MoRTH issues notification on sale of EVs without battery pack

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On Aug 12, 2020, Ministry of Road Transport and Highways released a statement that electric 2Ws and 3Ws can be sold without a battery pack. The purpose is to delink the cost of the battery from the vehicle and make the electric vehicles more affordable.

The battery can be provided separately by the OEM or an Energy Service Provider.

The move will provide a boost to EV adoption and battery swapping ecosystem.

Read More: What is Battery Swapping?

According to the statement, all relevant forms required for registration of such an electric vehicle will specify the motor number. An EV sold without battery would be registered on the basis of type approval issued by the test agency.

Industry response

The EV industry has largely welcomed the move, as it will help alleviate the biggest barrier in EV adoption i.e. the higher upfront cost as compared to ICE vehicles. The OEMs attribute nearly 50% of the EV cost to battery packs. Delinking the EV from the battery will make the purchase cost lower than ICE and some experts also feel that the vehicles without the battery (gliders) will not require a demand incentive at all.

The delinking of vehicle and energy will also drive the industry to work towards standardisation of 2W and 3W batteries, necessary to operate battery swapping operations at large scale.

Piyush Gupta, CEO of Delhi based battery swapping solutions company Lithion Power, applauded the MoRTH notification and said, “We have been waiting for the government to formalise this since a couple of years. It is a positive move that needs to be followed by clarifications on re-aligned subsidies, GST structure and liabilities.”

Rajeev YSR – COO, Avaan India also feels the step is in the right direction. In a LinkedIn post, he said that the Govt is taking the cognisance of industry recommendations in accelerating e-mobility adoption.

Further clarifications awaited

Some industry experts have pointed out that the notification leaves many questions unanswered, such as –

1. Will the central government’s FAME II subsidy still apply on EVs without batteries?

2. If yes, how will the subsidy be re-aligned? Will it be distributed between the OEM and the Energy Service Provider and in what proportion?

Recently released Delhi EV policy acknowledged the re-alignment of incentives in case the battery is not sold with the vehicle. The policy grants 50% of the purchase incentive (on top of FAME II incentive) to the vehicle owner and rest to the Energy Operator for defraying the cost of any deposit that may be required from the end use for the use of a swappable battery.

3. EV Batteries attract subsidised 5% GST when sold with the vehicle, and an 18% GST when sold separately. In case of a delinked battery, how will the tax structure work?

4. How will the warranty and insurance work?

“If there is a short circuit or some other battery linked problem with the vehicle, who will be responsible? The battery provider or the vehicle provider?”, asked Rohan Singh from ZipTrax CleanTech.

The notification document can be accessed here.

At EVreporter, we feel that the government initiative is definitely good but such notifications should be accompanied with necessary clarifications on interlinked aspects or a schedule for issuing those clarifications to help the stakeholders assess the overall impact of the move.

Also Watch: How does Battery Swapping makes sense for electric 3Ws?