In today’s Finshots, we talk about battery swapping and all the buzz around it

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The Story

Imagine it’s a Saturday morning and you get called for an emergency meeting at the office. You run to your electric scooter and power it on. It stays silent and you see a warning sign. Oops, you forgot to charge your battery overnight and there’s not enough juice left to get to your office.

You curse yourself and wonder, “What if I could’ve simply swapped out the dead battery and got a fully-charged one from somewhere?”

Well, fret not. Battery swapping could soon be a pan-India reality.

You see, India’s putting the final touches on a battery-swapping policy. And Foxconn, the largest electronics manufacturer in the world, is all ready set up the necessary infrastructure needed to make this dream a reality. The rumour is that it will partner with Gogoro, a Taiwanese company, known globally for its work in the battery-swapping domain.

But wait…what’s this battery-swapping thing we’re talking about?

Okay, let’s start from the top. And that means understanding the electric vehicle ecosystem itself.

See, the government wants EVs to be the future of transport in India. This will cut down our dependence on imported oil and it could also be environmentally friendly.

So, they’ve doled out incentives to make it cheaper for everyone to buy an EV. And it has worked. Sales of EVs tripled in FY22 over the previous year. And the hope is that by 2030, the EV market will grow by nearly 50% every year to hit the 17 million unit mark.

But there are multiple speed bumps along the way before we get to a point where we see EV adoption soar.

For starters, there’s the cost. Sure, incentives have made EVs cheaper but they still cost a pretty penny. And you could attribute most of it to the batteries. They’re the most expensive part in electric vehicles and the raw material needed to whip these up doesn’t come cheap. Batteries alone could make up for nearly 25–35% of the cost of your brand-new vehicle and you could just look at the famous Tata Nexon EV as an example.  The battery pack costs over ₹5 lakhs!

Then there’s perennial range anxiety — the question of “what if I run out of charge when I’m in the middle of nowhere?” On a full charge, you’ll probably get around 300 kilometres while driving an electric car. Scooters can only offer about 100 kilometres. And don’t forget that we still don’t have many EV charging stations peppered across the country — only 1742 to be precise. Especially when you consider that we have over 81,000 pumps that can top up petrol and diesel.

Now if you manage to get to a charging station, you can’t fuel up as you would do at a traditional fuel pump. Be prepared to wait for over an hour to get the battery’s juices flowing again. And imagine the horror of seeing another car queuing up at the station already! Yikes!

So what’s the answer to all these woes?

Battery swapping!

Sort of like renting a battery.

You buy a vehicle, but you don’t pay for the battery up front. Instead, you take a subscription that allows you to spread the cost over a longer time frame. And each time you need to swap out your discharged battery for a new one, just visit the station and you’re good to go. It’s Battery-as-a-Service or BaaS. It saves time. It’s cost effective and it could supercharge EV adoption.

However, there are issues.

At the moment, this battery-swapping business is a walled garden. Take Bounce Infinity — an electric scooter with a swappable battery. It’s great because you can swap it out at any Bounce station. What’s not great is that you have to use batteries supplied by the company. You’re locked into the Bounce ecosystem.

Somebody might look at this and say — “Okay! But what if the government lays down a certain standard so that these batteries become interoperable?”

In fact, the battery swapping policy we talked about earlier envisions something very similar. It intends to standardize batteries and charging stations to a certain extent. But this will come at a cost. The cost of innovation.

If EV manufacturers are forced to devise batteries with a certain specification, then it could curb innovative battery designs.

Why do you think a scooter from Ola Electric or Ather Energy offers different riding ranges? Battery innovation, of course. And if you look at Tesla, you’ll see how decades of innovation have given them an edge over the others. They’ve even tied in their software to make the batteries more efficient.

So yeah, ultimately, there will be a lot riding on the battery-swapping policy. Will the government offer enough leeway for innovation? Or will it just focus on interoperability for now?

We will have to wait and see.

Until then…

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