Teji Mandi Explains: Taiwan-based Gogoro's entry, a breakthrough event for EV sector

Lack of infrastructure has proven to be a serious roadblock for the growth of electric vehicles in India. As of now, while the passenger vehicle makers have taken a few baby steps in this segment, the electric two-wheeler (E2W) market remains in a completely nascent stage.

For starters, India doesn't manufacture batteries and depends entirely on Chinese imports. It makes EV manufacturing a costly affair. On the other hand, the lack of charging infrastructure makes EVs a viable option for commuters.

Gogoro's Entry: A Game Changer

Taiwan-based Gogoro has announced it will enter the Indian market in association with HeroMoto. This is a major breakthrough event for the EV industry in India. Gogoro is an Electric two-wheeler (E2W) maker and battery swapping facility provider. It is a major crusader in bringing the E2W revolution in Taiwan and currently holds around 21% market share of overall scooter sales in its home market.

Gogoro has committed to creating a battery swapping infrastructure in India. It will have a multiplier effect on the EV market in the country.

What is Battery Swapping?

The battery swapping model allows the EV manufacturers to sell vehicles without the batteries. Under this model, vehicles are sold without battery packs. Instead, batteries are owned by energy operators. The commuters can swap the used battery with a new one by paying a fixed amount.

Spillover Effect on the Cost of EVs

As a Credit Suisse report suggests, an effective battery swapping facility will have a massive spin-over effect on the manufacturing cost of electric vehicles. Currently, a battery pack itself forms 40-45% of the overall cost of a vehicle in India. If Gogoro-HeroMoto succeeds in delivering battery swapping infrastructure, it will significantly reduce the manufacturing cost of EVs.

There is another aspect to this. Due to the lack of charging infrastructure, EV manufacturers are forced to offer heavy-duty batteries along with their vehicles. These batteries can run up to 65-70 km on a single charge. It significantly adds up to the cost of manufacturing.

Proper swapping infrastructure would allow manufacturers to provide smaller battery packs with vehicles. And help bring down the overall vehicle cost.

A Perfect Fit for HeroMoto

A joint venture with Gogoro is a perfect fit for Heroes’ long-term EV plans.

Apart from setting up battery sweeping units, both the partners are planning to launch EV vehicles in India as well. This would be the third venture for HeroMoto into the EV space.

The company already holds ~35% stake in Ather Energy, targeting the premium end of the E2W market. Hero is also in the process to launch its E2Ws in CY22 which will be mass market-oriented. The JV with Gogoro in battery swapping space is likely to strengthen the synergy between these ventures.

A Need of the Hour for India

The battery swapping network can potentially remove a major hurdle for commuters who do not have easy access to setting up a charging point at their homes. Hence, offering a battery swapping service will significantly expand the addressable market of electric two-wheelers.

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