Tata Punch, Curvv EVs to Get BaaS Option Like MG Windsor EV

Amid declining EV sales and withdrawal of the FAME II (faster adoption and manufacturing of electric vehicles) subsidy, Tata Motors is considering introducing a Battery-as-a-Service (BaaS) model for its lineup. The idea is to cut down the initial cost by offering customers to rent the battery instead of buying it outright. This will help Tata attract price-sensitive buyers and strengthen its position in the EV market.

What is the BaaS model?

A flexible pricing strategy, BaaS lets you buy an electric vehicle without the battery, which is usually the most expensive component. Instead, battery payment is made on a rental basis. The rent is typically charged per kilometre driven, making the cost of owning an EV more manageable and affordable.

Sources suggest if Tata brings it into effect, the overall ex-showroom prices of cars like Punch EV, Nexon EV and Curvv EV could be cut by Rs 2-3.5 lakh (25-30% reduction). The Tiago EV, Tata’s most affordable electric car, could see a price drop from Rs 7.99 lakh to around Rs 5 lakh, bringing it closer to a traditional ICE car’s price.

MG First to Introduce BaaS in India

During the launch of the Windsor EV in September, MG became the first car brand to offer a BaaS programme. The base Excite variant costs Rs 13.49 lakh (shell+battery), but under the BaaS scheme, this comes down to Rs 9.99 lakh with an additional Rs 3.50 per km battery rental charge. This has allowed buyers to access the EV at a much lower initial cost, with the flexibility of paying for the battery usage based on actual usage. MG has also introduced BaaS to other models, like the Comet EV and ZS EV.

Why is Tata Considering BaaS Now?

The decision to consider the Battery-as-a-Service model comes at a crucial time for Tata. Over the last six months, the carmaker has experienced a steep decline in EV sales, about 16% in Q2 of this fiscal year. During this period, Tata sold 15,642 units compared to 18,615 units in the corresponding quarter last year. September 2024 alone saw a 23% decline, with 4,680 cars sold, down from 6,050 cars in the previous year. 

Tata’s Shailesh Chandra attributed this slowdown to factors like the removal of tax incentives in key states and the end of the FAME II scheme. Further, seasonal circumstances and slow consumer demand have prompted Tata to look for new strategies and regain market momentum. 

This could be a crucial factor in building trust among Indian consumers, who are still wary of EV technology, especially regarding battery life and replacement costs. By offering a rental scheme, Tata would take on the responsibility of maintaining the battery, which could reduce concerns about long-term reliability and resale value.

What Experts Say?

Industry experts are calling the introduction of BaaS a game-changing move for the Indian EV market. "This model not only reduces upfront costs but also gives consumers confidence that the battery will be maintained by the manufacturer, even when the vehicle changes hands," S&P Global Mobility Director Puneet Gupta said. The model can lower the cost of EV ownership and reassure consumers about the longevity and performance of the battery, he added.

Also, read Mahindra XUV e9 Coupe SUV to Have Three Screens, Two Battery Packs

Source - Moneycontrol