Electric cars and Budget 2022: Policy on battery swapping and interoperability standards to be developed.

As part of the Union Budget 2022 address, Finance Minister Nirmala Sitharaman revealed that India will soon implement a battery-swapping legislation for Electric Vehicles (EVs), as well as develop industry interoperability standards. In her speech, Sitharaman also mentioned that India will designate special mobility zones with 'zero fossil fuel policy' , implying the impending establishment of zero-emission zones (ZEZs) in key urban locations across the country, similar to those already in place in the United Kingdom, China, France, Norway, and the Netherlands, to name a few.

"Given the scarcity of space in metropolitan areas for establishing large-scale charging stations, a battery swapping strategy and interoperability standards will be developed. The private sector will be encouraged to create long-term, creative business models for Battery or Energy as a Service. This would increase the efficiency of the EV ecosystem " ,Sitharaman stated this in her Budget 2022 address.

The introduction of a battery-swapping legislation will have the greatest influence on the two-wheeler and three-wheeler sectors, since battery swapping for bigger EVs such as electric cars, buses, and trucks is a far more difficult and expensive solution.

Because the batteries required for electric two- and three-wheelers are very tiny, many batteries can be stored at switching stations, and the change operation itself takes only a few minutes, removing the stress of extended charging times from the EV ownership experience.

Furthermore, because the battery swap provider owns the battery, the purchase price of an EV is greatly reduced, as the battery accounts for the majority of the EV's costs, with users having to pay for the usage of the battery.

Interoperability, on the other hand, will assure the standardization of swappable batteries, reducing complications and expanding access to all EV owners.

At the moment, significant brands in the two-wheeler industry, such as Ather Energy and Ola Electric, do not have modular batteries and have instead chosen the permanent charging infrastructure path. Manufacturers like Hero Electric, Okinawa Auto-tech, and Revolt Motors manufacture two-wheelers with detachable batteries that can be recharged anywhere and could easily transition to a battery-swapping system. Hero MotoCorp, on the other hand, has agreed to collaborate with Taiwan's Gogoro in 2021 to establish a battery swap network across the country for its future electric two-wheelers.

Sun Mobility, Charge Up, RACE Energy, and Battery Pool are among the independent participants in the battery swapping market, and larger names have lately entered the game. Jio-BP had worked with delivery service company Swiggy to encourage electrification of the latter's delivery fleet by building a battery swap network, while Reliance BP Mobility had teamed with the Mahindra Group to study battery swapping options late in 2021.

Rajeev Singh, Partner and Automotive Leader at Deloitte India, commented on the development Battery swapping policies, including interoperability, may be a huge boon to all of the start-ups now operating in this market. It might also assist push fleet electrification, particularly for last-mile connection for both people and commodities.

However, the Budget 2022-23 failed to meet key EV industry expectations, such as adjustments to the Goods and Services Tax (GST) system, a drop in import tariff on lithium-ion cells, and the inclusion of electric cars in priority sector loans (PSL).

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