Good penetration of electric vehicles (EV) is expected in India over the next five years, especially in the e-2W, e-3W and e-bus segments. e-2W penetration is expected to represent approximately 13-15% of new vehicle sales by FY25. Similarly, e-3W and e-bus segment penetrations are expected to represent over 30% and approximately 8% respectively. 10% of new vehicle sales by FY2025.

In a recent research note, CIFAR stated that to achieve healthy EV penetration, expanding charging infrastructure will play a critical role. Currently, there are only less than 2,000 public charging stations in India with a concentration in a few states and that too mostly in urban areas.

Giving more insight, Shamsher Dewan, Vice President and Group Head, ICRA, said, “India is still lagging behind in the penetration of electric vehicle charging infrastructure. However, like most global counterparts, political pressure has also been strong in India to increase the number of electric vehicle charging stations. To capitalize on the potential opportunity in the space, several power packs and private players have also announced their intention to foray into charging infrastructure.

In order to increase the electric vehicle charging network, the Government of India (GoI) has allocated a total expenditure of Rs 1,300 crore for the same FAME scheme. Furthermore, the Indian government has proactively changed the guidelines for the development of pricing infrastructure in the country.

The revised policy simplified the supply of land and electricity and issued guidance on priority locations for the installation of electric vehicle charging infrastructure. That aside, several states have also subsidized electricity supply tariffs for electric vehicle charging stations. Overall, the policies aim to proactively promote more electric vehicle charging stations, with a significant portion of the population expected to have access to charging infrastructure within the next 3-5 years.

However, the electric vehicle charging infrastructure business is capital intensive. Even excluding the land, the initial upfront cost is around Rs 29 lakhs, with no subsidy. That aside, operating costs exceed Rs 10 lakh per year, which makes asset utilization critical.

ICRA estimates that it would take approximately four years for an EV charging station to break even based on current expectations of EV penetration and proportional asset utilization (30% in 4 years), regardless of any subsidy. Localization is currently only 10-15%, with hardware components largely imported from China and Taiwan. Increasing localization can lead to cost savings.

“Battery swapping is an alternative to developing EV charging infrastructure, especially for commercial applications. This is also currently in its infancy in India. Battery swapping is beneficial – it’s a quick way to charge a vehicle and it’s economical and fast. This reduces the initial cost of electric vehicles, as battery ownership is replaced by battery leasing. There is increased predictability of battery life due to controlled charging conditions. However, ensuring interoperability, availability of adequate funding and maintaining sufficient battery stock can be challenging,” Dhawan added.

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Posted: Wednesday 06 April 2022, 13:04 IST

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