Battery swapping policy: some impactful and conducive measures for EV adoption in India

The government recently introduced a draft battery swapping policy and interoperability standards with the aim of building and optimising the battery swapping ecosystems and paving the path towards large-scale EV adoption in India.

India is ambitiously striding out towards clean mobility and electric vehicles (EVs) are pivotal to bringing about this transition. The government of India has announced several initiatives including the Faster Adoption and Manufacturing of (Hybrid&) Electric Vehicles in India (FAME) I & II schemes as well as a Production Linked Incentive (PLI) Scheme for the National Programme on Advanced Chemistry Cell (ACC) Battery Storage (NPACC) to boost domestic manufacturing of batteries. There are various other evolving policies initiated by central and state governments towards EV adoption in the country.

Typically, EVs come with ‘fixed’ batteries that are charged by plugging the vehicle into a charging point while the battery remains inside the vehicle. However, to make the EV operations smooth across India, a vast network of charging facilities is required. 

Another feasible and highly beneficial option is to adopt Battery Swapping Services (BSS) which are a faster, safer and more convenient alternative to charging. In India, bulk of the EVs are two- and three-wheelers with smaller, easy-to-swap batteries making BSS more feasible in the current scenario. The government recently introduced a draft battery swapping policy and interoperability standards with the aim of building and optimising the battery swapping ecosystems and paving the path towards large-scale EV adoption in India. 

The landmark initiative to introduce the policy, and make the draft public for comments and suggestions, highlights India’s commitment to electric mobility adoption. However, there are certain points that require a review and can be revised to create a policy that is impactful for the consumers and the EV industry stakeholders alike. 

Compatibility and interoperable ecosystems

In the current draft, only UIN is mentioned without anything on the compatibility demonstration process.  This needs to be revisited and elaborated upon. When we talk about interoperable ecosystems, it implies physical transfer of asset from one ecosystem to another. However, different ecosystems might continue to operate batteries with different chemistry and cell technology, even after the policy comes into effect. There would be specific battery pack dimensions and the charging infrastructure deployed might support only certain specific battery packs offered by the particular ecosystem. Not only that, different batteries would naturally be at various stages of their lifecycle, and the economics of operations would come into play accordingly. When interoperability between ecosystems is enforced, it might lead to instances where an end-of-life battery gets swapped with a brand-new battery. Considering these challenges, inter-operable ecosystems are not a feasible option. Regarding phased transition, battery providers have already made significant investments in battery and connectors before any standardisation measures kick in. Since ACC batteries have a much longer life, this transition period has to be very long. There must also be additional incentive and support for the providers to undertake the transition to an interoperable ecosystem. 

Data sharing

Data is a critical service differentiator. Each battery provider optimises operations and financials based on the battery asset data. Therefore, the right approach would be to determine if there is any specific data that the government considers important for enhancing customer experience. This should be submitted in a pre-defined format on a quarterly basis as self-declaration by the battery provider and come into effect for the providers opting for interoperability between ecosystems. By sharing asset data, the providers will lose their competitive edge over the peers and it would discourage innovation in the industry. 

Business models

The intent of eliminating and avoiding closed loops is well directed and will undoubtedly help in increasing EV adoption. The policy rightly aims to standardise and achieve compatibility of EVs, batteries and charging infrastructure. However, interoperability between BSS ecosystems is not feasible. There must be minimal mandatory data sharing by the battery providers and only for the purpose of benefitting the end users. The need of the hour is to create a safe, reliable and compatible ecosystem with standardisation that can help the industry and boost EV adoption in the country. 

Fiscal Support

Standardisation and different business models might mean that the battery would be compatible in different set of EVs and could be cross utilised. Therefore, only the kWh rating must be taken into consideration as the basis for fiscal incentive. There is also a need to create a level playing field and encourage early adopters. This can be done by ensuring that the fiscal benefit is equally passed on the existing batteries of the battery providers.

Grievance redressal and compensation

The demand incentive given is appropriately passed on to the end user right from the outset through lowered pricing. Thus, returning of demand incentive is not financially viable. To draw a parallel, in the scenario of FAME-II Subsidy, it is not returnable by the EV OEM even if there is a complaint by the owner. Introduction of such a clause would mean that the battery owners wouldn’t be able to pass the complete incentive to end-users and would be compelled to reserve part of the incentive as a hedge against complaint risks and reversal of incentive. Thus, such a clause would deny the complete benefit of the applicable incentive for the end users. 

Provision of land at promotional rates for Public Battery Swapping Stations

To ensure fair competition, sharing of land parcel must be done in an open and transparent manner through a dedicated portal which is accessible to all battery providers. Further, to ensure equal opportunity for all players and provide diversity of options to end-users, it is suggested that there should be at least 3 battery providers accommodated at any given premises offered by the government or the public sector entities.

These are some of the key points that need to be reviewed as per the suggestions shared and it is hoped that the battery swapping policy draft is accordingly modified. This will ensure safeguarding the interests of the consumers and service providers and make way for faster EV adoption in India!

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

Most Read In Industry Express Mobility