Introduction:
The battery is the most expensive part of an EV and accounts for almost 40% of its cost. By leasing or renting the battery, the upfront cost of an EV can be significantly reduced.
In a Battery-as-a-Service (BaaS) scheme, EV owners purchase the vehicle without the battery, thereby reducing the initial cost of the EV. The battery is provided via subscription or rental agreement, which is paid for by a monthly subscription fee or an EMI. In essence, the cost of the battery is spread out in more manageable payments during the course of the battery subscription period.
MG’s Battery-as-a-Service (BaaS) Program:
MG’s BaaS is not just a battery rental scheme; it is a tailormade finance scheme. Essentially, the customer pays the cost of the vehicle up front (or through a loan), and the battery is paid for separately on a rental basis. Also, there’s no battery swapping involved, which is usually there in BaaS schemes. MG is completely waiving off the EV charging cost for the first year when using a public charger. One simply has to route the process through the MG eHUB app which lists multiple public EV charging stations, and the amount will be directly billed to the company.
For the first year, MG electric car owners can charge their vehicles for free at public EV charging stations listed on the MG eHub app. After 1 year, car owners will need to pay per unit at the charging stations, which is approximately Rs 15/kWh at 30kW CCS2 DC chargers & Rs 18.49/kWh at 60kW CCS2 DC chargers.
The MG Windsor EV comes with a 38 kWh battery. Post the 1 year free EV charging period, customers will have to pay at EV charging stations (if they choose to continue charging at public charging stations). At 30kW fast chargers, charging the EV from 20-80% will cost around Rs 345. At 60kW fast chargers, it’ll cost Rs 425. Once charged, the car will run around 265 km before needing another trip to the EV charging station. If the car owner drives 1500 km per month (50 km per day), he/she will need to make a trip to the charging station 5-6 times a month. This makes up the monthly running cost to be around Rs 1900 (with 30kW fast charging) or Rs 2340 (with 60kW fast charging). Post one year, car owners will have to shell out this much for public EV charging in addition to the Rs 5250 they are paying as battery rental. More on this below.
With battery as a service, the owner of the car technically does not ‘own’ the battery but is instead leasing it from the company. When you buy MG electric cars, you sign up for two contracts; one is the cost price of the car (which could be on EMI) and the other is a lease contract where you pay for the battery.
MG is offering buyers two purchase options for its electric cars (MG ZS EV, MG Comet EV & the new MG Windsor EV): either buy the car outright or buy it with a battery rental plan.
MG Windsor EV battery rental:
Let’s take the newly launched MG Windsor EV as the subject of our explanation process. With battery subscription, the base model of the Windsor costs Rs 10 lakh. The battery costs Rs 3.50 lakh. If you want to buy the car outright (with the battery), it costs Rs 13.50 lakh.
If you opt for the BaaS scheme, MG will charge you for every kilometre you drive, effectively on a ‘pay-as-you-go’ model. MG has fixed that to Rs 3.50 per kilometre (which is comparatively much lower than a petrol or diesel SUV, which costs between Rs 6-10 per km running cost).
The battery rental, where you pay for the battery @ Rs 3.50 per km, covers 1500 km per month running, which works out to be Rs 5250 per month.
MG has joined hands with 4 finance companies to come up with its unique BaaS scheme. Let’s have a look at each of the rental option for the Windsor EV:
Bajaj Finserv: The customer will be charged Rs 3.50 per km for a fixed usage of 1500 km. No additional charge will be levied for any extra kilometre run.
Hero FinCorp: Same charges as Bajaj Finance, but there will be extra charges for extra kilometres driven beyond 1500 km.
Ecofy: Customers with low credit score can choose this finance option. The cost per kilometre charge is higher than Bajaj & Hero, at Rs 5.80, for 1500 km. There will be additional charges for extra kilometres driven beyond 1500 km.
Scan the barcode and download the EV Joints app to find 6,000 EV charging stations across various networks.
Click & download the EVJoints app to find 6,000 charging stations.
VidyutTech: The simplest finance model is being provided by VidyutTech. There is no fixed monthly charge. The customer will be charged as per kilometres run, i.e., Rs 3.50 per km run. If there’s no running, the customer won’t be charged. However, there is a security deposit that the customer needs to make.
In case of the Bajaj & Hero, the customer will pay a minimum monthly charge of Rs 5250 (3.50 x 1500), plus extra charges for additional distance for Hero. In case of Ecofy, the minimum monthly charge will be Rs 8700 (5.8 x 1500).
Like people recharge their prepaid mobiles, MG electric car owners will have to buy battery recharge packs to run. The minimum recharge pack is for 1500 km, and unlike prepaid mobiles, this recharge pack will not expire. The car owner will spend Rs 5250 to buy the 1500 km battery pack. Once you have driven 1500 km, you’ll be notified to pay for another battery pack. It’s just like refueling your petrol/diesel car, once a month. You can buy a battery pack that covers a specific distance, say 1500 km, and use it as you go. No expiry date on that battery pack. It’s like buying bread which does not go stale. You can take your time while consuming. Different finance companies have different subscription plans which are either prepaid or postpaid, and have different minimum monthly running. Like for VidyutTech, customers will need to prepaid recharge via the Vidyut app. Depending on the kilometres the customer runs the vehicle, the amount will be calculated.
Comparing Windsor EV with BaaS & Ertiga Petrol:
The Windsor EV base model costs Rs 10 lakh with BaaS. With Rs 3.50/km running cost, the customer will spend Rs 3.50 lakh for 1 lakh kilometres. Let’s compare it with the Maruti Suzuki Ertiga (automatic transmission model), which costs Rs 11 lakh.
With the Windsor EV, the customer is getting 60% assured buyback, that is worth Rs 6 lakh.
The mileage of the Ertiga is around 20 km/l. With petrol at Rs 100 per litre, the running cost comes out to be Rs 5/km (100/20). Therefore, the customer will spend Rs 5/km or Rs 5 lakh for 1 lakh kilometres.
Approximate resale price for the Ertiga after 1 lakh kilometres is around Rs 4 lakh.
So, the Ertiga (AT) @ Rs 11 lakh + 5 lakh running cost – 4 lakh resale = Rs 12 lakh net expense.
And, the Windsor @ Rs 10 lakh + 3.50 lakh running cost – 6 lakh resale = Rs 7.50 lakh net expense.
This is a simple example of how cost-effective MG’s BaaS is for long distance travel.
Conclusion:
JSW MG Motor India has made an attempt to disrupt the electric car market in the country with its unique BaaS scheme. It will be interesting to see how MG’s competitors, especially Tata Motors react to this. More importantly, it will be interesting to see how the Indian customers react to this unique attempt.
