Will reduce vehicle upfront costs and charging time, while enforcing interoperability, sustainability, better quality and safety of batteries
India is marching ahead in the e-mobility revolution, led by the exponential growth in the electric two and three wheeler markets over the last five years. Its favourable policies at the national and state level have played a critical role in boosting the overall EV ecosystem and sales in the country. While progress has been made, two key factors continue to be a major barrier in mass adoption of EVs - the high upfront cost of electric vehicles in a price sensitive market like India, and inadequate charging infrastructure. For electric vehicles to become truly mainstream, particularly in the two and three wheeler market, which is the world’s largest in India, addressing these two barriers is essential.
Battery swapping, although at a nascent stage in the country, is increasingly being recognized as a game changer solution that can address multiple challenges, and lead to faster adoption of EVs. Taking note of this, earlier this year, government of India’s think tank, NITI Aayog, released a draft Battery Swapping policy, which is unprecedented globally. Its implementation could transform the EV ecosystem, by bringing in interoperability and standardization, safety, transparency, and circular economy for Advanced Chemistry Cell (ACC) batteries.
What is Battery Swapping?
Battery swapping is a mechanism where a discharged battery is exchanged for a charged one at a swapping station. It provides consumers with the flexibility of charging batteries separately from the vehicle. Battery swapping falls under the Battery-as-a-Service (BaaS) model that allows buyers to purchase an EV without a battery and pay a regular subscription fee to the battery service provider, where they simply exchange empty batteries with charged ones within minutes. They no longer need to wait at a charging station to charge their vehicle. Battery swapping is generally used for smaller vehicles such as two and three wheelers with smaller batteries that are easier to swap. It is time, cost and space efficient, as battery swapping stations require less land than charging stations.
India’s draft battery swapping policy will be a game changer for the EV ecosystem
Battery swapping stations have completely revolutionalised the EV industry in countries like Taiwan and China, where they are successfully operating for years now. It is the most popular alternative to charging stations and is picking up pace in India. As of 2022, India has roughly 20 companies operating more than 1,000 battery swapping stations. The draft policy aims to address key technical, regulatory, institutional, and financing challenges that will help develop battery swapping ecosystems and unlock the large-scale adoption of battery swapping in India.
- Promoting interoperability and standardization across the battery and charging infrastructure: Currently in India, every battery and vehicle manufacturer is free to produce a battery in any size, shape, form, and assembling process. There is no standardization across a battery pack or the connectors used to charge a battery in a swapping or charging station. Interoperability and standardization simply means that EV batteries and connectors are designed in a way that any EV battery can be used in any type of electric vehicle, and charged at any type of station through a standardised connector. The draft battery swapping policy defines specific technical and operational requirements to be adhered to by battery swapping stations, so that there is end to end compatibility between batteries and other components of the swapping ecosystem. Once launched, the policy will define standard dimensions for the battery pack design, battery management systems and connectors so that there is interoperability across the ecosystem. Battery swapping station operators will be required to house only standardized batteries and connectors. This will allow greater choices for consumers to opt for a battery subscription service from any swapping station, irrespective of the electric vehicle model they own or where they live.
- Improving safety and communication standards: The policy requires all batteries used in battery swapping stations to be BMS-enabled for efficient battery monitoring, data analysis and safety. Battery Management System is the software that manages the state of health of a battery, collects data, controls environmental factors that affect the cells in a battery and balances them to ensure the same voltage across cells. It is a critical feature for safety and communication in a battery. The draft policy will ensure that the BMS in a battery is self-certified and open for testing to check its compatibility with various systems and capacity to meet safety requirements. The policy also requires that swappable batteries be equipped with advanced features like IoT-based battery monitoring systems, remote monitoring and immobilization capacities. They will be tested and certified as per AIS 156 (2020) and AIS 038 Rev 2 (2020) standards for safety of traction battery packs. This is a critical step in light of the rising incidents of EV batteries catching fire across the country.
- Improving traceability and end of life use: The policy recommends that each EV battery at a swapping station must have a Unique Identification Number assigned to it at the manufacturing stage, which would help in tracking and monitoring its journey through the lifecycle. Battery swapping operators will be required to store the usage history and required performance data of the battery with the Unique Identification Number. This would be a critical component for tracing batteries towards the end of life for scrapping, second use or recycling. Given that India has no known reserves of lithium-ion, its ambition of building manufacturing capacity for ACC batteries and ensuring long term energy security, rests entirely on its ability to recycle existing EV batteries and reusing lithium in future productions. Many countries leading in transport electrification are implementing similar processes to improve battery traceability. For example, China introduced a unique ID for all EV batteries produced after August 2018, as that was considered the starting year of retired EV batteries in China. The introduction of a Unique Identification Number (UIN) will help build a regulatory framework needed for the end of life treatment of EV batteries.
- Leveling the playing field for fixed and swappable battery vehicles: Currently in India, manufacturing of vehicles with swappable batteries is fairly limited. While the sale of EVs without batteries has been legalized since 2020, it has not picked up much in the industry, which also limits the uptake of battery swapping as a solution. To address this, the draft battery swapping policy proposes that the demand side incentives offered under existing or new schemes at the national and state level, should also 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. This would incentivize the industry to produce more EVs with detachable batteries by reducing entry barriers and increasing consumer choice with a wider range of EV models.
- Leveling taxes for batteries and supply equipment: Until recently, under the Goods and Services Tax regime, the tax rates for lithium ion batteries and electric vehicle supply equipment were 18% and 5% respectively. The battery swapping policy proposes that the GST council consider reducing the differential across both tax rates. Accepting this recommendation, the GST Council in its 47th meeting reduced the tax rate on lithium ion batteries to 5%.
This draft battery swapping policy is designed keeping the end consumer at the heart of it all. Apart from benefits to the overall EV ecosystem, tts implementation will solve two major barriers for consumers – high upfront cost of EVs and inadequate charging infrastructure. The battery of an electric vehicle is nearly 40 – 50% of its cost, and its lifecycle is expected to be close to 8 years, much less than the life of the vehicle. By promoting battery as a service model through this policy, consumers will have access to more EV models without batteries, bringing their costs down almost by half. It would eliminate the risk of technology obsolescence and ensure higher safety as the onus of charging the battery will not lie with the consumers. They will have a wider range of EV models to choose from and opt for a subscription-based battery swapping provider offering the best technology at the best price.
In the long run, a national level battery swapping policy will solve multiple challenges, provided it is implemented well and widely socialized among consumers and industry players.