Decoupling battery packs from electric vehicles drives E2W adoption

The recent announcement by the Ministry of Heavy Industries regarding subsidy reductions for electric two-wheelers under the FAME-II scheme has sparked discussions among industry experts on the strategic measures needed to ensure the continued competitiveness of electric vehicles (EVs). Industry experts are now advocating for the decoupling of battery packs from the vehicles themselves, recognizing its potential to enhance cost competitiveness and drive EV adoption.

Ayush Lohia, CEO of Lohia, one of the early players in the industry, highlights the critical nature of this strategic move in achieving cost competitiveness and making electric two-wheelers (E2Ws) more attractive in the market. The electric two-wheeler segment, which accounts for 55% of India's entire EV industry, is facing significant pressure to reduce the cost of electric scooters. The impact of subsidy reduction on EVs is particularly pronounced in this segment, as buyers have limited purchasing power and may opt for petrol-driven two-wheelers given the circumstances.

While the electric two-wheeler industry in India has experienced significant growth in recent years, the sales of electric two-wheelers have declined after the subsidy reduction. One of the major challenges hindering widespread E2W adoption is the high upfront cost, primarily driven by the cost of the battery pack. Currently, the battery cost constitutes a substantial portion, ranging from 40% to 70%, of the total upfront cost of an electric vehicle. This cost is a significant deterrent, especially for price-sensitive consumers.

To address this challenge and make E2Ws more affordable, industry leaders propose decoupling the battery pack from the vehicle and selling it separately. The burden on consumers is significantly reduced by shifting the ownership cost to the energy operator's network. After decoupling the battery cost, this approach is expected to result in an approximate cost difference of 30% to 50% for electric two-wheelers.

Ayush Lohia elaborated on the rationale behind this move, stating that decoupling battery packs from E2Ws offers several advantages. Firstly, it addresses the affordability concerns of potential buyers, making electric two-wheelers more economically viable compared to traditional internal combustion engine vehicles. This increased cost competitiveness makes electric two-wheelers a more appealing option for a wider customer base.

Additionally, decoupling enables the implementation of battery swapping and interoperability, which creates a robust supply chain network to accelerate EV adoption. Battery swapping provides an alternative to traditional charging methods, offering a seamless and convenient experience for E2W owners. This approach also facilitates the emergence of a competitive market for battery swapping services, driving down costs and increasing accessibility.

While the reduction in subsidies for electric two-wheelers presents a significant obstacle, industry experts are confident that decoupling the battery pack from the vehicle will revolutionize the E2W market. This strategic move not only addresses cost concerns but also fosters a level playing field between electric and traditional vehicles.

To support this initiative, industry leaders emphasise the urgent need for the government to prioritise the implementation of battery-swapping policies. Effective collaboration among battery-swapping companies and standardization efforts are crucial for the successful implementation of this policy. Although achieving complete standardization may pose challenges, industry players must unite and find common ground. By establishing compatible battery-swapping infrastructure, the industry can provide a seamless experience to consumers, further enhancing the attractiveness of electric two-wheelers.