KEY HIGHLIGHTS
- BaaS reduces EV upfront costs, promoting accessibility.
- Battery lease offers flexible, usage-based subscription plans.
- Includes benefits like free charging and buyback options.
- Challenges resale due to separate battery ownership terms.
- Potential for high subscription fees with limited alternatives.
Introduced in India by MG for the first time, the Battery-as-a-Service (BaaS) Program is now gaining traction in the EV industry. After MG, Tata Motors is also planning to introduce BaaS for its electric vehicles. The Battery as a Service program is essentially a way to make EVs more accessible by reducing their ex-showroom cost. In this program, the battery pack is offered on lease to the buyer, which means they don't have ownership of the battery.
Buyers take a monthly subscription for the battery pack based on their usage in this program. Some automakers offer free charging under the BaaS program and others offer free swapping and replacement at the service stations instead of topping up the battery pack. Today, I'll be covering the advantages, disadvantages and other key things related to this program. Scroll down for more details and consider joining our 91Wheels WhatsApp Community to stay updated on the latest automotive news.
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What Exactly is a Battery-as-a-Service Program?
The BaaS program separates vehicle ownership from battery ownership which helps companies offer the vehicles at a lower price tag. When a customer buys an EV under the Baas Program, they have to subscribe to rental service based on km's and battery swapping service, depending on the brand. The battery-as-a-service program reduces the key concern of the high upfront cost of EVs. MG Motor (the only brand that offers BaaS in our region) is currently offering free charging service at the designated charging stations. All in all, the BaaS program is a convenient way to own an EV at a lower upfront cost.
Battery-as-a-Service Program: Advantages
Lower Upfront Cost
With BaaS, it becomes easier for automakers to offer their EVs at a lower ex-showroom. This is one of the biggest concerns with the EVs currently. By reducing the ex-showroom price tag, EVs can become more accessible for buyers, which eventually promotes EV adoption in nascent EV markets like ours.
Rental Charge Based on Usage
Automakers offering BaaS across the world or MG Motors in India offer tailored rental plans for users to pay for their battery packs based on their monthly usage. This gives a sense of freedom and independence to pay according to their usage.
Benefits
If a customer purchases a car under the BaaS initiative, the company offer various free services and benefits. For instance, MG is offering free battery charging services for one year, 60 per cent value buyback after three years and pay-per-km convenience. These benefits are not offered when the car is bought as a whole. If these freebies matter to you, you must opt for the BaaS program for your next car (if available).
Battery-as-a-Service Program: Disadvantages
Lack of Full Ownership Satisfaction
Despite offering so many benefits, the BaaS fails to offer the satisfaction of full ownership. Usually, we Indians need the sense of satisfaction that comes with full ownership. This could be a disadvantage for some and not for others. So if you are the one who loves to own your vehicle, I would suggest you avoid buying your car with the BaaS option.
Confusion While Reselling
When selling a BaaS-enabled EV, ownership of the vehicle does not automatically transfer ownership of the battery, as the battery is leased separately through a service provider. This separation can create confusion for potential buyers, who may not be fully aware of the subscription fees, battery conditions, or specific terms of the BaaS agreement. Additionally, prospective buyers may have concerns about taking on the ongoing costs and obligations of the subscription, potentially impacting the car's resale value or making the resale process more complex.
High Subscription Charges
If you buy a car under the BaaS program, it makes you dependent on the car brand. In case the brand significantly increases the subscription cost, you'll have no option other than paying it. This can create an obligation for you to pay a higher subscription cost if you want to use it.
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Verdict
Battery-as-a-Service offers an innovative approach to EV ownership that addresses cost, range anxiety, and environmental concerns. With reduced upfront costs, flexibility, and the potential for a circular battery economy, BaaS can play a key role in accelerating the transition to electric vehicles. However, the model also faces challenges, including infrastructure limitations, potential high subscription costs, and lack of full ownership.
For BaaS to achieve widespread adoption, investment in battery swap infrastructure, standardization, and service reliability will be crucial. As the EV industry grows, BaaS could become an important component of sustainable and accessible electric transition.
