MG Motor India’s recent introduction of a Battery-as-a-Service (BaaS) model for its electric vehicles marks a radical approach to electric vehicle (EV) ownership in India. We had an interesting conversation with Satinder Singh Bajwa, MG Motor India’s Chief Commercial Officer, where he urged consumers to take a step back and study the benefits of the model, and then accept the benefits of the model.
By separating the battery from the vehicle’s upfront cost, the carmaker aims to lower the acquisition price of models like the Windsor, Comet, and ZS EV, making EVs more financially accessible. However, despite its financial benefits, the BaaS model is likely to face considerable challenges in gaining acceptance among Indian consumers who traditionally prefer full ownership of assets.
Reducing Cost Of Ownership Through Pay-Per-Use Battery Model
MG’s BaaS model allows buyers to purchase the vehicle without the battery, significantly reducing the vehicle's price. For instance, the Windsor EV’s base model is priced at INR 9.99 lakh ex-showroom, exclusive of the battery. Instead of a single loan covering the entire vehicle, customers can opt for two components: a fixed EMI for the vehicle and a variable cost for battery rental based on usage.
Battery costs are set at INR 3.5 per kilometre, with a minimum usage of 1,500 kilometres per month, meaning customers only pay for the battery power they actually use. Additionally, MG is covering public charging costs for the first year (through their charging app) offering further incentives to early adopters. From the second year, customers will pay INR 1 per kilometre for charging.
This structure creates a favourable cost comparison with petrol and diesel vehicles. As Bajwa pointed out, traditional vehicles in this segment cost approximately INR 8-10 per kilometre when factoring in fuel, maintenance, and servicing. In contrast, the Windsor’s combined costs for battery, charging, and maintenance come to INR 4.75 per kilometre from the second year. This setup holds promise for affordability, especially for consumers in Tier-2 and Tier-3 cities, potentially expanding the market for EVs beyond India’s urban centres.
Addressing Consumer Concerns Like Resale Value, Battery Life & Charging Access
Beyond cost MG Motor is actively tackling customer concerns that often deter EV adoption, including doubts about battery life and resale value. Bajwa highlighted a buyback offer allowing customers to return the vehicle after three years for 60% of its initial value, an assurance intended to ease worries about depreciation. Additionally, MG has committed to managing battery life, guaranteeing full support for as long as the customer owns the car. These steps aim to bridge the knowledge gap around EV longevity and assure buyers that battery-related risks are covered.
MG has also addressed charging infrastructure concerns by offering one year of free charging across public networks accessible via their app. Though research indicates that 85% of EV owners primarily charge at home, this offer seeks to enhance convenience and ease range anxiety for new EV owners, particularly those in less EV-dense regions.
Challenges In India’s Ownership-Centric Market
While MG’s BaaS model is innovative, it may face resistance in India’s ownership-driven market. Indian buyers have a cultural preference for owning the entire asset, especially with high-value items like cars. Bajwa acknowledged that convincing customers to accept a rented battery model will take time. The concept of paying separately for the vehicle and battery may initially be confusing, with potential customers wary of monthly battery charges in addition to their EMIs.
Another concern is familiarity; while BaaS is common in certain global markets, it’s relatively new to India. Many consumers are accustomed to traditional finance models where they own the vehicle outright once payments are completed. The BaaS model’s ongoing battery rental may appear as an additional, continuous expense, making the financial benefits harder to recognise at first glance.
Widespread EV Adoption Hinges On Market Education & Broader Support
MG’s BaaS model could encourage a major shift in the Indian EV market, especially if other automakers adopt similar schemes. Bajwa believes that industry-wide support could legitimise the model and alleviate customer doubts. Government backing and increased awareness efforts would further aid acceptance. While MG’s approach may seem unfamiliar now, a broader adoption by competitors could normalise BaaS as a practical EV ownership model accelerating India’s transition to green mobility.
For now, the BaaS model’s success hinges on customer education and a gradual shift in mindset towards flexible ownership. Although MG has made significant strides in addressing financial and practical EV adoption barriers, acceptance of BaaS may be slow reflecting a cautious but evolving market. As Bajwa emphasised time and continued industry support will likely determine how quickly the BaaS model gains traction among Indian consumers.
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