India’s large-scale electric vehicle (EV) adoption is stymied by the lack of charging infrastructure, higher costs of EVs, range anxiety and other impediments. Battery swapping, which involves simply exchanging discharged batteries for charged ones, has the potential to eliminate such challenges. In order to expand the country’s EV and battery market, the Government of India announced its plan to launch a Battery Swapping Policy during Budget 2022-23, followed by the release of a draft policy by NITI Aayog. At a recent webinar organised by Renewable Watch, sector experts discussed the potential of battery swapping models in India and the barriers to their adoption. Edited excerpts…
In India, the battery swapping industry is at a nascent stage. Therefore, strong opinions for and against the technology can be seen across the industry. The demand for battery swapping can be as high as the number of EVs in the market. Therefore, the draft policy is indeed a welcome step but NITI Aayog needs to ensure that there is a consensus amongst stakeholders such as OEMs, battery manufacturers and battery-as-a-service providers on the standardisation of protocols, size, etc.
The battery costs were expected to go down or remain the same, but this did not happen. On the contrary, we have seen battery prices go up. In this context, battery swapping is key as it will assist in lowering the prices. Another important aspect is safety, considering the recent incidents of batteries catching fire. With battery swapping we need to ensure that safety is enhanced, not compromised. In terms of safety standards, the AIS 156 standard is good enough, but it needs to be implemented well. A safety infrastructure needs to in place and relevant stakeholders need to be given proper training. Going forward, more clarification is needed regarding liability if a battery catches fire. Apart from batteries, standards are needed for swapping stations. End-of-life management of batteries should also be a key focus area and should be mandatorily put under recycling.
Going forward, stakeholders can contemplate the idea of an EV having a fixed battery part and a swappable battery part that can be added if longer distances need to be travelled. With this, the cost of batteries can perhaps be lowered.
The promotion of battery swapping is a welcome move but three important points need to be kept in mind. One, what is the return on investment (RoI), as battery swapping only works for medium-to-heavy users as of now? For mild users we have to see how battery swapping becomes affordable. In general, a swappable battery is much more expensive to produce than a non-swappable battery because it entails extra reliability and ruggedness, more data management, and the high costs of setting up swapping stations. A private player expects a gross RoI of 33-35 per cent and it costs around Rs 50,000 for a 1.5-2 kWh battery. For a mild user travelling 30 km a day, the tariff comes out to be Rs 2 per km. So, the battery swapping operator will have to come up with discounting models. A major risk is the consumer not returning the battery for days. This can turn the battery into a dead asset. Therefore, faster rotation in the battery swapping station will have to be ensured to ensure profitability and subsidy support will be helpful.
Two, standardisation is easier said than done because it is difficult to standardise batteries across different technologies, configurations, etc. Revenue sharing post standarisation will be easy but standardising different technologies is difficult. Also, it needs to be ensured that by standardising, technology upgradation is not hampered.
Three, there are many risks of operating battery swapping stations as there can be vandalism, theft, etc. even after security guards are present because batteries are a high asset value. Another important issue is that battery swapping stations in lower densities will hamper customer experience. Also, the cost of batteries is expected to fall in the future, therefore, asset value will depreciated heavily, which investors will take note of while investing in battery swapping companies. All these issues are solvable but need greater deliberations between private players and policymakers.
Regarding the strategy for deployment of battery swapping stations, smaller lots in controlled places should be the focus initially. It is certain that subsidies on e-bikes will not be permanent. So, when subsidies are removed there is a possibility of e-bike sales going down again. In this context, in two to five years battery swapping can help in reducing the total cost of ownership of EVs. In the B2B space, battery swapping is already a success for three-wheelers. It is needed for the survival of the market. In the B2C segment, swapping is slowly catching up and will become mature in three to five years. There is nothing in particular that can accelerate this market, the investors should just be willing to incur the high upfront costs.
Magenta Power’s Electric Vehicle Enabled Transport (EVET) platform uses battery swapping as an option in the fleet. Our experience with EVET helps us give a user perspective rather than a charge point operator perspective on battery swapping. There are two major factors associated with battery swapping that require great attention. First, standardisation is crucial, not only in battery systems, but also in voltage systems that work in vehicles. From a user perspective, this becomes an issue when one has to work with different types of battery swapping operators, voltage systems and socket systems.
Second, as these are swappable systems, safety is a major concern. Battery swapping is seen as a secondary fixture, as a result of which it is not a part of the primary design of a vehicle. While battery swapping enclosures are set up keeping in mind the convenience of end-users, they are not necessarily a part of the integral core structure of the vehicle. As speed breakers and bumps are common on Indian roads, structural integrity issues are cropping up in these battery swapping systems.
This is the right time to focus on the development of technology for battery swapping, especially with regard to certain parameters. One component is the thermal management system, which is important because the temperature and weather vary tremendously across different cities, in India. The thermal management system is a significant piece of the safety and quality assurance puzzle. However, it has not received much focus and requires improvisation. Another parameter that is often not spoken about is the integration and transfer of data across multiple battery swapping operators. For better tracking and coordination, batteries may need to be installed with SIM card systems. The inherent telecom challenges in Tier 2 and Tier 3 cities may also have to be considered when developing such telecom systems for swappable batteries.
Moreover, it is important for the entire industry to come together and share their learnings regarding different aspects of the entire battery swapping system value chain. An expert body may also be created to streamline the transmission of information between various industry stakeholders. It is also important to note, that while optimisation of costs is essential at any point in time, safety cannot be compromised. Every individual element such as cells, thermal management systems and container systems must ensure safety and quality. Once the safety aspect is settled, cost optimisation should be prioritised, and not vice versa.
Going forward, establishing interoperability is imperative. The basic ethos of interoperability is standardisation. India has the ability to give a kick-start to the industry by formulating the standards for the interoperability of battery swapping systems. By doing so, we can become pioneers in this space. In the long run, battery swapping stations can become load management systems for balancing of the grid. Batteries can be effectively utilised for storage and balancing.
Roughly two years back, CHARGE+ ZONE started operating a battery swapping network. The company acquired battery swapping stations established by Ola Electric across Delhi-NCR. To move forward, we have set up some battery-swappable networks in Lucknow as well. In our experience, most of the battery swapping has taken place in the e-rickshaw segment, and it is becoming increasingly popular.
The first issue we are facing today is that there is a small distortion whereby a fixed battery receives 5 per cent duty when installed in a vehicle, but 18 per cent duty when purchased for battery swapping. The government should take the matter into consideration. The second issue is that subsidies are based on the battery’s initial capacity. There is no guarantee that we will receive a battery that has a stable battery life of two or three years. Battery manufacturers are not required to follow the standard. The other problem is that when it comes to designing battery swapping, communication is critical.
These e-rickshaws have the maximum battery-swappable traction. If these concerns are resolved, we will be able to swiftly replace the sealed lead acid batteries, which have a negative impact on the environment as to how they are being disposed of, charged, etc. There is no standardisation of these types of batteries. In contrast, lithium-ion batteries are standardised. If measures are taken to broaden communication about charging, they will help improve traction. Only the government can do it because we have seen in the past two to three years that the industry is not ready. The IEC-61815 standard exists for charging cars, which means any car can be charged at any standard. Having such a high density of investment in this platform may be a challenge if things cannot be promptly conceived of and accomplished. The government should definitely save the maximum size for the form factor, thus solving the communication conundrum.
From a design standpoint, battery swapping takes away the freedom of design from EV OEMs because of the form factor of the batteries with that level of optimisation. As a result, there will be no form factor standardisation of the battery pack unless the entire industry works together, and the form factor is rectified. In such a case, there would be no way to optimise charging points or charger ports, owing to possible changes in battery size.
India is already at the inflection point of the mobility revolution that is being driven by EVs. In 2021, 329,000 EVs were sold in India, representing a 168 per cent rise compared to the previous year’s EV sales. As battery prices fall globally, the capital cost of EVs is expected to become similar to that of ICE vehicles while the operational costs of EVs are already lower than ICE vehicles. Thus, the transition from ICE to EVs is inevitable and a robust charging infrastructure is a key prerequisite to achieve accelerated adoption of EVs in the country.
This EV charging infrastructure must be deployed keeping in mind India’s transportation needs. EVs traditionally come with their own batteries, which need regular charging and thus adequate power supply. Battery swapping is an alternative, which involves exchanging discharged batteries for charged ones. This de-links charging and battery usage and keeps the vehicle in operational mode. This battery swapping is more suitable for two- and three-wheelers, which have smaller batteries than four-wheelers that are thereby easier to swap.
Battery swapping offers three advantages relative to charging – time, space and cost efficiency – provided each swappable battery is actively used. First, charging requires at least three to four hours, which could create range anxiety. Meanwhile, battery swapping could be done in minutes as the battery is pre-charged. Second, charging stations require more space as vehicles need to be parked next to the chargers during the charging process. On the other hand, batteries can be stacked together, thereby saving space in the case of swapping stations. Third, batteries contribute a significant portion to the total EV cost. Swappable batteries help in significantly lowering the cost of EVs and accelerating EV adoption.
Battery-as-a-service is a common business model used by battery swapping providers. This involves users purchasing an EV without the battery and providing a monthly cost to service providers for battery use throughout the vehicle lifetime. Thus, the user can choose the subscription model and service provider as in the case of the telecom sector. This also relieves the user from the technology obsolescence risks. While battery swapping is still at a nascent stage globally, it is gaining traction for commercial and fleet operations. Our aim is to initially cater to light EVs, where swapping is easier. In the long term, we expect buses to move to a hybrid model with a fixed as well as a swappable battery. This will not only help in lowering the dead weight of the buses, but also address range issues.
The draft battery swapping policy is currently under consultation. The final policy will address all the tenets of battery swapping – technical, regulatory, financing and institutional arrangements. The policy will form the basis for the development of specific standards and four of them are already on the verge of completion. The guidelines for state-level implementation are also quite critical. With the formulation of the battery swapping policy in coordination with relevant government and external stakeholders, we are confident that this policy will be essential in the evolution of the EV ecosystem.