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View: Selling EVs sans batteries amounts to separating body from soul

View: Selling EVs sans batteries amounts to separating body from soul

View: Selling EVs sans batteries amounts to separating body from soul
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By S Murlidharan  Feb 8, 2022 7:17:11 PM IST (Updated)

The government move to allow sale of EVs sans batteries undermines both the brands and buyers. Manufacturers' USP is battery. And customers would be driven into shopping for a suitable battery after having bought the soulless vehicle

A customer is comfortable with the idea of original equipment (OE), be it the car AC or music system or GPS. Indeed, the manufacturer should give a completed product and not semi-finished one. The Chinese electrical goods major Haier doesn’t leave a buyer of its AC or geyser to arrange for its installation herself but instead sends its own electrician for installation to make the product usable. In the same vein, modern builders offer furnished residential flats so that wardrobes, modular kitchen and other aspects of interiors are not only in place in accordance with the requirements and predilections of the buyer but more importantly do not warrant modification of civil work hot on the heels of purchase of the flat, entailing both inconvenience and additional costs.

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The government has already, vide union budget 22-23, allowed EVs to be sold and registered without batteries with a view that it will considerably reduce the ownership cost and speed up adoption. It is wrong on both the counts. Customers are not fools as to believe with a touch of delusion and misplaced joy that they have bought a product at 50 percent its true worth when they know that what they are getting is just a bare-boned product devoid of its vital organ—batteries. The idea that batteries can be sourced by the customer herself from the market is just plain disingenuous.
Take the case of two wheelers. We already have scooties with batteries to start. Such limited batteries serve a limited purpose—ease of starting. When such batteries malfunction as they often do, one can kickstart. EVs are different. Their batteries are in lieu of fossil fuel thus becoming the very soul of the vehicle. It is inane for a manufacturer to sell his product that has been shorn of its USP. In any case, one should not foist on customer a product that she can’t use immediately.
The government’s thrust to reduce the ownership cost (by selling EVs without batteries) could trigger warranty issues that could snowball to nightmarish levels. For instance, it is not clear whether the vehicle manufacturer, battery producer or the dealer who swapped the battery will be held responsible if a vehicle catches fire. Chaos will reign in such a milieu with buck-passing becoming the norm. Besides, battery swap will not be possible unless the batteries are standardised.
To be sure, charging is not a major issue with two wheelers and cars for personal use—they can be charged at night, the way we normally do our laptops and cell phones. It is the commercial vehicles like taxis and trucks that need repeated charging during the course of a hectic day.
The governments of Maharashtra and Gujarat have registered impressive results with their incentive schemes to push two-wheeler and three-wheeler EVs by offering incentive to early birds and otherwise. Charging of two-wheelers is not problematic.
While EVs’ potential to make air cleaner and import dependency of fossil fuel is undeniable, we should not believe that a serious transition such as batteries in lieu of fossil fuel will solve itself through market forces and competition. Let us not be in a tearing hurry to meet deadlines. Rollout first and tackle glitches as they happen is not a very wise idea as the 2018 demonetization and later GST and the new income tax return filing portal have demonstrated. Thinking through a problem, finding solutions and then rolling out makes sense and avoids chaos, embarrassment and criticism.
Tesla’s Gigafactory in Nevada is a standing example of a manufacturer going the whole hog in supplying a vital component itself. Ditto for iPhone batteries of Apple. Vehicle manufacturers should provide the fuel batteries themselves as OE till such time the battery technology improves to such levels that standardisation facilitating battery interchange without impinging on the performance of the vehicle becomes possible. And for those who take pride in their OE, charging stations at vantage points especially along the highways and expressways is the only solution. For others, availability of pre-charged batteries in exchange of the batteries that have run out of steam can be an option subject compatibility issue.
Strip bonds—principal of the bond and interest thereon traded as separate instruments in bourses—are not uncommon in the US. But a vehicle stripped off its soul i.e., fuel battery to energise it on roads is a bad idea, the one that allows its manufacturer to condemning its customers to complete the unfinished product themselves for which they neither have the expertise nor the resources.
— S. Murlidharan is a CA by qualification and writes on economic issues, fiscal and commercial laws. The views expressed in the article are his own.
Read his other columns here
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