Battery swapping policy will infuse these new dynamics in electric mobility and allied segments

In this opinion piece, Samrath Kochar – Founder & CEO at Li-ion battery manufacturing company Trontek shares his take on how the impending battery swapping policy and interoperability standards will impact the EV ecosystem.

Once in a while, a single proposition has far-reaching implications than what is initially imagined. The same has happened recently with electric mobility, which plays an important part in Indian Government’s agenda to drive sustainable development. The centre is continuously boosting the adoption and acceptance of electric vehicles (EVs). The Government has in recent years introduced a slew of measures and rolled out polices for promoting EVs. It launched the production linked incentives to boost manufacturing of both electric automobiles, auto-components, and EV batteries, issued green license plate for battery operated vehicles, exempted permit costs, and has asked states to waive-off road tax on electric vehicles. 

This February, the Government stated in Budget 2022 that a battery swapping policy will be formulated and standards will be set by the end of the year for bringing inter-operability amongst electric vehicles. Duly remarked by Finance Minister, the expected policy would build more efficiency and agility in the world of electric mobility and that it would give rise to new segments such as Battery/Energy as a Service (BaaS and EaaS) and innovative business models.

Potential impact of battery swapping policy on allied segments

The proposed battery swapping policy may appear to be simple but it has multi-layered impact across segments within the world of electric mobility and will shape these segments in specific ways.  

Charging stationsThe battery swapping policy is being introduced to address the tremendous charging infrastructure needed to support the shift to electric mobility. Consequently, the policy will reshape the EV charging segment, leading to the emergence of battery charging and swapping stations. The battery swapping stations can leverage various sources of energy for powering them. If connected to decentralized renewable energy, these swapping stations will help provide e-mobility solutions to far-flung areas that are grid-dark and bring down the carbon footprint of such regions. However, a swapping station model may not exist standalone. It should be done in extension of a charging station as per hub-and-spoke model for extra-mile connectivity.

Auto OEMsThe batteries and battery management system collectively make the biggest and most important part of any electric vehicle. Currently, EV batteries come in all shapes and sizes with different features and properties. As fundamentally batteries power the vehicle, automobile OEMs currently pay much attention in making them unique by installing batteries of different make and capacities. The battery swapping policy will introduce set guidelines to ensure interoperability, which would more or less standardize the EV batteries or even the battery management systems. This would not only lead to a reduction in the EV costs but will also help make EVs and batteries of different brands compatible. 

Reducing cost of EV – Battery is the costliest component in an EV. The battery swapping policy can also lead to a system of selling EVs where buyers can purchase vehicles without the battery, while the battery can be purchased from another service provider at more economical cost. An EV without the battery will cost much less, and hence, it will attract users to EVs due to lower entry cost.

Some challenges worth attention

The battery swapping idea may have some challenges that need due attention, which the Government should consider while drafting the policy. These are listed below:

– Battery and vehicular technologies are evolving rapidly, with modern batteries producing more energy and powering vehicles over longer range per charge. Vehicles with latest batteries may not essentially need swapping. A recharge at the end of journey or destination will be good enough to sustain for the next day.  

– In the current scenario, battery swapping is a lot costlier than charging a battery. The cost for a battery swap is around Rs. 250 per swap, which is about three times the charging cost. The annual cost of ownership in comparison to swapping will be considerably high and become a deterrent for prospective buyers. The battery swapping appears to be more viable for B2B segment than B2C segment due to the high cost of swapping batteries. The system will be financially viable for fleet owners of e-commerce, food delivery and other such businesses on two accounts. 

  • First, it will be profitable in mobility segments where time is of monetary value and the vehicle will be swapping batteries as well as drivers in shifts throughout the day to extend more value per vehicle.
  • Second, as fleet owners are concerned more with operational expenditure rather than capital expenditure, it will lead to substantial savings when they buy electric two-wheelers or three-wheelers in bulk and save money in upfront cost of ownership of a battery. The cost of battery swapping needs to be brought down almost to the level that’s competitive with the cost of charging the batteries.   

In conclusion

Overall, the proposed battery policy would need across-the-board collaboration and exchange of ideas, experiences and knowledge as well as a much thoughtful consideration before the policy is finalized and implemented. The electric mobility segment is young and evolving at a rapid pace. The proposed battery swapping policy does infuse new dynamics in electric mobility, battery manufacturing, and allied segments. The industry eagerly awaits the policy draft and will support the government in every way possible. 

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One thought on “Battery swapping policy will infuse these new dynamics in electric mobility and allied segments

  • Could you also mention which companies will benefit from this?

    From an investor point of view.

    Reply

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