Tata Motors is thinking of adding a Battery-as-a-Service (BaaS) model to its lineup in response to falling EV sales and the removal of the FAME II (faster adoption and manufacture of electric vehicles) subsidy. Offering customers the option to rent the battery rather than purchase it outright is intended to reduce the initial cost. Tata will be better able to draw in price-conscious customers and solidify its place in the EV industry as a result.
Tata Nexon EV BaaS
India’s top electric car manufacturer, Tata Motors, leads the segment with roughly 65% market share. However, August 2024 sees a notable 14.57% YoY decline in sales. According to reports, the corporation is currently thinking of starting its own BaaS programs in order to provide much lower Ex-sh rates. The launch window is still unclear.
The Battery as a Service (BaaS) initiative was initially introduced in India by JSW MG Motor India. JSW MG Motor India has revolutionized the cost of electric vehicles, beginning with the Windsor EV. They have since expanded their BaaS model to include the Comet EV and ZS EV. The BaaS concept appears to be well received by customers, as seen by the MG Windsor EV’s over 15,000 reservations on the first day of sales.
MG provided a battery leasing service, which allowed them to quote Ex-sh costs that were substantially lower than those of normal EVs, where the battery was part of the ownership package. Taking note of this, Mahindra has introduced the BaaS model alongside their recently released Zeo commercial 4W pickup truck.
Interestingly, Mahindra has not released the BaaS model for the XUV400, their electric vehicle in the PV market. Currently, the Tiago EV costs Rs 7.99 lakh (Ex-sh), Punch EV costs Rs 9.99 lakh (Ex-sh), Nexon EV and Tigor EV cost Rs 12.49 lakh (Ex-sh), and Curvv EV costs Rs 17.49 lakh (Ex-sh). We hope that Tata will quote battery leasing of Rs 2.5 to Rs 3.5 per kilometer covered and cut upfront Ex-sh pricing by about 25% to 30%.
Assuming that BaaS reduces Ex-sh pricing by approximately 30%, the starting price for Tiago EV is expected to be around Rs 5.6 lakh (Ex-sh + Rental), Punch EV to be around Rs 7 lakh (Ex-sh + Rental), Tigor EV and Nexon EV to be around Rs 8.75 lakh (Ex-sh + Rental), and Curvv EV to be around Rs 12.25 lakh (Ex-sh + Rental).
The upfront Ex-sh pricing difference with base variants is Rs 7.5 lakh between the Tata Curvv EV and the MG Windsor EV with BaaS. A Windsor EV buyer may drive 2,14,285 miles with the Rs 7.5 lakh they saved by paying MG Rs 3.5 per km for battery rental. The lower upfront cost made possible by the BaaS model is really significant, especially considering that the bulk of EV consumers will likely need more than ten years to reach that mileage.
