India is spearheading a massive e-mobility revolution as part of its ambitious green energy transition endeavours. The country aims to reach net zero emissions by 2070 and the transportation sector is expected to play a key role in achieving this goal. Moreover, by 2030, India intends to achieve the electrification of 70 per cent commercial cars, 30 per cent private cars, 40 per cent buses and 80 per cent two- and three-wheelers. Over the past few years, the country has made several strides in the e-mobility sector with a surge in the adoption of electric vehicles (EVs). The government has implemented several measures to promote electric mobility in the country, including the provision of subsidies and tax breaks to buyers of electric cars. Furthermore, to encourage the adoption of EVs, the Department of Heavy Industries announced subsidies worth Rs 100 billion under the Faster Adoption and Manufacturing of Electric Vehicles Phase II (FAME II) programme. Yet the sector is not without its challenges. Limitations exist in terms of lack of adequate and reliable public charging infrastructure and the consequent lack of confidence among potential users. Moreover, the market depends highly on subsidies, which limit market forces to work on their own and bring in competition. At the fourth edition of the “EV Charging Infrastructure in India” conference organised by Power Line, charging infrastructure developers and fleet operators shared their perspectives on the current status of EV charging infrastructure in India, the challenges faced and the way forward for fleet operators. Edited excerpts…
The EV charging infrastructure market in India has evolved over the past four to five years and has witnessed tremendous growth, irrespective of the associated challenges. The charging infrastructure is not enough in the country at the current ratio of 1:7, that is, seven vehicles charging at one charging point. The ratio witnessed in developed countries has not yet been achieved in India.
As of now, we have supplied more than 1,000 chargers. We are in all segments of EV charging, including public charging, residential charging, fleet charging and workplace charging. Each segment has a very different sets of challenges of its own. We are also involved in last-mile mobility and we are working with clients such as Amazon, Flipkart and Porter for last-mile cargo transportation. As of now, we have more than 600 vehicles on the ground, running in different cities doing last-mile cargo transportation, and we are adding more than 150-200 vehicles on a monthly basis. As of now, we have 60-70 points where multiple vehicles can be charged simultaneously. In addition, we have our own technological systems in place such as applications public charging and for captive last-mile mobility.
Issues are present with respect to residential charging as not everyone has parking space inside building premises, thus parking on roads. In this scenario, the problem of where to install a charger exists. Thus, shared charging infrastructure has to be present. In addition, workplace charging infrastructure is the key.
Interoperability is linked to the basic problem of utilisation – even if a company has the biggest network, it may not have network or chargers available at other places in India even after five or six years. With lack of adequate charging infrastructure, it is important to link the chargers of different players with the same network so that customers can access them, irrespective of company. Going forward, interoperability of chargers and payment gateways will play a major role in enhancing the EV ecosystem.
New innovative solutions from India’s perspective will be required to resolve all these issues. With respect to public charging infrastructure, I believe that government and private participation will be key, because not everything can be solved by a private player. Also, there is a requirement for land and electricity load, for which some of the risks have to be taken by government entities. There has to be a shared risk mechanism for that model to work.
Lithium Urban Technologies is a corporate employee transportation company and runs a fleet of over 3,000 EVs across 17 cities in India. The company has no ICE vehicle in its fleet. We began by developing our own charging infrastructure and did not want to depend on third-party charge point operators. This helped us a lot with strategic placement of chargers and optimising our operations. Now, we have close to 650 DC fast chargers across the country. We have now diversified into last-mile transportation as well.
With respect to savings with EVs, it is more applicable to personal vehicles than commercial vehicles as even though the upfront cost is higher, the running cost of an EV is only 30 per cent that of an ICE vehicle. An EV becomes cheaper than ICE if it is used for more than 150 km per day. So, for companies that use transportation 24/7 and are able to use EVs for 200-250 km per day, the economics make more sense. These companies are able to save 15-20 per cent of their total transportation budget. A key incentive for corporates to shift to EVs is that the transportation budget can be forecast better because the risk of high fuel price volatility is absent. With increasing range per charge, corporates are now more comfortable with shifting 100 per cent to EVs. Going forward, I do not foresee such conversions happening towards electric buses because the upfront cost is almost three times higher than ICE buses.
Going forward, subsidies should be announced based on the utilisation rather than the asset purchased. That is, a mechanism needs to be in place through which a user is able to get the subsidy on a per km basis.
As far as the EV charging landscape is concerned, India has taken several strides over the past few years. Certain events have enabled this industry to grow at a faster pace. First is the delicensing mandate for setting up charging infrastructure in public places. Since electricity in India is a regulated sector, this was a welcome step for potential and existing charging point operators (CPOs). The second key milestone was the Ministry of Power’s mandate to state regulators to allow a separate customer category called CPOs and offer separate EV tariffs, not as part of existing connections. These steps have pushed India’s EV journey forward.
Furthermore, while there is an existing perspective that the demand and utilisation of home chargers is higher than that of public chargers, our experience in the European market suggests that once EVs become mainstream, people tend to demand more public charging infrastructure and rely less on home charging. There is no doubt that home chargers enable early adoption of EVs but as EVs proliferate further, the demand for public chargers will increase. Considering India’s case, the initial consumers of EVs in India are primarily people who possess a relatively higher purchasing power and can afford to establish home chargers. However, it is important to note that over 70 per cent of car owners in India do not have authorised designated parking facilities. Thus, if this segment of the population adopts EVs, they will most definitely require a robust public charging set-up to fulfil their charging requirements. As per our estimates, EVs may be mainstreamed in India by 2030, while cost parity may be achieved by 2026. Dedicated home charging means creating additional infrastructure, which will be underutilised and will entail additional costs. Moreover, in a country where we have constraints on resources, encouraging people to invest in a suboptimum asset category – home chargers – may not be the most efficient strategy going forward. Instead, community charging within gated apartments may be more optimal. Thus, future planning decisions regarding home and public chargers need to consider these crucial aspects of the Indian consumer market.
In terms of interoperability issues, there are two elements that need to be focused upon. First, various CPOs exist with different networks across the country. Each CPO mandates a consumer to use individual applications, and register and add a wallet to charge on the network. For a long journey, a consumer may have to download multiple apps, making it a cumbersome task. Therefore, integrating all CPOs on to one platform will be crucial to improve customer experience and confidence.
Second, eventually, the need for an application may be removed entirely if consumers are allowed to charge their EVs without any registration as done at petrol pumps. A QR code can be scanned to make the payment using various methods such as UPI, net banking, cards or wallets, as per consumers’ preferences. Open loop multipurpose prepaid cards may also be utilised to make payments to CPOs. To further ease consumer experience, CPOs may share their APIs with Google to allow consumers to easily discover and locate charging points using Google. These steps will not only help reduce the challenges faced by consumers but also improve returns for CPOs.
Finally, going forward, a key challenge that demands focus is the form of subsidies given in the sector at present. These subsidies are mostly given to PSUs for setting up charging infrastructure. This has the potential to distort consumer expectations and negatively impact private investment in the sector. PSUs are able to lower the selling price to consumers due to subsidies, which can become a significant disadvantage for private players. Thus, the subsidy should be limited to equipment, while pricing should be left to the market. Removing restrictions on price would help maintain competitiveness among various players and help in the recovery of costs in the long run.
Uber currently has more than 5,000 EVs on its platform. In our total fleet, the penetration rate for electric three- and four-wheelers is around 2 per cent. In contrast, the penetration is substantially higher for two-wheelers. Of all categories that we work in, for two categories (two- and three-wheelers) the unit economics and total cost of ownership (TCO) have started to work in large pockets across our locations. A key reason for better economics for electric two-wheelers is that their price has come down and is on par with ICE counterparts. Also, battery swapping has become feasible and there are players providing battery-as-a-service for this segment. For the four-wheeler segment the unit economics and TCO work only in very specific conditions and markets. Unit economics improve dramatically as utilisation rises because the capital expenditure is high and the operating expenditure is essentially 30 per cent of what it is for an ICE vehicle. As Uber is an asset-lite company, it does not own any charging infrastructure directly. The company does have partnerships, which give it exclusive accessibility to charging infrastructure.
The pricing and fare difference between EV and ICE vehicles depends on how the fixed cost is recovered over every trip. In some regions outside India, EVs are more economically feasible as a product and buyers are prepared to pay higher fares just because of environmental considerations. Due to this, we can set the fares significantly higher. Also, essentially, the need of the hour is to pay for the higher upfront cost of the vehicle, the asset and the infrastructure needed for charging.
India is one of the countries where slow charging is practised, making it a market that is unlikely to learn from more developed markets such as Europe and the US. If we look outside India, the majority of vehicles are actually capable of DC rapid charging. Currently, slow-charging products need eight to nine hours to charge fully, which significantly reduces utilisation. In contrast, fast DC charging vehicles need only 90 minutes to charge fully, allowing for a second shift. If we change this, utilisation may increase significantly.