Battery swapping: Silver bullet or a short-term remedy leading to a long term malady?

By Dr Samir Kapur

There is no doubt that the government is doing a commendable job with its FAME schemes. Another laudable move is Prime Minister Narendra Modi’s pledge towards making India Carbon Neutral or Net Zero by 2070, at the Glasgow Summit in November last year.

Also, early this year, the Government announced its plans to introduce a new policy to promote battery swapping, a service that allows EV owners to replace worn-out battery blocks for freshly charged ones at swap stations. The Government said that the policy will initially focus on battery swap services for electric scooters, motorcycles, and three-wheeled auto-rickshaws in a boost for sectors like last-mile delivery and ride-sharing.

It is true that battery is one of the most expensive parts in an EV and swapping permits companies to offer it as a service through lease or subscription models, cutting down the cost of owning the vehicle. However, we need to clearly evaluate the advantages and disadvantages before rolling out such a policy in a country like ours.

Battery is at the very heart of an EV vehicle and staggering competition in the space is leading to low-quality battery manufacturing, resulting in road accidents.

The one size fits all approach doesn’t work for the highly diverse Indian two wheeler market which is the largest in the world. Interoperability standardization of battery proposed in the Union Budget will lead to customer frustration, create artificial monopolies, and discourage open markets. This is an extremely serious issue for the two-wheeler industry and would require intense consultation and interaction between the government and industry.

For 2Ws, range is not so much of an issue with rapid advancements in battery tech and energy density. The focus should be on creating charging infrastructure which is a more sustainable solution. Moreover, 2Ws aren’t like domestic electronic gadgets where you can swap a depleted battery with a fresh one without implications of usage and wear-and-tear. In ICE vehicles, one cannot remove the engine as it is an integral part of the vehicle. Similarly, battery is integral to the e2W. For consumers, mass adoption of electric 2W vehicles, with either fixed or removable batteries, critically depends on meeting diverse requirements of performance, safety, and durability. In EV technology, the battery replaces the engine as the heart of the vehicle, where the fuel is electricity.

Also, two-wheeler applications have varied requirements in terms of battery capacity and discharge rates, as they come in different form factors, which further makes standardization a challenge. Besides, battery accounts for 50% of the cost of the vehicle, and therefore benefits like 10-15% improvement in range and reduction of the charging time every year by the adoption of evolving battery technology, would be considerably constrained with common standardized battery in swapping. For the sake of safety and convenience to customers, OEMs cannot part away with the responsibility of proper functioning, safety & quality of battery packs, to third-party suppliers.

With swapping and standardization of EV batteries, the domestic industry will collectively fail to welcome innovations and will continue to work with old and outdated technology, while the world moves ahead. Allowing even a semi monopoly or tangential alliance between battery makers and vehicle makers will kill all vehicle makers, by forcing consolidation. It must be noted that battery technology is a dynamic field, progressing at a furious pace and there is a lot of room for growth.

The standards that are set today, in all likelihood, would be irrelevant tomorrow. Not only that, even other materials used in battery manufacturing, packaging, and electronics are subject to change with innovations. Much like in cell phones which came with removable batteries, now battery tech has made them integral to the phone. It shows the way forward for e2Ws. Adopting battery swapping standards from outside of the country would mean directly relying on imported technologies, defeating the very spirit of the ‘Atmanirbhar Bharat’ mission.

Additionally, Battery-as-a-Service (BaaS) concept necessitates higher levels of battery supply than what is actually required. This has an adverse ecological impact. Additional batteries required in the swapping ecosystem (outside of vehicles) will go up to the tune of 1.3x to 1.5x more batteries per e2W, which can go up to as high as 1.7x for peak time load or in sparser areas. This will lead to a substantial increase in the cost of running of the swapping infrastructure, which will get passed on to the customers, thereby increasing the Total Cost of Ownership. The billions of dollars of investments made or being made by all others will fail to yield any positive results. Standardized swappable batteries will limit the open market, contain purchase options, and affect innovation.

Therefore, apart from creating artificial monopolies, lowering best value discovery for customers, it will also increase incidences of battery-related accidents as the responsibility will be passed on from one stakeholder to the other and consumers have to pay the price.

It is imperative for the Government to encourage open markets and technology agnostic policies that will compel players to compete and innovate. Any attempt at standardizing battery technology at this stage will cripple innovation, creating an uncompetitive and outmoded industry. Even as I write, the 2W industry delivers close to 10% fuel efficiency with each upgrade of the ICE engine, as engine tech is not forcefully standardized.

Given such a scenario, the choice should be left to the customer rather than mandating, encouraging, or implementing a particular technology. The need here is to look at long-term solutions, and not short-term fixes. Battery swapping is a distraction and considering the impacts of climate change, it is not something that we can afford at this point.

*The author is a visiting faculty to various leading management institutes, teaches consumer behaviour and marketing management