This article delves into the imperative and regulatory dimensions of establishing a battery swapping network in India, leveraging the nation’s manufacturing prowess and favourable market conditions, including the burgeoning e-commerce sector for last-mile operators and robust government support for the lower EV industry. It underscores stakeholder interest in diverse business models for battery swapping and identifies key opportunities, including cross-segment vehicle compatibility, partnerships with distribution companies and their franchisees, collaboration with state agencies and charge point operators; utilization of idle/free land for swapping stations, and enhancing network density. The potential integration of the swapping model within India’s broader charging ecosystem is also explored. Moreover, this article evaluates India’s capacity to emerge as a prominent player in the global battery swapping market through collaborative efforts with public and private stakeholders. It highlights the cost-conscious nature of Indian consumers and proactive measures by both central and state governments to promote EV adoption, pivotal in fostering a resilient EV infrastructure ecosystem nationwide.
The battery swapping market is globally gaining attention as a potential solution to address some challenges associated with EV and its charging infrastructure adoption for logistic, e-commerce and last mile delivery customers.
Compared to traditional charging stations, battery swapping stations are a more efficient way to address charging time, unsecured or lose charging, range anxiety with each battery change taking less than 5 minutes and require significantly less space for set up. Furthermore, due to its impact on lowering the high upfront price of electric vehicles by decoupling battery ownership, battery-as-a- Service (BaaS) is gaining traction in the battery swapping market. Battery swapping also minimizes vehicle downtime and acquisition expenses because the customer only pays for the net energy used or per swap.
The global market for battery swapping stations is a rapidly evolving segment within the lower EV infrastructure landscape. As per the JMK 2023 report the global battery swapping market in terms of revenue counted to be around INR 0.14 Lac Cr. in 2023 and estimated to reach INR 3.8 Lac Cr. by 2030 as shown in fig.1.
On the basis of service type, the market has been divided into two categories – where the subscription variety has shown a tremendous growth of 34% pertaining to its easy accessibility shown in fig. 2.
The pay per use design has formed limited accessibility to swapping market due to limited station and standardization issues. A pay-per-use model for battery swapping would typically involve users paying a fee each time they swap their depleted battery for a fully charged one at a swapping station. In an operator subscription-based model for battery swapping, users or customer typically pay a regular subscription fee to access the unlimited swapping service and exchange depleted batteries for fully charged ones at any swapping stations under the operator. This approach aims to provide a faster and more convenient alternative to traditional EV charging in B2B services.
As it indicates China and India growing in EV adoption tremendously, however various other countries operators has lined up their potential swapping business as per Govt. support and policy availability, which varies at larger extent. Fig. 3 shows cumulative count of the swapping stations commissioned till FY 2024 and targeted swapping station installation by the global player’s country wise by FY 2025.
Note:
- This graph prepared with cumulative data collected from various market research, forums and white papers based available reports on EV stations. It incorporates aggregated figures from two-wheeler, three-wheeler & other swapping stations for analysis.
- Rest of world comprises Thailand, Vietnam, Japan, South Korea, Indonesia and Hong Kong
It specifically indicates significant growth in the battery swapping business across Asian countries by 2025. The Asian market, in particular, is poised to experience an increase in swapping business from FY 2023 to 2025.
Standardization process stands challenging for swapping network and derive huge capital and operational challenges due to limited resources supply chain. This allows the battery swapping market primarily to the lower EV segment only. Due to the high capital expenditure required for battery swapping and the lower adoption rates of electric four-wheelers, e-buses, and e-trucks, battery swapping is not viable for higher e-vehicle categories. But in due course swapping technology getting attention for e-buses & e-trucks expected to launch in some countries such as China and USA, Europe by 2025. China announced 500 heavy swapping stations for e-buses & e-trucks by 2025 as per ICCT report 2023.
Indian Battery Swapping Market
As per NITI Ayog report 2023, it is projected by the government that over 30% of newly purchased vehicles will be electric by 2030, which might require 0.50 lakhs fast charging points and 10 lakhs home charging stations. This opportunity presents the Indian market as an ideal situation to lead in the realm of battery swapping in India for lower EV segment. The recent support from the Indian government for battery swapping, complementing established fixed charging methods as detailed in the draft battery swapping policy, highlights the significant potential of swapping business approach.
In India, where electric four-wheelers, e-buses, and e-trucks comprise less than 5% of the EV market, the battery swapping business is feasible only for the lower EV segment, including Electric Two-Wheelers (E2W) and Three-Wheelers (E3W), which are heavily used by e-commerce businesses and for last-mile delivery services. BSO such as Sun Mobility, Battery Smart, Battery Pool, Yuma, Gogoro, Voltup, Esmito, Chargeup, Race energy are major players in lower EV segment battery swapping business in India. However, TATA Motor, Daimler trucks, Ashok Leyland, Volvo and IPLtech, BECV are few commercial heavy electric vehicle OEMs looking forward to swapping infrastructure till 2025.
As per Indian Energy Storage Alliance (IESA) and JMK research report 2023, more than 20 battery swapping operators are active in India from 2021, with around 1640 swapping stations recorded figure of 8 Cr. swapping completed as highlighted in figure 4. This is estimated around market revenue of INR 90 Cr for FY 22-23.
NITI Ayog in 2023 projected establishment of over 10,000 swapping stations for E2W & E3W till 2028 and IESA indicated market revenue potential of around INR 500 cr. It encourages OEMs and swapping operators to partner with leading market players who have the necessary infrastructure and land availability.
Overview of Indian Battery Swapping Policy
Policy proposes reducing tax rate differential of batteries & Electric Vehicle Supply Equipment (EVSE), backs fiscal incentives, prioritizes metro cities for swapping network.
Key Highlights of Drafted Indian Battery Swapping Policy
- Reduce difference between tax rates on Li-ion batteries and EV Supply Equipment (EVSE) which are at 18% and 5% respectively (subsequently implemented through GST council order in July ‘22).
- Offer the demand-side incentives under new/existing schemes for EV purchase to EVs with swappable batteries eligible under this policy.
- Rollout of BSS in phased manner; prioritize metropolitan cities with population 4 Million+ for development of battery swapping network in 1st phase.
- Each BSS should serve at least 2 EV OEMs. Set up battery swapping stations at locations like retail fuel stations, public parking areas, malls, etc.
- Require state governments to ensure that public battery charging stations are eligible for power tariffs at concessional rate.
- Single window clearance to facilitate documents submission, issue trade licenses, approve allocation of public land & grant electricity connections.
- The policy emphasizes enabling innovation in adoption of possible business models, and derisking the investment in required infrastructure to encourage private sector participation and attract affordable financing.
- Policy underlines the importance of re-use of end-of-first-life swappable batteries and recycling of end-of-life batteries.
The introduced Battery Swapping Policy has garnered support from E2W and E3W OEM and BSO, potentially enhancing interoperability in the lower EV segment in India.
Key Insights Derived from the State Governments’ Initiatives
- Centralized battery swapping policy to standardize the primary components of stations and vehicles.
- Improvisation in interoperability in the EV charging ecosystem.
- The battery swapping market is primarily accessible in metro and tier-II cities due to increased EV adoption and available infrastructure support.
- Various entities such as DISCOMs, municipalities, state transport divisions, and railways are collaborating with swapping operators in mutually beneficial models.
- State regulators are setting subsidized EV tariffs applicable to swapping operators.
- The approval process for swapping station connections has shifted from a centralized to a decentralized level.
- The Indian government plans to release norms for the certification and testing process of swapping stations following the release of the swapping policy.
Swapping Business Challenges, Benefits and Opportunities
Challenges in Battery Swapping Business
Capital Investment
Establishing a swapping business demands substantial capital investment to set up a single station, encompassing key elements such as land infrastructure (20% of the total cost), rapid interchanging machinery and battery packs (60% of the total cost), and connection infrastructure (20% of the total cost).
- Due to limited OEM access, the market’s supply chain relies heavily on countries like China and Taiwan for the provision of rapid interchanging and battery pack components, which are currently priced at INR 5000 per kilowatt (as per Sun Mobility) and INR 14000 per kilowatt- hour (as per BNEF) respectively.
- The swapping business faces significant expenses related to land leasing or rental costs, particularly in metropolitan areas (benchmarking at INR 150 per square foot in Delhi) and tier-II cities (benchmarking at INR 80 per square foot in Indore), as operations are concentrated within central network areas of cities.
- There is a substantial tax burden associated with separate battery packs, ranging from 18-28%, compared to the 5-12% tax rate applicable to Electric Vehicles (EVs) as a whole.
Business Profitability
- According to the JMK report of 2023, over 90% of E2Ws and 70% of E3Ws rely on conventional charging at home or office locations, rather than utilizing swapping services, primarily due to the absence of OEM-based stations.
- Fleet or last-mile operators maintain separate operations supported by specific OEMs, fostering independence but resulting in limited swapping per station due to concerns regarding privacy and safety, as these operators do not share platforms or services with others.
Quality, Safety and Risk
- The lack of standardized battery packs and interchanging stations raises doubts regarding the quality of components and heightens concerns regarding safety standards.
- The absence of a validation or testing protocol established by the government, coupled with OEM monopolies, generates apprehensions regarding risk management and the formulation of certification plans.
Benefits of Battery Swapping
Particularly well-adapted to EV market in India, swapping offers advantages in maintenance, cost, range, time, last mile operations, logistics and real estate etc., shown in fig 6.
Battery Swapping Vs Conventional Charging
- Swapping of batteries takes 2-10 min compared to 5-8 hrs conventional home charging time.
- Using services of swapping operator relaxes E2W total cost by 40% and E3W total cost by 35% compared to 100% cost to EV owner without swapping services.
- Conventional charging requires additional connection and infrastructure at premises, however, EV owner only requires subscription for utilising swapping services without any other premium cost.
- Swapping services partners or EV owner does not worry about the battery warranty or performance compared to conventional charging EV owner.
Total Cost of Ownership (TCO) Analysis for 2- and 3-Wheeler in Indian Market
Favourable TCO is possible through high vehicle utilization, increasing the economic viability of EVs and implying a significant opportunity for electric 2W manufacturers to target fleet operators (e.g., Zomato, Swiggy, BBNow etc.) and logistic companies (e.g., Ekart, Blinkit, Ship rocket, ECOM etc). TCO analysis for individual E2W owner done, by adding total on road, running and maintenance cost with reducing residue value of the vehicle over 5 years of battery life cycle. Similar way TCO of battery owned E2W and non- battery E2W as follows:
The battery-swapping case is most attractive, as TCO comparison in fig 7 providing more than 60% savings from ICE and 22% from fixed EV battery in two-wheeler market swapping station. For B2B players, such savings are significant, resulting in a favorable business case for EV OEM with a swappable variant as well as operators of swapping stations. This estimates huge saving for two- wheeler EV owners with battery swapping option.
To be continued…
Eshwar Pisalkar is a Team Lead at Reliance BP mobility Limited for EV/BSS infrastructure development in India. He has 10+ years of industrial and research experience in the field of renewable energy solar, EV, BSS and Energy efficiency. He has a Master’s degree in Power Distribution with Smart Grids and Bachelor’s in Electrical Engineering. He is a certified Energy Manager and Solar Engineer in India.
