operator, the operator will determine the subscription price, and the consumer will have no option but to adhere to it, unlike sim-cards, where it is easy to shift from one operator to the other, moreover, all sim-cards are of the same size.
The time to deal with issues is now
It paints a picture of inconvenience for the consumers. Therefore, a mechanism to deal with these issues needs to be built at this stage itself.
As far as innovation is concerned, cell dimensions can vary, however outer battery pack dimensions need to be fixed. Outer dimensions can be managed by the battery assemblers without altering the cell’s form. Anyway, none of the battery assemblers in India manufactures the cell, they only assemble imported cells.
Also, if we take the example of one of the most successful battery swapping operators, operating in another country, it can be observed that in the same battery dimension they have doubled the battery range, and have announced to increase it even more. This is a great way to maximise asset utilisation, with minimum asset deployment.
Having said that, the battery size should not be made mandatory for all but should be limited to the ecosystem initially nudged by public funding.
The proliferation of battery swapping will be a significant contributor to the government’s COP26 targets, including decarbonisation of the power sector i.e., utilising ToD and renewable energy for charging batteries at swap stations. Further, it will help India reduce its dependance on the import of oil and battery raw materials (policy focuses on repurposing and recycling the batteries). This will in turn help in reducing the dependence on oil import, and also the import of battery raw materials (higher asset utilization as well as completer recycling of the batteries).
Financing options are easy to build, as ownership of the vehicle is to be financed at 50 percent of the cost (without battery), minimum technology risk, and negligible maintenance, in comparison with ICEs. Batteries will be taken care of, by better-funded OEMs and CPOs. Entrepreneurship will evolve as battery swapping with mini-modules (2-4 battery swap packs) will be made available at kiranas or paan shops.
Undoubtedly, the benefits of battery swapping as an alternative can only be accrued if the industry supports the transition in a fair manner, and establishes an ecosystem that focuses on consumers’ needs, safety and convenience.
(The authors of this article are Randheer Singh, director of E-Mobility at NITI Aayog, and Diewakarr Mittal, a young professional at NITI Aayog.)
(Edited by : Dipti Sharma)
