Going Electric Doesn’t Have To Be So Complicated

(Bloomberg Opinion) -- It may not have enough electric vehicles, powerpacks or the capital, but India has found a way towards mass electrification: swap batteries. 

The solution, where empty batteries can be exchanged for charged-up ones, is still in nascent stages in China, the world's largest EV market, where it is anchored in strong government policy. Elsewhere, it hasn't quite taken off. But for India, it could help leap-frog the nation's bid to reduce transport emissions and boost its electric footprint.

Across the Indian capital's dense localities, battery swapping stations are becoming a frequent site at local provision stores and small retail outlets. Meanwhile, the government has pushed out an EV battery swapping policy draft in recent months to bolster adoption and supply. It's also scouting sites along India's emission-heavy highways for new stations for swapping and charging.

For the most part, ambitious Indian startups have pushed their way forward. Sheru, a technology platform, allows electric autorickshaw drivers to swap batteries at retail stores or pay as they use them. It's working with stakeholders across the energy storage value chain. Meanwhile, Battery Smart, which just raised $25 million in a funding round led by Tiger Global, is focused on quickly building a swapping network and is working with domestic battery manufacturers. Sun Mobility is partnering with Amazon India in the state of Maharashtra — home to the financial capital, Mumbai — to put swapping stations at its warehouses.

For now, it's showing promise because the Indian vehicle market is dominated by two and three wheelers, making it simpler to charge and swap out the smaller powerpacks. It brings down the costs of commute sharply for users while increasing energy efficiency. These smaller vehicles are also responsible for a significant share of the emissions. This way could prove to be a model for other emerging markets across the world struggling to meet their green promises. 

The policy draft, while a progressive step, will need to be backed by state governments and big bucks to be adopted in smaller, denser and more polluted second and third tier cities. It'll also need to get meatier on details on the types of batteries to maintain quality, insurance for the safety of drivers and manufacturers, and providing better tax incentives for increasingly pricey powerpacks. In addition, state enterprises need to get involved, as they have in China.

The longer-term challenge for India will be whether it can use battery swapping for cars effectively when mass adoption reaches the four wheeler category.

Even the likes of Tesla Inc. have tried battery swapping. But Musk's company abandoned the project after setting up just one battery station. Other attempts include a 

In China, Nio Inc. has had to make significant capital investments. As of the first quarter, the firm had installed over 960 battery swapping stations in 197 cities across the country . But it's still running operating losses because of the rising depreciation and expenses. Nio expects losses associated with swap stations to increase for now, executives noted on the latest earnings call.

That stands as a question — and a warning — for India when it eventually transitions battery swapping to four-wheel vehicles. Battery swapping is effectively buying New Delhi time to get its act together on broader decarbonization and clean power generation. In addition, as batteries get better or the variety of chemistries in use change, charging times will fall and range will increase. Over time, this could slow growth for swapping. 

Still, lithium ion batteries are proving to be in short supply, and expensive. Policymakers are already looking to move on from the widespread but costly lithium ion variety, towards those that are made from more abundantly available materials.  For now though, there is enough to supply two and three-wheelers.

If policymakers can drive investment and capital towards the startups pushing through swapping, the rising awareness and utilization will ensure consumers are prepped for more electric vehicles in the future and hooked to the longer-term cost efficiencies. Without that, India could lose a prime opportunity to go electric and get cleaner.More From Bloomberg Opinion:

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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia. Previously, she was a reporter for the Wall Street Journal.

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