India Considers Battery Swapping for Electric Cars Rather Than Charging Stations

(Bloomberg) -- India is considering battery swapping for electric cars rather than charging stations as it seeks to spur adoption of cleaner transport in its notoriously polluted and crowded cities.

“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,” Finance Minister Nirmala Sitharaman said in her budget speech Tuesday, without going into detail.

The private sector will be encouraged to develop “sustainable and innovative business models for battery or energy as a service,” she said, improving the overall efficiency of the EV ecosystem.

Swapping an expended battery out of an electric car and replacing it with a fresh one, as opposed to charging the existing battery back up again, isn't a concept that's gained widespread acceptance outside of China. It was tried by EV pioneer Elon Musk last decade but ultimately abandoned due to poor uptake.

Still, there are some big advantages, namely speed and convenience. Videos on YouTube show battery swaps being completed in less than 10 minutes, including maneuvering the car into the changeover bay. Downsides include high startup costs -- building an automated swap station can cost 10 times as much as setting up a fast-charging station -- and batteries are the most expensive part of an EV, making it a capital-intensive business.

Read more: Battery Swapping for EVs Is Big in China. Here's How It Works

But India, which has fallen behind other major markets such as China and Europe in the shift to clean vehicles, needs to play catch up. EVs sales in the nation account for just 1% of the total versus as high as 30% in some cities in China. The sparse charging network and high prices -- in a country where people on average earn less than $2,000 a year -- have impeded wider adoption of EVs in Asia's third-largest economy.

Sitharaman's announcement buoyed shares of battery makers, with Exide Industries Ltd. rising as much as 2.9% and Amara Raja Batteries Ltd. climbing as much as 2.4%.

“A battery swapping policy could be a big booster for all the startups already working in this space,” Rajeev Singh, partner and automotive lead at Deloitte India, said. As well as helping to spur EV adoption, it could “also help drive electrification of fleets, especially for last-mile connectivity,” he said.

Read more: Amazon, Flipkart Leading India EV Transition Run Into Roadblocks

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