In a bid to make electric vehicles more attractive to consumers by addressing resale value concerns and higher initial acquisition cost, Maruti Suzuki plans to offer an assured buyback program and introduce Battery as a Service (BaaS) and subscription model for its first battery electric vehicle – eVitara.
Partho Banerjee, the company’s senior executive officer for marketing and sales, said concerns over the resale value of electric vehicles remain one of the major factors weighing on consumer confidence in EVs, apart from limited charging infrastructure, and the company plans to address this concern through an assured buyback program.
Unlike the broadly predictable resale values of ICE vehicles, EV buyers face significant uncertainty about future valuation for their vehicle. This concern is largely due to uncertainty over battery degradation, a critical issue since the battery accounts for approximately 40% of an EV’s total cost.
JSW MG Motor, some of the luxury carmakers and a few two-wheeler makers have also started offering assured buyback programs on their EVs to boost consumer confidence. For instance, JSW MG Motor offers an assured buyback plan for the MG Windsor PRO, which ensures that it will retain 60% of its value after three years.
Meanwhile, the higher upfront cost of electric vehicles continues to deter buyers in India’s price-sensitive market, even though EVs can offer a lower total cost of ownership over the long term.
Although the price gap between EVs and internal combustion engine vehicles had been narrowing, the introduction of GST 2.0 has altered that trajectory. The tax cut on petrol and diesel cars, while retaining the existing rate for EVs, has lifted overall vehicle demand but made electric models appear relatively more expensive to value-conscious buyers.
Battery-as-a-Service (BaaS) is a business model that aims to make electric vehicles more affordable and competitive with ICE models by separating the ownership of the battery from the ownership of the vehicle. The model consumers pay for battery usage on a subscription basis or per kilometre driven. This reduces the upfront cost of an electric vehicle as the battery accounts for 30-40% of the cost of an electric vehicle.
Maruti Suzuki believes BaaS could be attractive for consumers who do not want to pay a higher initial cost for an EV, and Banerjee confirmed that the company will launch the BaaS model for eVitara, which is expected to start sales in India in the coming months.
In the mass-market EV space, JSW MG Motor has introduced the BaaS with its Windsor EV, while two-wheeler manufacturers such as Hero MotoCorp and Ather Energy are offering similar schemes for their electric products.
Earlier this year, JSW MG launched the Windsor at a starting ex-showroom price of Rs 9.99 lakh, which excludes the battery cost. Under the BaaS model, the battery is provided on a rental basis at an additional cost of Rs 3.5 per kilometer.
However, some automakers are skeptical about the viability of the BaaS model for EVs, citing financial, logistical, and consumer value concerns. The country’s largest electric car maker Tata Motors, which had evaluated the potential of the BaaS model, sees it more of a marketing strategy than a practical solution, adding unnecessary complexity and cost to consumers.
However, Maruti Suzuki believes the BaaS could help address a key customer concern, noting that EV residual values largely depend on battery deterioration—an issue that can be mitigated through the BaaS model. ENDS