Battery as a Service (BaaS) will be the game changer for the future of EVs in India: Varun Goenka

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For electric vehicles to become an effective alternative to ICE vehicles, it is important that they are made affordable for buyers. We believe that Battery as a Service (BaaS) solutions can be a game changer for the adoption of electric vehicles. Typically, battery packs constitute up to 40% to 50% of an EV’s cost, and when this cost is eliminated, the vehicle can become affordable for more people. 

How does the BaaS model work for the customer?

– The vehicle owner can choose to subscribe to any of the available BaaS providers

– Gets options to pay-per-swap without any need to own or maintain the batteries

– Whenever the battery is discharged, the EV is simply taken to the swapping station, and the battery is replaced with a fully charged one.

Case in Point – Compared to a conventional vehicle where the battery is fixed and all expenses are borne by the e-rickshaw owner, the cost of ownership of a vehicle where the battery can be swapped is much lower. Moreover, the e-rickshaws need long hours to charge the battery. This results in the operations being limited from 80 km to 90 km a day and a maximum daily earning potential of around INR 850 for an average e-rickshaw driver.

In our BaaS model, we apply no upfront costs and offer daily rental plans that allow drivers to swap batteries 2 to 3 times a day. With this practice, drivers increase their average earnings from Rs 850 to Rs 1800, and instead of 80-90 km a day, they are now able to cover up to 160 km. The rickshaw owner effectively has to pay INR 150 per swap for an 80 km run which is less than INR 2 per km.

The BaaS model offers almost the same ease and efficiency that a petrol pump provides to ICE vehicles. The Government of India has promptly acknowledged the impact that battery swapping services can make on EV adoption. Accordingly, last year, the government announced that EV buyers are free to buy them without batteries from the OEMs and choose the swapping subscription if they wish so. 

Stakeholders in the battery swapping ecosystem

There is a whole battery swapping ecosystem being created in India. EV manufacturers, battery makers, swapping service providers, central and state governments, and consumers are all stakeholders in this ecosystem. The process is beneficial for all the participants.

– OEMs are able to offer the vehicle at much lower rates without the factory-fitted batteries

– Customers find the EVs more affordable and convenient to drive over longer distances.

– Swapping services companies get a business opportunity.

Relevance for commercial operations

Apart from the cost benefits for EV buyers, swapping services are also beneficial from an operational and logistical perspective. Since vehicles can get the discharged battery replaced with a fully charged one within minutes, it eliminates the need to remain off-road for long hours. Thus, there is greater freedom of movement and commercial utility for EV fleet owners. Second, the charging stations require parking space as each vehicle is likely to spend hours charging. In the battery swapping method, the vehicle gets back on the road quickly, and less space is required. 

Relevance for different vehicle segments

In the years to come, we believe that the BaaS model will be a crucial enabler of the overall EV ecosystem and benefit all vehicle owners, whether it is a 2-wheeler or a private car or bus. However, for the services to be successfully implemented across all vehicle categories, a regulatory policy governing the operational procedures as well as standardization and interoperability guidelines is a must. It is only when the policy is announced and made effective that the OEMs would start adopting practices conducive to facilitating battery swapping in cars and buses etc. In any case, the number of electric cars and buses in operation at present is too low to build specific battery-swapping infrastructure catering to them. That’s where the existing BaaS services are focusing on electric rickshaws, and 2 and 3-wheeler EVs.

Policy and interoperability

The Government of India is now in the process of finalizing and announcing the EV battery swapping policy which will lay down the operational guidelines for the ecosystem.

One of the biggest challenges currently faced by the Battery as a Service (BaaS) companies is the proposed interoperability of the batteries. The government is of the view that the batteries need to be standardized to the extent that they can be seamlessly installed in a vehicle of any make. Further, the interoperability clause would necessitate that a user can swap one brand’s discharged battery at any other swapping station.

Even though this is aimed at ensuring that EV owners are able to enjoy unlimited mobility by getting their discharged batteries swapped at any station, it is detrimental to OEMs. It is felt that such absolute standardization would kill innovation and scope for any brand to develop its USPs or proprietary tech.

The common expectation in the EV industry is that the government would allow market forces to determine battery sizes, chemistry and connector types etc. The battery swapping policy is anticipated to be legislation that addresses all such concerns and lays down operational guidelines to prevent substandard battery technologies and safety hazards from creeping into the system. 

These are issues that will be clarified and resolved in the coming months. However, it is undeniable that the BaaS ecosystem is going to be at the core of India’s EV transition in the years ahead!

Also read: Battery Swapping Draft Policy

About the author

This article has been authored by Varun Goenka, Founder & CEO, Chargeup – an NCR-based start-up providing a BaaS solution for e-rickshaws. The company provides daily rental plans to e-rickshaw drivers and clocks 20,000 swaps a month at present.