Draft Battery Swapping Policy

In News

• Recently, the NITI Aayog released Draft Battery Swapping Policy for Stakeholder Comments.

Draft Battery Swapping Policy

• Vision:
  • To catalyse the large-scale adoption of Electric Vehicle (EVs) by improving efficient and effective use of scarce resources (viz. public funds, land, and raw materials for advanced cell batteries) for the delivery of customer centric services. 
  • This Policy would support the vision by promoting the adoption of battery swapping technology.
• Objectives: 
  • Promote swapping of batteries with Advanced Chemistry Cell (ACC) batteries to decouple battery costs from the upfront costs of purchasing EVs, thereby driving EV adoption.
  • Offer flexibility to EV users by promoting the development of battery swapping as an alternative to charging facilities. 
  • Establish principles behind technical standards that would enable the interoperability of components within a battery swapping ecosystem, without hindering market-led innovation 
  • Leverage policy and regulatory levers to de-risk the battery swapping ecosystem, to unlock access to competitive financing.
  • Encourage partnerships among battery providers, battery OEMs and other relevant partners such as insurance/financing, thereby encouraging the formation of ecosystems capable of delivering integrated services to end users.
  • Promote better lifecycle management of batteries, including maximising the use of batteries during their usable lifetime, and end of life battery recycling.   
• Key Proposals:
  • The draft policy has suggested that the GST Council consider reducing the differential across the tax rates on Lithium-ion batteries and electric vehicle supply equipment. 
    • Currently, the tax rate on the former is 18 per cent, and 5 per cent on the latter.
  • Policy offers the same incentives available to electric vehicles that come pre-equipped with a fixed battery to electric vehicles with swappable batteries. 
    • The size of the incentive could be determined based on the kWh (kilowatt hour) rating of the battery and compatible EV,” the draft policy states.
  • The government will also specify a minimum contract duration for a contract to be signed between EV users and battery providers to ensure they continue to provide battery swapping services after receiving the subsidy.
  • The policy also requires state governments to ensure public battery charging stations are eligible for EV power connections with concessional tariffs. 
    • It also proposes to bring such stations under existing or future time-of-day (ToD) tariff regimes, so that the swappable batteries can be charged during off-peak periods when electricity tariffs are low. 
  • The policy also proposes to assign a unique identification number (UIN) to swappable batteries at the manufacturing stage to help track and monitor them. 
    • Similarly, a UIN number will be assigned to each battery swapping station. It also proposes to install battery swapping stations at several locations like retail fuel outlets, public parking areas, malls, kirana shops and general stores etc.

Significance

• Time, space, and cost efficiency, provided each swappable battery is actively used. 
• Battery Swapping provides a level playing field to innovative and sustainable business models such as ‘Battery As a Service’ (BaaS).
• Battery as a Service business models which will ensure lower upfront costs, minimal downtime, and lower space requirements. 
• The Policy addresses key technical, regulatory, institutional, and financing challenges that will help develop battery swapping ecosystems to unlock the large-scale adoption of battery swapping in India.

Battery Swapping

• It is an alternative which involves exchanging discharged batteries for charged ones. 
• Battery Swapping de-links the vehicle and fuel (Battery in this case) and hence reduces the upfront cost of the vehicles. 
• It is popularly used for smaller vehicles such as 2 and 3 wheelers which have smaller batteries that are easier to swap compared to other automotive segments wherein the same can be implemented mechanically.

Indian Initiatives in EV Technology

• The Faster Adoption and Manufacturing of Electric (Hybrid) Vehicles in India (FAME) I and II,
• The Production Linked Incentive (PLI) for National Programme on Advanced Cell (ACC) Battery Storage (NPACC), to boost indigenous battery manufacturing capacity. 
• State governments are developing complementary policies to promote Electric Vehicle adoption.
• E-mobility Revolution: India’s e-mobility revolution is led by the two-wheeler (2W) and three-wheeler (3W) vehicle segments. 
  • 2Ws account for 70-80% of all private vehicles, whereas 3Ws play a critical role for last mile connectivity in cities. 

Way Ahead

• The Government of India shall expedite the implementation of Battery Swapping policy and interoperability standards in order to improve efficiency in the EV Ecosystem.

Source: PIB