India races to trace EV batteries

For many Indian consumers, the decision to buy an electric car still comes down to two questions: Can I trust it to take me where I need to go without recharging, and will I be able to sell it later?

The first is range anxiety. The second is resale anxiety.

While recent charging infrastructure buildout is alleviating anxiety about how far an EV can travel between charges, many people are hesitant to buy an e-car because they're uncertain of its resale value. Assessing the resale value of an electric vehicle requires a universally recognised way to assess the health of the battery, the most expensive part of an EV.

India has initiated discussions about putting such a system in place – a battery pack "Aadhaar" – and this story examines why this matters.

What is battery "Aadhaar"?

Range anxiety and resale anxiety matter enormously for the next phase of India's EV transition. Electric two- and three-wheelers have driven most of the country's EV sales so far, but the much larger prize is the electrification of passenger cars and freight. Range anxiety has been quelled in many regions, even on long-distance routes, thanks to new and upcoming charging infrastructure.

However, potential customers remain on the fence because they worry there will be no takers for an e-car in the secondhand market.

Unlike an internal combustion engine (ICE) car, in which the condition of the engine and other major components can be assessed relatively easily, the most valuable and consequential component of an EV is the battery, and it is one of the hardest for a used-car buyer to evaluate. Battery health, charging history, degradation and repair or replacement records can have a significant bearing on an EV's value. But, currently, there's no standardised battery intelligence tracking system to verify this history.

This is what makes battery traceability a consumer issue, and potentially a brake on the development of India's second-hand electric vehicles market. This is before we even consider it a recycling and energy security issue.

Other major EV markets are beginning to address this through digital battery records. The European Union is set to introduce a 'Battery Passport' for EV batteries next year, while China has already implemented a digital identification system. India has constituted a committee to develop a similar framework, the Battery Pack Aadhaar System, but the initiative remains at the draft and consultation stage.

The absence of a battery Aadhaar could become increasingly important as India's EV fleet grows. Frost & Sullivan projects that electric passenger-vehicle sales could cross 300,000 units in 2026, up from fewer than 200,000 in 2025. Currently, however, EV penetration – the share of EVs in the total vehicles on the road – remains relatively low at around 8.5%, with two- and three-wheelers accounting for the overwhelming majority of sales.

For India's four-wheeler and freight EV markets to move beyond early adopters, consumers will need more than attractive purchase prices and lower running costs. They will need confidence that an EV can handle the journey, that its battery will retain meaningful value and that the vehicle will remain saleable when they are ready to upgrade.

What happens without traceability

The Strait of Hormuz closure and the resultant unpredictability in fuel prices and countries' energy security plans have sent EV adoption soaring in many countries. EV sales in Europe accelerated by about 30% year-on-year in the first quarter of 2026. The Asia-Pacific region, excluding China, saw an 80% surge.

In India, too, consumers are keen to adopt e-mobility as fossil fuel prices spiral, and Frost & Sullivan's projections capture that optimism. But, not only is battery Aadhaar still at discussion stage, the sector is also dealing with expensive loans, higher interest rates and longer loan repayment periods for buying an EV.

As a result, EV penetration in India remains at barely 8.5%, far lower than China's 62.9% and the EU's 17.4%. Two- and three-wheelers drive EV sales in India, accounting for 93% of the market, according to a report by the India Energy Storage Alliance (IESA).

EVs are crucial to decarbonise road transportation, which contributes to nearly 12% of energy-related CO2 emissions, a major contributor to air pollution, and an economic burden on India's economy.

A direct result of the absence of battery intelligence is expensive loans and insurance for EVs, compared with those for ICE vehicles, a recent study by Natural Resources Defense Council (NRDC) India, Alliance for an Energy Efficient Economy (AEE) and IIT-Delhi says.

Loans and insurance cost more because batteries account for more than 40% of an EV's price. The lack of standardised data on the composition and health status of batteries prevents financial institutions from determining interest rates and loan tenures for new and used EVs.

Banks "cannot offer finance on the resale of the vehicle because they don't know what's going to be the value or how much life is left in the vehicle," said Nitish Arora, co-author of the study, in a telephonic interview.

The study calculated that EVs have 10-30% lower loan-to-value ratios, about 1-9% higher interest rates, and nearly 6-18 months shorter repayment schedules than conventional vehicles. EV financing remains significantly lower than that of internal combustion engine (ICE) vehicles, it states, blaming broader market and institutional hesitations about technology risk and uncertainty about resale and salvage value.

How banks calculate EV loan rates and tenures

Indian banks determine the loan period and initial down payment based on a customer's CIBIL score, a credit score that shows a customer's loan worthiness. A borrower with a CIBIL score of, say, 800, may be eligible for an ICE car at zero down payment but that won't be the case with electric cars, said Arora. "If the score hovers around 650 then interest rate for ICE vehicles would be 9% but for EVs it will be around 12-13%."

Apart from expensive loans, unpredictable resale value is a major concern for EV owners. Autocar India and Spinny, a used car platform, said in a report that unlike ICE vehicles, EVs currently lack predictable resale benchmarks due to rapid technological evolution, concerns around battery health and changing consumer expectations.

The report suggests that improving transparency around battery performance, battery health assessment and residual value benchmarks will be critical to supporting the next phase of EV adoption in India.

Mining critical minerals from spent batteries

Usually, EV batteries comprise anodes made from graphite and cathodes made from a mix of lithium cobalt and other minerals. When the batteries reach the end of their life, they are shredded into powder to make black mass. Recyclers purchase the black mass by weight to extract metals. On average, recyclers strive to extract up to 90% of critical minerals from the black mass.

What the guidelines propose

The draft guidelines for battery pack Aadhaar issued by the Ministry of Road Transport and Highways, complement India's extended producer responsibility (EPR) and battery waste management compliance policies. They propose that original equipment manufacturers and battery suppliers will maintain digital record each battery across its lifecycle, using static and dynamic data, and upload it on the official battery pack Aadhaar portal.

The vehicle's battery pack will be assigned a unique 21-character alphanumeric identity and QR code. The static data will reveal the amount of critical minerals, technology and other materials used in manufacturing the battery. The dynamic data will record a slew of information, such as the battery's driving range and ability to hold a charge, both of which depend on a multitude of factors, such as the vehicle's maintenance and usage.

Most of the dynamic data will get uploaded to a centralised portal. The data will help assess a battery's state of health, determine the value of EVs and assist financial institutions in working out loan interest rates, tenure and insurance costs.

It will also assist the government in tracing batteries, and monitor the extraction and recycling of the critical minerals. Recycling of critical minerals is important, as 80% of lithium and rare earth elements are currently imported from China.

The frequently flaring geopolitical tensions and overdependence on China for critical minerals make EV battery recycling crucial for India, said Anmol Jain, an electric mobility expert at AEEE.

How battery pack 'Aadhaar' would work

Under the draft guidelines, the Battery Pack Aadhaar Number (BPAN) is intended to create a traceable digital identity for an EV battery through its lifecycle, from manufacture and use to reuse, repurposing and recycling. The system is designed to support second-life applications, including resale, while making battery recycling more efficient.

Battery manufacturers would generate the initial battery record and provide the required data. Authorised testing agencies would verify specified compliance parameters, while a designated national agency would generate the BPAN and its associated QR code. Vehicle manufacturers would link the BPAN to the vehicle's record in the VAHAN database, while the vehicle or battery could carry the number or QR code for identification.

The record would contain both static information, such as battery chemistry, manufacturing details and material composition, and dynamic information, including the battery's state of health and subsequent use. Different stakeholders would have different levels of access. Manufacturers and other industry players would provide and manage much of the data, with government agencies responsible for regulation and oversight. Vehicle owners would have access to key information, including static data and state-of-health information, while information related to recycling and extended producer responsibility (EPR) would be available to the relevant government agencies.

If implemented effectively, the system could bring together information that is currently scattered across manufacturers, EV makers, battery-management systems, regulators, recyclers and consumers. It could help answer basic but important questions about a battery's lifecycle: What materials does it contain? Where did they come from? What is its carbon footprint? How old is the battery, how much capacity does it have left, has it been reused or repurposed? Who has handled it, and when it reaches the end of its useful life, where does it go?

But the system also raises some difficult questions.

One is whether a battery can actually be tracked after it leaves its original vehicle. Under the proposed framework, information on subsequent use would continue to be recorded even when a battery is repurposed, for example as a household energy-storage system. However, the quality of such tracking will depend heavily on whether the entities handling the battery continue to upload the required dynamic data.

Carbon-footprint data presents another challenge. Indian battery assemblers and EV manufacturers may have to obtain information from multiple suppliers, potentially across international supply chains. Verifying the accuracy and consistency of this data could prove difficult.

There is also a vulnerability built into the system: what happens if the original manufacturer shuts down? Since much of the dynamic data is expected to be uploaded by OEMs and other designated entities, tracking a battery's subsequent condition could become difficult if those entities cease to operate.

And then there is the larger question of formal versus informal recycling. China struggled to establish effective battery traceability and recycling systems in its initial phase and has since moved towards stronger obligations and penalties for EV manufacturers, alongside recycling targets. India could face similar challenges if batteries move outside the formal recycling system.

These are not necessarily flaws in the concept of Battery Pack Aadhaar. They are questions that will determine whether it works in practice. The draft guidelines bring extended producer responsibility (EPR) and related regulatory mechanisms into the framework precisely because battery traceability cannot be separated from what happens at the end of a battery's life.

Experts therefore see pilots as an important next step. Testing the system with real batteries moving through manufacturing, vehicles, second-life applications and recycling could reveal the gaps that are difficult to anticipate on paper. The effectiveness of Battery Pack Aadhaar will ultimately depend less on the QR code itself than on whether the ecosystem behind it continues to update, verify and act on the information it carries.

Industry scepticism on data sharing

Despite the benefits, original equipment manufacturers (OEMs) are sceptical about the slew of data governments require to develop the system, including proprietary information and carbon footprint data.

"Battery manufacturers either don't want to reveal this data due to a trade secret issue or a section of them don't have access to it because they import the cells," Nitish Arora said.

OEMs are also concerned about uploading data to a centralised server, fearing it might be misused. The draft guidelines' clear categorisation of data that will be in public and private domains has failed to allay industry fear.

Jain of AEEE said the industry could be more comfortable sharing information in phases, and a good starting point could be to prioritise sharing of data on battery health. "In the later phases, data such as the origin of the battery's material and details about the carbon footprint could be added," he said.

Industry is moving already

With used electric cars struggling to get the right value in the market due to the missing battery state of health, some industry players have developed solutions.

Spinny and JSW MG Motors India have announced a joint venture, which will provide customers with state-of-health certification and OEM warranty continuity for used MG EVs.

A few start-ups are using a mix of technologies to fill the state-of-health gap by providing financiers with battery health data. The Energy Company uses hardware and digital twins, while EV Doctor uses Bluetooth, plug-and-play testing, and artificial intelligence to assess battery health, safety, faults and performance in real time.

However, observers of electric mobility believe that relying entirely on private entities for battery health data could be counterproductive. "Private players could also manipulate the batteries' health data," Jain said, saying an independent validation process is necessary.

Concern over data manipulation and recycling of EV batteries are indeed a global issue. Governments are regulating battery data, the European Union and China have already completed pilots of a similar system, called battery passports, to win the confidence of industry, financial institutions and EV owners.

Lessons from China and EU

China has 1.2 million end-of-life batteries from EVs sold in 2018 – average battery life was around eight years at that time – and these are piling up at the doors of the informal recycling sector, causing incidents of fire and pollution.

China's formal recycling sector processed only 25% of the total battery waste in 2020, and the hope is that the battery passport system will help trace batteries, hold owners and automakers accountable, and enable authorised recyclers to fulfil their mandates. This July, the Chinese government announced a national plan to recycle one million metric tons of used batteries annually by 2030.

For India, faster rollout of battery Aadhaar is crucial as many states are encouraging app-based taxi services, delivery services and public transport providers to adopt EV fleets, announcing incentives for buying EVs. A glut of used batteries is on the way, and formal battery recycling infrastructure needs battery Aadhaar.

"Battery pack aadhaar involves a lot of players such as international manufacturers, recyclers, retailers, financial institutions, and re-users, making it a tedious and expensive procedure," said Charith Konda from Institute for Energy Economics and Financial Analysis (IEEFA). "We can take cues from the EU that has allayed industry fears and compliance requirements."

The EU ran three pilot projects and involved major battery manufacturers and OEMs from across the globe, including China, before formalising its battery passport plan. On the contrary, India's committee for development of battery pack aadhaar system comprises mainly of government bodies, though it empowers the committee to ask car makers and OEMs to weigh in.

India's EV sector, however, is very different from Europe's. Two- and three-wheelers dominate the market, costs are tightly constrained and the battery ecosystem includes a much wider range of players at very different levels of technological maturity. The draft itself acknowledges this, calling for an "India-first, practical implementation pathway" that avoids imposing the data burden and infrastructure costs of the European system on mass-market batteries.

That makes the next phase critical. Battery Aadhaar will have to do more than create a unique number and a QR code. It will have to persuade manufacturers to share reliable data, ensure that the information remains updated as batteries change hands and uses, and give recyclers and financial institutions enough confidence to act on it. It will also have to work for India's enormous two- and three-wheeler market, where affordability and informal-sector participation could determine whether the system succeeds or remains largely on paper.

The prize is bigger than better resale values. A functioning battery identity could help turn an EV battery into a trackable asset, allowing its value, health and materials to be followed through multiple lives and ultimately into recycling.

This article is also published on Climate Action Live. illuminem Voices is a democratic space presenting the opinions of leading Sustainability Thought Leaders, their views do not necessarily represent those of illuminem.

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