This article has been authored by Dr. Nilesh Kane, Chief-Power Distribution, Tata Power Company.
The Indian automobile market is finally starting to catch up with the idea of clean mobility, though the % share of electric vehicles (EVs) is still in low single digit today. From a peak of 26 million vehicles sold in 2018-19, the demand for petrol/diesel-fired vehicles has dropped to 17.5 million last financial year, while during the same period the EV sales increased from 1.3 lakh to 2.3 lakh. Though in percentage terms EVs represent just around 1% of the overall market, the trend is clear – clean personal mobility is here to stay and is expected to play a bigger role in coming years. Before the current decade comes to a close, policy makers are expecting EVs to constitute 70% of all commercial cars, 30% for private cars, 40% for buses and 80% for two and three-wheelers.
Since the first electric vehicle rolled out at the turn of the new millennium, the idea of clean mobility has remained a miniscule portion in the larger automobile market space in India. While the total cost of ownership of EVs has been the biggest impediment for the growth of clean mobility in the country, the real elephant in the room was about powering these vehicles through a national network of reliable EV charging stations. Even progressive-minded consumers who wanted to switch to EVs, had to deal with ‘range anxiety’ i.e., worry about running out of charge between two charging points. While consumers have been waiting for a denser charging network before switching to EVs whereas auto companies could not scale up, leading to higher cost of vehicles. This apparent deadlock that was holding back the demand for EVs in an otherwise promising market like India continues to be a challenge and we are only beginning to resolve.
Over the last couple of years, the public charging network across India has increased rapidly, while two-wheeler consumers that constitute the largest segment in the EV market, use home charging points. But automobile market experts also tell us that a robust and efficient national public charging network will be an essential pre-condition for the growth in the adoption of electric mobility in India. As per Global trend, EV charger ratio is 6 both for China and the Netherlands, 19 for the U.S. while it stands 135 for India. That means there is one charger per 135 EVs in India compared to 6 in China. To achieve the global benchmark India needs to install 46000 charging stations by 2030, according to Alvarez and Marsal firm.
According to recent estimates by rating agency ICRA, India is expected to invest Rs 14,000 crore to install 48,000 charging points over the next three to four years. If this forecast materialises fully, we will have nearly three EV charging points for every four-petrol pump in the in the country today. All of that put in place in less than five years, while the 65,000-gasoline station in India were built over the last five to six decades!
Despite the general optimism in the EV and its ancillary industries, that is seeing so many new players joining in every year, Charge point operators (CPO’s) as a standalone business can be quite challenging. The emerging economics of CPO’s as a business is quite interesting too. As a capital-intensive business, a typical charging point of fast chargers costs around Rs 30 lakh (i.e. Apart from EV chargers the major cost is on account of Power Infra required to energise the EV charger and excluding land) and will cost Rs 10 lakh a year to run it. So, an entrepreneur of such a business will have to wait at least three years to see any profit even if he/she manages to bring in enough business to cover the running cost each year.
The frequency of the rings from the cash register in EV charging outlets will depend on the EV population in the country and its continued growth. Efforts are already underway to give the EV industry its big push during the first few years of its growth. Today we have a subsidy-driven market-creating schemes across all major states and national level too through FAME scheme. Similarly, the government also eased the rules for setting up charging points, ensuring their growth is not hampered by over-cautious and complex policies.
Though existing state-owned oil companies (like Indian Oil, Hindustan Petroleum etc) are rolling out plans to set up EV charging stations across the country, a sizeable chunk of the emerging network will also come from private players like Tata Power which is promoting sustainable mobility through their network of EZ Charge to build a pan-India EV Infrastructure. Some of these private companies are also tying up with state-owned brands to expand their EV charging network.
Finance will be the critical bottleneck that we will have to proactively manage to ensure EV sales and shortage of charging points don’t get into the egg-and-chick conundrum, effectively thwarting India’s march towards clean mobility and ultimately Net Zero goal set for 2070.The franchisee model, built on the shoulders of individual entrepreneurs is a very sound proposition at many levels. One, it will be a reliable job generator and two it will support the risk-taking entrepreneurial spirit in India that is seeing a surge in recent years. But above all, it will ensure that millions of Indians will become active participants in the country’s clean mobility revolution, thus ensuring its sustainability in the long run.
As per our understanding first we need to create a perception in the minds of the consumers by putting up more charging networks and create awareness about its usage and accessibility. Secondly as a promotional offers Type-2 chargers needs to be installed across various housing societies combined with Fast chargers at strategic location to give confidence and to remove the anxiety of the consumers. Thirdly the Aspects of Total cost of ownership needs to be reduced by adopting latest technologies in the Batteries and EV chargers and enhancing the reliability and last active community engagement through various campaigns and social media promotions.
For the first time in the history of India’s automobile industry, clean private mobility is getting a serious shot as a credible alternative to petrol/diesel vehicles. The impressive growth in demand for two-wheeler EVs in recent years has already established the fact that the common man is ready to make the big switch. There is absolutely no reason to doubt the inevitable dominance of clean mobility on Indian roads. Our national environmental goals tied to our international climate change commitments are now expecting us to fire from all cylinders (green).
However, roads will continue to be the dominant connector for India’s masses, with nearly 300 million registered vehicles in the country today. When we start to replace these with EVs, we are going to need a massive nationwide network of public charging points. And that is one big ball we cannot take our eyes off, if we are serious about the future of clean mobility in India.
Disclaimer: Views and opinions expressed in this article are solely those of the original author and do not represent any of The Times Group or its employees.