Hyderabad: People are purchasing Electric Vehicles (EV) more than ever in the history of transport. Even though India is late to this idea compared to its developed counterparts, the government is keen on moving the ecosystem towards a future where E-vehicles are the norm and fossil fuels are the thing of the past.
The Union minister for road transport and highways, Nitin Gadkari, in October said that 80% of two-wheelers and 30% of private vehicles will be electric by 2030. Battery price will constitute up to 50% of an electric vehicle’s cost.
The Union Government has rolled out the Faster Adoption and Manufacturing of (Hybrid &) Electric vehicles (FAME 1 and 2) policy in India, to encourage both manufacturers and end consumers to invest in a new technology that the market has never seen before in mass.
The idea to replace the vast petrol/diesel refueling infrastructure with an E-charging one is a colossal undertaking. Even though the government is bullish about the possibilities of it becoming a nearer reality, experts disagree. They say that the radical shift that is being expected in a short time is not possible keeping in mind that it involves billions of dollars of investment by companies. Also in an extremely price-sensitive market like India, the plan to replicate the western model, out and out sounds like a misplaced notion.
Keeping in mind the diverse possibilities that a complex country like India offers, there are startups working day and night, across states, that are trying to popularize a new idea. They call it battery swapping.
Battery swapping sounds just like the idea that it represents. In the traditional electric vehicle concept, the end customer owns both the body of the vehicle and the lithium-ion battery that runs the vehicle. The battery has to be charged regularly in order to commute. Battery swapping offers a radical alternative. The customer just owns the vehicle. The battery inside, once it’s drained, can be replaced by a fully charged one at a battery swapping station. What does this offer? Time and money, say the startups that are championing this idea.
Siasat.com spoke to the CEO of RACEnergy, Arun Sreyas, a Hyderabad-based startup that is creating waves in the battery swapping electric infra ecosystem. Arun said that there are solid reasons behind the electric vehicle segment not taking off in the country even though the conversations have been happening for quite a long period of time.
“Conversations have been happening about charging for close to seven years now. But it’s not really taking off. There is a clear problem with the charging model idea especially with regards to the end customer. It will take you an hour on average to charge your battery while filling up the petrol tank will take just a few minutes. Time is an important factor here,” he said.
In partnership with Hindustan Petroleum Corporation Limited (HPCL), RACEnergy inaugurated its first battery swap station at HITEC City in Hyderabad on January 4. Three battery swap stations are being set up at various HPCL outlets at prime locations in the city, in January.
In the battery swap stations, the drained batteries, which are manufactured by RACEnergy, can be exchanged with charged ones in two minutes. RACEnergy is also providing retrofit kits that convert existing ICE autorickshaws into electric vehicles that will be compatible with its swapping network. By bringing both these technologies together, RACEnergy is able to provide a similar experience of re-fueling ICE (Internal combustion Engines) vehicles, but at 50 percent of the operating cost, and with minimal upfront costs.
Two months ago, the startup worked with Andhra Pradesh’s New Renewable Energy Development Corporation to set up its first battery replacement station with five retrofitted autorickshaws as part of its first pilot project in Tirupati.
The company plans to build a network of 500 battery swap stations across India by mid-2023. 100 of them are planned for Hyderabad.
When asked about the reasons as to why there is no conversation around the battery swapping idea when compared to the charging one, Arun said that drawing conclusions is part of human nature.
“Charging has been going up in the four-wheeler segment. It will definitely work in that space. Given that the adoption of electric vehicles has started with the four-wheelers globally speaking, people tend to look at the same model working for three and two-wheelers. It can work to some extent especially because of private charging. It is just the talk that is happening. Drawing conclusions is human nature. Swapping is just taking off. Every customer, every automotive manufacturer realizes that swapping is the way to go. Mahindra has just launched a vehicle. It’s just hasn’t yet translated into many auto-rickshaws because it’s just too recent. It will take some time for the products to hit the ground,” he said.
Arun strongly believes that the auto-rickshaw, cab market is the key to the success of battery swapping because time and cost of the product are the key factors there.
“When you are talking about auto rickshaws, they are even more pricing sensitive. If the charging model really works, we would have seen the Tesla of Auto Rickshaws. There is a limit to pricing. It’s around 2-2.5 lakhs. That price limit is digestible to Auto owners. That’s how the diesel, petrol, and the CNG Auto rickshaw model works. There are electric auto-rickshaws in our market. But nobody is purchasing them. That’s because they are usually priced at 3.5-4 lakhs,” he said.
He also said that both the charging and swapping infra are going to coexist because of the diversity that people of the country demand.
“We don’t see a charging or a swapping model taking over 100 percent of the market. It’s going to be a hybrid. Both will coexist. The market is very huge and the segment is quite hyper-local. Vehicles from one city never go to another. Hyderabad alone has around 1.2 lakh auto rickshaws. That is a very large market in itself,” he remarked.
Indians traditionally take pride in owning the vehicle from top to bottom. We asked Arun whether the swapping idea is a mental barrier on those terms. He opined that it’s not going to be a big challenge.
“Do you want to take ownership? Please go ahead. But nobody wants to do it keeping in mind the price. A lot of customers don’t even go for automatic cars because they are a lakh or two costlier. It almost took a decade for the shift to happen and it’s not totally done, yet. The cab drivers still go with the manual. It’s just cheaper to purchase. Even with the traditional petrol pump idea, You don’t really own the petrol there; it’s just put in your tank. Petrol is expensive when you have a full battery sitting with you which is around 3-4 years of fuel in terms of worth. People are most welcome to own the battery, but the model is clearly not working out. Indian culture sure loves ownership but more than that, price sensitivity is also Indian culture,” he remarked.
On the question of the FAME subsidies still not out yet for the battery swapping companies, Arun said that the government is looking for clarity because it’s still a new area.
“The swapping subsidies aren’t out yet. It’s still a grey area because the segment is still starting out. But a lot of state governments are more proactive and they treat swapping and charging equally. They are offering the same subsidies for swapping and charging. Hopefully, with the next FAME, they are seeking clarity from industry players like us, on how the subsidy could be worked out. I am sure swapping will get subsidies going into the near future,” he said.
Since the start-up is based out of Red Hills, Hyderabad, we asked him about the Telangana government’s aid in promoting the idea. Arun said that they are getting all the help required.
“Telangana government is super helpful, not just regarding swapping, but also about the whole idea of electrification of transport. Industries Minister KT Rama Rao and IT Secretary Jayesh Ranjan are taking proactive steps to push this idea into the market. We got the retro fitment approval. There is definite support from the top level. But there is also work to be done regarding educating people about something totally new. That will take a bit of time,” he said.
RACEnergy has signed up agreements with Original Equipment Manufacturers (OEM) for their retrofitting idea to bear fruit. Arun said that the company will announce something big by the end of 2022. The company raised a seed+ round of $1.3 million led by Micelio Fund and growX ventures, along with investments from Huddle, Prophetic Ventures, BITSian Angels, among others in August 2020.