Draft battery swap policy has its drawbacks too
PremiumBattery swapping falls under the business model where the EVs are purchased without the battery
BENGALURU : Niti Aayog’s draft policy on battery swapping, which primarily focuses on electric two-wheelers (e-2W) and three-wheelers, is being seen as a step in the right direction and comes against the backdrop of rising penetration of electric vehicles (EVs) in India.
This policy would ensure equal opportunities across business models which involve sale of EVs with fixed or swappable batteries.
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The policy is a step forward in conversion to clean mobility, according to analysts. However, the road to this being adopted on a mass scale is not without hurdles. Battery swapping falls under the Battery as a Service (BaaS) business model where the EVs are purchased without the battery. A regular subscription fee is paid to service providers for battery service during the vehicle’s lifetime.
“The success of BaaS will depend on devising efficient ways to address the interoperability of batteries and software for battery management system, financing for the battery inventory (for use in vehicle and a back-up in charging/swapping station), initially low captive demand, and risks because of evolving battery technology for EVs," said analysts at Kotak Institutional Equities in a report on 25 April.
“At present, the battery packs of EVs are not standardized among different vehicle brands, models and segments, which makes them incompatible," the analysts said.
“Technology has not matured yet and this needs some deliberation," said an analyst who spoke on the condition of anonymity, sharing a similar view. However, there are entities whose battery swapping ecosystems have been successful. One such example is Gogoro, a Taiwanese company with which Hero MotoCorp Ltd has a joint venture.
The total cost of ownership (TCO) would be favourable for e-2W with a battery-swapping system when compared to e-2W with fixed batteries, said Kotak analysts. The TCO would be cheaper than it would be for internal combustion engine vehicles.
However, with recent instances of e-2Ws catching fire, safety concerns arise. Battery swapping cannot be seen as a sure shot solution to avoid such incidents, analysts said. This is because a faulty battery management system can still cause fire in e-2W with battery-swapping system.
Meanwhile, the penetration of e-2Ws in India is on the rise and has surpassed 4% in March 2022. “The share of e-2Ws in states leading the transition, such as Delhi and Karnataka, has reached 8-12% in March. Our estimates factor in EVs forming 6-8% of 2W industry in FY24/FY25," said analysts at Jefferies India in a report on 25 April.
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It remains to be seen if the e-2W fire incidents slow down this transition.