How govt of India is transforming the electric vehicles market with battery swapping solution?

During her Union Budget 2022-23 speech on February 1, 2022, Finance Minister Nirmala Sitharaman stated that the Centre aims to implement a battery swapping scheme. This initiative, together with the requirement for interoperability standards, has the potential to accelerate India’s electric mobility adoption goals.

Click Here to Know What is Battery Swapping and How to Start Battery Swapping Business in India?

Across all segments, India has almost 300 million automobiles. With electric vehicles (EVs), massive infrastructure investments are required to create a sustainable ecosystem that includes an energy grid, charging network, energy operators, scrappage centers, and battery re-mining.

As the industry grows, it will be necessary to determine whether battery and vehicle reuse is more sustainable than scrapping. As a result, accommodating large-scale transition becomes more difficult with such a high number of vehicles, rapid vehicle expansion, and limited room to urbanize.

EV technology has advanced significantly, and costs have decreased. However, India is still lagging behind the rest of the world in this area.

Between 2015 and 2020, India’s EV market grew at a compound annual growth rate of 133%. However, in absolute terms, electric vehicle penetration in India is currently quite low, at under 1% of total vehicles.

Two-wheelers have the biggest market share, accounting for 80% of all sold and registered vehicles.

About 95% of EVs on the road now are low-speed two-wheelers, but their contribution to reducing emissions from trips is small in absolute terms.

As a result, there is still a significant opportunity and need to increase penetration to achieve the transition goals.

Challenges in battery Swapping

The cost of the battery now accounts for 40-70% of the total cost of an electric vehicle. It can assist move the initial cost to the energy operator’s network if separated and sold separately, thereby shifting the cost of ownership to operations.

Interoperability and battery switching may thus be a way to get around this. It will enable the creation of a broad network of energy-operator supply chains, resulting in increased adoption and, as a result, a faster transition.

Ten-point roadmap by GOI for Battery Swapping

Technology transformation and mobility as a function are two independent objectives for mobility solutions. Cohesion between the two agendas is required to advance to the forefront of the clean energy transition.

And India requires a bold goal with a clear action plan based on the following principles:

Standardization of battery technology for battery Swapping

Swapping will be facilitated by common battery architecture, such as pack size, cavity, electric power control unit, and output performance per unit. These serve as accelerators for obtaining economies of scale more quickly.

Battery Recycling:

India has a fantastic potential to take center stage. Batteries that are being replaced can be manufactured with a recycling-friendly design to make repurposing easier. Recycling and manufacturing with recycled content will reduce sourcing to some extent, which will have a favorable impact on vehicle unit costs.

Ensuring Circular Economy of Vehicles:

EV battery disposal and car resale remain a point of concern in the absence of market data. Scrappage incentives are only available on older Bharat Stage-II and BS-III cars under the Scrappage Policy 2021. A clause linking scrapping incentives to ensuring that BS-IV and BS-VI vehicles are used for EV conversion when they are surrendered might be extremely beneficial. The manufacturer’s buy-back promise will also encourage users to deregister in exchange for cleaner automobiles, allowing for more recycled content manufacturing.

Key Financial Enablers:

• Reduce the GST on batteries to achieve total cost of ownership parity and lower energy operator’s overhead costs.
• To enhance access and utilization per unit space, decouple battery swapping from charging infrastructure.
• To coincide with the government’s ‘Make in India’ aspirations, priority would be given to local manufacture, material sourcing from recycling, and more.
• Standardization of battery costs and energy tariffs per kilowatt-hour across the country to achieve operational price parity

Battery as a Service:

Batteries, like liquefied petroleum gas or other functioning batteries, should be viewed as a service sector. Instead of subsidizing purchase costs, incentives for battery units should be extended to include per-kilometer operations. For financially viable solutions, gross-cost financing approaches, as well as the standard operating procedure for energy operators, can be investigated.

Subscription Model for end-users Reliability:

To decrease anticipation and improve confidence in availability, BaaS can be made available to users (both private and commercial) via a subscription model.

Corporate Available Fuel Economy (CAFE)

CAFE standards should be raised to 95-100 grams of CO2 per kilometer to encourage OEMs to prioritize zero-emission vehicles and make use of the industry credit system.

Shared mobility and aggregator:

Vehicles linked with aggregators such as Ola, Uber, Zomato, Amazon, and Delivery, among others, are included. The government is correctly prioritizing this segment, which has a large user base and high visibility. It has more than a numerical impact, and it will unintentionally alleviate technology apprehension among users and financial institutions.

This category is based on multiple ‘degrees of freedom’ in public transportation operations and hence appeals to a wide range of socioeconomic groups. For some, it is convenient, while for others, it is affordable.

This section accounts for a greater proportion of trips generated in our cities, serves as the backbone of the city’s localized logistic distribution network, and is yet unorganized. This area has the potential to be revolutionary for India’s energy transition if a policy vision and a roadmap are developed.

Building co-reliance:

It’s critical to identify value-chain propositions for users, drivers, energy operators, city governments, and financial institutions. For a localized EV ecosystem, resource planning for one city at a time is required. To develop a cohesive system, inventories of current modes, land infrastructure, parking spaces, private and public charging infrastructure, and EO networks in cities are needed.

Leverage intelligent transport systems technology to enable efficiency:

Using databases to deploy digital applications that enable human-to-machine and machine-to-machine interfaces, increasing energy accessibility, maximizing utilization, and increased traction, as well as ensuring efficient operations, safety detection, seamless delivery, and improved convenience in the ecosystem.

In India, battery-changing technologies have yet to gain traction, hence charging is favored. In the post-transition phase, however, it is a viable alternative to gasoline.

Swappable batteries can be small in size while also removing concerns about range and supply. It will mimic the existing network of fueling stations if it is successful, allowing for more smooth operations.

Private sector investment can be used to operate supply chain networks and keep energy operators afloat. Battery switching and the network of energy operators form a service segment in this instance. The availability and accessibility of this energy grid will be critical to operations.

It’s critical to develop long-term business models that may be used to move this upfront expense to the cost of owning and operating an electric vehicle.

Thirteen of our states have announced EV policies, with another eight in the works, coinciding to some part with the national goal of 30% EV sales penetration by 2030.

For faster adoption of electric vehicles, there must be a synergy of policy action roadmaps.