India has made significant progress towards its goal of achieving net-zero carbon emissions with a focus on accelerating the transition to clean energy. One notable success is the FAME-II policy, which has led to the adoption of one million electric two-wheelers. India’s goal is to achieve 100% electrification of its transportation sector, which has the potential to reduce the fiscal burden of fossil fuel imports and create an ecosystem of manufacturing and infrastructure players, generating millions of jobs.
Battery Swapping as an Enabler
India’s stock of two-wheelers powered by internal combustion engines is expected to hit 300 million by the end of the decade. EV two-wheeler stocks currently stand at less than 1% penetration, indicating an opportunity for growth. Battery swapping can accelerate electric vehicle adoption by addressing the dual apprehensions of inadequate charging infrastructure and range anxiety, particularly in densely populated metros and Tier-1 and 2 cities.
Cost and Time Benefits
Battery swapping allows for smaller, swappable batteries that reduce overall costs, as batteries account for a significant portion of the total vehicle cost. Battery swapping technology also saves on time, as depleted batteries can be replaced with pre-charged ones within minutes at battery-swapping stations. Battery swapping also eliminates any upfront expense incurred during electric vehicle purchase and can help reduce capital expenses for commercial fleet owners, enabling them to utilize their assets more efficiently by providing a quick refueling solution.
Infrastructure Incentives for Battery-Swapping Operators
Creating battery-swapping infrastructure requires similar incentivisation as received by direct charging solution providers under the FAME-II policy. The government needs to announce a battery-swapping incentive policy incorporating inputs received through industry-policy-maker consultations, providing a level playing field in terms of FAME-II incentives and equal GST rates for all. Suitable incentives are needed to catalyse electric vehicle adoption rates, as creating enabling battery swapping infrastructure is capex heavy. This makes incentives all the more essential.
India’s G20 Presidency
India is now at its moment of reckoning through its G20 presidency, heralding its rise globally. Electrification of the transportation sector with a focus on Smart Mobility, promoting local manufacturing of innovative technologies and launch innovative business models are essential to accelerating India’s journey to achieve net-zero goals.
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By Kaushik Burman
India is at an inflection point in having accelerated its journey towards net zero carbon and embraced the clean energy transition with remarkable resilience. The government of India, along with its key ministries and aided by National think tanks have collectively laid impetus to the decarbonisation goals with gusto – manifest the success of FAME-II policy towards EV adoption, leading to achieving the 1 million electric two-wheeler mark.
It has been a great start to an exciting yet arduous journey of an ambitious goal – that of 100% electrification of its transportation sector, which has the potential of not only reducing the fiscal burden of expensive fossil fuel imports, but also creating an ecosystem of upstream manufacturing and downstream infrastructure players, creating millions of jobs in the process.
Two-wheeler is an integral part of India’s mobility ecosystem, especially in densely packed urban cities. The current stock of two wheelers powered by internal combustion engines, would be in the range of 240 million units, and about 18-20 million new units get added annually. Safe to say that by the end of this decade, the total stock would end up in the 300 million range on conservative basis.
Out of this population, EV two-wheeler stock is about 1.5-2 million units, which is less than 1% penetration. This data points to a material opportunity in making if the key enablers are set in motion.
Relevance of battery swapping in transforming EV landscape
In essence, battery swapping does away with the long wait times required for fully charging a discharged battery with a fully-charged one at designated stations, much like fuel pumps do for traditional vehicles. Swapping of batteries also addresses the dual apprehensions of inadequate charging infrastructure and range anxiety.
In densely populated metros and tier-1 and 2 cities, where real estate is scarce and is expensive, battery swapping infrastructure can accelerate the adoption rates in the two-wheeler and three-wheeler segments.
Cost Benefits: While conventional batteries require larger battery sizes (kWh) to power the vehicle, battery swapping technology allows for smaller, swappable batteries which reduce overall costs. Since batteries account for a significant portion (4-50%) of the total vehicle cost, the battery expenditure is borne by the Battery Swapping Station (BSS) rather than the vehicle owner, resulting in cost savings.
For commercial fleet owners, battery swapping offers a means of reducing their capital expenses while enabling them to utilize their assets more efficiently by providing a quick refueling solution. In fact, a well-established network of swapping centers could prove to be a critical enabler for the mass adoption of EVs within India’s public transport system.
The time factor: Reports indicate that the minimum time required to charge an EV is one or two hours. Unlike this, battery swapping is a fast alternative since depleted batteries can be replaced with pre-charged ones within minutes only.
The expense element: By providing batteries via a subscription model, battery swapping eliminates any upfront expense incurred during an EV purchase. EVs have also been made more affordable since the government provides several incentives to manufacturers and consumers.
Space issues: At charging stations, plug-in chargers are typically slow and can only charge vehicles one at a time. Conversely, simply charging batteries and swapping discharged ones needs less space since depleted batteries are stacked together and then charged. All of which ensures swapping stations are less capital intensive and more effective.
Range-anxiety apprehensions: Vehicle owners mainly fear they will run out of charge much before they reach their destination, triggering range anxiety. This fear is primarily propelled by inadequate or improper charging infrastructure, which arises due to cost barriers and space complications. On the other hand, establishing battery-swapping stations is easier, quicker and relatively convenient while the swapping process in itself is less time-consuming.
Infrastructure incentives are a must for battery-swapping operators
Battery swapping infrastructure creation requires similar treatment of incentivisation as received by the direct charging solution providers under the FAME-II policy. While the finance minister has laid strong emphasis on green growth in the Union Budget for FY2024 presented this February she had also announced the framing of the EV battery swapping policy in the Union Budget for FY2023 – however, the much-awaited battery swapping incentivisation policy is yet to be published, which has a huge potential to invite FDI into the battery swapping network infrastructure creation.
Thus, there is a pressing need for the government to announce the battery swapping incentive policy incorporating the inputs received through numerous industry-policy-maker consultations. The industry in this regard applauds the Ministry of consumer affair’s directive to defer interoperability standards and hopes that the policy will reiterate this and not foist any standards; in line with the recent developments.
Providing a level playing field in terms of FAME II incentives and equal GST rates will help the nascent industry. Present-day incentives are provided to vehicles powered by direct charging, but not to vehicles enabled by battery swapping – this invariably creates a skewed market. As the creation of the enabling battery swapping infrastructure is capex-heavy suitable incentives will catalyse the EV adoption rates. This makes the level playing field even more pertinent.
This year is India’s moment of reckoning, as India heralds its rise globally, through its G20 presidency. Electrification of the transportation sector, with emphasis on Smart Mobility, promote local manufacturing of innovative technologies, localisation of high-power electronics and launch innovative business models – all of these are quintessential to the adoption of electric vehicles and accelerate India’s journey plan to achieve net zero goals.
The author is the General Manager of Gogoro India.
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