Although it lacks sufficient electric vehicles, powerpacks, and capital, India has discovered a way to achieve mass electrification: swap batteries. The solution, which involves exchanging empty batteries for charged up ones, is still in its early stages in China, the world's largest EV market, where it is supported by strong government policy. It hasn't quite taken off elsewhere. However, for India, it could help the country leapfrog its efforts to reduce transportation emissions and increase its electric footprint.
Battery swapping stations are becoming more common in the Indian capital's dense neighbourhoods, where they can be found at local provision stores and small retail outlets. Meanwhile, the government has recently released a draught EV battery swapping policy in order to increase adoption and supply. It is also looking for new swapping and charging stations along India's high-emission highways.
For the most part, forward-thinking Indian startups have succeeded. Sheru, a technology platform, enables drivers of electric autorickshaws to swap batteries at retail stores or pay as they go. It collaborates with stakeholders from all stages of the energy storage value chain. Meanwhile, Battery Smart, which recently raised $25 million in a round led by Tiger Global, is working with domestic battery manufacturers to quickly build a swapping network. Sun Mobility is collaborating with Amazon India in the state of Maharashtra, which includes Mumbai, the financial capital, to install swapping stations at its warehouses.
For the time being, it's showing promise because the Indian vehicle market is dominated by two and three-wheelers, making charging and swapping out the smaller powerpacks easier. It significantly reduces users' commuting costs while increasing energy efficiency. These smaller vehicles also contribute significantly to greenhouse gas emissions. This approach could serve as a model for other emerging markets around the world struggling to meet their green commitments.
While the policy draught is a progressive step, it will require the support of state governments and large sums of money to be implemented in smaller, denser, and more polluted second and 3 Tier cities. It will also need to get more specific about the types of batteries used to maintain quality, insurance for driver and manufacturer safety, and better tax breaks for increasingly expensive powerpacks. Furthermore, as in China, state enterprises must become involved.
The longer-term challenge for India will be determining whether it can effectively use battery swapping for cars once mass adoption reaches the four-wheeler category. Even Tesla Inc. has experimented with battery swapping. However, Musk's company abandoned the project after establishing only one battery station. Other efforts have included a Renault-Nissan alliance that agreed to build 100,000 EVs to the specifications of Better Place, a now-defunct venture capital-backed firm that developed and sold battery charging and switching stations. The company launched its first station in Israel in 2011 but filed for bankruptcy two years later because it was too expensive and batteries were not widely available to power utilities.
Nio Inc. has had to make significant capital investments in China. The company had installed over 960 battery swapping stations in 197 cities across the country as of the first quarter. However, it is still losing money due to rising depreciation and expenses. Nio executives stated on the most recent earnings call that they expect swap station losses to increase for the time being. That raises a question and a warning for India when it eventually transitions to four-wheel vehicles with battery swapping. Battery swapping effectively buys New Delhi time to address broader decarbonization and clean energy generation. Furthermore, as batteries improve and the chemistries used change, charging times will decrease and range will increase.
Nonetheless, lithium-ion batteries are becoming scarce and expensive. Policymakers are already looking to shift away from the widely used but expensive lithium-ion batteries and toward those made from more abundantly available materials. For the time being, however, there is enough to supply two and three-wheelers. If policymakers can direct investment and capital to startups promoting swapping, rising awareness and utilisation will ensure consumers are ready for more electric vehicles in the future and hooked on the long-term cost savings. Without it, India may miss out on a golden opportunity to go electric and become cleaner.