By Parveen Kumar and Anshika Singh
Battery swapping is emerging as an efficient and alternative fast-refuelling option for electric vehicles (EV), especially for e-2Ws and e-3Ws, which are spearheading EV growth in India. The implementation of battery swapping can help address critical challenges, including long charging time, insufficient space, and high upfront cost for EV owners, while simultaneously enhancing sustainability through second-life applications of batteries in renewable energy storage.
Mitigating climate change by curbing carbon emissions ranks high for India under its clean energy goals, or “Panchamrit” strategy, announced at the COP26 summit. India’s commitment to transitioning 30 per cent of its total vehicle sales to electric by 2030 remains at the forefront of its decarbonisation journey. However, for electric vehicles (EVs) to become a common sight on Indian streets, the underlying complications of high upfront cost, range anxiety, long charging times, and lack of charging infrastructure need to be ironed out. India is home to dense urban areas where space is already a limited commodity, and plug-in charging, the highly adopted charging method with its own set of limitations, is proving to be slow in upscaling the adoption of EVs.
Battery swapping is one solution that has the potential to leapfrog all these barriers and provide users with a refuelling time comparable to that of internal combustion engine (ICE) vehicles. It is a charging method that allows EV drivers to replace depleted battery blocks with freshly charged ones at battery swapping stations (BSS) within a few minutes and reduces range anxiety for drivers while increasing vehicle runtime.
India, primarily a light-electric-vehicle market, can leverage the benefits of battery swapping. As two- and three-wheelers (2W and 3W) are the dominant personal transport modes in the nation, this gives India an upper hand in adopting battery swapping, with the elimination of the expensive automation that is necessary for heavy battery vehicles. A battery is the most expensive part of an EV, and swapping enables new-age business models like battery leasing or battery as a service (BaaS), which help in the financial decoupling of batteries from EVs. Battery swapping is therefore emerging as a promising business model for commercial EVs and, hence, Indian decision makers are finally taking stock of its potential through progressive policy support.
Battery Swapping: Global Status
Early attempts at battery swapping have received a black eye. Whilst Better Place, an Israeli start-up in the field of battery swapping for cars, filed for bankruptcy in 2013, Tesla also abandoned the idea of battery swapping with the common reason of low utilisation of this high-capex infrastructure. But today, this innovative idea is gaining new impetus across the globe, particularly in China, with vigorous investments pouring in from car makers. As of October 2021, Chinese car makers have installed more than 1,000 BSS in several cities, while many more are planned to tackle the issue of scarce urban land. Moreover, China’s policymakers have supported the development of battery swapping by introducing battery standards in collaboration with car makers to optimise battery swapping usage. Another notable intervention, for e-2Ws, comes from Taiwanese company Gogoro, a detachable-battery-scooter manufacturer, which has expanded its battery swapping services to Japan, France, and Germany.
Impact of EV Adoption in India
While the Indian government has realised that the shift to EVs is imminent, their adoption by Indian consumers is still at a nascent stage which constitutes around 3 per cent of total vehicle sales (Figure 1). Currently, about 97 per cent of on-road EVs are e-2Ws and e-3Ws, due to their economical total cost of ownership (TCO) and incremental purchase subsidies offered at the central and state level. e-2Ws and e-3Ws are growing at a CAGR of 66 per cent and 42 per cent respectively, and are likely to dominate the Indian automotive market further by 2030.
However, recent consumer studies suggest that the sparse public charging infrastructure and longer charging times have been one of the major challenges in accelerating EV adoption in India. India has a poor charging density of roughly 2,826 public charging stations for more than one million EVs on the road today, which is limiting the ease of EV usage. Besides this, the majority of India’s existing public charging infrastructure is more appropriate for the four-wheeler (4W) segment and is of little use to e-2Ws and e-3Ws, owing to their lower power requirement. The constraint of space in urban areas, coupled with exorbitantly high land prices, makes the installation of charging infrastructure an expensive affair and a major blockage to its widespread deployment. Furthermore, while slow charging limits the operating time of an EV, the tropical climatic condition in India poses another challenge to the performance of EV batteries, which, in combination with fast plug-in charging, can accelerate battery degradation, resulting in a reduction of battery life.
Addressing these issues, battery swapping emerges as an alternative fast refuelling option, especially for commercial vehicles that cannot wait at charging stations for long. The big hiccup of urban land scarcity is being solved by micro-size modular BSS in India, with footprints that range from an automated teller machine (ATM) to two parking spaces. This way, setting up a BSS is much more cost-effective than setting up multiple charging stations. As the majority of e-2Ws and e-3Ws in India are equipped with detachable batteries, India can easily leverage battery swapping as a charging method and entice both consumers and manufacturers who were on the fence about EVs.
Sustainability and Environment Benefits
Enhancing sustainability, battery swapping has the potential to reduce the carbon footprint of EVs with the integration of renewable energy into the EV sector. Not only can the depleted batteries be charged with renewable energy, but the end-of-first-life batteries can also be repurposed for second-life applications, such as stationary energy storage systems, thus adding more sustainable revenue streams for swapping operators. Their application in surplus renewable energy storage or even fast refuelling of EV fleets at peak-demand hours is an appealing opportunity for battery manufacturers possibly to generate more profit.
Further, as India begins to adopt battery swapping, discussions will soon gravitate towards supply chain vulnerability of raw materials for lithium-ion batteries. As battery swapping incorporates swapping of depleted batteries from the EVs with charged one, therefore additional battery packs are needed to store energy in the meantime. Studies on the optimization of battery-swapping stations have found that a battery inventory of 1.5-1.75 times the number of vehicles to be served are required. But swapping can also be a potential answer to this burgeoning question via innovation in battery design. Innovating batteries with modular designs that are interoperable with varying vehicle segments could reduce the size of swappable batteries to half that of fixed ones, but with similar energy efficiencies. This would inevitably mean a smaller amount of critical raw materials in the battery and reduce import requirements by a factor of at least six.
Moreover, armed with cell-level information, swapping operators can exert a gigantic, if unspoken, leverage and be a harbinger for establishing a battery recycling ecosystem. To date, the lack of data on battery health has been a major deterrent to its repurposing and recycling which can be leapfrogged by using cloud-based battery management systems (BMS) and, in essence, enable a circular economy for batteries in India. Henceforth, battery swapping could also help moderate any potential supply chain bottlenecks that we might be looking at in the not-too-distant future.
Emerging Business Models
One of the major reasons for the growing acceptance of battery swapping across the world is the introduction of new, innovative models that address the high upfront purchase costs of EVs. When it comes to financing an ICE vehicle, banks and financial institutions mostly look at the buyer’s paying capacity. However, there are additional concerns when financing EVs. Being unsure about this new technology and its resale value in the event of loan defaults, banks are reluctant to lend and, if they do, they charge higher interest rates with higher down payment and shorter repayment periods.
Because of this, the introduction of innovative business and financing models using battery swapping could be a game changer in which swapping operators, having the advantage of battery technology know-how, could make financing of EVs easier. Financial institutions like banks and insurance companies can help develop a cash flow model by collaborating with swapping operators and reducing the burden on the purchasing agency.
Besides, the BaaS model is also a promising initial path to lower upfront acquisition costs for commercial vehicles such as e-2Ws, e-3Ws, and small commercial vehicles, including cargo e-4Ws for load-carrying, especially in the e-commerce space. Small commercial e-4Ws have fixed routes and so smaller, swappable batteries would increase the load-carrying capacity of these vehicles and compel fleet operators to forge a path to clean mobility.
Enabling Policy for Battery Swapping Model
Now, several companies, new and old, have ventured into the battery swapping business. However, this industry has yet to fully succeed in India and, for this, a public policy stimulus remains key. In 2020, the Indian government made permissible the sale of e-2Ws and e-3Ws without batteries to reduce the high upfront cost of vehicles and promote the use of battery swapping in these segments. In addition to this, several state governments in India have taken initiatives to promote battery swapping. For instance, the governments of Delhi and Maharashtra have allocated a 50:50 distribution of the EV purchase subsidy between the vehicle owner and swapping operator for consumers opting for the battery swapping model. Despite significant regulatory incentives offered, lack of standards is the biggest bottleneck for large-scale adoption of battery swapping in India. Standards ensure interoperability by guaranteeing that batteries made by one company can be used by others. Nevertheless, a uniform, “one size fits all” approach could also stifle innovation. The design of each vehicle manufacturer’s batteries and the battery technology selected provide a strategic advantage in terms of superior vehicle performance and architecture, while stringent standards related to the technology used or battery pack size would entail tearing up existing and future product plans and starting from scratch.
Henceforth, to build a long-term use case for battery swapping in India, NITI Aayog in April 2022 released the draft national battery swapping policy to provide a big thrust for start-ups in the EV space. The policy attempts to bring clarity around financial incentives for vehicles sold without batteries, including a tax reduction from 18 per cent to 5 per cent for EVs without batteries. Some of the key features for standardisation and safety include a unique identification number (UIN) for batteries, mandatory installation of Smart BMS, and non-restrictive guidelines for data collection and sharing to help in tracking the battery and its related key data over the entire life. These measures will not only help in improving the efficiency of the battery swapping ecosystem but also improve the overall safety dynamics of EV batteries, which has been much debated in view of recent e-2W fire incidents. Furthermore, this policy advocates the implementation of a closed-loop supply chain via reuse and recycling, which would minimise any environmental impact of batteries in the future.
Conclusions
Battery swapping has the potential to be the most promising alternative for an efficient fast-charging infrastructure, especially for commercial vehicles, besides offering sustainable streams of revenue for operators. It offers key advantages relative to plug-in charging in terms of charging time, installation space, and the upfront purchase cost of EVs. Furthermore, battery swapping also provides a level playing field for innovative and sustainable business models that could effectively tackle issues of financing for EVs and the electric transition of low-capacity freight vehicles. Standardisation of battery safety systems remains key for faster adoption of battery swapping, especially for e-commerce delivery operators. India, which has fallen behind other major markets in the shift to green mobility, needs to play catch-up, and fast-tracking a reliable charging infrastructure like battery swapping has become the consensus solution.
About the Authors
Dr. Parveen Kumar is a senior programme manager at the WRI India Under the Cities programme. Currently, he is associated with projects related to the electric vehicle ecosystem. He has previously worked at the Indian Institute of Science (IISc), Bangalore, and has received a PhD from JMI, New Delhi. He has more than 14 years of post-PhD experience in science, technology, and policy research. He has published several peer-reviewed papers in reputed journals, as well as articles in leading magazines.
Anshika Singh is currently working as a Programme Associate with the Electric Mobility team at World Resources Institute India. She currently holds a Master’s degree in Transport Planning and a Bachelor’s degree in Planning from the School of Planning and Architecture, Delhi. Her areas of interest include climate change, sustainable transportation, green mobility, and low-cost transportation.
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