India Joins BEV Drive towards Battery Swapping

India’s unique infrastructure challenges are forcing it to consider radically different paths to electrification than many other nations.

In her Union budget speech early this February, India’s finance minister Nirmala Sitharaman said: “Considering the constraint of space in urban areas for setting up charging stations 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.”

Relevant amendments to the country’s Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME-II) program will be rolled out by the government’s think tank NITI Aayog around June, this year. This step adds India to the short list of nations which ramp up the battery-as-a-service (BaaS) model in their state-wide EV strategies, alongside China and Singapore. It started heading in this way in May, 2021, by issuing a regulatory allowance for EV makers to sell EVs without batteries. It gave a strong leg up to the local battery subscription and battery swap markets. While it still seriously lags behind China and Taiwan, the two strongest BaaS markets, the upward dynamics is strong with hundreds of swap stations installed across the largest cities serving to tens thousands of two- and three-wheelers. While the detailed data is not available yet, a rough estimates suggests that its swap network has grown by at least two or three times in the past year.

Expectations of yet another year of strong growth are now seen at vehicle manufacturers such as Mahindra, Honda, Piaggio and Hero MotoCorp, all having pledged to launch their own battery swap networks in 2022. “I think that the package offered to battery swapping services will open the window for promoting electric two- and three-wheelers and fuel the demand,” said Atul Kumar, research manager, automotive and transportation research, at MarketsandMarkets Research.

To a large extent, the government is focusing on the battery swap model in response to cost sensitivity in vehicle owners which, so far, has mis-directed the national electrification program. On the level of EV uptake, all is fine. “Roughly 35% of all rickshaws in India were electric by the end of 2021,” emailed Ryan Citron, principal analyst at Guidehouse Insights. However, when looking closely at rickshaws’ three-wheelers, so-called tuk-tuks, more than 90% of them use lead-acid batteries, cheap yet heavy and unreliable, he wrote.

This short-sighted choice seriously impedes their profitability. It takes lead-acid batteries ten to 12 hours to recharge, emailed Pulkit Khurana, co-founder of Battery Smart. Worse yet, their capacities are insufficient for a full workday: “Typically, drivers spend three to four hours by mid-day to top up, so, they can do only a very limited mileage. Also, lead-acid batteries need replacement every six to eight months.”

The battery subscription model resolves it by taking the burden of upfront cost off vehicle owners’ shoulders. Moreover, in today’s practice at all major operators, modern lithium-ion batteries are used, a sure proof that they provide a better return on investment than lead-acid.

Remarkably, in the aforementioned speech, Sitharaman skipped these issues and stressed, instead, the constraint of urban space for public chargers. Typically, the average charger can daily serve many times less vehicles compared to the average fuel pump while it occupies about the same space. In other words, electrification of road transport at scale might require allocating manifold larger space for the charging infrastructure compared to today’s gasoline network which is often unfeasible in Indian crowded cities.

Swap stations can help to relieve this concern owing to their higher capacity, thinks Khurana: “Swapping is closer to fuel stations where vehicles only spend a few minutes and are back on the road. A charging station might be able to cater to around ten vehicles a day while a swapping station requires the same space yet it can serve hundreds of them.”

For cars, a lack of space would not be an issue if the government mandated that each fuel station must have at least one charging point, argued Kumar. However, the needs of light EV drivers are much different: “The problem is about keeping a vehicle at a charging point for an hour or two, sometimes longer. When you travel by car, you can stop at a café at a fuel station and get a snack as your vehicle is being charged but when you travel by a scooter, you wouldn’t want to devote time to such a long break. That is why the government has put an emphasis on space.”

“Evidently, the government has a very strong intent to enable EV adoption and manufacturing in India, so, we will see more progressive steps in the future,” emailed Khurana. “We are very hopeful that financial support would be rolled out in a thoughtful, staggered and targeted manner while taking multiple stakeholder interests into account to avoid any adverse effects to the maximum possible extent.”