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Sustainability requires the mobility to shift from fossil fuel powered vehicles to electric (battery) powered vehicles. Electric vehicles, in turn, require a proper battery, which constitutes 30-40% of the cost of the vehicle, and the proper management of the EV battery.
When we talk of battery management, it has various aspects like its technology, safety, chargeability, cooling and overall economics. Apart from the battery catching fire, which has now been overcome, the battery cost is the major deterrent in diffusion and adoption of EVs. This concern, of late, has been addressed by a new business model for EV batteries known as “Battery as a Service (BaaS).”
The principle behind BaaS is to give a new treatment to EV batteries considering it to be a service rather than a product, thus, it ceases to be an integral part of the EV. In this model, the EV and battery are considered two distinct items for sale; while the vehicle is sold to the customer, the battery is leased or swapped.
With this, the customers avoid concerns about range, battery degradation and charging time as they can readily swap the discharged battery with a fully charged or a new battery.
The swapping model was used by Scooters India Limited in Kathmandu and Lucknow at the end of last century and the beginning of the new millennium. Vikram EVs were used as point-to-point shared taxis on a particular route specified by the transport department. The dealer had earmarked shops on the route where charged batteries were kept.
The driver could swap the battery as soon as he saw the charge level of the EV battery nearing 20%. Such swapping of the battery took hardly 2 minutes. The concept of BaaS was not propagated at that time, however, such a shift to “service economy,” suited both the consumers, who prefer getting services rather than owning assets, and manufacturers whose capital requirements go down and a new business is created.
Battery as a Service (BaaS) decouples the battery from the vehicle creating a new business model for sale of EVs. Thus, consumers get an option of buying the vehicle and leasing the battery separately. The providers of BaaS have two models; first to rent out batteries to EV owners and the second to establish networks of battery-swapping stations. Using this business model, JSW MG Motor has launched its EV – Comet Mini – at an unbelievable entry price of Rs 4.99 lakh.
This low cost of acquisition by the customers has been made possible by its battery-as-a-service (BaaS) program, which allows the customers to pay based on battery usage which is accounted for based on kilometres driven. The present battery rental cost is Rs. 2.5 per kilometre, the charging cost, which is approximately Rs.1 per/km needs to be borne by the customer.
This battery leasing model becomes similar to paying for fuel in internal combustion engine (ICE) powered vehicles. The battery swapping model is more popular in case of 2Wheelers and 3Wheelers, especially e-rickshaws. Rapido in partnership with IndoFast Energy has decided to bring to market 10,000 Piaggio’s battery swappable electric 3Wheelers, E-City Max.
A number of start-ups have come in this space; Battery Smart, Lithium Power, SMV Green Solutions, Persist Energy, Mechalae Energy and GridXenergy are some of the examples. Battery Smart, which is an integrated battery-as-a-service network, is setting up the largest network of battery swapping stations for electric vehicles.
Mechlae Energy, too, is in the business of EV battery swapping globally; it promotes Energy as a Service (EaaS) which is user-friendly technology. The BaaS model is becoming popular as it promotes price transparency which helps consumers in assessing the true cost of EV ownership and operations.
At home or office, the user has sufficient time for charging but on the road charging time has been a concern for EV owners, even with a fast charging facility which may take around 30 minutes. Long-distance travel with EV, therefore, causes great inconvenience and waste of time.
BaaS model of EV operations, especially battery-swapping model, addresses this issue as owners/drivers can replace depleted batteries with fully charged ones within 2 minutes making EV as convenient as petrol/diesel powered vehicle; in fact, more convenient than CNG powered vehicle that requires longer time for gas filling and the passengers have to get out of the vehicle while gas filling. Battery swapping also offers advantages for fleet operators, such as taxi companies or delivery services, where vehicle downtime directly affects productivity and profitability.
With BaaS, fleet operators can minimize downtime by swapping batteries quickly, keeping vehicles on the road longer which enhances operational efficiency. The BaaS model drives out the range anxiety, i.e. the fear of the EV running out of battery before one can reach a charging station. The BaaS mode drives out the worry of the battery getting discharged as the battery can be swapped anywhere, anytime on the way.
It is a known fact that EV batteries degrade over time; their capacity and performance reduces with the use. The BaaS model overcomes this problem by proper battery lifecycle management as leasing of batteries, instead of owning them, the EV owner avoids the risks of a low functioning battery caused by its aging. The BaaS providers, in their own interest, constantly monitor and manage battery performance.
This ensures customers to always have the battery in optimal condition, if not the BaaS providers replace the battery at their cost. The BaaS model allows the old battery to be recycled or put to secondary uses. Old batteries readily find use in energy storage systems for renewable energy, promoting sustainability.
As the BaaS model gets popular, the battery standardization takes place in the market promoting interoperability, thus reducing inventory cost for BaaS providers. Manufacturers of EV are working on standardized battery designs which are promoted by various countries.
Everyone, the EV manufacturers, battery manufacturers, BaaS providers and the consumers get the benefit of standardization. The standardization makes the battery interoperable making it a more unified and efficient EV ecosystem. EV owners of different vehicle brands, thus, can swap batteries more conveniently.
No doubt, the BaaS model will help in promoting EV sales but it has a few challenges in its widespread adoption. These challenges are infrastructure investment, different battery types & configurations, battery ownership & liability and wider consumer acceptance.
The dense network of battery swapping stations that is required for the success of the BaaS model requires huge investment and skilled manpower for battery maintenance. Even if finance and skilled manpower is made available, different EV manufacturers have their own battery design and configuration making it difficult for BaaS providers to satisfy all manufacturers and consumers.
The ownership of the battery is that of the service provider in the BaaS model but dispute arises when there is battery failure or degradation. The quality of swapped batteries, too, remains a concern for the consumer. Further, consumers are accustomed to owning the complete vehicle including the battery; some customers feel loss of status with leased batteries.
Despite these challenges, the potential for the BaaS model is huge, especially for fleet operators. Policies including tax breaks and incentives should be put in place so that large number of BaaS providers come in the market that will boost the electric vehicle industry, thus, helping the nation in the transition to green transportation.
(The author is Former CMD, Scooters India Ltd, and Distinguished Professor, FSM; Views are personal)
