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Niti moots battery swapping policy: EV industry to get a leg up

Buyers of electric vehicles (EVs) with swappable batteries and the battery providers will get subsidies from the government if a draft policy proposed by the Niti Aayog is implemented.

battery swapping

Flagging the concept of battery-as-a-service (BaaS) and laying down the standards for interoperable batteries, the draft policy out by the think tank on Thursday said all metropolitan cities with a population above 4 million should get priority for development of battery swapping network in the first phase.

Suggesting a slew of fiscal incentives to support the nascent industry, the draft policy suggested that the Goods and Services Tax (GST) Council may consider reducing the tax rate on lithium-ion batteries, which currently attract 18% GST, while electric vehicle supply equipment (charging docks) is taxed at 5%. “The GST Council may consider reducing the differential across the two tax rates,” it said.

Battery provider companies such as Sun Mobility, Ola Electric, Lithion Power, Voltup, Race energy, Esmito, BatterySmart ChargeUp are likely benefit from the proposed policy. Of course, the EV players which include most major auto companies and a few new entrants, will also gain from the resultant rise in demand for these vehicles.

To level the playing field across EVs with fixed or swappable batteries, it is proposed that demand side incentives offered under existing or new schemes for EV purchase can be made available to EVs with swappable batteries. The size of the incentive could be determined based on the kWh rating of the battery and compatible EV.

“An appropriate multiplier may be applied to the subsidy allocated to Battery Providers to account for the float battery requirements for battery swapping stations in different battery swapping ecosystems,” the Niti Aayog suggested.

It also suggested provision of land at promotional rates for public battery swapping stations.

Several supporting initiatives have already been implemented to promote EV adoption to decarbonise the transport sector, such as the Faster Adoption and Manufacturing of Electric (Hybrid) Vehicles in India (FAME) I and II, and the production-linked incentives for National Programme on Advanced Cell Battery Storage, to boost indigenous battery manufacturing capacity.

Under FAME, demand incentives for electric two-wheelers is `15,000/kW with maximum capped at 40% of the cost of vehicles. In the PLI scheme worth `18,100 crore in ACC , four companies, including Reliance New Energy Solar, Ola Electric Mobility and Hyundai Global Motors Company, have been selected.

Battery swapping falls under the broader umbrella of BaaS business models which involve users purchasing an EV without the battery, which significantly lowers upfront costs, and paying a regular subscription fee (daily, weekly, monthly, etc) to service providers for battery services throughout the vehicle lifetime.

Finance minister Nirmala Sitharaman had announced in the FY23 Budget that the government was set to roll out a battery swapping policy, in a bid to reduce upfront costs of purchasing EVs and drive adoption among buyers.

The policy is targeted at battery swapping systems used in electric scooters and three-wheeler electric rickshaws. The draft is up for consultation, and the Niti Aayog has invited comments on it until June 5.

The policy aims to create a framework for greater interoperability while safeguarding the innovation potential for the EV battery ecosystem.

“Any individual or entity is free to set up a battery swapping station at any location, provided that the specified technical, safety and performance standards are adhered to,” according the draft policy.

Given the recent incidents of electric two-wheelers bursting into flames, it said: “To ensure a high level of protection at the electrical interface, a robust/rigorous testing protocol shall be adopted to avoid any dielectric breakdown, arc phenomenon, or any unwanted temperature rise at the electrical interface. BMS of the battery must be self-certified and open for testing to check its combability with various systems, and capability to meet safety requirements.”

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