Emerging Role of Battery as a Service in Accelerating EV Adoption

The increase in uptake of electric vehicles (EVs) globally in various vehicle segments marks a significant shift in urban transportation, especially in a rapidly developing country like India. The country has witnessed growth of e-mobility adoption across multiple segments (2W, 3W, 4W, light/medium goods vehicle (LGV/MGV), mainly driven by demand side incentives leading to lower price gap between Internal Combustion Engine (ICE) and EV vehicles. 

Various programs and schemes such as PM E-Drive, Production Linked Incentive (PLI) schemes for manufacturing of advanced chemistry cells and auto component Industry have been instrumental to accelerate the adoption of EVs in India.

With advanced technologies in place, the range of vehicles is getting better. Despite reduced operational costs, the primary barrier to widespread EV adoption in 4W and LGV category remains the high initial investment required for purchasing EVs compared to traditional ICE vehicles. While demand side incentives have reduced the price gap, many consumers still find buying e-4W and e-LGVs financially challenging. Recognizing this challenge, major original equipment manufacturers (OEMs) are introducing Battery-as-a-Service (BaaS) option, which allow users to pay for battery usage separately from the vehicle purchase, thereby reducing the initial financial burden on consumers while providing OEMs with a consistent revenue stream.

Battery rental model 

Under the BaaS model, consumers pay a monthly or annual subscription fee for battery usage, instead of purchasing the battery outright. This arrangement reduces owner’s concerns about battery maintenance, repair costs, and replacement. By decoupling the battery cost from the vehicle price, EV ownership becomes more affordable and appealing to a larger customer base. For consumers with high monthly run, BaaS model may reap maximum benefits in terms of cost savings vis-à-vis ICE counterparts. However, consumers may still have apprehensions regarding the potential subscription fee increase and their emotional attachment to the vehicle. Addressing these concerns will be crucial for strengthening trust and encouraging widespread adoption of BaaS model.

In 2W category, Ather Energy had launched a battery subscription service for its vehicles. However, feedback indicated that some users prefer complete ownership due to emotional connect with their vehicles. In 3W category, Piaggio's Ape Electric offers a battery subscription model with a coverage of 120,000 kilometers or eight years for cargo vehicles, and 150,000 kilometers or the same duration for passenger vehicles. After this threshold, the monthly rent significantly decreases, which further enhances the economic feasibility of EVs for consumers.

In 4W category, JSW MG Motors India has taken significant steps in this direction by introducing a battery subscription model for its recently launched Windsor EV. Customers can opt for a fixed monthly fee, allowing them to focus on the vehicle’s performance without worrying about battery maintenance costs. 

Global scenario

Globally, the BaaS model has been implemented in countries like Singapore and China, where battery swapping stations provide easy access to charged batteries, significantly reducing downtime for users. In Singapore, companies have standardized battery designs, enabling easy swaps that save time and improve efficiency. This approach not only accelerates EV adoption but also encourages the development of a comprehensive battery ecosystem.

Numerous companies in China have established battery-swapping and battery rental ecosystem that cater to a diverse range of vehicles. These initiatives highlight the importance of collaboration between private companies and government entities to build a reliable and accessible battery ecosystem.

• Solid electrolyte: Unlike liquid electrolytes, which can leak or combust, solid electrolytes are inherently safer.
• Energy density: Solid-state batteries promise significantly higher energy density, meaning EVs could travel further on a single charge.
• Faster charging: The potential for faster charging times is one of the most exciting benefits of SSBs.

The future of BaaS in india

While BaaS has the oppportunity to enhance the e-mobility ecosystem in India, following considerations related to its implementation will be critical. 

1 Opportunity for Taxis/Fleet Operators and LGVs: For BaaS to be implemented successfully in India, it is essential to understand the target market with maximum benefit. Commercial vehicles, particularly taxis and fleet operators can benefit significantly from battery rental models, owing to their higher run. Similarly, large organizations that lease vehicles to employees can adopt BaaS models.

2 Awareness related to BaaS: Increasing awareness related to the economic benefits of BaaS model is essential as many users still emotional attachments to vehicle ownership. 

3 Stabilizing prices for subscription models: There is a need to relook at the subscription fees and make it more affordable for end-user. Encouraging long-term contracts for subscription models with specified increase per year shall be worked out to reduce the fear of increasing subscription rate in future. 

The BaaS model has the potential to revolutionize the automobile industry in India by addressing key challenges such as affordability and accessibility. By decoupling the battery cost from the vehicle price, this model not only lowers the upfront financial burden on consumers but also stimulates demand by making EVs more accessible. Currently, the responsibility of providing battery is upto OEMs. In future, OEMs could focus only on vehicle manufacture and innovation without the burdening itself with battery management, which can be done by another specialized agency. The battery provider may become one of the subsidiaries of the OEM. 

About Piyush Saxena: Piyush Saxena is a Research Associate at the Transport and Urban Governance Division at TERI, where he specializes in projects/studies related to heavy duty vehicles, freight decarbonization, electric vehicles, fuel efficiency norms and carbon credits. With over two years of experience at TERI, he holds a master’s degree in Urban Development Management from the TERI School of Advanced Studies and a bachelor’s degree in Civil Engineering from Maharshi Dayanand University.