• In order to achieve healthy EV penetration, expansion of charging infrastructure will play a critical role, which is currently at a nascent stage in India.
• Several policy measures being undertaken to speed up EV charging infrastructure penetration. The GoI has issued revised guidelines in Jan-22 to proactively promote more EV charging stations. A few states have also provided capital incentives for EV charging infrastructure under their policies, apart from subsidised electricity tariffs for EV charging stations.
• Asset utilisation remains key for operating viability of charging stations. ICRA’s estimates that it would take about 4 years for a public EV charging station to breakeven, based on current expectations of EV penetration and commensurate asset utilisation, without accounting for any subsidy.
• To capitalise on the potential opportunity in the space, several PSUs and private players have also announced plans to foray into charging infrastructure.
• ICRA expects addition of ~48,000 chargers over the next 3-4 years at an investment of ~Rs. 14,000 crore.

ICRA Research expects a healthy electric vehicle (EV) penetration in India over the next five years, especially in the e-2W, e-3W and e-bus segments. The penetration of e-2Ws is expected to be at about 13-15% of new vehicle sales by FY2025. Likewise, the e-3W and e-bus segment penetrations are expected to be greater than 30% and about 8-10% of new vehicle sales respectively by FY2025. In a recent research note, the agency stated that in order to achieve healthy EV penetration, expansion of charging infrastructure will play a critical role. Currently, there are only less than 2,000 public charging stations in India with concentration in a few states and that too primarily in urban areas.

Giving more insights, Mr. Shamsher Dewan, Vice President and Group Head, ICRA says, “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.”

In order to increase the EV charging network, the Government of India (GoI) has allocated a total outlay of Rs. 1,300 crore for the same in the FAME scheme. Further, the GoI has proactively amended guidelines for charging infrastructure development in the country. The revised 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.

However, the EV charging infrastructure business is capital intensive. Even excluding land, the initial upfront cost is approximately Rs. 29 lakhs, without subsidy. This apart, the operating costs are over Rs. 10 lakh/year, thus making asset utilization critical. ICRA estimates that it would take about 4 years for an EV charging station to breakeven based on current expectations of EV penetration and commensurate asset utilisation (30% in 4 years), without accounting for any subsidy. The localization is only 10-15% currently, with the hardware components largely imported from China and Taiwan. Increase in localization can have cost savings.

Adds Mr. Dewan, “Battery-swapping is an alternative solution instead of developing EV charging infrastructure, especially for commercial applications. This is also currently in 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 EV, 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.”