Draft Battery Swapping Policy From Niti Aayog- Key Points

The much awaited Draft Battery Swapping Policy is finally out. Released by the Niti Aayog, the new policy is widely expected to give a push to the EV transition, by helping add incentives for manufacturers, lower costs for consumers, and setting standards for interoperable batteries. A battery swapping policy is seen by many experts as a game changer, simply because batteries make up such a high proportion of EV costs, ranging from 35% to 45% in models. Removing these out of the equation, with an option to possibly ‘rent’ them, could truly lower entry costs for potential buyers. Of course, as recent incidents of fires involving lithium ion batteries have shown, the policy will have to take a nuanced view of any effort to enforce standardisation, so that it does not compromise safety standards.

Taking a top down approach, the draft policy focuses on larger cities first, proposing that all metropolitan cities with a population of more than 40 lakh be prioritised for the development of battery swapping networks under the first phase, which is within 1-2 years of the draft policy getting finalised. Other major cities such as state capitals with a population greater than 5 lakh will be covered under the second phase. That seems to broadly reflect the adoption of EV’s in any case, besides supporting infrastructure for now. The last date for comments on the draft policy is June 5, 2022.

Key Highlights

GST Rationalisation

AT the outset, the big proposal is in the area of GST. The draft policy has suggested reducing the differential across the tax rates on Lithium-ion batteries and electric vehicle supply equipment. Currently, batteries attract a rate of 18 per cent, while EV supplies are taxed at just 5%.

Even as GST decisions will be taken by the GST council comprising state finance ministers too, for states, the policy proposes concessional power tariffs for EV charging stations. It also suggests bringing 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. State Transport Departments and authorities should ensure easy registration processes for vehicles sold without batteries or for vehicles with battery swapping functionality, adds the fraft policy document. It suggests keeping the responsibility of planning and land allocation for battery swapping stations to municipal authorities everywhere.

Subsidies

The policy urges no discrimination between vehicles with swappable batteries and those without, when it comes to incentives. Incentives are sought to be maintained on a metric such as kW capacity of the batteries. Besides that, the policy continues to make the case for supporting only Advanced Cell Chemistries (read- batteries beyond the lead acid generation, mostly Lithium Ion for now)

“An appropriate multiplier may be applied to the subsidy allocated to battery providers to account for the float battery requirements for battery swapping stations in different battery swapping ecosystems,” the draft policy said. 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.

Unique Identification Number

To track battery source , the draft policy proposes  assigning a unique identification number (UIN) to swappable batteries at the manufacturing stage to help track and monitor them. All batteries considered must have a self certified BMS system.

Business Models

Niti Aayog acknowledges the role of battery-as-a-service (BaaS) models to push swapping in the market, “Given the nascency of battery swapping, interoperability between EV batteries and other components within a battery swapping ecosystem is adequate for eligibility under the policy, as long as all components within the ecosystem adhere to the technical and performance standards defined for BaaS and battery swapping services,” the draft policy says.

Cooperation Between Manufacturers

The policy proposes that major battery providers be encouraged to sign data-sharing agreements to provide information on battery health and performance to ensure better quality control and prevent mishaps.

As of now, two-wheel EV maker Bounce has launched an electric scooter with a swappable battery. Under the company’s business model, customers can pay to swap their battery at one of their stations, whenever it runs out of juice.

On safety it says that “Batteries shall be tested and certified as per AIS 156 (2020) and AIS 038 Rev 2 (2020) standards for safety of traction battery packs, as well as additional tests that may be prescribed for swappable batteries which are subject to multiple coupling/decoupling processes at the connectors,” .

The draft policy also proposes to make  swappable batteries equipped with advanced features like IoT-based battery monitoring systems, remote monitoring and immobilisation capabilities.