In the next 3-4 years, India may see an addition of about 48,000 electric vehicle charging stations at an investment of ₹.14,000 crore given the proposed investments planned by several public sector undertakings and private players, says a report by Icra Research.
It expects a healthy electric vehicle (EV) penetration in India over the next five years, especially in two-wheeler, three-wheeler and bus segments. The penetration of electric two wheelers is estimated at 13-15 per cent of new vehicle sales by FY25. Likewise, the electric three-wheeler and electric bus penetrations are expected to be greater than 30 per cent and about 8-10 per cent of new vehicle sales respectively by FY25.
Charging infrastructure
To achieve healthy EV penetration, the availability of adequate charging infrastructure is critical. Now, there are only less than 2,000 public charging stations with a concentration in a few states and that too primarily in urban areas.
Several policy measures are being undertaken to speed up EV charging infrastructure penetration. The Centre had issued revised guidelines this January to proactively promote more EV charging stations. A few states have provided capital incentives for EV charging infrastructure under their policies, apart from subsidised electricity tariffs for EV charging stations, it said.
“India remains a laggard in EV charging infrastructure penetration. However, like most global counterparts, the policy push has been strong in India as well to increase the number of EV charging stations. To capitalise on the potential opportunity in the space, several PSUs and private players have also announced plans to foray into charging infrastructure,” said Shamsher Dewan, Vice President and Group Head, Icra.
The revised FAME policy has simplified land and electricity procurement and issued guidance on locations of priority for EV charging infra installation. This apart, several states have also subsidised electricity procurement tariffs for EV charging stations. Overall, the policies aim to proactively promote more EV charging stations, with a sizeable part of the population expected to have charging infra access in the next 3-5 years.
Capital intensive
However, the EV charging infrastructure business is capital intensive. Even excluding land, the initial upfront cost is about ₹29 lakh, without subsidy. This apart, the operating costs are over ₹10 lakh/year, thus making asset utilisation critical.
ICRA estimates that it would take about four years for an EV charging station to achieve break-even based on the current expectations of EV penetration and commensurate asset utilisation (30% in 4 years), without accounting for any subsidy. The localisation is only 10-15 per cent presently, with the hardware components largely imported from China and Taiwan. An increase in localisation can have cost savings.
Battery-swapping
Battery-swapping is an alternative solution instead of developing EV charging infrastructure, especially for commercial applications. This is also currently in the nascent stages in India. Battery swapping is advantageous – it is a quick way of recharging a vehicle and is cost and time-efficient. It reduces the upfront cost of EVs, as battery ownership is replaced by battery leasing. There is increased predictability of battery life due to controlled charging conditions. However, ensuring interoperability, adequate financing availability and maintaining sufficient battery inventory can prove to be challenging, said Dewan.