GameChanger Law Advisors is a reputed Bengaluru-based corporate and commercial law firm. In a recent collaboration with Speciale Invest, a leading seed-stage venture capital firm, they have jointly released a first-of-its-kind report containing a cross-jurisdictional, regulatory and industry analysis of electric vehicle battery packs.
Talking on the same with Aishwarya, Amrut Joshi, Founder, GameChanger Law Advisors has expressed his opinion on the recent changes happening in EV Battery regulations and their impact on the industry.
According to the Economic Survey 2023, India’s domestic EV market will witness a 49% compound annual growth rate between 2022 and 2030, and the number of EV units sold annually will touch 10 million by 2030. What are the expected challenges and opportunities do you see in this rapidly evolving field?
A critical factor that underpins any new mobility solution, and its acceptance by consumers, is that of safety. All stakeholders in the global EV industry will need to keep a close eye on passenger safety while designing and manufacturing different components in an electric vehicle, be it battery packs or charging stations. The cost of technical failures can be extremely high and tragic, and can influence public perception, and consequently, regulation as well. It is therefore important for all stakeholders to collaborate on a constant basis and ensure that while there is a healthy competitive landscape, they are all on the same page when it comes to ensuring passenger safety. Cost of a product, while being an important consideration, cannot and should not take precedence over passenger safety.
India’s regulatory standards are still under discussion when it comes to EV battery packs. Tell us your opinion on the current regulatory landscape of EV battery packs in India?
For a country that has a very nascent EV market, India has actually adopted a very proactive and forward-looking approach towards regulation of different market players in the Indian EV industry. The Ministry of Road Transport and Highways (MoRTH) has adopted the Automotive Industry Standards (AIS), which address different elements required for a safe EV landscape, including standards on battery safety (AIS 048), vehicle safety (AIS 038) and battery+vehicle safety L category (AIS 156). The L category includes motorcycles, passenger vehicles and cargo vehicles.
Kindly mention some specific considerations that an investor looks for while choosing an EV OEM and their views on Battery Pack Regulations in India?
While I am not an investor, what I can from experience in advising Investors and Companies on venture capital financing transactions is that the ingredients for attracting venture capital investment remain the same largely i.e. a breakthrough technology, team with relevant industry experience, product-market fit, sustainable unit economics. Moreover, given that the battery pack accounts for 30-40% of the value of an electric vehicle, Investors will certainly advocate for clarity in battery pack regulations, as well as an adaptive approach i.e. one where Indian regulators can incorporate best practices seen in other regions around the world.
Countries like the UK, California, EU have their own set of regulatory standards for EV battery packs manufacturing, what makes India’s current regulatory standards different from the rest of them?
Our analysis of the regulations in each of these jurisdictions revealed that there are some very interesting differences in the approach to regulation. For example, in California, there are different regulations that apply to different models of vehicles. Currently, in the US, it is our understanding that there is no mandatory requirement for recycling of batteries, but India, UK and EU regulations all prescribe recycling of EV batteries. These are just a few of the key differences in the regulatory frameworks.
Lithium-ion battery is not the only alternative to EV battery packs. What is the manufacturing scope of such alternatives and do we have any regulatory framework for the same?
While India is still heavily dependent on the import of lithium-ion batteries, sodium-ion is one alternative that is set to improve energy density, charging speed, and overall performance of EV batteries. Policymakers should be open to incentivizing the use of such alternatives, including offering OEMs and battery pack manufacturers with sufficient tax breaks for different elements used in the production of EVs and EV components, after also addressing other technical quality and safety standards associated with the use of such alternatives.
Any key suggestions you would like to give to Indian policymakers and OEMs?
Our Report has concluded with suggestions for Indian policymakers, including prescribing appropriate regulations that require (i) manufacturers to submit a Carbon Footprint Declaration (CFD). A CFD will enable regulators with industry-wide data to track the carbon footprint for manufacturing EV batteries, and thereby frame policies that can progressively help in reduction of the carbon footprint involved in battery manufacturing; (ii) manufacturers to mandatorily incorporate a Digital Battery Passport that provides crucial data to enable sustainable management of batteries; and (iii) the adoption of a battery swapping policy, as well as a second life policy. Battery swapping solves the problem of difficulties in setting up charging stations and is also time efficient. Second-life batteries are batteries that can be applied for a different use after their initial lifecycle is over, such as such as stationary energy-storage services. Giving a second life to batteries by reusing them in different, but still effective ways, lead to economic and environmental benefits. Policymakers should propose market-wide regulatory standards for second-life batteries for manufacturers or end users.
