Why battery-as-a-service will drive future of e-mobility

Muthu Subramanian, Managing Director and General Manager, Yuma Energy talks about this evolving concept that can play a pivotal role in energy storage.

By Muthu Subramanian calendar 07 Jan 2024 Views icon4841 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp
Why battery-as-a-service will drive future of e-mobility

Awash in investor dollars, India’s electric mobility ecosystem has hit a purple patch in recent years. However, the sector’s ability to sustain this hyper-growth will hinge on how well it overcomes two critical challenges. The first challenge is well known — EVs still remain costly for most buyers. Making them affordable involves moving the up-front capital expenditure of new vehicles to a recurring operating expenditure like in ICE vehicles, where fuel is the main recurring expense. The second challenge is reducing vehicle downtime to drive up utilisation. This particularly benefits the business economics of commercial applications of EVs.

Battery swapping: An ideal solution

Battery swapping (also known as battery-as-a-service or BaaS) presents a viable and proven solution for both these challenges. By taking fixed batteries out of the equation, BaaS reduces the upfront cost of EVs and thereby drives adoption. It also reduces vehicle downtime and improves utilisation, since swapping a removable battery is faster than charging a fixed one. Fast-charging batteries are another way to lower downtime, but the technology’s prohibitive costs for many use cases, and its need for parking spaces and proprietary chargers make it less attractive than BaaS.

The success of a battery swapping network depends on a couple of key considerations, such as accurate network planning in line with evolving demand density, and the up-front investment needed to build a dense network and achieve optimal utilisation to recover the investment.

Based on Yuma’s experience, three strategic principles can help BaaS companies build dense and optimised networks of swap stations. Here they are.

Accessibility, the key to driving adoption

One does not think twice before taking an ICE-based vehicle on a long roadtrip because fuel stations exist every few kilometres; therefore, there’s no range anxiety.

A dense network with consistent battery availability addresses range anxiety, which is the key to rapid EV adoption.It is also critical since swappable batteries are often of lower capacity than fixed batteries (owing to weight limitations for swapping).

This assurance of battery availability is why consumers place their trust in battery swapping networks. Thus, networks must evaluate their accessibility at a micro-cluster level in line with demand patterns and median driving distances to ensure that stations are adequately spaced in the micro-cluster.

Customer experience

Most users of swappable battery technology use their vehicles for commercial mobility. Here, a major differentiator that any BaaS player can build, is customer experience. To cite Yuma’s example, customers can pre-book tokens before arriving at swap stations. We’ve also brought down total waiting and swapping times to under a minute, which ensures minimal downtime for customers.

Offering an assisted model for swapping, at least in the nascent stages of evolution, will also help the swapping industry to improve customer experience, battery handling and safety. Once users get comfortable with the concept, the industry can gradually transition to 100 percent ‘DIY battery swapping’ options for more experienced consumers.

Unit economics

The last and most critical pillar of a network-building strategy is swapping unit economics. Battery swapping must be affordable for end users to drive EV adoption.

For the industry, therefore, the unit economics of a delivered battery swap has to be a sacrosanct metric. Its core focus must be on leveraging smart algorithms and tech interventions to optimise costs. Leveraging government and policy support will also bring down the swapping cost for consumers. The underlying strong unit economics will translate into a strong trajectory for expansion while enabling investment in automation and product interventions to improve the consumer’s experience.

BaaS-OEM tie-ups will gather pace

As battery swapping networks scale up, OEMs are keenly exploring partnerships with them to offer more affordable mobility solutions to consumers. Soon, we are likely to see the evolution of multiple ‘franchisee’ models with varied levels of asset ownership and operational structures. These models will distribute the ‘burden’ of capex investments, aid rapid network expansion, and help create sustainable entrepreneurs. The strength of a BaaS partner’s network will determine the pace of sales growth for OEMs opting for battery-swapping technology. This will also be a key input for the success of last-mile logistics players who are looking to all-EV fleets to improve their unit economics and adhere to clean mobility regulations.

Technology crux of BaaS network expansion strategy

Technology lies at the heart of any BaaS network’s expansion strategy. Things like data-led operations, machine learning models, and Internet of Things (IoT)-enabled hardware help BaaS companies to track assets and predict current and future customer demand.

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