What are the challenges involved in adoption of EV?
Few things that come to our mind are
- Range of EV
- Battery life
- Price of EV
- Charging infrastructure
- Availability of right product
- Start-ups and investors commitment towards building EV eco-system
Let us discuss all the challenges one by one.
Range of EV: A survey conducted among 650 respondents in 20 cities including Metros as well as Tier-1, Tier-2 and Tier-3 cities found that most people travel simply from home to office. A good 75 per cent of Indian commuters travel less than 1000 km a month (or roughly less than 35 km in a day). *Source: https://timesofindia.indiatimes.com/business/india-business/indian-commuters-travel-35-km/day-says-survey/articleshow/63140954.cms)
If we consider EV options like an Ather or a TVS iQube: they provide an approximate range of 80km per charge, i.e. a commuter needs to charge his vehicle only thrice a week. This is feasible and confirms that range factor is more of a mind-set concern and not an actual issue when it comes to EVs. Further with growing Charging infrastructure facilities & development of fast charging batteries & even the swappable batteries options coming up, the Range of the EV is definitely not a challenge for EV adoption.
Battery life of EV: Battery is the major cost component for any EV. Approximately, 60-70 percent of the cost component is determined by it. Therefore, the life of a battery plays a vital role in decision making or adoption of EV.
A good battery goes through 1500 charging cycles before it reaches 80 percent efficiency. It is not the number of years but the number of charging cycles that determines the life of a battery. Taking into account, the above-mentioned example of an average Indian commuter travelling less than 35 km in a day, clubbed with the EV range of 80 km per charging, it would take 1.2 lakh km or roughly 10 years for the battery to reach an 80 percent efficiency. This does not mean that the battery needs to be replaced after a decade of use but confirms only the fact that it may need more frequent charging. Besides, these batteries can be sold/used for other operations like power backup for home/garage etc., as they still have 80 percent efficiency. Considering the above points, Battery Life doesn’t seem to be a challenge for EV Adoption
Price of EV: The current government schemes have been set-up at two levels: Central Govt and State Govt.
Central Government Benefits: FAME-II
*Source: https://e-amrit.niti.gov.in/national-level-policy
State Govt Benefits:
*Source: https://e-amrit.niti.gov.in/state-level-policies
- For FAME-II: Rs 10,000 Cr is allocated which translates into a subsidy of Rs 15,000/- per kWh of battery capacity.
- Along with this, there is also exemption of Green tax for EVs.
- The GST (tax) goes down for EV to 5 per cent as compared to 12-18 per cent for ICE (Internal Combustion Engine).
- If a loan is availed to buy an EV, then the interest can be claimed as a deduction in income tax upto tan amount of Rs 1.5 Lakh.
- In addition to the above benefits, the State Govt provides further support (subsidy/discount) of: 5k-10k discount per kWh of battery capacity.
- Road tax and registration fee subsidies also add up to the benefits.
When we club all these benefits, the pricing of an EV is at par with an ICE vehicle. Further the cost of running an EV is very low (90 per cent less) as compared to an ICE. An approximate analysis states that the cost per km for an EV 2W is 30 paise/km and that for an ICE 2W is Rs 3 /km.
The above points on the Procurement cost and the Operating cost confirms that Price is really not a matter of concern when it comes to EV adoption.
Charging infrastructure: The growth of EV industry will be hindered if it’s found lacking in creating the charging infrastructure. This is the major challenge faced by all government authorities across the world. A report estimates that India needs about 4 lakh charging stations to meet the requirement for 2 million EVs that could potentially ply on its roads by 2026.
To cater to this huge demand, an integrated work approach between the government and the private sector is required. The fuel companies like BPCL and IOCL are trying to accommodate electric charging stations in their existing facilities.
The Ministry of Housing and Urban Affairs (MoHUA) amended its Model Building Byelaws (MBBL) 2016 to include the provision of electric vehicle charging in buildings.
- Charging infrastructure shall be provided for electric vehicles at 20% of all ‘vehicle holding capacity’/’parking capacity’ at the premises.
- The building premises will have to have an additional power load, equivalent to the power required for all charging points to be operated simultaneously, with a safety factor of 1.25.
Below mentioned are some of the recent commitments by PSU and Pvt Sector for building the charging infrastructure.
OLA Electric has entered charging infrastructure tie-up with companies for $2 billion dollar investments. It means setting up more than 1 lakh charging stations in 400 Indian cities in next five years. Ola Electric made strategic investment in a fast-charging tech company StoreDot. StoreDot is a “pioneer in batteries with extreme fast charging technology”. As a part of the investment, Ola Electric will have access to the company’s battery technology, which it claims can fully charge a battery in five minutes. Ola will also have exclusive rights to manufacture batteries with StoreDot’s fast charge technology in India.
BPCL confirmed in April ’22 that it will invest Rs 200 Cr to set up 100 fast EV charging corridors with 2,000 stations, along the busiest 100 national highways.
Indian Oil has set up 1,000 EV charging stations. The fuel company now has EV charging points in more than 500 towns and cities including multiple state and national highways. It now plans to have a base of 3000 plus charging stations that will convert highways into e-highways across the country, over the next three years, as per a statement.
Tata Power has partnered with Apollo Tyres to deploy electric vehicle charging stations. Tata Power has a presence across all the segments of the EV charging eco-system and has deployed all types of chargers — DC 001, AC, Type2, Fast DC chargers up to 50kwh and up to 240kwh chargers for buses.
Hero MotoCorp, BPCL tie up to set up charging infrastructure for electric two-wheelers. Hero and BPCL will first establish charging infrastructure at the existing fuel stations and “subsequently may broaden the collaboration to develop more synergies within the EV eco-system and adjacent business verticals,” the companies said in a statement. In the first phase, charging stations will be set up across nine cities starting with Delhi and Bengaluru. The user charging experience will be controlled by a Hero MotoCorp mobile app.
Hero Electric, ElectricPe also join hands for EV charging network. The collaboration entails Hero Electric riders to access ElectricPe’s charging network, as the former recently committed to setting up 100,000 charging points by the end of this year.
Omega Seiki Mobility, Log9 Materials to jointly invest Rs 150 Cr in charging infrastructure. Supporting electric cargo three-wheelers, both the companies will facilitate deployment of InstaCharging stations that can fully charge the vehicle within 35 minutes as compared to upto 3.5 hours taken by conventional electric three-wheelers, a company release said.
TVS Motor Company to partner with Jio-bp for EV charging solutions.
Tata Power, Rustomjee ink pact to set up EV charging infrastructure across project in Mumbai region.
Big power companies like Tata Power or Power Utilities want to diversify their business and are exploring business opportunities where they can make money by creating an infrastructure for a business model which has a visibility of assured consumption — The EV charging eco-system.
All the above-mentioned Commitments shown by both PSU & Pvt Sector companies indicate that the challenge of charging infrastructure is going to be short-lived. Yes, it needs investment, but that is a given when there is an appetite for it.
Availability of the ‘Right EV product’: The current ICE market is segmented into Motorcycles contributing to 9.5 Lakh units sale per month, Scooters contributing to 3.25 Lakhs units per month, while Moped sales are pegged at 35k units per month. i.e: Motorcycles contribute to 73% of the Total 2W ICE Industry.
The EVs which contribute to about 2% of the 2Wheeler Sales volume however is highly skewed towards Scooter segment with a Sales contribution of more than 95%.
This confirms that there is a huge opportunity for new product offerings in EV Motorcycle segment.
Upon drill down of IC Engine Cubic capacity wise contribution, we understand that the highest contribution comes from the 100-110cc segment @ 58% followed by 125cc segment contribution of 25% of ICE 2Wheeler Sales. Here we see the EV’s following the pattern of ICE, with majority of EV’s benchmarking the performance parameters w.r.t the 100-125 cc segment.
95% of the EVs available in India today are scooters and are skewed more towards the 100-125 cc segment in terms of their performance parameters.
Out of the Top 20 Popular e2W Only 4 are Motorcycles.
The largest contributor to 2W industry is the Motorcycle segment (73%) which is hardly explored by the EV Manufacturers & club it with the performance range (Cubic capacity) segmentation of ICE & we come across this huge scope of product offerings that can be worked out in EV to cater to the varied needs of the Indian consumer.
EV companies definitely need to work a lot on providing the ‘Right Products for the Right Segment’ of customers, if they truly want to penetrate the ICE market.
As of now, the availability of the ‘Right EV product’ seems to be the only concern for faster EV adoption.
Now, that we are talking about ‘Right product,’ we would like to touch upon the recent incidents of EVs catching fire.
Why electric vehicles have been catching fire in India? While the adoption of EVs has been picking up in the country, with almost one million units on the road, the peddling of low-quality batteries ill-suited to Indian conditions is likely derail the progress of the industry.
Nearly 99 per cent of battery fires occur due to short circuits leading to uncontrolled current. Short-circuits happen for three reasons —
1. Poor cell quality: Due to manufacturing irregularities, there can be an issue with how the anode, cathode and separator are packed together. An accidental contact internally leads to short circuit, which in turn leads to uncontrolled current, eventually resulting in fire.
2. Poor battery design (the way cells are connected and packaged): Packaging refers to the way the cells are put together, and how they are electrically joined and how they are held together mechanically. Huddling cells together with zero spacing and insulation is a recipe for disaster. Every nut and bolt needs to be thought through. Indian roads can shake anything loose. Now imagine the EV plying on a patchy Indian road and a loose bolt dangling inside a tub full of active cells – it’s a ticking bomb.
3. Poor BMS (management of cells via sensing and software intelligence): Overcharging happens due to poorly designed Battery Management System’s (BMS) hardware (poor sensing and accuracy), lack of BMS intelligence or a badly written BMS Software. Overcharging leads to dendrite build-up which causes cells to bulge, crush into each other and in due course cause short circuit – eventually leading to fire.
Indian road conditions differ from Western nations that have cooler temperatures and comparatively smoother roads. Cells should be between 35 and 45 degrees Celsius, but in India, the ambient temperature itself is above 45 or 48 degrees. This raises the question of keeping the cells below the ambient temperatures, because batteries that are being imported from colder markets today do not support this. With higher ambient temperatures, the lack of a proper BMS and heat management systems make inexpensive battery packs a major safety hazard, while simultaneously reducing efficiency and its life.
The recent incidents of 2W catching fire have come as a wakeup call for EV manufacturers to look into the three points discussed above and work towards providing a better quality and a safe product which holds its grounds on the parameters of Safety – Security – Reliability – Performance.
The government has also swung into action. The government has asked electric two-wheeler manufacturers to halt new launches, as per a report by The Economic Times, until the fire incidents were thoroughly investigated.
Apart from asking to halt launches, EV two-wheeler makers have also been asked to recall EVs from the particular batch of vehicles that the fires were reported on. EV makers such as Ola, Pure EV, and Okinawa have already announced voluntary recalls for more than 7000 vehicles over the last week.
The Transport and Highway Minister Nitin Gadkari made an announcement saying if EV makers are being negligent, they will face hefty penalties. Gadkari said, “If any company is found negligent in their processes, a heavy penalty will be imposed, and a recall of all defective vehicles will also be ordered.”
The official quoted above, also said, “Manufacturers who did not have incidents of electric two-wheelers catching fire have also been cautioned to take corrective actions on their sold vehicles. The ministry has asked EV makers to educate consumers about charging safety and how to prevent fire incidents.”
Now, let’s understand the commitment levels being shown by the start-ups and investors to build the requisite eco-system for EVs.
Start-ups and investors commitment towards building EV eco-system: EV technology evolution in India requires sizable investment in R&D and product development, for both automobile platforms and battery/charging technology.
Considering the potential in EV business, investors are more than willing to fund the projects. Fund raising amounting to Rs 3,307 Cr have been raised by EV start-ups in year 2021 alone.
With these kind of investment commitment shown by investors and EV start-ups, we can be rest assured that the EV Technology is here to stay and grow. Now we only need to know is this the right thing…..stay tuned
Laveenomics 