INSUBCONTINENT EXCLUSIVE:
The national policy will be a game changer for the entire auto sector.Electric Vehicles (EV) are the hottest trend in the stock
market.Indeed, the market has rewarded any auto company with a credible EV story with rich valuations
If you're a shareholder of Tata Motors, you already know this.In fact, about a year ago, auto companies without an aggressive EV plan were
underperforming the rest of the market.Now however, the EV craze in the market has reached almost every stock associated with EVs.The Union
Budget 2022 has added more to this fire.In her budget speech, Finance Minister Nirmala Sitharaman, announced the government's upcoming EV
battery swapping policy.As per news reports, NITI Aayog is working on the details of the policy and it could become a reality in a few
This national policy will be a game changer for the entire auto sector.So how will it play out?Let's find out...The Core IssueThe battery
is the most important, and expensive, part of an EV
You could say it's the brain, heart, and soul of an EV combined.The batteries need to be charged regularly
In case of heavy use, EVs would need to be charged daily.It's impractical to drive an EV to a petrol pump to get it charged
This is because it takes a long time to charge such big battery packs.So it's best to charge an EV at home.But this presents a big problem
The lack of charging points in crowded areas
It's impractical for each and every standalone house or building to have EV charging points.Thus the idea of battery swapping makes a lot
of sense.The business model will be called 'Battery as a Service'.An owner of an EV can detach the battery from the vehicle and charge it
At the same time the depleted battery can be swapped for a fully charged one.This greatly increases the range of an EV
It will significantly boost demand for EVs because range in a top concern for any potential EV customer
The process is quick and easy
And there's hardly any need to wait in long lines at a charging station.This is great for the passenger car industry.But it's also very
useful for commercial vehicles too
The long waiting times for trucks to charge up their batteries will be cut short
A battery swap will take only a few minutes
This will increase the amount of time trucks spend on the roads delivering goods
This means more revenue for truck operators.There is another important thing to note...The Big Value PropositionWhen battery swapping
becomes mainstream, maintenance costs for EVs will fall drastically
EV owners won't feel the need to buy a new EV if they can simply keep swapping batteries.This ensures a lot of revenue for the companies
No matter what happens to the rest of the EV supply chain, battery makers will be laughing all the way to the bank.Currently, Indian
electric vehicle makers import batteries from China, which is the world's top producer of batteries.However, companies are now
accelerating plans to produce EV batteries in the country, hoping to take advantage of the government's subsidies.The new EV battery
policy will give a huge boost to the sector.Here's what the Finance Minister said...'Considering the constraint of space in urban areas
for setting up charging stations at scale, a battery swapping policy will be brought out and inter-operability standards will be
formulated.The private sector will be encouraged to develop sustainable and innovative business models for 'Battery or Energy as a Service
This will improve efficiency in the EV ecosystem.'How did the Industry React?The auto industry was pleased.Here's the official response of
TVS Motors...In the electric mobility space, we strongly support the measures undertaken by government to promote clean and green mobility,
mainly introducing the battery-swapping policy (which) will be instrumental in supporting an efficient EV ecosystem.This is what SIAM
said...It will create new avenues for companies to venture into the business of battery swapping
Additionally, creating special clean zones will further accelerate the adoption of EV's and spread awareness amongst the citizens.Startups
like Sun Mobility also welcomed it...Battery swapping technology addresses key challenges around upfront cost, range anxiety and long
charging time enabling faster adoption of EVs
As the policy unfolds, it would be great to see the government addressing key points around how customers can access subsidies, range per
charge criteria and GST for swapping services in line with EVs.One Possible ConcernAt the heart of this new policy is the term
'inter-operability'.At the moment, every EV maker produced their own battery
There is no fixed standard for batteries.This is important because users of EVs will want to swap their batteries quickly and seamlessly
No one wants to face issues like they do when charging cell phones.Customers will find it highly inconvenient if they find the charging
station does not have the battery that fits in their car.If every EV maker has their own battery standard, battery swapping will be a
non-starter.Thus, the government will need to step in to ensure there are certain minimum standards
Every company making EV batteries will have to follow these standards.This will ensure customers are not inconvenienced.Thus when this
policy is rolled out, you won't need to worry about which EV you buy as far as charging the battery is concerned
You will be able to do it at any location which offers battery swapping.You can rest assured the 'new' battery in our car will offer the
same performance as the 'old' battery.So will companies go along with this?It could take a while.Major auto companies don't share any
They will have to collaborate on this one if they want a quick adoption of EVs in the country.Alternatively, the government will have to
mandate a standard and offer subsides.Top EV battery Companies in IndiaWe first wrote to you about EV battery players in India last
year.Here's the link to that article.In that piece we mentioned 5 companies to watch opt for...#1 Amara Raja Batteries#2 Exide
Industries#3 Tata Group#4 Hero MotoCorp#5 Maruti SuzukiA few months later, we provided a detailed update on the plans of these companies
You can read the update here.If the post-budget commentary of these companies is anything to go by, the industry is certainly happy with the
policy announcement.But how they respond in the market with specific products and strategies will be known only after a few months once the
policy is rolled out.And when it is, rest assured we will write to you again with all the details.Happy Investing!Disclaimer: This article
is for information purposes only
been edited by TheIndianSubcontinent staff and is auto-generated from a syndicated feed.)
