By separating the battery cost from the vehicle purchase price and converting it into a monthly payment, companies had hoped to make EVs more affordable for consumers. 

But BaaS has failed to lure the personal EV buyer, which could hamper the EV market from reaching its full potential in the country. 

Lack of standardisation, weak resale markets, financing challenges, and infrastructure gaps have slowed the uptake, say industry insiders. Battery leasing and subscription models remain a small part of India’s EV ecosystem.

“Unless form, fit and function become standardised across manufacturers, large-scale battery swapping will remain difficult,” Ravindra Patki, Managing Partner at Vector Consulting Group, told The Secretariat.

Battery Swapping

The BaaS model allows for battery swapping. A depleted EV battery in a pack can be quickly exchanged for a fully charged one at a dedicated station instead of having to plug in for a recharge. An EV battery pack costs anywhere between ₹3.5 lakh and ₹12 lakh, whereas a battery pack rental typically costs between ₹0.90 to ₹4.99 per km.

But battery swapping networks remain concentrated in commercial fleets even as India sold more than a million electric two-wheelers in FY2024-25 and continued to see strong growth in FY2025-26.  

Industry leaders such as Battery Smart have built more than 1,500 swapping stations and deployed over 2 lakh batteries. But adoption is still dominated by high-utilisation vehicles such as e-rickshaws, cargo three-wheelers, and delivery fleets.

According to the VAHAN Dashboard maintained by the Ministry of Road Transport and Highways, electric two-wheelers accounted for around 8% of total two-wheeler sales in FY2025-26, while electric three-wheelers crossed 50% penetration. 

Passenger EVs, however, remain below 5% of total car sales. Clearly, the battery swapping idea has not clicked with this segment.

Key Conditions Missing

Patki said battery swapping and BaaS have gained traction only in segments where three conditions are simultaneously met: affordable products, readily available charging infrastructure, and favourable total cost of ownership.

“These conditions exist primarily in electric three-wheelers, gig worker fleets, and some commercial applications. Electric three-wheelers have achieved penetration levels of around 60%, while electric scooters account for roughly 20% of total scooter sales, with nearly 14 lakh electric scooters sold in FY2025-26. 

“However, battery swapping is largely concentrated in commercial operations where vehicles run long distances daily and require quick turnaround times,” Patki told The Secretariat.

For delivery fleets operated by companies such as food delivery and logistics platforms, battery swapping reduces downtime and keeps vehicles on the road. In contrast, most retail consumers travel relatively short distances and can charge their vehicles overnight, reducing the need for battery swapping.

“The highest adoption of battery-as-a-service has happened in electric three-wheelers and commercial operations where utilisation is significantly higher,” he added. 

Lack Of Consumer Confidence

One of the biggest hurdles remains uncertainty around battery degradation and replacement costs.

While individual batteries can be replaced often, consumers typically expect six to eight years of usage from an entire battery pack. 

Many are unsure of how soon the batteries will degrade, how much range loss - an EV covers less and less distance as a battery ages - they will get over time, and what replacement costs they may face once the battery performance declines.

Speaking to The Secretariat, Amit Kumar, former Managing Director, LeasePlan India, said these concerns continue to influence purchase decisions despite government incentives and industry efforts to promote EV adoption.

“The absence of a mature secondary market for EV batteries further compounds the issue. Consumers have limited visibility on residual battery values and often depend on original equipment manufacturers (OEMs) for replacement solutions,” he said. 

Absence Of Standardisation

The absence of battery standardisation is also a significant structural challenge. 

Unlike conventional automotive batteries, EV batteries vary widely in chemistry, design, size, mounting architecture and vehicle integration. Different manufacturers use different battery formats, making universal replacement and swapping difficult.

Kumar said the lack of common standards prevents the creation of a seamless replacement ecosystem.

Patki compared the challenge to the evolution of SIM cards in the telecom industry. Standardisation enabled interoperability across devices and operators. A similar framework would be necessary for widespread battery swapping.

While the government has introduced multiple safety and performance standards for batteries, enforceable standards governing interchangeable swappable batteries are yet to emerge.

The Need For Charging Stations

Discarded batteries at swapping stations are later charged. 

Kumar argued that consumers require confidence that charging facilities will be available whenever needed, much like fuel stations for conventional vehicles. “Multiple charging providers operate separate networks, often requiring users to maintain different mobile applications and payment systems,” he said. 

According to the Bureau of Energy Efficiency (BEE), India has over 30,000 public EV charging stations, but the country will require several hundred thousand charging points by 2030 to support projected EV growth.

Industry stakeholders believe infrastructure remains insufficient to eliminate range anxiety.

Experts believe greater interoperability and integration across charging networks will be essential to improve user convenience and encourage EV adoption.

Financing Isn’t Battery Leasing 

Industry experts argue that many products marketed as BaaS are effectively financing arrangements rather than genuine battery subscription models.

Under these arrangements, consumers pay a lower upfront vehicle cost and make monthly payments linked to battery usage or financing. However, the battery remains attached to the vehicle and is not routinely replaced or swapped.

Patki noted that major electric two-wheeler manufacturers do not currently offer true battery-swapping solutions to retail consumers because their vehicle designs do not support quick battery replacement.

“Most programmes function as financial restructuring mechanisms that reduce initial purchase prices without fundamentally changing battery ownership or replacement practices,” he said.

Former LeasePlan India Managing Director Kumar said similar models are also being offered in passenger cars, where the battery cost is separated from the vehicle price and paid through instalments.

“Eventually, the customer is paying for both the vehicle and the battery. The model primarily changes the payment structure,” he said.

Battery leasing also faces challenges from the financing side.

According to Kumar, battery financing is still dominated by non-banking financial companies (NBFCs), while mainstream banks are yet to participate meaningfully in the segment.

“Many financing models also impose minimum usage requirements. Some programmes require customers to pay for a fixed number of kilometres every month, regardless of actual usage, reducing the perceived affordability benefits. In addition, lenders face difficulties because batteries cannot easily be separated from vehicles in the event of defaults, making asset recovery more complex than traditional vehicle financing,” he said. 

Strongest Use Case

Despite challenges in retail markets, experts believe commercial fleets will continue to drive BaaS.

Commercial vehicles typically experience higher utilisation rates, allowing batteries to depreciate faster and making subscription-based models more economically viable.

Battery swapping is therefore expected to remain concentrated in logistics fleets, ride-hailing vehicles, cargo three-wheelers and other high-usage commercial applications.

“The economics of battery replacement and depreciation work more effectively when vehicles operate intensively rather than in typical household usage patterns,” he said. 

What Could Change The Equation

Patki said the long-term future of battery leasing will depend heavily on India's ability to develop a domestic battery manufacturing ecosystem.

“India must move beyond assembly and focus on battery chemistry, cathode and anode production, mineral processing, and cell manufacturing if it wants to reduce costs and create a stable battery ecosystem,” Patki said. 

He also pointed out that although lithium resources have been identified domestically, commercial extraction and processing could still take years because of regulatory, environmental, and logistical challenges.

BaaS is therefore facing an ecosystem problem.

While subsidies and policy incentives have accelerated EV adoption, battery leasing requires deeper reforms, including battery standardisation, stronger charging infrastructure, improved financing frameworks, a mature resale ecosystem and competitive domestic battery manufacturing.

Until these issues are resolved, battery-as-a-service will not become a mainstream solution for India's retail EV market.