EV Battery Swapping Policy To Be Redrafted As Industry Raises Interoperability Concerns

The Indian government’s draft battery swapping policy for electric vehicles (EVs), which was introduced last year, is being redrafted, as the industry has raised concerns over the proposed mandates for interoperability of batteries, multiple sources aware of the development told Inc42.

Government think-tank NITI Aayog introduced the draft EV battery swapping policy in April last year. The policy was aimed to strengthen the battery-swapping ecosystem to improve efficiency of electric two- and three-wheelers. 

Along with proposals such as introduction of a subsidy scheme for battery providers and a reduction in the GST tax slab for batteries, the draft policy also focussed on bringing standardisation in the battery space and promoting their interoperability.

“In a closed-door meeting held in January this year, which was chaired by union minister Piyush Goyal, it was decided to scrap the draft policy on the back of industry players’ demand, given the bill assumed there would be standardisation of batteries so that they become interoperable. The proposal was too far-fetched for the sector. It has not happened anywhere in the world,” said a source with knowledge of the matter, requesting anonymity.

The person also said that the main challenge in this area is that the battery swapping technology is in its nascent stage and is set to evolve in the coming years, which makes it impossible to adopt a battery standardisation model at this point.

The development was first reported by Mint.

As of now, there is no clarity on how much time will the government take to introduce a new draft bill around EV battery swapping.

Proposal & Hurdles

Interoperability can be defined as the compatibility of fixed or swappable EV batteries with different EV models.

The policy noted that Battery as a Service (BaaS) models, particularly for battery swapping services, will need to ensure interoperability between EVs and batteries for the successful mainstreaming of battery swapping as an alternative.

After the draft policy was introduced last year, several EV industry experts told Inc42 that it had several hurdles to cross, with the main one being interoperability.

The founder and CEO of Altigreen Propulsion Lab, Amitabh Saran, had then said that lithium-ion batteries are extremely sensitive and, in swapping, when different batteries go into different vehicles, it’s difficult to maintain the same consistency in terms of quality of the battery pack, and the range expected from it, among other things. This is because the cell behaviour varies under different temperatures, charging patterns, and usage.

Speaking on the interoperability issue, Pulkit Khurana, the cofounder of Battery Smart said, currently, batteries and connectors are evolving and so is the chemistry of the batteries. So, it is extremely difficult to introduce standardisation in the battery swapping process.

Battery Smart is currently one of the leading battery-swapping startups in India. It competes with the likes of Sun Mobility, RACEnergy, Chargeup, and Esmito, among others.

Khurana believes that the sector will flourish even without a broader policy, with the rising adoption of two- and three-wheeler EVs. However, he said that the industry is more in need of certain operating standards related to the quality of batteries used and their safety, which the government has largely addressed, and there is a need for more incentivisation through steps like GST rationalisation.

It is pertinent to note that the GST on batteries is being levied at 18%, and the same on EVs has been reduced to 5%. In the draft battery swapping policy, the Centre wanted to address this gap as well.

“The GST Council, the decision-making body on GST provisions, may consider reducing the differential across the two tax rates. The council will take an appropriate decision in this regard at a suitable time,” reads a section of the draft policy.

While the EV industry was expecting to see rationalisation of the GST rate during the Union Budget 2023, the Centre made no such announcement.

Meanwhile, in India, where EV sales are led by two- and three-wheelers, battery swapping is gradually receiving more demand, particularly in the logistics and last-mile delivery use cases. 

“A lot of such vehicles are being used to earn a source of income – be it electric rickshaws, buses, bike taxis, or two-wheelers for home deliveries. Typically, 5-10 personal vehicles are equivalent to one commercial vehicle in terms of the kilometres they travel, hence, the utilisation is also high. That is making them shift and opt for battery swapping over fast charging,” said the CEO and cofounder of RACEnergy, Arun Sreyas. He added that this infrastructure can truly boost the adoption EVs in the country.