Abstract
With greenhouse gas (GHG) emissions and mobility being inextricably linked, the Indian government has introduced a slew of policies to decarbonize transportation and transition toward electric mobility. Though electric vehicle penetration is currently at a nascent stage, India offers the world’s largest untapped market, especially in the two-wheeler (2W) segment. However, high upfront purchase costs, scarcity of charging-enabled parking spaces, and longer charging times have been the major challenges in accelerating electric two-wheeler (e-2W) adoption in India. Addressing these issues, battery swapping is an alternative fast refueling option that eliminates wait time for charging, makes better use of land, and promises increased available run time. This paper analyzes the status of e-2W adoption, their total cost of ownership (TCO), and the growth trajectory of e-2Ws in three different scenarios of sales penetration to estimate the battery capacity requirements for battery swapping by 2030. The TCO analysis suggests that e-2Ws are more economical for commercial than private usage because of their higher daily utilization; however, battery swapping makes e-2Ws economical even for private usage. By 2030, the cumulative number of e-2Ws is estimated to increase from 17.4 million with a 20% sales penetration of e-2Ws (pessimistic scenario) to 54.4 million with an 80% sales penetration (optimistic scenario). Noting the additional battery pack requirements for the battery-swapping option, India is estimated to require a staggering figure of 133–291 GWh, 75–162 GWh, and 42–91 GWh of battery capacities under the optimistic, realistic, and pessimistic sales scenarios respectively.
Keywords
In India, two-wheelers (2Ws) comprise mopeds, motorcycles, and scooters, which cumulatively account for 80% of the vehicle stock and contribute to around 18% of the total transport greenhouse gas (GHG) emissions and ∼30% of the particulate emissions in urban areas ( 1 ). According to a recent study (2), electric two-wheelers (e-2Ws) can already help in ∼20% reduction in the life cycle GHG emissions compared with gasoline 2Ws in India, owing to their small battery pack size and high powertrain efficiency. Also, GHG emissions in India remain higher for overnight charging by 3%–9% compared with daytime charging of electric vehicles (EVs), which experiences the presence of more renewable-produced electricity. However, as the life cycle GHG emission from electricity generation in India is anticipated to decrease from 927 gCO2e/kWh in 2019 to ∼676 gCO2e/kWh by 2030, the emission-reduction potential of e-2Ws in India is expected to improve further ( 2 ). Henceforth, unlike in other western countries, the decarbonization journey in India will be hinged on its ever-growing 2W segment in the near term.
Since the transport sector as a whole accounts for 13.5% of the country’s total carbon emissions, India has committed to reaching a 30% sales share for EVs by 2030 under the EV30@30 campaign and has introduced an array of initiatives to decarbonize the sector ( 3 , 4 ). In 2015, the Government of India (GOI) launched the first phase (2015–2019) of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) scheme aiming to provide demand incentives for the purchase of battery-operated vehicles as well as funds for the installation of charging infrastructure ( 5 ). Based on the learning in phase 1, the second phase of the FAME scheme (FAME-II) was launched in 2019, which was later revised with increased subsidies from ₹10,000 per kWh of battery capacity to ₹15,000 per kWh for e-2Ws ( 6 ). Following the central government, several state governments in India have come up with EV policies to further accelerate EV adoption in their states ( 4 ). In 2021, GOI introduced a vehicle scrapping policy, which incentivizes the scrapping of old vehicles with polluting internal combustion engines (ICE) and the purchase of a new vehicle while simultaneously disincentivizing the renewal of registration of old vehicles ( 7 ). E-2Ws in 2021 accounted for approximately 61% share of the total EV sales and are expected to spread further with India representing the largest unexploited EV market in the 2W segment ( 8 – 10 ).
However, regardless of the country’s ambitious targets, India’s EV market remains at a nascent stage. Recent consumer studies have pointed out the high upfront purchase costs, lack of charging infrastructure, and longer charging times as major impediments to accelerating EV adoption in India ( 11 , 12 ). The scarcity of charging-enabled parking spaces ( 13 ) in Indian cities, coupled with exorbitant land prices, makes the installation of charging infrastructure an expensive affair and a major barrier to their widespread deployment. Furthermore, slow plug-in charging options take around 2–8 hours to fully charge an EV, which in turn results in limited operating time for an EV. In addition to this, the tropical climate in India poses another challenge to the performance of EV batteries, which in combination with fast plug-in charging can accelerate the degradation of the battery ( 14 – 16 ). To address these issues, battery swapping emerges as an alternative fast refueling option, especially for light EVs including e-2Ws and electric three-wheelers. Under the battery-swapping option, the depleted battery of an EV is replaced with a charged one within 2–10 minutes, either manually or with the usage of robotic arms, and makes optimal use of the land available ( 17 ). Today, micro-size modular battery-swapping stations (BSS) with small footprints ranging from the size of an ATM to that of two parking spaces are becoming increasingly popular in countries including China and India for e-2Ws, and are simple to use for EV owners ( 18 – 21 ). The depleted batteries from the vehicle are then charged in a controlled environment, which prolongs battery life with reduced instances of fast charging ( 22 ). Moreover, the planning and management of a battery-swapping system are also subjected to significantly fewer limitations by local land-use restrictions and power-grid operations ( 18 ). From a power-grid perspective, battery swapping provides the dual benefits of power load balancing and integration of renewable energy sources in the grid ( 23 – 26 ). Besides this, battery swapping also helps in separating the battery value from the EV and enables consumers to avoid high upfront purchase costs by leasing batteries from battery or vehicle companies ( 27 ). This indicates an enormous potential for battery swapping in the Indian EV market in reducing charging costs while also maximizing vehicle uptime, which is crucial in the commercial usage (e.g., hyperlocal delivery) of e-2Ws ( 28 ).
To this date, no study has attempted to estimate the battery requirements considering different EV charging methods and varying levels of penetration for the e-2W segment in India. With this study, we attempt to give a holistic picture of the e-2W segment and the battery market size under the different scenarios of battery-swapping penetration in the e-2W segment. First, this paper analyses the status of e-2W adoption in India and the available charging infrastructure options in India for boosting e-2W sales, and gives a brief overview of the measures taken by the government for promoting the usage of battery swapping for light EVs. Then, a total cost of ownership (TCO) analysis is performed to get an insight into the economic viability of e-2Ws under both plug-in and battery-swapping models. Subsequently, a sensitivity analysis is presented to identify the influential parameters that affect the TCO of e-2Ws. This study then comprehensively assesses the projected growth trajectories for e-2Ws for the year 2030 using time-series analysis under three EV penetration scenarios to estimate the potential market of e-2Ws for battery swapping in India. Finally, the potential battery pack capacities for e-2Ws required in the battery-swapping option by 2030 are estimated.
This study could be an important contribution in practice if such a framework is disseminated to low- and middle-income countries in Southeast Asia including Vietnam, Taiwan, and Thailand, which are significant consumers of the global 2W market ( 29 – 31 ). The methodology and implications from this study can find immense potential in such developing nations to project and quantify the impact of their EV policy initiative as well as provide key learnings for a smoother transition of their 2W fleet.
Methodology
TCO Analysis
A TCO analysis details the total monetary cost of an asset attributed under different cost components right from its purchase to its disposal ( 32 ). The electric drive train generally has a significantly higher purchase price, lower operation and maintenance costs, better fuel economy and lower taxes compared with fossil-fuel-powered vehicles. Therefore, there is notable relevance in investigating the TCO for EVs, rather than just the fuel economy or purchase price. Broadly, the inputs in a TCO model can be classified as capital expenditure (Capex) and operational expenditure (Opex). Here, the Capex (also known as one-time cost) includes procurement cost of the vehicle, whereas Opex (also known as recurring cost) includes operational and maintenance costs, fuel costs, labor costs, and other miscellaneous costs. This study makes use of Equation 1 from a previous work ( 33 ), for developing a Microsoft Excel-based tool to calculate the TCO per kilometer for different 2W variants ( 33 , 34 ).
where
PC = purchase cost of the vehicle,
RV = residual value of the vehicle at the end of vehicle life,
CRF = capital recovery factor,
AOC = annual operating cost of the vehicle,
AKT = annual kilometers traveled,
r = discount factor, and
N = lifetime of the vehicle (in years).
The CRF is given by
This paper compares TCO per kilometer of a low-cost (LC) and high-cost (HC) e-2W variant with plug-in charging and the swapping option with its equivalent ICE counterpart in the Indian market. The TCO analysis presented in this paper uses only direct costs associated with vehicle use and ownership. As a result, indirect costs such as opportunity cost of refueling or recharging the vehicles have not been accounted. The TCO was calculated considering a 10-year vehicle holding period ( 35 , 36 ) with 2021 as the base year, a discount rate of 10%, and a resale value of 10% for all 2W variants ( 37 , 38 ). Other cost inputs used in the analysis are detailed in Table 1.
Details of Purchase Cost and Mileage of 2W Variants Used in the TCO Analysis
Note: 2W = two-wheeler; TCO = total cost of ownership; e-2W = electric two-wheeler; LC = low-cost; HC = high-cost.
Includes taxes and insurance cost.
The purchase cost of the swapping variants is calculated by reducing 30% of the purchase cost of the plug-in counterparts of the e-2W, as battery swapping enables the separation of battery cost from the vehicle ( 39 , 40 ). Some other major inputs include the cost of electricity for e-2W with a plug-in option (Rs 6/kWh), the cost of electricity for e-2W with a battery-swapping option or swap cost (Rs 34/kWh), one battery replacement (USD 156/kWh), cost of petrol (Rs 95.5/liter), and one liter of petrol has 8.2 kWh of energy ( 33 , 39 , 41 ). The scope of this analysis excludes all associated costs, such as charging infrastructure, battery-swapping infrastructure, and so on. Further, we also estimated the net present value (NPV) of the costs and benefits of transitioning to e-2Ws ( 42 , 43 ).
Potential E-2W Penetration for 2030
The status of the e-2Ws market under this study is estimated using the 2W sales data from online dashboards or websites including the ‘Vaahan’ dashboard by the Ministry of Road Transport and Highways (MoRTH) that keeps track of all registered vehicles in India and various research reports ( 44 – 47 ). The annual sales data of e-2Ws from the Society of Manufacturers of Electric Vehicles (SMEV) website (FY 2015-16 to FY 2020-21) were analyzed to estimate the penetration of e-2Ws by 2030 under various scenarios ( 45 ). This data was then used to extrapolate the penetration of e-2Ws by 2030 under three sales scenarios discussed below to further estimate the range of potential e-2W sales in India:
Optimistic Scenario: Taking cognizance of the dominance of 2Ws on Indian roads, the apex public policy think tank of the GOI, NITI (National Institution for Transforming India) Aayog, has set the ambitious target of electrifying 80% of 2W sales by 2030 ( 48 ). This e-2W sales scenario aligns e-2W adoption with this target and is a high sales scenario.
Realistic Scenario: This e-2W sales scenario (40% share of e-2Ws by 2030) aligns with the estimates of the e-2W market-based research and the trends of e-2W penetration in the market so far ( 49 ).
Pessimistic Scenario: This e-2W sales scenario (20% share of e-2Ws by 2030) is a low sales scenario based on estimations from market studies under which the least penetration of e-2Ws is expected ( 49 , 50 ).
Next, to determine the sales of e-2Ws in the future under each of the sales scenarios, a time-series analysis of domestic 2W sales in India was done. From fiscal year (FY) 2010/11–2020/21, the domestic 2W sales figure in India were obtained from the website of the Society of Indian Automobile Manufacturers (SIAM). Using the compound annual growth rate (CAGR) observed at 4% from FY 2010–2019, the domestic 2W sales till FY 2030 are estimated. The sales figure for FY 2020 were not considered in this study because of the heavy lockdown imposed from March to June in India owing to the COVID-19 pandemic that resulted in a sharp decrease in vehicles registered. The observed CAGR of 4% is then used to project the domestic 2W sales from 2021 to 2030. The e-2W sales in each of the scenarios are estimated based on the penetration of e-2Ws out of the annual domestic 2W sales and then back-calculating the corresponding annual growth rates to achieve them, using
Estimation of Battery Requirements for E-2Ws by 2030
To estimate the battery requirements for e-2Ws by 2030, a few parameters related to current e-2W models including battery capacity, battery configuration, and energy efficiency of battery packs were considered. A repository of these key specifications of all e-2W models is currently available from the websites of various original equipment manufacturers (OEMs). Around 94% of the e-2W models available in the Indian market were equipped with detachable batteries, whereas the rest came with fixed batteries ( 51 ). Over the years, e-2Ws have been powered with a range of battery capacities. In the case of low-speed e-2Ws, the battery capacity is in the range of 1.25–2 kWh, whereas for high-speed e-2Ws it is in the range of 2–4 kWh. Electric motorcycles have higher battery capacities in the range of 4–6 kWh; however, they constitute only 4% of the e-2W sales ( 10 ). As low-speed e-2Ws make 72% share of the e-2W sales, most of the models were found to have capacities in the range of 1.9–2.85 kWh and the mean battery pack size was observed to be 2.36 kWh.
Furthermore, to keep up with the larger battery pack sizes of high-speed e-2Ws and their increased forecasted growth in the next five years, under this study two sub-scenarios for battery capacities are created. Besides, this study assumes that the battery pack size for both the sub-scenarios will remain constant and nonetheless give an improved driving range over the years owing to the constantly increasing energy efficiency of batteries achieved through advancements in battery technologies. The first sub-scenario assumes the battery pack size to remain constant at 2.36 kWh whereas the second sub-scenario assumes a battery pack size of 4 kWh, keeping in line with the battery capacity of high-speed e-2Ws. The aggregate battery capacity required in India for each year was estimated using
Status of E-2W Market in India
Status and Future of 2Ws in India
In India, 2Ws are defined as two-wheeled vehicles propelled by either a thermic engine (with a capacity exceeding 25 cubic centimeters (cc)) or a motor (with power exceeding 0.25 kW) with a maximum speed of at least 25 km/h ( 52 ). Broadly, 2Ws are categorized into either L1 or L2 ( 53 ). Here, the 2Ws with an engine capacity not exceeding 50 cc or motor power not exceeding 0.5 kW and a maximum speed not exceeding 45 km/h belong to the L1 category, and 2Ws not falling under the above definition are categorized as L2. Currently, 2Ws account for ∼80% share of the total vehicle mixes on the Indian roads, making them the dominant vehicle segment in all Indian cities ( 54 ). In commercial application, 2Ws are used for last-mile delivery/hyperlocal delivery of the e-commerce sector in urban areas for a wide range of goods, from food and beverages to apparel and electronics. As online food and grocery retail in India are predicted to grow from 0.3% in 2019 to 2.3% by 2024, the increase in last-mile logistics for this segment is expected to fuel demand for commercial usage of 2Ws ( 55 ).
Current Market Penetration of E-2Ws in India
At present, India is witnessing year-on-year growth in e-2W sales. While only 20,000 e-2Ws were sold in 2015, there was a boom with the introduction of the FAME-I scheme 2015 which led to the increase in e-2W market penetration from 0.1% to 0.6% by the end of FY 2018 (shown in Figure 1). The COVID-19 pandemic made a dent in the overall sales figure in FY 2021 but it also encouraged buyers to switch to cleaner e-2Ws from the polluting ICE variants. Consequently, the sales in FY 2022 have shown a quick recovery for e-2Ws, with twice the sales share from pre-COVID levels. Under FAME-II, the e-2W subsidies are primarily targeted toward high-speed e-2Ws with a minimum range of 80 km per charge, minimum top speed of 40 kmph, and powered by advanced battery technology ( 6 , 56 ). Because of the strict guidelines for the subsidy, only 28.5% of the 144,000 e-2Ws sold in FY 2021 were availed of the FAME-II subsidy; however, the market share for high-speed e-2Ws is projected to grow to 46% in the coming 5 years ( 10 ).
Current electric 2-wheeler sales and their penetration in India.
Potential of Battery Swapping in Boosting E-2W Sales
Given the small battery pack sizes of e-2Ws (almost one-eighth the size of a sedan), they can be easily charged from a regular wall socket ( 57 ). Data from Ather Energy, a leading HC e-2W manufacturer in India, indicates that most e-2W owners tend to charge at home ( 57 ). A major reason for this is that e-2Ws for private usage have lesser daily driving needs of close to 24 km/day, which can be easily sufficed by the current battery pack sizes ( 58 , 59 ). However, when it comes to e-2Ws in commercial applications, especially in metropolitan cities, their higher vehicle utilization and limited range increase the hassle of recharging batteries. Charging these e-2Ws owned by fleet operators at captive plug-in facilities could significantly increase either the vehicle downtime or the capital expenditure and act as a deterrent for future EV adoption. Henceforth, for supporting the widespread transition to these EVs in commercial usage, proper planning and establishment of appropriate public charging facilities remain critical ( 60 ).
Early adopters of EVs in European countries and the United States have favorable conditions for charging, as most households have plenty of space to park EVs ( 61 ) along with sufficient energy supply from the utility distribution grid to charge EVs. In Norway, for example, 95% of EV owners have access to on-site charging facilities at their own homes ( 18 ). However, in a highly populated country like India, it would be impractical to perform the widespread deployment of plug-in charging outlets, primarily because of insufficient parking space and increased vehicle idle time with longer charging time. This is where battery swapping comes to the rescue, under which the discharged battery can be replaced with a charged one at the BSS, offering an experience similar to refueling an ICE vehicle. Because of the lower battery weight of e-2Ws, the inherent operational complexity involved in swapping batteries from the vehicle is also minimized, which eliminates the need for expensive automation ( 62 ).
As for consumers, the high upfront cost can be tackled by separating the battery value from the EV by using leasing mechanisms, which reduce the upfront cost by 30%–40% ( 27 , 63 ). When vehicle buyers use leasing as a financing option, the risk of uncertain depreciation rates does however transfer from the individual to the financial institute. Therefore, in India, it is expected that both battery swapping and plug-in charging will co-exist, where the enormous benefits of battery swapping will push its adoption in commercial e-2W applications ( 13 ).
India has 11 key players that are operating battery-swapping services in major Indian cities ( 64 ). Most of the battery-swapping providers today are providing their swappable batteries under the “batteries as a service” model wherein vehicles are purchased without batteries by users, and the standard batteries and charging infrastructure are bundled as a service ( 51 ). Other business models involve swapping services by e-2W rental start-ups, which cater to the charging needs of their fleet as well as to the public.
Existing Policies and Initiatives to Boost Battery Swapping
Stemming from the need to address range anxiety and boost consumer confidence in EVs, the national and state governments in India have announced an array of policy measures to support the development of a robust battery-swapping network. This section provides a brief description of the recent positive initiatives introduced at different levels for promoting battery-swapping usage.
National-Level Initiatives
Although battery swapping has not been the major focus under the national policies of FAME-I and FAME-II, the GOI compensated for this by allowing the sale and registration of e-2Ws without factory-fitted batteries to address the issue of the high upfront purchase cost while simultaneously enabling a network of battery-swapping systems ( 65 ). Later, a strong case for battery swapping was made in 2022, wherein, NITI Aayog released the draft national battery-swapping policy to bring clarity around financial incentives for the vehicles sold without batteries and tax benefits under goods and services tax (GST) on EV batteries, which currently rests at 18%. Moreover, to enable a seamless service of battery swapping in the nation, some key features for standardization and safety were included in this draft policy, such as the Unique Identification Number for batteries, mandatory installation of a smart battery-management system in EV batteries, and non-restrictive guidelines for data collection to help track the battery key data over the entire life.
At present, the battery specifications and battery replacement systems of OEMs for different vehicle segments vary, which makes swapping an unpopular and arduous task for energy operators. Standardization of batteries helps in interoperability, making batteries compatible with vehicles of different OEMs and different vehicle segments. From the perspective of EV drivers, interoperability ensures the ability to swap the batteries of their EVs at any BSS with a single payment method or swapping application. To address this, the Bureau of Indian Standards is working on establishing standards for batteries, which will involve vehicle and battery identification numbers in specified formats to identify the origin of the parts and the materials used, among others ( 66 ).
State-Level Initiatives
Complementing the initiatives of the central government, several state governments have started boosting the use of battery swapping under their state-specific EV policies for enabling a robust charging infrastructure ( 4 ). For instance, the Delhi state EV policy offers incentives ranging from the provision of land at concessional rates and capital subsidy for setting up BSS to rebates on the purchase of advanced batteries. For buyers in Delhi and Maharashtra who purchase e-2Ws (without batteries) under a battery-swapping model, 50% of the vehicle purchase subsidy is provided to the energy operators to defray deposit costs of the battery-swapping service. The states of Haryana, Madhya Pradesh, Andhra Pradesh, Kerala, and Karnataka are providing a 25% capital subsidy for setting up BSS. However, it is noted that many states do not provide the same level of support for battery swapping as they do for plug-in charging. Mainstreaming the battery-swapping option through equivalent financial support can boost EV penetration among 2Ws, by making it cheaper to buy EVs without batteries. Table 2 summarizes the variety of incentives provided under notified state EV policies in India.
Selected Incentives for Promoting Battery Swapping Under States’ Electric Vehicle Policies
Note: BSS = battery-swapping stations; GST = goods and service tax.
Economic Viability of E-2Ws
For EVs, the high upfront costs have been one of the main barriers to accelerating their adoption ( 11 , 12 ). For this, a comparative TCO analysis can provide a better understanding of the real cost of buying a 2W variant over its useful life ( 32 ). Figure 2a and b compares the TCO per kilometer of plug-in versus battery-swapping model of lithium-battery powered LC and HC e-2Ws with a petrol 2W for varying daily travel distances. For private usage, where the typical average daily distance traveled (ADDT) is close to 25 km ( 59 , 63 , 67 , 68 ), the TCO per kilometer of LC e-2W with swap model (LC Swap) is seen to be the lowest, whereas the HC e-2W with plug-in charging offers the highest TCO per kilometer. However, in commercial usage (last-mile connectivity, last-mile delivery services, etc.) with ADDT above 50 km, the TCO per kilometer of all e-2W variants remains less than the petrol-2W (see Figure 2a). Furthermore, this analysis suggests that e-2Ws opting for battery swapping can reduce their TCO per kilometer in the range of 21%–25% in private usage; however, in commercial usage (ADDT of 100 km) their TCO per kilometer can increase more than 16% compared with plug-in option.
Comparison of total cost of ownership (TCO) per kilometer of e-2Ws (plug-in versus swapping models) with petrol 2Ws: (a) without FAME-II subsidy at different average daily travel distances; (b) with FAME-II subsidy at different average daily travel distances; and (c) with ±50% variation in the purchase cost, swapping cost, or fuel cost.
Based on these observations, it is affirmed that without any purchase subsidies, the daily utilization of e-2Ws with plug-in option remains key for lowering their TCO per kilometer. However, availing of the FAME-II subsidy (Rs 15,000/kWh) makes the TCO per kilometer of even the e-2W (HC plug-in) less than the petrol-2W at an ADDT of 50km and ensures a noticeable improvement in the economic viability of e-2Ws in both private as well as commercial usage. In addition to this national subsidy, several state governments are providing additional financial incentives in the range of Rs 5000–10,000 per kWh for e-2Ws, which could further improve their economic viability.
Subsequently, to identify the variables that could have substantial uncertainty in the economic evaluation, a sensitivity analysis is performed for the purchase cost and fuel cost of petrol-2W and HC e-2W (both plug-in and swapping options). The input values of these parameters were varied by a factor of ±25% and ±50% from the base case, that is, without FAME-II subsidy, to examine their impact on the TCO. Although purchase cost is found to be the most influential cost component, it has a stronger impact on an e-2W than a petrol-2W (shown in Figure 2c). Among the fuel cost, the variation in the cost of petrol is having a relatively high impact on the TCO per kilometer compared with electricity cost in the plug-in and swapping option of the e-2W. Further, the variation in the electricity cost per kWh is having a relatively higher impact on the TCO per kilometer of the e-2W with the swapping option than the plug-in option.
Further, the ±25% variation in the resale value leads to the variation in the TCO per kilometer of e-2Ws in the range of ±1% and petrol-2Ws in the range of ±0.5%. Note that the resale value of a vehicle depends on various factors including vehicle age, mileage, and initial purchase cost. As EV adoption in India is at the nascent stage, uncertainty about resale values is one of the major concerns for stakeholders. With the higher visibility of EVs, technological innovation, improved battery capacity and longevity, maturity of second-life application, and recycling market of used EV batteries, resale anxiety is expected to diminish ( 69 – 75 ).
With a ±25% variation in the discount rate, the TCO per kilometer varies in the range of ±2% for the petrol-2W and ±8% for the e-2W variants. Further, the sensitivity analysis suggests that the variations in the discount rate, resale rate, and electricity cost (for e-2W with plug-in option) have relatively less impact on the TCO per kilometer compared with the other cost components (e.g., purchase cost, swap cost). Other studies have also found that the electricity cost and discount rates have relatively less impact on the TCO per kilometer ( 76 , 77 ).
The NPV value is found to be negative for all the variants of e-2Ws at ADDT of 25 km (i.e., personal usage), and it becomes positive with the increase in ADDT or reduction in the upfront cost. For example, the NPV value becomes positive for e-2W (LC_Swap) at ADDT of 25 km with the inclusion of the FAME-II subsidy or reduction in the swap cost (i.e., electricity cost per kWh in e-2W with swapping option). However, for an ADDT of 100 km, the NPV value is positive for all the variants of e-2W even in the absence of FAME-II subsidy. Note that the positive figure of NPV suggests that the investment will be profitable on a net basis.
The above analysis gives a better idea of how economically competitive e-2Ws are with the petrol variant. The results make it evident that e-2Ws in commercial applications emerge as the most potential candidate even without government support because of their higher daily utilization while battery swapping as a charging method makes e-2Ws economical even for private usage. This analysis further indicates the urgent need to provide comparable purchase subsidies for battery-swapping models as well, to ensure greater economic feasibility and propagate their adoption. Thus, the growth engine of the e-2W market would be fueled by various drivers, of which affordability and charging convenience provided by battery swapping would play key roles.
Potential Market Penetration of E-2Ws by 2030
In the logistics sector, the last-mile delivery accounts for almost 40% of the overall supply chain cost, and the challenge here lies in reducing the last-mile cost to maximize cost benefits ( 78 ). A well-taken path to reduce cost at the driver’s end is by adopting EVs, which can help in reducing the operational cost significantly. As stated earlier, e-2Ws present in the Indian market already have the economic viability needed to increase their driver’s net income with their lower operation and maintenance costs. Taking a cue from this, the electrification of commercial 2Ws in India is growing at a rapid pace, and many of the e-2W manufacturers and logistics partners are deploying asset-light models with vehicle leasing and renting options for e-commerce platforms ( 79 ). Overall, demand aggregation has emerged as a feasible option for e-2W adoption in India, given its compelling economics in commercial usage.
Estimated Market Penetration of E-2Ws by 2030
Based on the current growth trends with a CAGR of 4%, the domestic 2W sales are expected to reach more than 29 million units by the end of FY 2030. Since 80% of this figure is to be e-2W as per the NITI Aayog’s target under the optimistic sales scenario, this study finds an upper bound of more than 23 million e-2Ws to be sold in the year 2030 (Figure 3). Under the realistic and pessimistic sale scenario, which assume a 40% and 20% e-2W penetration, respectively, the e-2W sales figures are expected to reach 11.7 million (Figure 4) and 5.8 million (Figure 5), respectively, in 2030. Furthermore, to reach these targeted sales figures, the expected CAGR remains highest at 76% in the optimistic scenario, 66% in the realistic scenario which closely resembles the current growth rate of e-2W sales, and 51% in the pessimistic scenario.
Projected electric 2-wheeler sales in India from 2021 to 2030 under optimistic sales scenario.
Projected electric 2-wheeler sales in India from 2021 to 2030 under the realistic sales scenario.
Projected electric 2-wheeler sales in India from 2021 to 2030 under the pessimistic sales scenario.
The results from this analysis suggest that a cumulative sum of 54 million e-2Ws will be on the road by 2030 under the optimistic sales scenario, whereas close to 30.4 million and 17.4 million e-2Ws will be sold in India by 2030 in the realistic and pessimistic scenarios, respectively. Additionally, NITI Aayog (in 2017) announced an ambitious plan to ban the sale of petrol and diesel vehicles in India from 2030 to encourage the adoption of EVs ( 80 ). For such a scenario of 100% decarbonization to happen, this study estimates that e-2W sales require a CAGR of 80%. As several e-commerce giants including Amazon, Flipkart, and BigBasket are jumping on the electric bandwagon through electrification commitments for their last-mile delivery fleet in this decade, e-2Ws in last-mile logistics will be the harbinger for driving the estimated sales figures under this study ( 79 , 81 ).
Battery Capacity Requirement for E-2W Stock by 2030
To estimate the battery capacity requirement in the Indian e-2W market, this study considers the cumulative e-2W stock by 2030. Table 3 details the battery capacity requirements in each of the e-2W sales scenarios. During 2021–2030, a threefold increase in e-2W sales is projected under the optimistic sales scenarios compared with pessimistic sales scenarios. For the battery pack capacity fixed at 2.36 kWh for an e-2W (sub-scenario-1), the e-2W stock in India by 2030 would require 127 GWh, 71 GWh, and 40 GWh of battery capacity under the optimistic, realistic, and pessimistic sales scenarios, respectively. In the case of battery capacity fixed at 4 kWh for an e-2W (sub-scenario-2), the battery capacity requirement increases to 216 GWh, 120 GWh, and 68 GWh in the optimistic, realistic, and pessimistic sales scenarios, respectively.
Estimated Battery Capacity Requirements for E-2W by 2030
Potential Battery-Swapping Infrastructure Requirements
Currently, it is hard to predict an absolute number of e-2Ws that would opt for battery swapping as the charging method, since the share of commercial 2Ws or e-2Ws out of the total 2W sales is unknown. To estimate the market potential that battery swapping would have in the e-2W segment by 2030, a sensitivity analysis is performed to figure out a range of battery pack demands with varying levels of battery-swapping usage. Furthermore, battery swapping involves the replacement of a depleted battery with a charged one; this implies that the system requires additional battery packs to function as energy storage systems during operation. A study on the optimization of BSSs in Hong Kong found that a battery inventory of 1.5–1.75 times the swapping demand can optimally serve the EVs effectively ( 82 ). This study assumes a similar swap factor of 1.5 times the original battery pack requirements for e-2Ws using battery swapping, meaning an additional requirement of 50% of e-2W battery packs to store energy for the time the vehicle is operating.
Figure 6 demonstrates the daily energy required for e-2Ws under each sales scenario with 10%, 30%, 50%, and 70% e-2Ws opting for battery swapping. The results show that with an average battery capacity of 2.36 kWh, e-2Ws would require battery capacities of 19–134 GWh for battery swapping under the optimistic sales scenario, whereas for the realistic and pessimistic sales scenario battery capacity requirements fall in the range of 11–74 GWh and 6–42 GWh, respectively. With an increased average battery pack capacity of 4 kWh, the battery capacity requirements increase to 32–226 GWh, 18–126 GWh, and 10–71 GWh under the optimistic, realistic, and pessimistic sales scenarios, respectively. To showcase how sensitive these results are to the swap factor, this study altered the swap factor to 1× and 2×. The results suggest that using a swap factor of 1× would essentially translate to 100% adoption of plug-in charging, since no additional battery capacities would be available for storing energy at the BSSs, and would lead to a decrease in battery capacity requirement by 33%. Whereas a swap factor of 2× would result in an increase of 33% in the battery capacity requirements.
Sensitivity analysis of battery pack requirements for electric two-wheelers with varying levels of battery-swapping adoption by 2030.
Conclusion
India’s EV ambitions are based on the successful electrification of 2Ws, whose vehicle form factors are ideal for swapping. Battery swapping has the potential to be the most economical alternative for efficient fast-charging infrastructure, especially for commercial fleet operators in the e-2W segments, who experience high vehicle utilization during operational hours. The TCO analysis in this study suggests that the e-2Ws in commercial applications have greater economic viability even without government financial incentives because of their higher daily utilization. However, battery swapping as a charging method can make e-2Ws economical even in private usage. Moreover, battery swapping has the potential to be the most economical alternative for efficient fast-charging infrastructure, which could provide enormous efficiency benefits, especially for commercial fleet operators. Battery swapping also provides an opportunity for innovative and sustainable business models that could effectively tackle issues of financing for EVs.
Under the current circumstances and aggressive measures taken by the Indian government to support the electrification of 2Ws, India may cross the realistic sales scenario and achieve the ambitious targets set up by NITI Aayog. Under the optimistic sales scenario, this study estimates that the cumulative stocks of e-2Ws in India will reach close to 54 million by 2030, which translates to India requiring 127–216 GWh of battery capacities. With the battery-swapping penetration in the range of 10%–70%, the e-2W segment would require an additional 7–75 GWh of battery capacity under the optimistic sales scenario and currently positions the early players in an advantageous position. Henceforth, India should enable a vibrant EV ecosystem at the national and state level by establishing a robust network of charging/swapping infrastructure to accelerate its EV adoption. Measures such as extending financial subsidies for the battery-swapping model to reduce the cost of batteries, and charging infrastructure for swapping service providers, as well as standardization of batteries for e-2Ws, could further help in increasing their economic feasibility and deepen their penetration in the Indian EV market.
Footnotes
Author Contributions
The authors confirm contribution to the paper as follows: study conception and design: Dr. Parveen Kumar; analysis and interpretation of results: Dr. Parveen Kumar and Anshika Singh; draft manuscript preparation: Dr. Parveen Kumar and Anshika Singh. All authors reviewed the results and approved the final version of the manuscript.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) received no financial support for the research, authorship, and/or publication of this article.
