MG’s Windsor has popularised Battery-as-a-Service (BaaS) in India’s private EV market.
Buyers pay less upfront by leasing the battery, turning it into a running expense.
Moderate drivers break even over a decade, with the benefit of lifetime battery coverage.
High-mileage users end up paying more in rental fees than outright purchase.
A GST mismatch adds to costs, but consumers are drawn to the lower entry price.
On my daily commute to my office in Delhi, I pass a temple where new cars are inaugurated almost every day. I noticed a striking pattern recently: Over the last five days, every vehicle garlanded at the temple has been MG Motor’s Windsor, the compact electric crossover launched last September.
When JSW and MG first introduced the Windsor with a battery-as-a-service (BaaS) option, I doubted whether the idea would take off. The maths seemed skewed — the car itself attracts just 5 per cent GST, while the BaaS service is taxed at 18 per cent.
Why, I wondered, would anyone choose to pay a higher tax on the costliest part of the vehicle? Yet, family after family opting for the Windsor suggests otherwise. The lure of a lower upfront price appears to have outweighed concerns about a higher overall cost of ownership.
BaaS flips the traditional car-buying model on its head. Instead of purchasing the vehicle with its battery, buyers pay for the car minus the battery — slashing lakhs off the selling price — and then rent the battery on a usage basis. Think of it as buying a car, battery cost not included.
MG’s Windsor Excite variant is priced at about Rs 9.99 lakh ex-showroom under BaaS, compared with around Rs 14 lakh with the battery. The difference, roughly Rs 4 lakh, is essentially the battery’s cost. Instead of paying that upfront, buyers pay per kilometre — initially Rs 3.5/ kilometre (km), later revised to Rs 3.9/km — with some finance partners requiring a minimum of 1,500 km a month.
The battery, meanwhile, remains the property of MG’s finance partners. The customer signs one contract for the car and another for the battery lease. Charging remains the owner’s responsibility — you plug in and pay your electricity bill — but the battery itself comes with an unlimited-kilometre lifetime warranty for the first owner. If it degrades or fails, MG replaces it.
The genius of BaaS lies in how it shifts costs over time. Consider two Windsor buyers: one pays Rs 14 lakh upfront with the battery, while the other pays Rs 10 lakh plus a per-kilometre rental. Over ten years and 1,00,000 km of driving, the renter will have paid roughly Rs 3.5-4 lakh in fees, almost identical to the outright cost of the battery. For a moderate driver, the sums break even, with the added benefit of lifetime battery coverage.
The scales tip with mileage. A low-use driver covering 6,000 km a year might pay only Rs 2-2.5 lakh in fees over a decade — far less than the Rs 4 lakh they would have shelled out for the battery. A high-mileage driver covering 15,000 km annually, on the other hand, could rack up Rs 5-6 lakh in rental fees, paying more than if they had bought the battery outright. The model, then, is not universal; it rewards light and average users but penalises heavy commuters.
India’s GST regime complicates matters. Electric vehicles (EV) attract just 5 per cent GST, whether sold with or without batteries. But battery services — rentals, swapping, or subscriptions — fall under the 18 per cent slab. This means every per-kilometre payment a BaaS customer makes is taxed more heavily than if they had simply bought the battery as part of the car. Over years, that adds up.
Industry associations have lobbied to align GST on BaaS with EVs at 5 per cent, arguing that the higher rate undermines the model’s promise. The government has acknowledged the anomaly, but so far the gap remains.
For now, customers seem willing to absorb it. Perhaps because the tax bite is hidden inside a manageable monthly bill, unlike the sticker shock of a Rs 14 lakh upfront price.
BaaS offers clear benefits. It lowers the entry barrier, making EVs financially accessible to a broader audience. It provides peace of mind on the most expensive component, the battery, by shifting the risk to the manufacturer. And it lets buyers treat the battery as fuel — an operating expense rather than a sunk capital cost.
But it comes with strings. High-mileage drivers pay more over time. Many plans require minimum monthly commitments, turning it into a quasi-subscription regardless of usage. Resale is complicated — the second owner must either continue the lease or buy the battery. And of course, the GST mismatch remains a structural disadvantage.
The ideal BaaS customer, then, is a budget-conscious, moderate-use driver. Someone commuting 30-50 km a day, who wants a new EV without the burden of a heavy loan. For them, the economics are neutral-to-positive and the peace of mind invaluable. It also suits early adopters who plan to upgrade in a few years and can rely on MG’s 60 per cent assured buyback after three years.
For heavy highway commuters or those who value the simplicity of outright ownership, the conventional model remains the better choice. And it’s worth noting that, with or without BaaS, the total cost of owning an EV remains significantly lower than that of a comparable internal combustion engine vehicle.
Standing at that temple in Delhi, watching one Windsor after another being garlanded, it is clear that MG has struck a chord. The BaaS model may not yet dominate sales, but it has cracked open the idea that owning a car need not mean owning every part of it. If tax policy evolves to support it and if rivals such as Tata or Hyundai join in, BaaS could become a serious lever for mass EV adoption in India.
For now, it is less a revolution than a conversation starter — a bold experiment that has already nudged thousands of Indian families into electric mobility. Whether it scales or not, MG’s Windsor has ensured that the country is no longer just debating when EVs will be affordable, but also how they will be financed.