Delinking The Battery: Why The New EV Policy Is A Welcome Step

The past few years have seen accelerated development in the electric vehicle (EV) space. Several policy initiatives by the government and the growing EV innovation ecosystem is building momentum and India is poised to leapfrog growth in electric mobility. In keeping with policy support, the Indian Government recently announced an important decision that could make significant headways in EV adoption. 

According to a statement by the Ministry of Road Transport and Highways, it is now possible to sell and register electric vehicles without batteries and even without specifying the make/type or any other details of the battery. The battery could be provided separately by the OEM or the energy service provider. However, the prototype of the electric vehicle and the battery is required to be type approved by the Test Agencies specified under Rule 126 of the Central Motor Vehicles Rules, 1989.

How does this announcement impact EV adoption?

One of the major challenges in EV adoption is their prohibitive cost and limited range as compared to the Internal Combustion Engine (ICE) vehicles. The reason for this is the battery. A key EV component, the battery unit determines the range and also contributes to 30-40% of the total cost of the vehicle. 

The decision by the Government to allow EVs to be sold without the battery is a welcome step that will boost EV adoption. It will significantly bring down the upfront cost of the vehicle, even bringing it down to lower than ICE 2 and 3-wheelers. The customer will also have a wider choice in choosing the battery based on their preferences of high performance, or budget, or range. 

Opening doors to new thinking

There has been some criticism for the decision; but think of it this way - an EV being sold without a battery is analogous to ICE vehicles being sold currently without fuel. Traditionally vehicle manufacturers simply mention the fuel grade to be used. Buying the correct fuel grade from a reputed petrol pump is the responsibility of the vehicle owner. And the liability to sell the correct fuel type and quality as per standard is of petroleum companies. In this case the fuel is the battery and the energy providers are charging stations, OEMs and energy providers. 

This approach can have a significant impact in the EV ecosystem. Some of the key areas of impact include: 

• Driving battery standardization: If a vehicle with standard battery bay size with CAN interface and connector is sold, energy companies will eventually settle down on standard batteries. They will standardize certain parameters - if not battery sizes and form factors then, like USBs, at least the type of connectors, location, etc. Finally, we could have 2-3 different battery standards similar to charger connectors.
• Faster innovation creating more choice for the consumer: Battery swapping companies and battery manufacturers who were dependent on few vehicle manufacturers can now develop and offer a variety of safe, innovative battery options directly to customers. It will encourage small battery and BMS start-ups to innovate faster and get early access to test markets.
• Introducing new models of EV energy consumption: We could see entrepreneurs setting up small charging stations to boost connectivity or offering energy-as-a-service. This can help, to an extent, in mitigating range anxiety issues and more comfort with EVs.   
• Increasing technology adoption: As EVs and batteries are delinked we will see increased adoption of technology to aid in search and swap. For instance, technology can help customers find nearest battery swap stations and battery availability. Technology can also make swaps safer by ensuring that swaps happen for only compatible battery types by matching the right vehicle and right battery at the point of delivery.
• Creating entrepreneurial opportunities: Millions of entrepreneurs could now become battery-swapping station owners. This allows for greater decentralization of wealth and fuel availability. EV technician courses under Skill India could create upskilling opportunities which in turn will boost economic activity and entrepreneurship uptake 
• Allowing more financial freedom to the consumer: Consumers can now buy a new EV at a lower price than a second-hand ICE and avail cost benefits of reduced running cost. This could revolutionize mobility for a whole socio-economic class and open new opportunities for people in roles like delivery personnel. In addition, financial institutions will be more willing to finance EVs as the quantum of money at risk per loan is less.

The next steps

This is a first of a kind move in the world and shows that India is investing in the right places. This decision has the potential to move the electric mobility debate from the nitty-gritty of chargers and number of vehicles to an entrepreneurship debate – how can we move the dot by failing quick and testing small. As we wait to see this new EV opportunity unfold, there are perhaps a few more things that require clarity.

When it comes to risk, decoupled batteries add an extra layer of complexity of distributed battery maintenance and usage. This requires more clarity on insurance claims and reimbursement mechanisms for death, accidental injury, fire claims, and vehicle damages. There are also new protocols and clarity required on safety measures and licenses for battery swap stations and how the new regulations will be implemented. 

How do you think this decision will play out? What changes will it bring into the EV sphere? 

Shreyas Shibulal

Guest Author Shreyas Shibulal, the Founder Director of Micelio Mobility Private Limited