Budget 2022: Not charging stations, EV battery swapping system coming; what it means

In an attempt to promote cleaner transport, Finance Minister Nirmala Sitharaman announced Centre’s plans to implement a battery swapping policy for electric vehicles (EV) during her Budget 2022 speech. Alongside battery swapping measures, India will also focus on formulating interoperability standards to both improve the adoption of EV as well as improving the industry’s efficiency. Presenting her fourth Union Budget, Sitharaman also highlighted the govt's plans to come up with special mobility zones for EV. Explaining the reason behind taking the battery-swapping route instead of establishing charging stations, she said “Considering the constraints for space in urban areas for setting up charging stations at scale, a battery-swapping policy will be brought out and interoperability standards will be formulated”.

This announcement showcases the momentum the EV industry has created in recent years. With technology advancements, electric vehicles are finally able to match the performance of its fuel-based counterparts minus the pollution risk. As such they offer a great alternative to decline the existing pollution problem of India. But the efficiency needs to be improved and the Finance Minister asserted the need for the private sector to come together and develop “sustainable and innovative business models for battery or energy as a service”.

Can battery-swapping be an alternative to charging stations?

India’s move to use battery-swapping instead of charging stations in order to refuel EVs is not a novel concept. It has been used by many countries and businesses in the past, including Elon Musk’s Tesla. The process basically includes changing the battery once it is empty and replacing it with a full battery instead of charging it again and reusing. But this idea is not widespread. At present, China is one of the few countries that still uses this method. Even Tesla had to stop battery-swapping altogether due to poor uptake.

Battery-swapping does have some upsides to it, however. It can be done within 10 minutes, as many YouTube videos showcase. Apart from speed, it is also more convenient as the driver is not reliant upon a charging station and can swap at any point the battery hits empty. But the downsides are also worth mentioning. First, this move will be a capital intensive task for businesses as the battery is the most expensive part of the EV. Further, building automated battery-swapping stations can cost multiple times that what it would to build charging stations. Only time will tell the hurdles that will be created from this decision and how all the stakeholders come together to find the best solution.