India’s EV Battery-Swapping Plan Will Run Into These Bumps

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.

The government is working to establish standards for battery-swap services focusing on electric two- and three-wheelers used for ferrying customers and transporting goods for last-mile delivery. NITI Aayog is co-working with the Bureau of Indian Standards, Department of Science and Technology, and others to finalise the detailed technical standards for batteries, according to a draft note issued by the government think tank. The document has been reviewed by BloombergQuint.

Removing an expended battery and replacing it with a charged one, as opposed to recharging the existing unit, isn’t a widely accepted concept outside of China. But it is convenient as it addresses the three biggest challenges facing EV adoption: slow charging time, vehicle range and high upfront costs. That’s why India is exploring it as one of the key options to drive demand.

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.

Chetan Maini, the man behind India’s first electric car Reva, said battery swapping can help accelerate electric mobility by 30%. “The combination of 2x increase in utilisation battery and 3x increase in battery life could give you 6x reduction in lithium import,” Maini, chairman of Sun Mobility, which offers interoperability and swappable battery solutions for EVs, told BloombergQuint.

Maini makes it sound much easier than it actually is.

One-Size-Fits-All May Not Work

Formulating the policy and standardising it at an operational level is not an easy task, Varun Goenka, co-founder of battery-swapping platform Chargeup, told BloombergQuint over the phone.

Naveen Munjal, managing director at Hero Electric, agreed. “What do you mean by standardisation? It’s critical to get the right form factor and what’s that remains to be seen.”

According to Munjal, each company is going to have a different battery management service. “How do you standardise that? And we don’t have clarity on that currently.” India’s largest electric two-wheeler maker, he said, will focus on battery swapping when the “ecosystem is created in the country”.

Maini of Sun Mobility, which has more than 1,000 vehicles on its platform for battery swapping, said that the government plans to create one battery that fits all. While there is nothing wrong in that, he said limiting to only one standard might curtail innovation.

Standards should be there but they shouldn’t limit or force the industry, he said. “Concessions and policies should be standard-agnostic.”

According to Hemal Thakkar, director at Crisil Ltd., it will not be easy to get EV manufacturers to agree on interoperability as “companies will not be comfortable sharing beyond the type of batteries”.

Interoperability, Maini said, is even more complex since putting someone else’s battery will be challenging as chemistries could be different. “The techs are so different, so who is liable if something goes wrong.”

There are nuances that need to be corrected while drafting the policy, he said.

Nascent Industry

As demand for EVs rises, companies are slowly queuing up and exploring different models.

There are, according to Maini, at least 50 companies eyeing such battery-swapping opportunities. His own Sun Mobility offers battery-as-a-service and energy-as-a-service models to let customers lease or subscribe for batteries or electrical devices.

Last year, Reliance Industries Ltd. formed a joint venture with Britain’s BP Plc for battery swapping in the country. Hero MotoCorp Ltd. and Taiwan’s Gogoro, too, have partnered. Japan’s Honda Motor Co. has also set up a battery-sharing and swapping business in India. Bengaluru-based startup Bounce became the first original equipment maker to launch an electric scooter without a battery pack. Its model comes with a subscription to the company’s battery-as-a-service product.

Sun Mobility, Maini said, has a network of 70 swapping stations and aims to add 40 stations each month. Chargeup has about 100 stations in Delhi alone and aims to take it to 1,000 by the year-end as it expands into other cities.

That compares with China Tower Corp.’s 24,000 battery-exchange depots across cities aimed at low-speed EVs and electric two-wheelers, often used in food delivery and courier services. Last month, the world’s biggest battery maker, China’s Contemporary Amperex Technology Co., said it was going to expand its battery-swapping business. Gogoro in Taiwan has 2,055 swapping stations and now manages over 200,000 exchanges a day.

Yet, it has failed to pick up outside China and Taiwan. Elon Musk tried it nearly a decade ago to ultimately abandon the plan.

Financing

Financing and lack of incentives are other hurdles. Banks are reluctant to lend as they are unsure about the new technology and the resale value of batteries in the event of defaults.

“From financiers’ perspective, they don’t understand battery as an asset,” Crisil’s Thakkar said. “And EVs already are a new sector for them.”

The government is looking at resolving some of the issues raised. According to the draft note issued by NITI Aayog, the battery-swapping policy will comprehensively cover all the key elements, including technical, regulatory, operations, financing, and institutional arrangements.

“The policy will form the basis for the development of specific standards and guidelines for downstream state level implementation,” the draft note said.

Maini said that the government recognises that safety is important and innovation shouldn’t be curtailed. “The question is [whether] the solutions that are being proposed will see the light? We don’t know yet.”