Constraints, Challenges and Avenues for EV Adoption in India

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This post is part of a series titled ” EVolution or rEVolution? Strategizing for EV Growth in India” from EV Next Perspectives. See all posts for this series from here. See the previous post The Needs & Drivers of the Indian EV Market

The Constraints, Challenges and Avenues for EV Adoption in India

Introduction

For anyone designing a growth strategy for EVs, it is important to understand the following about challenges:

Challenge over Time – How will the challenges will trend over time? Are the challenges of a short term nature that will become insignificant in a short time (say, within a year or two)? Or are these challenges that will take a decade or more to be mitigated?
Alternatives – Are these challenges rigid or flexible? That is, is it possible that these challenges could be mitigated to a significant extent through the use of some alternatives?
Control over Challenge – Finally, what is the extent of control that the Indian government or industry has over these challenges?

Inputs on the above aspects are provided for the key challenges to EV growth.

The Challenges

Category	Challenge	Analysis
Cost	High Cost of EVs (mainly owing to cost of batteries) Li-ion batteries cost around $250/kWh currently, needs to go down to about $100/kWh for cost parity	Time – Significant cost reduction (50-60%) for EV cost parity will take until about 2026 Alternatives – No viable alternative Control – India has little control over the Li-ion battery cost as the country does not produce the batteries currently and is unlikely to be a price setter in the foreseeable future
Performance	Limited Range of EVs Most EV ranges today are 50-75% lower per charge, compared to the range achieved for a full tank on a conventional vehicle.	Time – Range of Li-ion batteries needs to increase by 75-100% for EVs to be used for inter-city travel. This could take until about 2022 for non-premium EVs. Alternatives – An extensive charging (or swapping) infrastructure could partially take care of the range challenge, but public vehicle charging infra in India is practically non-existent, and getting a reasonable extent of urban charging infrastructure in key cities alone could take 5 years (until 2023) Control – While the Indian government or industry has little or no control over the technology improvements to increase range, they have reasonable control on deploying public charging or battery swapping infrastructure
Performance	High Charging Time for EVs Normal charging could take 4-8 hours for full charge Fast charging could be completed in about 1 hour in many DC fast charging points, with 80% charge being completed in 30-40 minutes.	Time For a charging time of 15 minutes or less, even DC fast charging needs a decrease of about 50% in charging time – this could take until 2023 for affordable mass market DC fast chargers. It is not clear what the timelines are to considerably decrease charging times for normal charging (these currently take between 4-8 hours for full charging) Alternatives DC fast charging as an alternative to normal AC charging (Level 1 or 2) Battery swapping Control The government or Indian industry has little or no control over technology to bring down charging time

The following points stand out from the above table

To a large extent, the challenges are technology-based, revolving around batteries and battery charging. The exception is the EV charging infrastructure, which is more of a cost and infrastructural challenge than a technology challenge.
Neither the technology challenges nor the infrastructural challenges can be resolved in the short term.
Battery technologies for faster charging and higher ranges are likely to take until 2023.
Li-ion batteries will take perhaps until about 2026 for enough cost reduction to make EVs reach cost parity with conventional vehicles.
Extensive roll out of EV charging infrastructure to cover inter-city highways and smaller cities and towns will be infeasible in the short term (2-3 years).
While high cost is a rigid constraint (unless one considers external incentives as an alternative), there are alternatives for low range and high charging time challenges, in the form of optimal charging infrastructure and battery swapping business models. However, both these alternatives have technical, operational or economic challenges on their own. An “optimal” combination of these alternatives will hence be needed to maximize value and minimize costs.

Avenues to facilitate growth in short & medium term

The last section characterized the challenges and concluded that it will take a while for direct mitigation of these. The section also touched upon some alternatives available. This section expands on those and provides a detailed list of avenues that are feasible in the short and medium term to mitigate the challenges to some extent and facilitate growth.

Let’s review these avenues

Examples

Challenge	Tools & Avenues	Details	Examples
Price
Reduce Initial Vehicle Price	Business Model	OPEX model Lease model Battery swapping	Mobility as a service Generate Capital (USA) Sun Mobility
Reduce Initial Vehicle Price	Financial & Non-financial Incentives	Financial incentives Other incentives	Subsidies Accelerated Depreciation Lower GST Low interest loans Preferential parking, green number plates
Performance
Increase Range	Optimal Charging Infrastructure	EV charging Infra aligned to focus markets	Focus on charging infra for top 10 cities
Decrease Charging Time	Selective Use of Fast Charging Business Models	DC Fast charging stations in select locations within cities Battery swapping	Fast charging infra at parking lots, malls and metro stations Sun Mobility, Lithion Power

What is listed in the table above is not just a list of avenues, but avenues that are feasible in the short run.

Highlights from the above table

While there’s no direct way to decrease the upfront cost of electric vehicles in the short term, it can be indirectly overcome through financial incentives and alternative business models.
The subsidies and other financial incentives being considered here are only for select segments, thus resulting in budgetary requirements that central or state governments could be able to meet in the short term.
For upfront vehicle cost reduction, it is quite feasible to implement business models such as the OPEX or Lease models in the short run.
Similarly, the challenge of low range for EVs cannot be overcome by technology alone very soon (except for very select, high end models), so the feasible avenue is to have a combination of dense EV charging infrastructure and a dense battery swapping station infrastructure. But if such a high density charging/swapping infrastructure needs to be implemented in a short period of time, the geography for such deployment will need to be select and restricted.
DC fast charging stations cost an order or magnitude higher than normal AC charging stations, while enabling charging in 60 minutes or less (could be as low as 30 minutes for 80% charging). Thus, the challenge of long battery charging time can be overcome in the short term through selective use of fast charging stations, something feasible from both infrastructure and economic perspectives. A denser deployment of such a charging station network in select geographies also lends to a higher capacity utilization. A higher capacity utilization of charging stations will result in a better break-even period for the owner/investor of the charging station, and perhaps also lower the price per unit of power delivered to the end user.

We now have a good understanding of the market segments, their needs, the challenges to meet these needs, and the avenues feasible within a reasonable timeframe. We are now ready to put all these together, to arrive at a strategy for EV growth in India.

This post is part of a series titled ” EVolution or rEVolution? Strategizing for EV Growth in India” from EV Next Perspectives. See all posts for this series from here. See next post Strategizing for India’s EV Growth

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