In a bid to promote electric mobility in India, the Indian government now permits sales of EVs without a battery. This step has been taken to reduce the upfront cost of EVs, since the most expensive component in an electric vehicle is the battery pack (which accounts for 40% cost of the total cost). Read The Article
PSR Analysis: We anticipate that electric 2 and 3-wheelers will be the first segments to benefit from this move. This move by the central government will support the FAME-II program and the Delhi government’s latest EV policy, aiming for 5 lakh registrations of EVs in 5 years.
As the upfront cost of the electrical 2 and 3 wheelers will be lower than their ICE counterparts when registered without battery, it will be more attractive to consumers. However, implementation will be critical for the success of this move. As lack of infrastructure was one of the key reasons for customers not opting for EVs.
This move also will significantly change the current business model. Along with the traditional revenue stream of selling of batteries, now OEMs and energy providers will introduce the battery subscription/ rental/ leasing model.
Besides, OEMs will partner with private players to strengthen the EV infrastructure. This will uplift the entire EV ecosystem and add new stakeholders like battery swapping, rental and leasing stations, compact units for battery storage and charging, etc.
However, it should be noted that batteries are closely integrated with other systems of the vehicle. So, frequent swapping of batteries might lead to safety concerns. Hence a lot of analysis needs to be done by all the stakeholders of the ecosystem before its commercialization. PSR
Aditya Kondejkar is Research Analyst – South Asia Operations for Power Systems Research
