‘Poor charging infrastructure, high prices’ — what’s putting the brakes on India’s 2030 EV target – EQ Mag Pro

Two-wheeler electric vehicles faring well, but long charging duration & expensive batteries may dent govt’s ambitions, says Indian Venture and Alternate Capital Association report.

New Delhi: Electric vehicles (EVs) have elicited excitement in the Indian automobile industry, but for India to achieve its EV target by 2030, the manufacturers will have to report exponential growth in sales.

Union Minister Nitin Gadkari had said last year that by 2030, the government intends to have EV sales accounting for 30 per cent of private cars, 70 per cent of commercial vehicles, and 80 per cent of two- and three-wheelers. However, according to a report released last month by the Indian Venture and Alternate Capital Association (IVCA) — an organisation working on promoting capital ecosystem — this target is a bit ‘aggressive’.

The IVCA’s observation is based on a combination of factors including less than adequate charging infrastructure, high cost of batteries and low expenditure on research and development.

Its report ‘Electrifying Indian Mobility’ projected that by 2027, EVs may account for less than 4 per cent, 38 per cent and about 40 per cent of India’s cars, two-wheelers and three-wheelers respectively, in terms of market share.

The IVCA prepared the report in collaboration with management consulting firm EY-Parthenon and law firm Indus Law.

Why EV craze is subdued

When it comes to EV cars, the IVCA report says low distance range and limited choices are among the main reasons for their limited acceptance.

“There are only a few models available in the market. In addition, these models have range issues and are slow charging. Newer and better models are expected in the coming years,” it states.

High prices, too, is a big factor for the low market penetration of EVs. At present, the most affordable normal sized electric car costs a minimum of Rs 12.49 lakh (average ex-showroom) while a petrol car (the cheapest) costs nearly three times lesser, with prices starting at around Rs 3.8 lakh.

The use of special metals in the battery makes up a major chunk of an EV’s price, which, according to a June NITI Aayog report, if not lowered, can have a significant impact on EV adoption in the country.

The report, titled ‘Forecasting Penetration of Electric Two-Wheelers’, states that even if battery costs come down by 2 per cent annually, hardly 16-17 per cent of two-wheelers on Indian roads will be electric by 2030, and that too if the government keeps providing incentives.

The two-wheeler EVs can form more than 90 per cent of the segment sales only when the battery prices drop by over 8 per cent every year on average along with improvement in power and range, according to the NITI Aayog.

The IVCA report, meanwhile, cites four barriers to growth of the EV market. “Charging infrastructure is the foundation on which the EV market is built and India has not achieved an expeditious pace of establishment and use of charging infrastructure which creates a barrier in both production and sale of EVs,” it says.

While there are only 1,742 charging stations currently in the country, this number is expected to reach 100,000 units by 2027.

India’s inefficient power distribution system adds uncertainty to the EV charging infrastructure, the report adds. “Factors like unsurety in utilisation rates of charging stations, huge operating costs, load on electricity discoms, etc., create a negative environment for operators to establish charging stations and discourage investment when there are not sufficient numbers of EVs in Indian roads for operators to realise the returns on their investments.”

The use of lithium-ion batteries, which require metals and minerals not found abundantly in India and inflate import bills, acts as a second big hurdle. Low expenditure on research and development and usage of coal as a major source of energy to charge EVs are the other hurdles, according to IVCA.

EVs remain an untapped opportunity for the market players and have a large scope for investment, according to Ishpreet Gandhi, founder and managing partner of venture capital firm Stride Ventures.

“Within the start-up ecosystem, we have seen a significant rise in the number of companies in the EV space in the past couple of years. EV has almost become synonymous with start-ups with the majority of the companies in the space being recently established,” the IVCA report quotes Gandhi as saying.

According to him, while investment in EVs has increased, it continues to be “a largely untapped market, presenting a significant opportunity for investors to bridge the funding gap through structures like vehicle financing, capex financing, etc”.

“This presents a huge opportunity for EVs to be driven commercially through electric bikes, rickshaws, buses, cabs, etc,” he adds.

Source: PTI