CarbonCopy explores how things stand currently in India’s EV market and what has to change to meet government targets
Walking through the entrance gate of my residential colony in Delhi last week, I had a minor run-in with the rider of an electric scooter who was delivering groceries down the street. I had stopped too soon and, given the mechanics of these vehicles sans roaring combustion engines, I hadn’t heard the scooter approach.
However, it proved to be a happy accident, as mutual apologies turned into a conversation about how he had bought the scooter (subsidised by the government and through his grocery delivery company), where he charges it once a day (at a public charging station in Okhla, to the city’s southeast) and the daily running costs (less than Rs 200 for charging, a little more when he needs overnight parking).
Electric vehicles (EVs) are today ubiquitous in Delhi, mostly as scooters and rickshaws, if not cars, given the state government’s generous subsidies and a two-decade-long nudge away from petrol and diesel-powered vehicles towards gas and battery-powered alternatives. In fact, in a response to Parliament this July, the ministry of heavy industries said that of the 1.33 million electric vehicles registered in India on that date, 156,000 were in Delhi. (The numbers exclude Andhra Pradesh, Madhya Pradesh, Telangana and the Lakshadweep islands, whose registrations haven’t been incorporated in the central Vahan database.) Only Uttar Pradesh, with 337,000 million registered EVs, has outpaced Delhi’s growth.
In the absence of a single clear policy on electric mobility, the Union government’s Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) II project, with its generous subsidies, plays the role of a flagship scheme, slowly nudging buyers towards EVs. Of the different vehicle categories—two-wheelers, three-wheelers, cars (divided respectively by their passenger or commercial purposes), trucks and buses—the e-rickshaw is by far the most popular under the scheme.
Electric two-wheelers account for about 3% of all two-wheeler sales today. Data from a recent study by Climate Trends and JMK Research and Analysis shows that electric three-wheelers, on the other hand, have surpassed 50% of all sales in that category. The study estimates that if this nearly 50% compounded annual pace of growth holds, India will sell around 19 million EVs by FY 2030 and electric two-wheelers will lead this charge.
The explosion of electric three-wheeler sales is not surprising, given their low operation costs. “A three-wheeler that runs 80-100 km a day requires a single charge for its 3kWh (kilowatt-hour) battery, going up to 4 units of electricity for the day,” says Vaibhav Pratap Singh, programme lead at the Centre for Energy Finance, within the policy think-tank Council on Energy, Environment and Water (CEEW). “Assuming an average tariff of Rs15 per unit, the fuel cost of an e-rickshaw is Rs60 a day, far cheaper than any of the fossil fuel alternatives. The daily distance covered by a privately owned car or bike is likely to be lower than this.” By comparison, an autorickshaw running the same distance consumes, on an average, 4-5 litres of petrol or CNG—and costs anywhere between Rs300-500 a day to run at current fuel prices.
The government’s think-tank NITI Aayog, in partnership with Rocky Mountain Institute (RMI) India, has said in the past that if FAME II and other measures are successful, India can expect to achieve EV sales penetration of 30% in private cars, 70% in commercial cars, 40% in buses and 80% in two and three-wheelers by 2030, if the auto industry continues at its current pace of growth for the next eight years. That’s an estimated 80 million EVs by 2030, more than four times as many that were calculated as currently possible in the previous paragraph.
Even if the country falls short of this ambition, India’s EV sector is still likely to be among the fastest growing in the world. A June 2022 study by the global management consultancy firm Arthur D Little believes that by the end of this decade, one of every 10 EVs sold worldwide will be in India. Making EVs cost-competitive with conventional ICE vehicles and bolstering the EV support system—especially charging infrastructure, component manufacturing, and after-sales service—will be crucial for EVs to turn the status quo on its head.
Juicing up your EV
With how an EV is currently designed, the lithium-ion battery is its most critical component. However, policies on where EVs can be charged, how much it should cost, quality standards for batteries and alternatives to charging have lagged the rollout of the vehicles themselves. In this vacuum, the really early EV adopters—primarily electric rickshaw drivers within the National Capital Region (NCR)—created makeshift solutions of their own.
Singh remembers how in his early days of studying the subject, he found that anybody looking to make a quick buck could offer overnight parking and home-charging facilities to early adopters of e-rickshaws in Delhi, a city where access to electricity and space is still a luxury.
“We looked at charging stations where BSES (an electricity distributor in the NCR) supplied power,” Singh told CarbonCopy. “There were some households that offered up to 30 charging points with overnight parking facilities. Given how cheap electricity is for people who can access it, you could ask for a 100% premium on cost from drivers.”
Under the FAME II scheme, the Ministry of Heavy Industries has sanctioned 2,877 public charging stations in 68 cities and 16 major highways. Of these, 50 have been installed so far. If India is to meet its 2030 EV generation targets, a CEEW analysis expects we will need over 29 lakh charging points installed across the country.
Given the slow pace at which the government is setting this infrastructure up, the private sector has rushed in, anticipating exploding demand. CEEW’s data estimates that there are 934 public charging stations in India (this excludes captive charging facilities that fleet owners might set up) with 2.55 charging points on average at each station.
“There’s not much working capital required to operate a charging station,” Singh says. “Once you’ve covered the cost of land and equipment, the only running cost is the electricity and states are now offering preferential tariffs for EV charging. The current average monthly utilisation of a charging point is under 8%. We’ve calculated that at a utilisation rate of 20%, the costs are covered. At 30-40%, the stations start to become profitable.”
In September, Union minister for road transport and highways Nitin Gadkari announced that his ministry is piloting an “e-highway” initiative (national highways for EV, or NHforEV) that promises a 30-day single-window clearance to anybody who wants to set up a charging station along designated highways. The first of these will be a 500km corridor on the Delhi-Jaipur-Agra corridor.
The electric mobility start-up SmartE was founded in 2014 to offer last-mile connectivity to commuters on the Delhi Metro. At one point, the company had more than 1,000 vehicles in its fleet and partnerships with major auto manufacturers. But this asset-heavy model was a deadweight on its balance sheet during the pandemic. In a recent conversation, Goldie Srivastava, co-founder and CEO, explained that they have since pivoted towards setting up charging infrastructure instead.
“Obviously, setting up charging stations is cheaper than owning and operating vehicles,” Srivastava said. “Now, we let the drivers buy their own vehicles while we take care of every post-sale need, and that’s primarily parking and charging. We have more than 1,500 charging points today spread across Delhi-NCR, where the rates of EV penetration are high and where we have a legacy relationship with the Delhi Metro for access to land near stations, and in some cities in Uttar Pradesh.”
Srivastava believes that EV growth, led by three-wheelers in India, will be fastest in the north and east once the Delhi market fully matures. “We’re seeing EV sales shoot up in Assam, Odisha, Bihar and West Bengal. Mobility markets in the south and west are more complicated; an e-rickshaw won’t suffice, they need an e-auto and currently, only two companies (Mahindra and Piaggio) manufacture this.” But this may change soon with more companies likely to join the fray.
The need for publicly accessible charging infra in each city can vary depending on its geography, the vehicle type favoured in that market and surprisingly, on the quality of urban housing. Singh of CEEW estimates that in EV markets where motorists can access charging facilities at home, the need for public charging stations reduces significantly.
Srivastava has also noticed this pattern. SmartE services about 1,200 e-rickshaws in Lucknow and Kanpur, but the need for charging stations here are fewer than in Delhi as most drivers can park their vehicles at homes they own, and slow charge overnight.
If this is the case, public charging services become more critical along highways and outside city limits in order to encourage long-distance commutes on EVs and to settle a motorist’s battery-related range anxieties.
Batteries, now a service
An alternative that is emerging to setting up charging infrastructure is swapping out the batteries of an EV every time its charge runs down. In March 2022, Hero Electric and SUN Mobility agreed to manufacture 10,000 e-two wheelers integrated with the latter’s smart battery-swapping technology. Bengaluru-based bike rental start-up Bounce is offering e-scooters with and without a battery to customers. Its battery-as-a-service business is also exploring how it can retrofit electric batteries into scooters running on petrol.
The government think-tank Niti Aayog has a draft battery swapping policy under consideration which recommends, among other things, standardisation of battery specifications and quality across manufacturers, reducing recharge times to a fraction of what it takes to charge an EV and bulk charging battery packs during the grid’s off-peak hours, when tariffs are low.
Vadodara-based Charge Zone is covering both bases, offering charging stations to rickshaws, cars, bikes and buses, but is also dipping its toes in the battery-as-a-service model that Niti Aayog is advocating. Kartikey Hariyani, its co-founder and CEO, expects the second option to grow once battery standardisation becomes the norm.
“Carrying batteries as inventory makes the second model capital-intensive for us,” Hariyani said. “It transfers the bulk of the risk of buying an EV, the quality control, risk of theft or poor management, to the battery swapping company, and not the vehicle owner. I think it’s a business vertical that has the potential to grow, provided we can execute the right linkages and component suppliers. Right now, we’re just waiting to see what the final version of the policy will say before we expand this further.”
Charge Zone’s battery customers are primarily e-rickshaws now, which need roughly two swaps a day, each costing Rs100-120 a pop. At the time of purchase, the cost of the vehicle sans battery comes down by about a quarter of its list price. Hariyani is also keeping an eye on the fortunes of Gogoro, a Taiwan-based two-wheeler battery swapping company that listed on the Nasdaq earlier this year. Its stock tanked almost immediately in the public market. Despite its near ubiquitous presence with a 92% market share in Taiwan, analysts are predicting a fall in revenue and expanding losses over the next 12 months.
Gurgaon-based start-up Battery Smart also targets e-rickshaws, but the older models that came to the market with lead acid batteries. “When we started, there were 2.5 million e-rickshaws in India powered by lead acid batteries, with nearly 70 million people using them for first and last-mile commutes,” Pulkit Khurana, co-founder, told CarbonCopy. “Lead acid batteries need to be replaced every six months, making them a recurring expenditure for drivers. Our battery-as-a-service model eliminates this ownership problem.”
Battery Smart lets EV owners trade in lead acid batteries for a lithium-ion swapping service, which they can sign up for as little as Rs5,000, Khurana said. The company currently services more than 8,000 vehicles and has over 265 swap stations in Delhi, Gurgaon, Faridabad, Ghaziabad, Noida, Jaipur, Karnal, Panipat, and Lucknow. They say that their batteries can be retrofitted into 120 two- and three-wheeler models.
Well-laid plans, no execution
Despite the growth potential that EVs have in India, the charging infra, as it stands, lags large Asian peers like China and Japan and even smaller ones like Taiwan. The Climate Trends-JMK research quoted at the start of this piece estimates that we need far, far more than the 15,000 charging stations that we are likely to have installed by 2030.
Assuming that only 20% of personal vehicles and 50% of commercial EVs will actually need access to public charging, CEEW estimates that Rs20,600 crore will be required to boost India’s charging infrastructure. The ministry of power’s Charging Infrastructure Guidelines and Standards require at least one EV charging station 3km x 3km grid and one in every 25km of roads and highways.
There’s no reason why these numbers have to be so low when there’s plenty of low-hanging fruit. State and local governments can mandate parking and charging facilities in all new construction projects, both residential and commercial, and the three large government-owned oil marketing companies that dominate our gas stations can be made to install charging points as well. But these targets need to be clearly defined quickly for India to be EV-ready by 2030.