Developing Sustainable and Innovative Business Models for Battery or Energy as a Service

India mulls battery swapping for electric vehicles as an alternative to set up charging stations as it looks to spur adoption of cleaner transport. But the plan may run into hurdles. EV sales in India are picking up, especially for two- and three-wheelers, on account of incentives offered for such vehicles and costlier fuel. Still, the nation lags other major markets such as China and Europe. EV sales in Asia’s third-largest economy account for 1% of the total sales, compared to 30% in some cities of China. High ownership cost and sparse charging network have so far impeded wider adoption of the battery-powered transport.

The major challenges for electric vehicle deployment include the prohibitive battery cost and a large amount of time required for energy refuelling. Although the concept of battery swapping can solve the latter problem, it is difficult to overcome the former problem while ensuring a long-range drive. 

In the latest Budget, Finance Minister Nirmala Sitharaman said, “Considering the constraint of space in urban areas for setting up public charging stations (PCS) at scale, a battery swapping policy will be brought out and interoperability standards will be formulated. The private sector will be encouraged to develop sustainable and innovative business models for ‘Battery or Energy as a Service’. The proposed Battery Swapping policy will introduce disruptive business models such as battery as a service (BaaS), leasing, etc. so that electric two-wheeler and three-wheeler customers need not own the battery, which is about 50% of the total vehicle cost, bringing down the upfront vehicle cost much below the ICE counterparts. Niti Aayog is given the responsibility to roll out EV battery swapping policy in four months.