India’s electric vehicle transition began in 2013 with the NEMMP and the subsequent FAME policies. These initiatives laid the foundation for the rapid expansion of India’s EV market, which is projected to grow at a CAGR of 49 per cent from 2022 to 2030 (NITI Aayog 2023). Thanks to various government initiatives, EV penetration in total vehicle registrations has notably increased to around 7 per cent in 2024, compared to just 1 per cent in 2021 (MoRTH 2024).

India’s EV transition is primarily driven by the two-wheeler (e2W) and three-wheeler (e3W) segments. As of 2024, a total of 4.4 million EVs have been registered in India, with e2Ws and e3Ws representing approximately 50 per cent and 43 per cent of total registrations, respectively (MoRTH 2024). These segments serve a significant portion of the population and play a crucial role in urban and peri-urban transport, first and last-mile connectivity, business-to-business (B2B), and business-to-consumer (B2C) logistics. There is substantial year-on-year growth in EV sales. However, the overall share of EV registrations is minimal compared to ICE vehicles.

Despite the lower TCO, especially in smaller segments such as two-wheelers (2W) and threewheelers (3W), the adoption rate of EVs across these segments has yet to gain momentum. The low uptake can be linked to various barriers, including high upfront costs, the lack of long-term financing options, battery obsolescence, range anxiety due to the insufficient charging network, long charging times, and the unavailability of spaces for parking and charging EVs. According to India Battery Swapping Association (IBSA) estimates, there are currently approximately 17,000 charging stations and around 3,000 battery swapping stations in India (Saraswat and Mall 2024).

Traditional charging is ideal for personal use, allowing users to charge their vehicles overnight at home or during work hours. However, for commercial operations and highutilisation vehicles, such as those used for logistics, delivery services, and ride-sharing, prolonged charging times, land requirements, and the current shortage of fast-charging stations pose challenges. The fragmented nature of the market further complicates the electrification of commercial vehicles ranging from 3 to 55 tonnes. More than 90 per cent of fleet operators own fewer than five vehicles, making access to long-term financing for EVs a significant concern.

Battery swapping systems provide a promising solution for these challenges. Removing the battery from the vehicle reduces the upfront cost by ~40 per cent (Jain et al. 2022). Additionally, with a battery swapping system, the battery can be swapped in about three minutes, compared to the five to six hours needed for traditional charging (Jain et al. 2022). This faster swapping option benefits commercial fleet operators by decreasing vehicle downtime and increasing vehicle utilisation, as depleted batteries are swapped out instead of waiting to be charged. Lighter swappable batteries can also enable the carriage of additional cargo.

What is ‘battery swapping’ and ‘battery as a service’?

Battery swapping treats an EV and its battery as separate entities. Users can exchange their discharged battery for a fully charged one at a swap station in under three minutes. The fundamental principle involves separate ownership of the battery, providing it as an ondemand service (Jain et al. 2022) – known as battery as a service (BaaS) – which users can access through a subscription or lease. This separate ownership reduces vehicle costs and addresses concerns related to replacement costs and battery performance. The on-demand service is provided in just a few minutes, significantly reducing the vehicle’s charging time. Therefore, battery swapping could effectively tackle the significant challenges faced by fittedbattery EVs.

Types of battery swapping systems

IEC 62840–2:2016 outlines the safety requirements for the swappable battery systems (SBS) used in electric vehicles. This system is designed to connect to the supply network, with power supply levels reaching up to 1000 V AC or 1,500 V DC, in accordance with IEC 60038. Additionally, this standard is applicable to battery swap systems powered by on-site storage systems, such as buffer batteries (International Electrotechnical Commission 2016a). Various battery swapping methods exist, defined by the battery’s location within the vehicle and the position of the robotic arm.

Top swapping: This is the most common type of battery change, also known as vertical battery swapping. The entire battery is lifted from the vehicle and replaced with a fully charged battery. The swapping is done manually in 2Ws (Hussain et al. 2024). Robotic arms are used to perform the replacement in electric buses (e-buses) and trucks (e-trucks), where the batteries are positioned at the top or behind the driver’s cabin (Ahmad et al. 2020).

Sideways swapping: In this type of swapping, the empty battery is pulled horizontally from under the vehicle and replaced with a fully charged one. This method is common in 3Ws, small four-wheelers (4Ws), e-buses, delivery vans, and e-trucks (Hussain et al. 2024). Since the battery is changed from the side, the space and infrastructure needed for a vertical battery changing station, which is more costly to install, are unnecessary.

Rear swapping: This battery swapping method involves removing the vehicle‘s rear seats, where the battery is fixed, to replace it. This approach is common in cars with large trunks as well as in trucks and buses (Lakshmi 2024).

Bottom swapping: This technique is used in vehicles with bottom-mounted batteries. The swapping station places the vehicle on a raised platform, and the batteries are replaced from below using an automated arm and various peripheral equipment, often situated beneath (Lakshmi 2024).

Manual swapping of the top, rear, and side batteries is primarily practised for smaller vehicle segments.

Types of battery swapping deployment models

Decentralised model: The decentralised deployment model is the most common. It consists of roadside battery swapping cabinets with individual recharging compartments, each containing one battery. These cabinets can significantly expedite the recharging process. When a user inserts a depleted battery into one compartment, another provides a fully charged battery (if available) while the depleted battery is recharged for future use. Due to their ease of installation, these cabinets serve as a convenient solution for private electric bike (e-bike) owners, shared e-bike operators, and delivery riders.

Hub and spoke model: Widely explored in the literature, this model features centralised hubs where batteries are charged and maintained. From there, they are transported to demand centres where swapping occurs at distribution outlets/battery swapping stations. These stations are strategically placed in urban areas, providing easy access for e2Ws and e3Ws. Additionally, this model is utilised for emergency response services, where batteries are delivered to users’ locations and swapped accordingly.

Battery swapping business models

Various business models with different ownership and operations structures have emerged to reduce the capital expenditures (CAPEX) and operating expenses (OPEX) associated with establishing and maintaining battery swap systems. These models are classified into asset-heavy and asset-light models based on land ownership, charger usage, operation and maintenance (O&M), and battery management. They are further divided into four subcategories: (a) franchising, (b) dealer-owned and dealer-operated (DODO), (c) dealer-owned and company-operated (DOCO), and (d) company-owned and company-operated (COCO). Table 1 provides further details on these models (Jain et al. 2022).

How does battery swapping differ from conventional fixed battery charging? 

Traditional charging is well-suited for personal use since users can charge their vehicles overnight at home or during work hours. However, prolonged charging times, land requirements for parking space, and a scarcity of fast-charging stations deter commercial operations and the higher utilisation of e-vehicles in logistics, delivery services, and ridesharing. Battery swapping systems offer a promising solution for these challenges. They present a viable alternative for commercial fleets, public transport systems, and high-usage personal vehicles, providing flexibility and efficiency (Tripathi et al. 2023). A significant advantage of battery swapping compared to fixed batteries is the reduced charging time and lower upfront cost of the vehicle as is discussed in Table 2.However, the benefits of battery swapping extend beyond these aspects.

Land requirements

From the infrastructure perspective, the land footprint associated with battery swapping is 0.94–3.92 sq. ft per vehicle for e2Ws and e3Ws, which is approximately 80–95 per cent less than that of point charging (~20.75 sq. ft per vehicle) (Ola Mobility Institute and CEEW [forthcoming]). According to IBSA, the area needed for battery swapping is one-fifth of what is required for fixed charging. For instance, battery swapping requires one acre of land for every 100 buses, whereas fixed charging requires five acres to charge the same number of buses. The reduced land footprint results from battery swapping’s ability to serve about three to four times as many vehicles per day compared to point charging (Ola Mobility Institute and CEEW [forthcoming]); IBSA estimates battery swapping can accommodate eight to ten times more vehicles in a day compared to point charging. Additionally, a 25 sq. m. swapping station can service 20–30 swaps in one hour, whereas a fast charging station can charge only 3–6 vehicles per hour (Prasad, Uchida, and Feng 2023).

A battery swap station can cater simultaneously to the recharging needs of multiple battery electric vehicles (BEVs), utilising a minimal geographic area for the battery swap kiosk. Therefore, it is ideal for locations with dense vehicular traffic and limited land availability.

Impact on battery quality

There are two types of battery charging: slow charging and fast charging. Slow charging is considered better for maintaining battery quality but requires four to five hours for a full charge (Jain et al. 2022). In contrast, fast charging can fully recharge the battery in just one hour. However, during and after fast charging, battery packs experience significantly higher temperatures and slower thermal equilibration (Tanim et al. 2018), which accelerates capacity decline (Gao et al., 2022). Battery swapping addresses both of these concerns. The quick swap time ensures minimal vehicle downtime and swapping centres provide a controlled environment for charging and thermal management of batteries. Battery swapping extends battery life and improves safety, preventing battery strain during fast charging. Furthermore, since the swapping occurs in a controlled environment at the designated station, monitoring the health and safety of batteries becomes easier. Unlike home charging, common charging areas can invest in a single health monitoring station for all the batteries that come in for charging. This results in proper battery monitoring during charging, preserving their health and safety and making these systems more socially acceptable.

Sustainability and scalability

Scaling existing charging systems and widely adopting fast charging stations raises concerns about the strain they may place on the local grid. Consequently, this increased demand could necessitate significant infrastructure upgrades, potentially delaying the rapid expansion of the charging network. In contrast, battery swapping presents a more sustainable and timely solution, serving as an important source of grid flexibility (Warrior 2022). According to IBSA estimates, peak power requirements are 50 per cent lower with swappable batteries than with fixed batteries. Additionally, battery swapping stations could function as grid-scale energy storage, alleviating stress on the power grid. Therefore, battery swapping stations can meet the needs of an increasing number of future EVs while efficiently utilising resources to align with the goals of sustainable urban planning, making it a scalable model.

Benefits of battery swapping for users, discoms, and countries 

Section 1.2 highlighted some advantages of battery swapping over fixed-battery charging. However, battery swapping offers widespread and varied benefits for different groups.

Benefits for users

Reduces upfront costs: The high upfront costs associated with EVs have remained a significant barrier to their rapid adoption. By separating the battery and vehicle costs through battery swapping, upfront costs decrease by approximately 30–50 per cent, making them competitive with ICE vehicles (Ola Mobility Institute and CEEW [forthcoming]). For instance, the price of an e2W sold without the battery (in the absence of subsidies) is INR 60,000–70,000, which equals that of an ICE vehicle, thereby addressing affordability concerns.

Reduces operational and maintenance costs, as users pay on a per-swap basis: The high cost of batteries remains a significant concern for users. With battery swapping, users pay either for each swap or a subscription fee for BaaS rather than incurring the hefty cost of purchasing a battery. This alleviates customers’ worries regarding battery replacement and maintenance.

Removes customers’ concerns about technology obsolescence. Lowering the upfront cost of the vehicle and separating ownership of the battery from the vehicle alleviates concerns about technology obsolescence. Customers can access newer battery technologies more readily without replacing their entire vehicle. As battery technologies evolve, the responsibility to provide the latest, more efficient batteries will fall on the battery service provider, not the customer. Thus, customers benefit from technological advancements without the anxiety of replacement costs.

Lowers downtime: With battery swapping, customers can exchange a drained battery for a fully charged one in just two to three minutes. In contrast to point charging, which takes over four to five hours, the speed and convenience of the swapping process are comparable to refuelling a vehicle. Consequently, battery swapping offers customers a simple recharging solution that minimises downtime and eliminates the need to charge vehicles at home or work.

Increases run-time and enhances earning potential for shared e-mobility drivers: The reduced time needed to swap batteries ensures that the vehicle’s uptime and productive hours remain unaffected. This enables commercial users of these vehicles to increase their earnings. For instance, vehicles using advanced batteries through swapping are able to operate 25 per cent longer than those powered by conventional charging (Ola Mobility Institute and CEEW [forthcoming]). Consequently, various last-mile delivery companies choose fleets primarily consisting of battery swap vehicles such as Zypp Electric. Additionally, other delivery companies, including Rapido and Delhivery, have incorporated battery swap vehicles into their EV fleet.

Benefits for discoms

Enables load shifting and peak shaving: As EV penetration increases, the growing energy demand must not burden the grid. Battery swapping allows batteries to be charged during non-peak hours, which can then be swapped and used during peak demand periods, thereby reducing the strain on the grid. Additionally, battery swapping stations can serve as battery energy storage systems to support the grid during times of high energy demand, postponing the need for ‘peaking‘ plants or upgrades to transmission and distribution systems.

Formalises an informal sector: Establishing an organised and dense network of swapping stations that charge EV batteries through legitimate connections can help eliminate power theft. Since 2010, there has been a surge in the penetration of e-rickshaws in Delhi and other cities in Uttar Pradesh, Bihar, and West Bengal, among others (Shandilya, Saini, and Ghorpade 2019). However, limited development in charging infrastructure facilities has resulted in illegal electricity syphoning, causing losses to discoms. Establishing battery swapping centres encourages formalisation and upgrading of the power consumed by erickshaws, which currently dominate India’s EV market.

Accelerates the adoption of renewable energy: Batteries serve as energy storage systems that effectively promote renewable energy. They store excess energy produced from renewable sources, which can later be used to reduce evening peaks. This supports grid stability, maximises the use of renewable energy, and facilitates a more sustainable energy system.

Benefits at the national level

Helps accelerate India’s USD 54 billion recycling opportunity: India’s lithium-ion battery market is projected to grow from 2.9 GWh in 2018 to approximately 132 GWh by 2030 (CAGR of 35.5 per cent). This tremendous volume of batteries will result in an increase in the number of ‘spent’ batteries within the ecosystem, which, if not disposed properly, can lead to health and environmental consequences. Hence, the increasing battery waste must be managed effectively and recycled. As the batteries currently in use in EVs are expected to reach the end of their lifespans, India’s battery recycling market is presented with a significant opportunity – by 2030, the recycling market is anticipated to be approximately 128 GWh, representing USD 54 billion (Bhattacharjee 2023; Lohum 2023).

Reduces environmental impacts: In battery swapping systems, ownership and responsibility for the management, maintenance, and care of batteries lie with the operators who own and lease them. Therefore, they oversee the recycling and safe disposal of batteries, allowing for better management of end-of-life batteries than individual owners can provide. This approach can streamline second-life use and recycling processes, helping to reduce the negative environmental impact associated with improper disposal.

Creates jobs and enables upskilling of workers: According to a 2019 World Economic Forum report, by 2030, the battery value chain will sustain ten million additional safe and fair jobs worldwide. More than 50 per cent of these will be in emerging economies (and contribute both direct and indirect employment to the economy (World Economic Forum 2019). Because the skills needed to transition from working at a petrol station to swapping batteries are straightforward to acquire, these newly created jobs can provide opportunities to upskilled workers, thereby reducing negative impacts on the current employment rate.

Increases economic activity for and by neighbourhood kirana stores: Battery swapping can integrate local kirana stores (grocery stores) into its value chain, generating indirect employment benefits. Because swapping stations have smaller, portable battery storage racks that require less space, they can be widely distributed across small kirana stores in densely populated cities. The government can offer minor incentives such as tax benefits and GST waivers to shop owners for establishing swapping stations, which will not only create new livelihood opportunities for them but also facilitate the creation of a network of battery swapping stations.

Provides an impetus for indigenisation: India has set a target of achieving 60 per cent indigenisation by 2025 to promote local manufacturing and reduce import dependence (Sharma 2019) . One strategy to accomplish this is by imposing tariffs on lithium-ion cell imports and offering incentives for local manufacturing, such as a 100 per cent tax deduction on capital expenditure in the first year of operations and output-linked cash subsidies (Ghosh and Bhaskar 2020). These measures will enhance the self-sufficiency of battery manufacturing in India. However, the import tariffs must remain unchanged until PLI are instituted to develop a competitive domestic manufacturing system. When coupled with battery swapping systems that can rapidly create economies of scale, indigenously manufactured batteries can reach a break-even point more quickly. Therefore, the demand generated by battery swapping accelerates indigenisation.

Enhances India’s global role in EV adoption: By tackling various issues that contribute to the limited adoption of EVs, battery swapping can play a crucial role in accelerating EV uptake in India. With proper policy and regulatory support, there is also significant potential to implement battery swapping stations globally, which will bolster India’s leadership in battery swapping.

Challenges of battery swapping

While battery swapping as a technology offers multiple benefits, specific challenges are associated with it. These are discussed in this section.

Cost implications

• The high deployment cost of battery swapping stations for medium and heavy electric vehicles: Deploying a battery swapping station for 4Ws and medium and heavyduty vehicles (MHDVs) entails a significant initial investment, primarily due to the costs associated with maintaining a battery inventory and specialised infrastructure such as mechanised arms (Pulse Energy 2024). Studies indicate that approximately half of the setup cost for a swapping station is attributable to the battery inventory, while the other half covers equipment, cables, and transformers (Cui, Xie, and Niu 2023).

• The high maintenance costs of swapping stations: The charging equipment in battery swapping stations requires regular maintenance to prevent corrosion and other damage, increasing the overall maintenance cost of a swapping facility (Prasad, Uchida, and Feng 2023).

Environmental impacts

• Upfront emission concerns when manufacturing battery packs: The battery production process consumes a large amount of energy and emits significant levels of carbon dioxide. The circulation of approximately 1.5–2 times more batteries in a battery swapping system compared to a fixed charging system increases upfront emissions.

Infrastructure and logistics

• Managing battery inventory: Battery inventory management, planning, and operations pose challenges, particularly in ensuring that sufficiently charged batteries are available at swapping stations with varying flow levels. Due to the high cost of batteries, many battery swapping stations maintain a limited stock of charged batteries, resulting in users picking up partially charged batteries for use (Wang, Hou, and Guo 2024).

• Lack of clarity regarding the roles and responsibilities of battery swapping stakeholders in the event of accidents: In the battery swapping model, frequent plugging and unplugging of batteries can lead to thermal runaway, which may result in fire incidents. In such situations, determining liability becomes complex, as the responsibility could fall on the car manufacturer, the battery manufacturer, or the battery swapping service provider (Danilovic and Liu 2021).

• Complexity due to the lack of uniformity in swappable batteries: Batteries from different car manufacturers and models have different chemistries, power and energy densities, form factors, and drivetrains that require specific energy and power ratios. These variations lead to compatibility issues, limiting the interoperability of batteries among vehicles from different OEMs, which consequently restricts the potential for widespread adoption of battery swapping. Interoperability and standardisation of battery packs may be required as potential solutions to alleviate this challenge. However, the nascent nature of battery swapping, and the limited development of interoperability standards globally, make this a potential that could be explored in the future.

Interoperability can be understood at various levels of aggregation, emphasising the integration and compatibility of components, systems, and networks (Chen et al. 2022).

Component level: This level focuses on the interoperability of individual parts, such as battery cells, connectors, and management systems, ensuring they can interface correctly and function together within a system.

System level: This level considers the interaction between the battery pack, the vehicle, and the swapping station. It ensures that the battery can be safely integrated and operated in different vehicles and charged or swapped at various stations. Modular and scalable battery systems are prime examples.

Network level: This broader perspective encompasses the entire network of swapping stations and service providers. It ensures that users can access a cohesive network of services, enabling them to use any station within a specific network or across different networks without compatibility issues.

However, there has been limited global discussion on interoperability and standardisation. Industry-led consortia have been formed, which have either chosen intra-network interoperability or are working on developing common standards. Pilots have yet to demonstrate inter-network interoperability to gauge the potential of battery swapping and interoperability.

Evolution of battery swapping

The concept of battery swapping and BaaS is not new. It was initially adopted in the fourwheeler segment by companies such as Hartford Electric and GeVeCo from 1910 to 1924, along with Milburn Light electric cars in Chicago in 1917. Better Place reintroduced battery swapping for four-wheelers in 2008. Tesla followed suit in 2013 by launching a fast swapping system that enabled Tesla cars to swap batteries in just 90 seconds. These companies aimed to address range anxiety but struggled to inspire confidence among early adopters.

By the late 2000s, battery swapping faced setbacks in several geographies, including China, Europe, and the US, due to unsustainable early business models and economics. The key roadblocks related to the bulky nature of the battery used in high-mileage vehicles, as well as engineering challenges related to new types of mountings, fasteners, seals, and connectors. Furthermore, safe and durable battery and vehicle designs were necessary to facilitate rapid battery replacement. However, with changing times, advancements in battery technologies made swapping feasible, and by the early 2020s, battery swapping began to gain popularity.

Current status of battery swapping in India

India has seen early success with battery swapping for both 2Ws and 3Ws. According to IBSA, over 3,000 battery swap stations are currently installed across India for e-2Ws and e-3Ws, facilitating approximately 7 million e-km daily for hundreds of businesses as shown in Figure 3. The value of battery packs in the Indian battery swapping industry currently stands at USD 500 million, and according to IBSA estimates, this is projected to reach USD 26 billion by 2030. The Ministry of Road Transport and Highways (MoRTH) permitted the sale of vehicles without batteries in 2020, and NITI Aayog developed a draft policy on battery swapping in April 2022. The future holds enormous potential for a rapidly growing battery swapping market, and India is well-positioned to emerge as a global supplier of swappable vehicles across all segments.

The MHI has established a strong foundation for boosting EV market penetration through the FAME, Advanced Cell Chemistry (ACC), and PLI programmes. Aiming for 30 per cent vehicle electrification by 2030, the government is investigating innovative solutions to address the current challenges in EV charging infrastructure.

India’s battery swapping ecosystem is evolving rapidly through a combination of national Ev policies, state -level initiatives and growing private sector participation. With increasing focus on reducing charging time, improving affordability, and supporting high-utilization vehicle segments, battery swapping is emerging as a key enabler of India’s electric mobility transition, particularly in the 2W, 3W, and commercial fleet sectors.

National policy framework

India’s new EV registrations surged from 174,000 in FY2020 to almost 1.6 million in FY2024 across vehicle segments, taking the cumulative number to 4.4 million. This growth can be attributed to policy support from the central and state governments that helped scale the manufacturing of EVs and reduce the TCO. Including battery swapping in existing EV policies can instil confidence in consumers and further accelerate the growth of EVs. Table 4 presents an overview of existing national EV policy frameworks, government circulars related to electric vehicles, and efforts they can take to support the battery swapping ecosystem further.

Standards in India for battery swap stations 

The IBSA has led the discussions on the standards for electric vehicle battery swapping over the past few years. Vehicle manufacturers have been following the MoRTH’s CMVR for the type of approval process for swappable battery EVs. The process involves comprehensive testing, evaluation, and certification of EVs to verify compliance with regulatory requirements. Further, the BIS published draft standards for standardisation and interoperability (Table 5).

Issues related to interoperability and standardisation 

• Safety: Interoperability introduces combinations that may be challenging to manage and raises safety concerns. For instance, with the exact battery pack dimensions, form factors, and communication protocols, a combination of three battery providers, three swap operators, and three OEMs necessitates testing 27 configurations to ensure customer safety, which, according to IBSA, is impractical. In contrast, interchangeability (the exchange of batteries between vehicles within an ecosystem) is tested, safe, and transparent, ensuring traceability and accountability for the safety and performance of the entire swapping ecosystem.

• Legal framework: Defining mechanisms to assign liability in the event of accidents is necessary before pursuing interoperability. For example, if a battery from one company enters a swap station operated by another company and causes a fire incident, there is currently no clarity on who will be liable for that incident. Both battery and station companies might assert that their respective products are faultless.

• End-of-life recycling: In a closed-loop system under the “extended producer responsibility”, the respective BSOs and manufacturers have a greater role in properly disposing of batteries at the end of their life cycle. However, in an open system, where batteries move between systems, the accountability for recycling becomes unclear.

• Investments at risk: Over 30 companies have entered India’s battery swap space, investing millions of dollars to develop the necessary technology. IBSA believes that if any standards, apart from safety standards, are modified at this stage, the entire investment made so far could become obsolete.

• Innovation: Pushing towards a single standard may hinder innovation, as one size does not fit all. For example, there are scooters with power levels ranging from 800W to 8000W. Implementing a single battery size that meets all requirements for range, performance, power, and so on would limit OEMs’ and customers’ options, potentially discouraging customers from adopting EVs. Additionally, adopting a single standard would also restrict opportunities to export EVs globally, as different markets have various sets of requirements.

• Diversify battery swap options for customers: Standardising the dimensions of battery packs may lead to commoditisation, with the market focusing more on reducing swap costs to capture market share rather than on providing high-quality products. An open market enables BSOs to introduce newer products, offering customers a wide selection of options. For instance, companies are actively developing new battery packs, including solid-state batteries, which offer higher energy density and more charge cycles than lithium-ion batteries. These batteries are often smaller, more compact, easier to handle, and have a longer operational lifespan.

Regarding interoperability and standardisation, the IBSA maintains that:

• The appropriate battery sizes and connector interfaces should be allowed to evolve within the individual ecosystem over time-based on market acceptance. This flexibility will foster product innovation and ensure safe designs. Safety should take precedence over interoperability.

• IPR and royalty restrictions hamper innovation, thus creating unfavourable business conditions for promoting EVs.

The Department of Consumer Affairs, BIS, MoRTH, NITI Aayog, DST Society of Indian Automobile Manufacturers, IBSA, and industry stakeholders under the chairmanship of then Union Minister Mr Piyush Goyal met on 3 January 2023 to finalise the issue of interoperability (Minutes of the meeting attached in Annexure 10). They decided that the safety standards for batteries and swap stations should be prioritised, and all other requirements should be in abeyance. Point 14 in the minutes states:

After detailed deliberations, it was decided that Light Electric Vehicle (LEV) battery swapping interoperability standards may not be brought out at this stage since the technology is still evolving and the majority of manufacturers/swap operators are not in favour of the interoperable standards and the proposed dimensions for EV battery swapping. Further, the following was decided:

• BIS to prepare horizontal standards and battery specific quality control orders (QCOs) for all batteries.

• BIS may formulate stringent standards on the performance and safety of batteries and remove size from the Draft standard of battery swapping.

• A meeting of the Technical Committee, who have formulated the standards on batteries may be conducted at the earliest.

At the meeting held on 27 February 2024 by the Ministry of Consumer Affairs with various industrial stakeholders, the following was agreed upon (minutes of the meeting attached in Annexure 10):

QCO on battery swapping station standards delineating the policy on swapping stations be developed by the Government of India (GoI) in consultation with all the stakeholders, including Industry Associations. MHI may be requested to take this forward.

State policy framework

State policies developed in conjunction with national EV policies are critical for the rapid adoption of EVs. Since 2013, 28 state EV policies have been notified. Among these, nine include provisions to expedite the development of battery swapping (Figure 9). Additionally, some states offer subsidies on vehicle purchases (Figure 10).

Indian market

Battery swapping emerged in India in the early 2010s as a pragmatic complement to point charging and has attracted significant investment since 2015. This was followed by a series of developments and achievements that laid the groundwork for expanding battery swapping. In 2017, Ola, in collaboration with government and business partners, deployed a fleet of electric rickshaws featuring swappable batteries in Nagpur, Maharashtra. It was found that e-rickshaw drivers using swappable batteries could operate their vehicles for 25 per cent longer ranges than those with fixed Li-ion batteries. This pilot demonstrated battery swapping as a reliable charging method, particularly for small vehicles (2W, 3W).

In 2018, the Centre for Battery Engineering and Electric Vehicles at the Indian Institue of Technology Madras (IIT-M) Research Park built on the success of the 2017 Nagpur pilot and developed a prototype for a swappable battery.

Following this, explorations and investments in EVs with swappable batteries by Indian startups, large manufacturers, and global automakers intensified. As of 2024, India’s battery swap market size is approximately USD 500 million, with nearly 20 players in the market, as shown in Table 6 (Future Market Insights 2024). Annexure 5 provides the segment-wise distribution of battery swapping market players)

These players consistently enhance their market presence through mergers, acquisitions, and collaborations. For instance,

• In late 2020, VoltUp announced a partnership with Hindustan Petroleum Corporation Limited (HPCL) to establish 50 battery swapping centres across India by June 2021. In early 2023, it partnered with Bharat Petroleum Corporation Ltd (BPCL), aiming to set up 650 swapping stations with over 7,800 charging docks across 50 cities over the next three years.

• SUN Mobility has partnered with companies including Amazon, the Delhi Metro Rail Corporation (DMRC), Bengaluru Metro Rail Corporation Limited (BMRCL), Indian Railways, Tata Power, Delhi Transco Ltd (DTL), Bosch, Uber, Vitol, and others to expand its network. In 2024, SUN Mobility formed a 50–50 joint venture with Indian Oil Corporation Limited (IOCL) to establish battery swapping stations at IOCL fuel pumps nationwide. As of July 2024, SUN Mobility has over 650 stations and has operated more than 550,000 km.

• In August 2021, Battery Smart partnered with GoMechanics to establish swap stations in their 100+ garages throughout India. In early 2022, they collaborated with Zypp Electric to integrate 2,000 Zypp electric 2Ws into its network. In early 2024, Battery Smart worked with Zepto to electrify last-mile deliveries. As of July 2024, Battery Smart operates around 1,140 swapping stations across more than 30 cities in India (Business Standard 2024). The company offers swapping services to over 50,000 vehicles using more than 150,000 Li-ion batteries.

• In early 2022, RACEenergy partnered with HPCL to launch its first battery swapping station in Hyderabad. Later, in 2023, it collaborated with Lohum to extend the life of swappable battery modules, seamlessly transitioning into practical second-life applications (Bhardwaj 2023). 

• Mooving is growing rapidly and is currently among India’s top three battery swapping companies. It has 400 base stations across three cities, with over 10,000 batteries in circulation. In 2024, Mooving announced a partnership with HPCL to install automated swapping stations at more than 22,000 HPCL retail outlets nationwide (Pall 2024).

Investment and funding support driven by the market facilitated the expansion of these market players. Table 7 summarises this.

Segment-wise overview of battery swapping in India 

2W segment

In the long term, the market for swap-capable e2Ws is expected to grow due to factors such as technological advancements in lithium-ion batteries, increased research and development spending by major players, and a rise in global e2W sales (Mordor Intelligence n.d.).

Significant progress in the battery swapping market for e2Ws commenced in 2021. Companies such as VoltUp, Gogoro, SUN Mobility, Honda Power Pack Energy India, SAR Group, and Yuma are operational in India. OEMs providing swap-capable e2Ws include Ampere, Shema, Omega Seiki Mobility, Honda, Bounce Infinity, Atul Auto, Piaggio, Swarna, Gogoro (their vehicle), and Lectrix.

As India boosts the appeal of electric mobility by lowering ownership costs and addressing concerns about EV charging times, the battery swap market is poised for growth. Research shows that gasoline-powered 2Ws are the most expensive to own and operate in India over the long term, regardless of usage levels.

Literature indicates that in India, swap-capable e2Ws are primarily used for commercial applications where vehicle utilisation is high. To assess their suitability across various use cases, we calculated and compared the total cost of ownership (TCO) for ICE 2Ws, e2Ws with fixed batteries, and e2Ws with swappable batteries. The results demonstrate that even at lower daily usage–such as 30 km per day, typical for personal use–the TCO per kilometre for swap-capable e2Ws is lower than that of conventional ICE 2Ws and e2Ws with fixed batteries. Specifically, the TCO per kilometre for swap-capable e2Ws can be as low as INR 1.46 without subsidies.

Battery swapping, therefore, is a promising solution for 2Ws across all use cases from both operational and economic perspectives. This includes personal use and commercial operations by B2B enterprises, such as urban freight, e-commerce deliveries, and shared mobility. For instance, in 2023, Zypp Electric operated over 16,000 e-scooters and e-bikes in various Indian cities. Their primary clients include companies such as Zomato and Swiggy, which require a daily range of 100–120 km per vehicle, making battery swapping a cost-effective and efficient solution. Likewise, Delhivery, a Gurugram-based logistics and infrastructure provider, has been testing EVs for last-mile deliveries and is actively exploring battery swapping due to its potential to enhance e2W runtime.

Annexure 6 has further details on the TCO analysis.

3W segment

India’s transition to electric mobility focuses on electrifying the populous and polluting small vehicle segments. Consequently, e3Ws hold the second largest share in India’s battery swapping market, accounting for 24.5 per cent.

The expansion of battery swapping in this segment is due to several leading BSOs, including Battery Smart, SUN Mobility, RACEnergy, and international players, such as Honda, who add an international flavour to the Indian battery swap market. SUN Mobility, a prominent player in India’s battery swapping sector, has partnerships with brands such as Piaggio and Omega Seiki, providing a compact and portable battery swapping solution that requires minimal power and space to scale operations. Likewise, Battery Smart, another key player in the Indian market, mainly focuses on low-speed e-rickshaws and the ‘L3‘ EV category, collaborating with local businesses to establish swap stations. Honda Power Pack Energy has also teamed up with Omega Seiki and Atul Auto to offer a Honda Battery Swapping Solution (Honda e:Swap) for the 3W segment. Finally, RACEnergy provides a distinctive form of battery swapping that retrofits existing ICE 3Ws to EVs that are compatible with its swapping network.

The TCO of e3Ws with swappable batteries is lower than that of their ICE counterparts, at INR 1.21 per km without subsidy (details on assumptions of TCO are in Annexure 6). In addition to their lower cost, swappable e3Ws allow for quick and convenient battery replacement, which increases the range of the vehicle and reduces downtime, making them an attractive option for shared mobility, last-mile delivery, and other commercial applications (Prasad, Uchida, and Feng 2023). Due to these benefits, several B2B logistics players are willing to switch to EVs (Prasad, Uchida, and Feng 2023).

Even in the 3W passenger segment, where the reliance on public charging is high, battery swapping is currently more cost-effective than point charging.

Studies have shown that access to residential charging presents challenges for many passenger e3W (L5M) drivers (Vahan Sewa n.d.). Additionally, dedicated parking spaces require improvement, leading drivers to park their vehicles on roads or in other public areas (Roychowdhury, Mohanty, and Shrivastava 2021). Furthermore, drivers with access to residential parking may lack the necessary electricity connections, electric equipment, and uninterrupted power supply to facilitate residential charging. These factors heighten the dependence of passenger e3Ws on public charging, which is more expensive, as noted above. Public charging is also less convenient, as BEV users lose the ease of charging their vehicles without leaving home.

Figure 13 compares the 5-year TCO of passenger e3Ws using battery swapping with those using a combination of point charging and residential charging. The x-axis indicates the share of public charging in the total charging requirements of the e3Ws, while residential charging accounts for the remainder. The y-axis plots the 5-year TCO. Point charging is the most economical method when the majority of charging occurs through residential means. However, battery swapping becomes more economically viable for a passenger e3W when the dependence on public charging surpasses 55 per cent of total charging needs, as public charging incurs higher costs than residential charging. Additionally, there is an opportunity cost related to point charging (both residential and public), meaning a loss of earnings for the e3W driver due to the time spent at public charging stations to recharge the vehicle. Both of these costs increase the TCO when there is a significant reliance on public charging.

Consequently, battery swapping can increase the appeal of passenger e3Ws, particularly in situations where access to residential charging is restricted and reliance on public charging is high.

Bus segment

India has emerged as a leader for e-buses in South Asia, aiming to deploy 50,000 e-buses by 2030 (Shakti Sustainable Energy Foundation 2023) World Resources Institute (WRI. However, the high upfront cost of BEV buses is a significant challenge in their uptake. For BEV buses, the purchase cost is two to four times higher than that of conventional buses. Approximately 40 per cent of the cost of BEV buses is attributed to batteries (Kumar, Mulukutla, and Doshi 2024). Implementing battery swapping for BEVs in these segments can significantly reduce the initial cost of e-buses, thereby enhancing their cost competitiveness with conventional vehicles.

Battery swapping also provides the benefit of a shorter recharge time compared to point charging. Point charging buses take several hours when using a slow charger and about 40 minutes with a DC fast charger. In contrast, battery swapping requires only about three to six minutes. Therefore, battery swapping can significantly decrease charging downtime and enable BEVs to operate for extended periods.

Ashok Leyland spearheaded the initial efforts to launch a battery swap-capable e-bus in 2019 in collaboration with SUN Mobility. India’s first battery swap bus, the Circuit-S, was specifically designed for Indian conditions. That same year, the Ahmedabad Municipal Corporation issued a tender for 18 of these buses from Ashok Leyland under the gross cost model, wherein Ashok Leyland owned, operated, and maintained the buses while the municipal corporation compensated the company with a per-kilometre rate (EAI 2018). Eighteen e-buses were deployed as a pilot project and travelled over 650,000 kilometres in one year, achieving over 25,000 battery swaps. Additionally, SUN Mobility showcased its battery swapping solution for buses this year, unveiling the first 10.5-meter battery swappable buses for intercity and mofussil (i.e., regional, suburban) routes.

By separating the battery cost from the bus, for the first time, the upfront price of the buses is reduced to match that of a traditional diesel bus. The bus is uniquely designed for Indian mass transport, as the battery’s compact and lightweight form factor allows for more passenger space and standing room. Additionally, the swappable technology is compatible across various bus platforms. As per CEEW and IBSA estimates, when a subsidy is available, the TCO for battery swapping in buses is more appealing than fixed charging and diesel options. Figure 14 presents the TCO comparison of different fuel types in the bus segment.

Truck segment

Similar to the bus segment, the high upfront cost of BEV trucks, which ranges from 2.5 to 3.5 times higher than conventional trucks (Kaur and Narla 2023), hinders their adoption. Since batteries account for about 40 per cent of the cost, implementing battery swapping for BEVs in these segments can significantly lower their upfront cost as the BEV would be sold without the battery. This improves their cost competitiveness compared to conventional vehicles. Additionally, as seen with BEV buses, battery swapping provides the benefit of a shorter recharging time, typically about three to six minutes. This greatly decreases charging downtime, enabling BEV trucks to operate longer, potentially increasing profits and minimising the opportunity cost of charging. Therefore, battery swapping in trucks could be a viable solution to stimulate growth in the electric truck market (Dalroad 2024).

Companies such as IPLTech Electric are exploring battery swapping for trucks. In September 2025, Montra Electric eM&HCV, belonging to the same parent company as IPLTech Electric launched the Rhino 5538 EV 4x2 TT, a 55-ton electric truck, at its manufacturing facility in Manesar, Haryana. The truck offers a range of 198 km on a single charge and battery swapping technology allows battery changes in under six minutes (Shiraguppi 2025). Currently, these systems are primarily used for short-haul applications at ports, mining sites, and in urban logistics.

Since 2020, China has promoted battery swapping technology, establishing itself as the world’s largest market for electric trucks (Cui, Xie, and Niu 2023). In 2022, China sold 36,000 electric trucks, accounting for 91 per cent of the global total. Drawing parallels from the growth of swap-capable trucks in China, India also has the potential to electrify the challenging heavy commercial vehicle segment through battery swapping.

According to CEEW, the TCO of truck battery swapping is more appealing than that of fixed charging and diesel segments. Figure 15 illustrates the TCO for battery swapping compared to fixed charging and diesel alternatives.

The Chinese province of Hainan offered a subsidy of 15 per cent of the total construction cost of battery swapping stations from January 2021 to December 2022 (Cui, Xie, and Niu 2023). The Qingdao City in China has also promoted battery-swappable electric buses by adopting the “vehicle-electricity separation” model, in which the Qingdao Municipal Government purchases electric buses without batteries and delivers them to the bus operator (United Nations 2023). The Qingdao Electric Power Company buys batteries from manufacturers and leases them to bus operators, while the State Grid Corporation of China mainly funds the construction of battery swap stations. In 2022, 49.5 per cent of the electric trucks sold in China were battery-swappable (Cui, Xie, and Niu 2023).

Hence, battery swapping could address critical challenges in adopting electric buses and trucks. The government should support pilot programmes to investigate the potential of battery swapping for these two vehicle segments in India.

A comprehensive mapping exercise was carried out to identify the stakeholders involved in the battery swapping industry. Subsequently, three sets of consultations took place in June 2024. This section discusses the various challenges and obstacles highlighted by stakeholders.

Challenges highlighted by the vehicle original equipment manufacturers

Challenges in the existing regulations

• Registering vehicles without batteries: According to the MoRTH circular RT11036/72/2017 regarding the “Sale and Registration of Electric Vehicles without Batteries” dated 12 August 2020, vehicles without batteries can be registered based on the Type Approval Certificate issued by an accredited testing agency, without the need to specify the make, type, or any other details of the battery. However, challenges arise when attempting to register these vehicles at RTOs without batteries, primarily due to the limitations in the homologation certificate issued by testing agencies that fail to distinguish between fixed, removable, and swappable technologies in EVs.

• Registering EVs without batteries in the M and N categories: The MoRTH circular (RT-11036/72/2017) currently covers only the “L” category of vehicles, which includes 2Ws and 3Ws. However, given the rise of electric vehicles in the 4W segment, the registration of vehicles without batteries should also be extended to light commercial vehicles, buses, and trucks. However, post the consultations, ARAI notification, AIS 038 (Rev-2), Amendment-4 issued in August 2024, makes provisions for the registration of EVs without batteries in the M and N categories and this no longer remains a challenge.

• Lack of subsidies and incentives for swap vehicles: Demand-side incentives under previous schemes, such as the FAME I & II and the Electric Mobility Promotion Scheme (EMPS), as well as current initiatives like the PM e-Bus Sewa Scheme, favour fixed-battery vehicles due to their incentive structure (subsidies based on battery size). Additionally, certain clauses in the PM e-Bus Sewa Scheme tender that specify minimum ranges of 200, 180, and 160 km on a single charge hinder the ability to benefit from battery swapping.

• High interest rates for users: Financing options for EVs and related systems come with very high rates due to a lack of trust in the new technology and the high perceived risks by financial institutions. Accessing long-term financing for EVs, including battery swapping models, is difficult. As a result, establishing large-scale manufacturing facilities has become a challenge for OEMs.

• Onboard chargers for EVs: Currently, vehicle OEMs are required to include the onboard charger with their vehicles. However, since the swap vehicle does not need a charger, as it is swapped in a public place rather than at home, this requirement hampers swap vehicle OEMs from obtaining homologation for their vehicles without the chargers.

Challenges highlighted by the battery swapping operators

Challenges in the existing regulations

• Pending notification of the battery swapping policy: NITI Aayog drafted a battery swapping policy and published it for comments in 2022. Industry players provided their comments on the draft Battery Swapping Policy for NITI Aayog’s consideration (attached in Annexure 1). Notifying the Battery Swapping Policy will provide a roadmap for various stakeholders in the ecosystem to facilitate the deployment of battery swapping stations. Consultations with stakeholders from the battery swapping ecosystem highlighted myriad challenges, including the inverted GST structure, incentive parity, recognition in national and sub-national policies, the vehicle registration process, etc. The draft policy covers essential aspects such as the second life of batteries, recycling, data sharing and communication, safety standards, potential subsidy schemes, and tariffs for electricity which supports the growth of battery swapping. In January 2025, however, the MoP issued guidelines for the Installation and Operation of Battery Swapping and Charging Stations which provides the necessary structure for stakeholders in the battery swapping ecosystem to operate.

• Lack of a clear definition of battery swapping stations: The distinction between a battery charging station and a BSS is arbitrary and confusing. All battery swapping stations currently deployed charge batteries, yet industry players refer to them as BSS. However, this contradicts the terminology introduced by the MoP and can lead to misinterpretation by on-ground agencies such as urban local bodies, discoms, and land authorities. It must be noted that this challenge has been addressed by the MoP guidelines issued in 2025 which provide clear definitions for battery swapping stations and its associated technology.

• Inadequate safety standards for battery swap stations: Certain guidelines and safety standards for battery swap systems are essential as the government promotes BaaS and battery swapping to enhance consumer convenience and increase the adoption of EVs at scale. BIS developed the drafts of IS 17896 (Part 1):2022/ IEC TS 62840-1:2016 and IS 17896 (Part 2):2022/ IEC 62840-2:2016 in 2022, outlining the essential guidelines and safety requirements for battery swap stations. However, the standards remain at a draft stage and have yet to be notified. The notification of these standards is imperative to ensure the safety of battery swapping stations and provide essential guidelines to plan the infrastructure.

• Contradictions in policies and tenders regarding fixed charging and battery swapping: The policies and tenders issued by various government agencies at both national and sub-national levels exclude battery swapping and only mention public charging stations. Therefore, the government should ensure technology-agnostic policies and tender documents to create a level playing field for both swappable and fixed electric vehicles. The current version of the Charging Infrastructure Guidelines issued by the Ministry of Power also heavily favours point charging in its description of requirements, procedures, tariffs, provisions, standards, and more. The unintentional omission of battery swapping as a charging alternative places this infrastructure and mobility solution at a disadvantage.

• Exclusion from the PLI scheme: Currently, critical EV components, including battery packs, battery management systems, and charging or swapping infrastructure, are excluded from the PLI scheme. Including these components in the PLI scheme will help reduce the overall costs of EVs and facilitate wide-scale adoption.

• Exclusion from the PM E-DRIVE Scheme: Initially, battery swap vehicles were not eligible for demand incentives. Furthermore, the budget for EV PCS did not include battery swapping stations. Extending the scheme’s incentives to cover battery swap vehicles and stations will facilitate widespread adoption. Recognising this, in September 2025, the Ministry of Heavy Industries issued the operational guidelines for the deployment of EV PCS under the PM E-DRIVE scheme under which BSS will be eligible for financial support to set up upstream infrastructure and EVSE costs in certain cases (Table 4).

• Exclusion from the PM e-Bus Sewa Scheme: Battery swap buses face challenges in accessing the opportunities provided by the PM e-Bus Sewa Scheme due to the technical specifications of the tender. The specifications stipulate that the minimum range of the e-bus on a single charge must be (i) 200 km (at 80 per cent SoC) for a 12 m bus, (ii) 180 km (at 80 per cent SoC) for a 9 m bus, and (iii) 160 km (at 80 per cent SoC) for a 7 m bus. These requirements hinder the adoption of battery swapping technology.

Challenges related to the financing of swapping stations and batteries

• GST parity for batteries: Battery swapping is a capital-intensive business. In addition to the batteries in circulation with each subscriber, BSOs need to maintain additional batteries charging on standby–between 30 per cent and 50 per cent more batteries than those in circulation. Furthermore, while a 5 per cent GST applies to batteries pre-fitted to an EV, the rate increases to 18 per cent if the batteries are purchased separately. This higher taxation significantly impacts the BSO, which must keep a substantial inventory of spare batteries in addition to those in circulation at any given time. Achieving GST parity will create a level playing field and support the EV growth targets set by the government.

• Blocked working capital: Currently, to provide battery swapping services, the operator purchases batteries with an 18 per cent GST, while recovery is anticipated over a period of 5 to 7 years, depending on the battery’s lifespan. As the battery swapping sector in the country is still developing, BSOs are significantly investing in establishing battery swapping infrastructure to meet the growing demand. However, considerable capital is being tied up due to the government’s GST input credit. Given that the majority of the swapping operators are start-ups in the early growth stage, GST parity will provide a level playing field and help achieve the EV growth targets envisioned by the Government.

• Difficulty accessing long-term financing: Battery swapping is a capital-intensive venture because operators must account for land rents, battery inventory for swap stations, upstream infrastructure, and more. However, due to the risks associated with this nascent market and the uncertainty regarding the future proliferation of battery swapping technology, financiers are reluctant to provide long-term loans.

• High electricity tariffs: Electricity tariffs vary across different states, with costs reaching as high as INR 8 per kWh in some instances. These elevated costs render battery swapping operations unviable. Furthermore, BSOs struggle to obtain electricity at an attractive price for their swap stations. India’s power sector regulations stipulate that only consumers with a contracted 1 MW or higher demand can purchase electricity through open access. However, as part of their EV policies, Andhra Pradesh, Delhi, and Madhya Pradesh have lifted this restriction, permitting the purchase of electricity of over 100 kW. Open access allows customers to procure electricity at lower prices from various competitive electricity providers rather than being confined to the local provider. The government should consider replicating the 100 kW contracted demand across states.

Challenges regarding infrastructure

• Limited upstream infrastructure: In the absence of subsidised EV connections, there are economic challenges as they compete with fixed vehicles that enjoy these advantages. The minimum requirement is 30 kW per swap station. If multiple swapping stations exist, the power requirements could increase to 60 kW and 90 kW. When electricity demand exceeds 50 kW, most discoms require the BSOs to obtain a high-tension connection or set up a transformer to accommodate the swap stations.

• Poor quality of power supplied to swap stations: In various regions, particularly in rural areas, the quality of power fluctuates with regard to voltage dips. This further hampers the charging of the batteries in the swap stations. The issues with power dips are intensified in the case of heavy electric vehicles, which require a 440 V connection from a minimum of 66 / 120 KV feeders. However, only the regular 33/11 kV feeder is available.

• Delay in PESO approvals: The current Petroleum and Explosives Safety Organisation (PESO) approval process is not suited for an EV-ready future, where numerous applications will be submitted for swap stations and point charging station deployment at petrol pumps. While the current approval timeline is 21 days, the typical approval process takes 30 to 45 days per station, which hampers the large-scale deployment of battery swapping stations. Therefore, capacity, standard operating procedures, and processes need to be enhanced for a quicker turnaround.

• Land approvals: Accessing real estate required for setting up infrastructure for battery swapping presents a challenge. Existing stations often lack the necessary space (approximately 500 sq. ft.) to accommodate transformers alongside swapping facilities, which are essential for providing the required power.

Challenges regarding the operations of swap stations

• Traceability and end-of-life use of batteries: The absence of protocols or regulations on traceability and end-of-life use of batteries makes it challenging to to understand how the batteries are used beyond their first life. To address this, UINs assigned by BSOs to track the assets need to be in place.

Challenges highlighted by fleet operators

• Higher GST on swapping: Battery swapping players provide BaaS to their consumers, meaning the battery is leased to the customer, who pays a subscription fee. If batteries incur 5 per cent GST, the energy operator experiences 13 per cent lower blocked working capital, resulting in a reduced cost of capital that can be passed on to the customer. Battery swapping mainly exists in the B2B sector, particularly in last-mile connectivity and delivery. A preferential GST on battery packs will directly enhance the livelihoods of gig workers using battery swap vehicles.

Example: Considering a battery cost of INR 40,000, the additional GST for 2 BP is (40000*2*13 per cent) = INR 10,400. The extra annual capital cost on this GST would be INR 1,040 (assuming a 10 per cent interest rate).

• Exclusion of low-speed 2Ws (micro-mobility) from CMVR: Battery swapping is widespread in the micro-mobility segments and is often used extensively in the gig economy. Despite a significant number on the road, these vehicles are often not included in the EV targets. The lack of registration poses challenges for various state and city authorities in regulating them. Their informal nature frequently results in safety concerns, leading to restrictive measures.

Challenges highlighted by financiers

• Information asymmetry: Investors require clear insights into the technology, support for project pipelines, and advisory assistance. The nascent nature of the sector has led to limited information availability. This scarcity of information and the perceived risks associated with rapidly evolving technology hinder investors from funding innovative companies (Palai and Vashi 2024).

• Complex asset valuation: Valuing assets in the EV sector is complicated, mainly due to uncertainty about the lifespan of their components. This challenge prevails in the battery swapping sector as well. As a result, financiers face difficulties in determining asset values and incur high capital costs to mitigate risks. Moreover, the lack of clarity on the salvage value of components and the limited secondary markets further intensify this challenge (Pmanifold 2019).