A significant announcement in this year’s budget was about introducing a battery swapping policy and creating interoperability standards to boost India’s electric vehicle (EV) ecosystem. Then in April 2022, NITI Aayog published a draft battery-swapping policy. Such signs of support for the development of the battery swapping ecosystem are laudable. So far, the national level has mainly focused on building a comprehensive network of EV charging stations, with limited focus on developing battery-swapping infrastructure. The emergence and successful operation of battery swapping solutions provides an opportunity to facilitate an environment that is solution agnostic, provides a level playing field for a variety of potential solutions to compete in the market, and provides a range of options for EV users. Ensures portfolio.
Key requirements of the policy framework: The final policy of the country, which will include inputs from stakeholder consultations, should consider five key aspects. First, given the beginning of our battery-swapping market, policy measures should facilitate the phased development of a swapping ecosystem that is linked to the EV market maturity stage. Second, the policy should adopt a targeted approach, identifying priority vehicle segments and enabling rapid adoption of swapping solutions in areas where battery swapping may have the most value. Third, policy must find a balance between standardization and encouraging innovation. Fourth, the policy should provide equal growth opportunities for multiple technologies, solutions and business models and let the market choose the winner. Lastly, the policy should provide flexibility to various stakeholders, including state governments, to develop battery-swapping ecosystem development strategies that best suit their needs.
Standardization and Interoperability: The approach to standardization must first identify the aspects that may or may not be standardized. The main advantage of standardization (and the resulting interoperability) is the ability to move the battery swap from an existing business-to-business (B2B) effort to a business-to-consumer (B2C) experience. This translates into ease of use and accessibility and many options for the EV user. However, standardization is a lengthy process that requires consensus among many battery and vehicle manufacturers.
Additionally, setting waterproofing requirements through standardization can spur innovation. Therefore, standardization must follow a measured approach, in which, to begin with, some fundamental aspects of battery swapping can be standardized. For example, in Delhi’s recent tender for charging and battery-swapping stations, vendors are required to test their solutions for basic parameters such as verification of performance and safety functions and environmental tests. Even in China, swapping standards are related to security. Institutional mechanisms should be established for building consensus on battery pack dimensions, connector standards, labeling of batteries, setting minimum performance standards and communication with the grid.
Design of incentives: The draft policy recommends incentives for swappable vehicle models. For administrative ease, the policy should encourage vehicle and swapping operators to apply as a consortium for incentives in which incentives are transferred to the principal member. The impact of revenue-sharing recommendations such as The 1/kWh created by the Ministry of Power in its recent guidelines on charging infrastructure needs to be studied further in the context of battery swapping. This is because fixed charging only uses energy when charging vehicles, whereas battery-swapping stations require them to have fully charged batteries in anticipation of demand.
Regulatory Changes: The draft policy recommends reducing the Goods and Services Tax (GST) rate for lithium-ion batteries from 18% to 5%. Since this measure falls under the purview of the GST Council, the policy may propose an alternative where funds from state EV funds and/or FAME-II corpus are used to refund this GST differential to battery-swapping operators. goes. The policy should also consider the inclusion of battery-swapping stations in the planning/design phase of public and semi-public infrastructure assets in urban areas, including city development plans.
Additionally, since battery charging and battery-swapping stations may be located separately, policy should encourage states to create rules for the safe transportation of batteries and to provide guidelines for making these rules. Lastly, the draft policy recommends setting up of a single window clearance system that includes issuance of business licenses. However, the final policy should provide clarity on the status of battery swapping as an unlicensed activity. If a business license is indeed required, the policy should identify the issuing authority and the procedure for issuing it.
In India, battery swapping may develop as a suitable use case for two- and three-wheelers, which comprise more than 80% of all automobiles in the country. Therefore, an efficient battery-swapping policy will be crucial for us to accelerate India’s e-mobility transition. Also, the policy we adopt should be mindful of the beginning of the battery-swapping ecosystem in India and therefore avoid limiting various aspects of the swapping value chain to undisputed parameters.
Akshima Ghate and Shijoy Varughi, respectively, Managing Director and Advisor, RMI India. Huh
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