Incentivising EV companies should stimulate the growth of EV infrastructure

Discussing the gradual shift from fuel-based to electric vehicles, EV makers and charging infrastructure providers explore various options to improve the EV infrastructure scenario.

Between FY20 and FY22, the country saw a significant increase in EV adoption, with EV sales increasing 155 percent year on year to 4,29,217 units in FY22. Furthermore, recent market reports indicate that electric two wheeler penetration will be around 13–15 percent of new vehicle sales by FY25, with electric three-wheeler and e-bus segment penetrations expected to be more than 30 per cent and 8–10 per cent, respectively, by FY25. 

Robust charging infrastructure is critical to the success of India’s EV market. The Indian government recognises this and has launched an initiative to significantly expand and strengthen public electric vehicle (EV) charging infrastructure. According to Stefan Louis, CEO, Nexcharge, only a higher rate of EV adoption can provide a viable business case for charging infrastructure development. He also suggests that DISCOMs be mandated to develop charging infrastructure to provide sufficient confidence to EV adopters regarding refuelling. There were concerns regarding EV charging stations’ safety and deployment in public areas.

Policy support to boost EV infrastructure in India

According to Maxson Lewis, Managing Director of Magenta Power, “For the EV industry, the revised extension to the FAME-II scheme is less of a ‘how much incentive’ and more of a commitment from the government to the EV ecosystem.” Many applicants found it challenging to benefit from this in the past due to the strict criteria. However, the revision has made it possible for more players in the EV ecosystem to participate.

“There are a plethora of policy interventions driving the E-mobility transition globally,” says Vijayanand. S, President-New Energy Business, Amara Raja Batteries Ltd. India is no exception, with cash incentives, tax breaks for vehicle purchase and registration, subsidies for establishing charging infrastructure and discounted electricity tariffs, and policy support for building local manufacturing capacity and an EV supply chain, and so on. “It has gained significant momentum with FAME-II implementation, and total cost of ownership is already in favour of e2W and e3W,” Vijayanand adds. “Battery Swapping Policy (Battery as a Service) could lower initial EV costs and charging issues.” Government schemes have boosted the EV sector in India, but market growth ultimately depends on gaining consumer trust and diversifying product offerings.

Stefan agrees with the discussion above and thinks the FAME II subsidy will encourage the quick adoption of EVs in the targeted vehicle segments and create demand for electric buses, three-wheelers, four-wheelers, passenger cars, and two-wheelers. The battery swapping policy has also been implemented, primarily for 2Ws and 3Ws. However, a dynamic charging infrastructure should be in place to successfully implement these government initiatives. He continues, “There is also a need for a central organisation that is in charge of the national development of charging infrastructure. Several states, including Maharashtra, Telangana, Andhra Pradesh, and Karnataka, took the lead in promoting products and driving demand for electric vehicles.

“Not to mention, such empanelment serves as a validation of the quality of the products supplied,” says Mayank Jain, Co-Founder & Director of Crayon Motors. “With the Fame II policy, the government has reduced the initially high cost of acquiring EVs, making them more accessible to consumers. As a result, these regulations are helping the industry increase volumes and achieve economies of scale.

“Under the automatic route,” says Samrath Kochar, Founder & CEO of Trontek, “100 percent foreign direct investment is permitted in this sector.” The federal government is putting clean mobility first. Recent efforts to modify the FAME-II scheme to make electric two wheelers more affordable are examples. Furthermore, several production-related incentives are pushing for local manufacturing as well as newer technologies and products, all to increase the adoption of electric mobility.

There are several obstacles to increasing EV adoption in India. They range from raw material availability and supply chain issues to the lack of indigenous manufacturers of EV components. There is also the issue of slow growth in the renewable energy sector for charging EV batteries, along with a lack of skilled talent, proper regulatory guidelines, certification requirements, standards for battery testing, safety, validation, and so on. India also has critical geographical terrain and a variety of climate conditions.

Upscaling charging and battery infrastructure to match the graph

Accessible, simple, and low-cost charging infrastructure is required for EVs, whether at home or in public places. AC, DC fast chargers, and others are among the charging technologies that are currently available. India has over 12,000 charging stations of various types, with over 1 million EVs on the road (mostly e2W and e3W). “Assuming 50-70 million EVs on the road by 2030, India requires significant investment to develop EV charging infrastructure to keep pace with EV adoption,” Vijayanand says.

Mayank stresses that the central and state governments and private companies will play a key role in building charging infrastructure for EVs. In products with detachable batteries, battery swapping seems to be a viable option. However, batteries have a variety of parameters, including size, voltage, configuration, etc. For wide-scale adoption, it is essential to design homogenous battery specifications. “Given the high cost of batteries, the issue of battery ownership and safety plays a key role here,” elucidates Mayank.

Also, Crayon Motors is working with various companies and is targeting a two-minute battery swapping process. Where battery swapping is not possible, charging stations need to be there. EV charging is a time consuming process; therefore, suitable infrastructure to set up a mass charging station. It should ensure space for the consumers to wait and rejuvenate themselves while charging their cars. “Thus, I feel charging set up in residential and commercial complexes will play a pivotal role. The infrastructure along the ever-expanding highways of our country will promote EV adoption. To further lower the environmental impact of EVs, we must focus on promoting green power, “Mayank adds.

We should be aggressive enough to meet the challenge of EV charging stations. Currently, this infrastructure is almost negligible considering the growth of EVs in the country, especially two-and three-wheelers. As four wheelers join the bandwagon, this demand and the scarcity will intensify, making the coming few years crucial for the sector.

Commenting on India’s position on the development of charging infrastructure, Samrath suggests drafting a regulatory policy for the creation of EV charging infrastructure and mandating such infrastructure at every level, starting from housing colonies to public places. “Without this, the EV revolution will remain incomplete.” That apart, the government has to step in and incentivise private players to set up charging infrastructure in the country,” he emphasises.

Development in battery swapping options 

Crayon Motors, an Indian manufacturer of e-mobility solutions, and Bounce Infinity are collaborating to establish the “first interoperated battery-swapping network”. Under this partnership, Crayon Motors’ customers can choose to buy a 2W or 3W without a battery and make use of Bounce Infinity’s “Battery-as-a-Service.” The smart solution, which will largely be available at locations as diverse as Crayon Motors’ dealerships, residential complexes, petrol bunks, restaurants, cafes, co-living spaces, corporate offices, Kirana stores, etc. 

The association shall extend battery as a service to all “low-powered” and “high-powered” 2W’s manufactured by Crayon. The stations will always have charged and ready-to-go batteries that can be swapped with near empty batteries in minutes. With this infrastructure, customers wouldn’t have to wait for their vehicles to charge, be anxious about the range or remember to charge them.

Challenges in stabilising EV charging stations across India

According to Maxson, the next quarter will see a price rise following the ongoing supply chain strain and raw material shortages. Nearly 60 percent of EV parts and components are imported, except for some manufacturers who decided to develop core components internally. Additionally, he thinks that the “import-assemble-sell” players will be the most negatively impacted and the ones who will spearhead localisation. These efforts, however, take time to complete. Over the next two to three quarters, there will be a full negative effect.

EV technology is also in its early stages, says Mayank. Aside from rising input costs, a key reason for EV price increases can be linked to a heavy reliance on imports. Scale economies are not yet present in India, though they are rapidly developing. This enhancement will aid in the development of an EV-friendly culture. One primary consideration is that cells account for a significant portion of the cost, which can be reduced by achieving economies of scale. Through FAME-II, we are accelerating the adoption and development of such infrastructure.

Overall, things are looking up. However, critical components remain a concern and even more significant given the present geopolitical context. The current situation will continue to be vulnerable to price volatility and variances.

Samarth states, “The biggest challenge is related to supply-chain led price volatility owing to various factors, including the Russia-Ukraine conflict and market shutdowns in China.”

Adding more details, he explains that the primary equipment required for EVs is the lithium-ion battery, which accounts for the single most significant cost component of an EV’s cost. Presently, India does not have any sources of lithium or cobalt or the capability to manufacture lithium-ion cells, and our entire supply is dependent on imports from China and Korea. Even China, the largest manufacturer of lithium-ion cells, imports its raw materials from other countries like Bolivia, which have large deposits of these materials. Even if India were to import the raw materials, it would take us at least 3–4 years to start the production of lithium-ion cells.

Talking about the impact of EVs on the power grid, the demand will be very gradual and only constitute a fraction of the country’s overall capacity. Also, the kind of pressure exerted will be quite different and require power grids to be smart and more flexible, Stephan concludes.

India has the potential to power a full-fledged fleet of electric vehicles, and the government’s policy initiatives are making sure that the EV market is set up for success. We are cautiously optimistic that the challenges that stand in the way of efficacy will be dealt with through timely policy modifications.

There is a need for a centralised institution responsible for the country-wide development of charging infrastructure. Stefan Louis, CEO, Nexcharge.

There is a multitude of policy interventions driving the E-mobility transition globally.
Vijayanand. S, President- New Energy Business, Amara Raja Batteries Ltd

The government’s commitment to the EV ecosystem is more apparent in the revised extension to the FAME-II scheme. Maxson Lewis, Managing Director, Magenta Power

It would take a minimum of three to four years for us to start indigenous production of lithium-ion cells.
Samrath Kochar, Founder & CEO, Trontek 

A charging infrastructure along the ever-expanding highways of our country will promote EV adoption.
Mayank Jain, Co-Founder & Director, Crayon Motors