Tata Motors may offer Battery-as-a-Service option to drive up electric vehicle sales: Sources

Tata Tiago EV

In a bid to strengthen its market leadership in battery electric vehicles (BEVs), Tata Motors is exploring the feasibility of a Battery-as-a-Service (BaaS) model for some of its product lines, according to sources aware of the development. Expected to be offered in the electric variant of Tiago, Punch, Tigor, Nexon and other models, the battery rental option for consumers is expected to bring down the ex-showroom prices of its BEVs by 25-30 percent, claimed sources.

In the BaaS model, car buyers purchase the EV without the battery, thus reducing the upfront cost of the EV. While the vehicle is available at reduced prices, the consumers have to pay rentals on battery usage on a per-km basis.

“There is a strong possibility that Tata Motors will give BaaS option because consumers are actively looking for affordable EV options. Its prospective consumers are ready to shell out monthly battery rentals which are economical to operate,” said one of the sources, requesting anonymity. The source, however, clarified that plans are right now on the drawing board and the final call will be taken after gauging the initial response to pilot runs.

JSW MG Motor scheme

In the domestic Passenger Vehicle (PV) market, JSW MG Motor India has already introduced this offering in Windsor EV, which is priced in the range of Rs 13,49,800 to Rs 15,49,800 and can be bought for Rs 9.99 lakh (ex-showroom) under the BaaS programme (Rs 3.50/ km additionally). A few weeks later, the company extended this option to Comet EV (price starts at Rs 4.99 lakh + battery rental at Rs 2.5/km) and ZS EV (starts at Rs 13.99 lakh + battery rental at Rs 4.5/km).

“Having a wider portfolio of EVs, Tata Motors is keen to hold on to its current market share of 75-80 percent in the electric PV space. While discounts and free vehicle charging could attract some buyers, the company has discerned that price parity with ICEVs will actually gravitate customers. Taking a cue from JSW MG Motor India, the company is deliberating on the battery rental options,” another source told Moneycontrol, also requesting anonymity.

At present, Tata Motors is selling electric variants of its ICE models like Tiago.ev (Rs 7.99 lakh onwards), Tigor.ev (Rs 12.49 lakh onwards), Punch.ev (Rs 9.99 lakh onwards), Nexon.ev (Rs 12.49 lakh onwards) and has recently launched Curvv.ev (Rs 17.49 lakh onwards). With the BaaS programme, the prices of the above models can come down by Rs 2-3.5 lakh (excluding battery), as per industry observers.

“We are always open to experimenting and piloting new ideas. We had tested the BaaS option about three-four years back and found that it was confusing customers. While physically the battery and the vehicle are not separated, financially the pricing model was separating them. It was not easy for customers to understand this and so we decided not to proceed with it then," stated Tata Motors spokesperson in response to queries sent by Moneycontrol.

Falling EV sales

The decision, if taken, will come at a time when the overall EV market has been witnessing a decline in sales over the last six months. During the first quarter (April-June) of this fiscal, the homegrown automaker’s e-PV sales have dropped by 14 percent at 16,579 units vis-à-vis 19,346 units in the same period last year. During Q2 FY25 (July-September), its sales declined by 16 percent at 15,642 units as against 18,615 units in the same quarter of the previous fiscal.

During September 2024, its total EV sales (International and Domestic) went down by 23 percent to 4,680 units as against 6,050 units in the same month last year.

According to Shailesh Chandra, Managing Director, Tata Motors Passenger Vehicles Ltd and Tata Passenger Electric Mobility Ltd, the PV industry in Q2 FY25 saw a more than 5 percent decline in retails (Vahan registrations) compared to Q2 FY24 driven by “slow consumer demand” and seasonal factors.

“Electric vehicle sales in the personal segment were affected by the lapse of registration and road tax waivers in key states. Fleet EV sales continued to remain impacted due to lapse of FAME II and non-inclusion of the fleet segment in the PM-eDRIVE scheme,” stated Chandra in an official statement.

A game-changer?

According to S&P Global Mobility, Tata Motors has established itself as a dominant player in the Indian EV sector.

“The introduction of Battery-as-a-Service presents a game-changing solution, lowering the cost of EV ownership and bringing these vehicles well within the reach of mainstream consumers,” Puneet Gupta, director at S&P Global Mobility, told Moneycontrol.

He added, “In a market like India, where consumer trust in EVs is still developing and word-of-mouth confidence remains limited, BaaS offers a vital solution. It addresses key concerns about battery technology by ensuring that the OEM retains responsibility for the battery, even when the vehicle changes ownership. This model not only reduces upfront costs but also reassures consumers about battery longevity and performance, a crucial factor in accelerating EV adoption in India.