By: Tannaz Ahmed, Public Policy Consultant at Chase India
By all accounts electric vehicles (EVs) are the future and economies across the world are tallying the numbers of EVs sold. Policymakers are busy predicting when EVs will surpass the number of internal combustion engine (ICE) vehicles sold. In India too there is a great deal of optimism. This ties in well with India’s climate goals and ambitions of becoming the global hub for EVs.
To catalyse this transition India must seriously consider making battery swapping the mainstay of its EV strategy especially those for light EVs. It is after all a simple concept that involves exchanging discharged batteries for charged ones. It has the potential to enhance the attractiveness of electric mobility by addressing both the early market purchase price disparities (batteries are not sold but subscribed to) with conventional vehicles and, importantly, the recharging time challenges and range anxiety of EVs. Additionally, considering the gestation time and the constraint of space in urban areas for setting up charging stations at scale, battery swapping is the apt alternative.
The idea of battery swapping is not new. The first company known to offer battery swaps was the General Vehicle Company, founded in 1912 by General Electric in the USA. The company offered a subscription-based battery-swapping service for trucks. However, by 1924 the service was shut down.
The current business model of battery swapping was pioneered by Better Place, an Israel-based electric car tech startup in the year 2007. It was followed by other interesting business models which could improve upon this idea. However, experience shows that the road has not been easy rather it has been quite a bumpy one with numerous gaps to fill. This was particularly seen when Tesla made changes to the strategy of Better Place by limiting its battery-swapping operations to itself. Later, Ample, a company with energy delivery solutions for electric vehicles innovated to design modular, swappable, batteries eliminating the need for automakers to redesign their vehicles.
India too is aggressively pushing itself towards electrification, especially in the automotive and transportation sector. The Draft Battery Swapping Policy introduced in April 2022 was a positive step for this ecosystem. The draft policy makes the right noises – talks about innovation, the play of market forces, and interoperability to deepen penetration and safety norms.
While the industry awaits the final policy it will be important to flag the key issues the said policy must address.
Given the nascency of the industry and the learnings from the global world, the industry needs to grow organically with opportunities to be creative. The best innovation appears from the collaboration of stakeholders across industries and domains. The common concept behind battery architecture includes electric power, cavity, pack size, output performance per unit, electric power control unit etc and the technology for each of these has been constantly changing for better output. Even the design of vehicles is constantly improved, and the policy should encourage it.
Therefore, any rush towards a single standard for the sake of interoperability will limit the same innovations that can lead to exponential penetration of EVs.
The safety of users is paramount. The battery in the vehicle and at charging stations should be safe. It is pertinent for the growth of the industry to have safety standards which are also resilient to changing climate and thereby making it a progressive policy which considers every facet. Very closely linked to safety is the need to be able to fix the liability of any untoward incident with high accuracy. Ambiguity will lead to a drop in safety standards. In the organic growth path suggested for the industry the issue of liability will be fixed as we go along and hence the issues linked to safety will also be addressed.
New industries and ecosystems are best stimulated with suitable financial incentives for the product providers and end users. Benefits with a lower rate of GST or parity with fixed battery EVs for FAME II subsidies will be much appreciated. The availability of finance on favourable terms for manufacturers can go a long way in creating sustainable business models. If financial institutions are allowed to categorise lending for the purchase of EVs as ‘priority sector’ lending it could ease credit flow.
With India’s ambitious goals for its EV industry getting the battery swapping policy right will be imperative. Not only will it enable the rapid adoption of EVs, but it will also help build a new industry altogether with both manufacturing and service legs. Besides the climate goals that will be addressed, exports will be a significant opportunity. With a robust domestic industry, it will allow India to become the global hub for research and development too.
Author: Tannaz Ahmed, Public Policy Consultant at Chase India
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