Introduction to BaaS in electric vehicles
MG Motor India has introduced an innovative concept with its Windsor electric vehicle (EV), a new crossover utility vehicle (CUV), offering a revolutionary Battery-as-a-Service (BaaS) model, which will make EVs in India cheaper.
This new approach makes EV ownership more affordable by separating the cost of the battery from the vehicle itself.
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| MG Windsor sales surpassed all EVs in India in its first month in October probably because of the BaaS model. |
This move is designed to make EVs accessible to more people without the heavy upfront costs typically associated with ownership.
What is the BaaS model?
The BaaS model works by allowing customers to rent the battery instead of buying it outright.
In the case of MG Windsor, the vehicle is priced at Rs 9.99 lakh (Rs 999,000), while customers pay an additional Rs 3.5 per km for the battery usage.
This payment is similar to how fuel is paid for in traditional internal combustion engine (ICE) vehicles.
Buying the battery instead of BaaS would have made the Windsor EV costlier by Rs 4 lakh (Rs 400,000) at Rs 14 lakh (Rs 1.4 million).
This usage-based model helps lower the initial cost of purchasing an EV, making it an affordable option for more customers.
How BaaS makes EVs affordable
The battery in an electric vehicle typically accounts for about 40 per cent of the total cost of the car.
By shifting this significant cost to a usage-based model, MG Motor is helping to reduce the financial burden on buyers.
A top executive at MG Motor India feels this shift makes electric vehicles more accessible.
“This model is all about freedom — freedom from any financial burden and freedom to only pay for what you use,” the executive said.
Cost of EV ownership versus traditional cars
One of the biggest advantages of the BaaS model is its cost-effectiveness compared to owning a traditional ICE vehicle.
For instance, driving a conventional car for 1,500 km per month would cost around Rs 12,000, considering the current petrol prices of Rs 100 per litre.
In contrast, using an electric vehicle under the BaaS model to cover the same distance would cost about Rs 7,000, including the battery rental fee and charging costs.
This makes EVs an attractive option for customers looking to save on fuel costs and reduce their carbon footprint.
Positive feedback from customers
The BaaS model has received overwhelmingly positive feedback from MG’s customers, particularly first-time buyers and those upgrading from two-wheelers.
Many have appreciated the flexibility and reduced financial burden that comes with renting the battery.
The MG executive believes that as more customers experience the benefits of this model, adoption rates will continue to rise.
Expansion of the BaaS model
MG Motor plans to expand the BaaS model beyond the Windsor and introduce it across other electric vehicles in its lineup, including the Comet and ZS EV models.
This expansion is expected to encourage more consumers make the switch to EVs and further boost the adoption of electric vehicles across India.
However, challenges such as improving charging infrastructure remain a concern.
Tata Motor’s response to BaaS concept
While MG Motor is confident of the BaaS model’s success, not all automakers are convinced.
Tata Motors, for instance, has expressed doubts about the viability of the BaaS model in passenger vehicles, citing concerns over its long-term effectiveness.
A senior executive from Tata Motors stated, “We have done the mathematics and observed the process, but we remain unconvinced, especially for passenger vehicles.”
Future of EVs in India
Despite such challenges, the MG executive remains optimistic about the future of electric vehicles in India.
He believes that as battery prices continue to fall and charging infrastructure improves, the economics of EVs will become even more favorable for consumers.
In fact, EV sales have already seen a significant rise, growing nearly 100 per cent over the past two years.
E-Vroooom’s views
The BaaS model, introduced by MG Motor India, is a game changer for the Indian electric vehicle market, making EV ownership more affordable and flexible and if Tata Motors, along with other auto firms, adopts this concept, EV sales in India could skyrocket in the near future.
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