EV problem: Incentives in place, but no infrastructure

India’s EV conundrum: Incentives in place, but no infrastructure

Electric car. Credit: iStock Photo

Social media was recently abuzz that a Bengaluru-based car-maker had plans to launch an electric car with a 500-km range per charge. Assuming this plan is successful, it would help overcome range anxiety and would certainly push fence-sitters towards buying electric cars. 

Over the past 18 months, four big car-makers have launched electric vehicles (EV) in the Indian market. Notwithstanding the Covid-19 impact, electric car sales as a percentage of overall car sales in India is abysmally low at less than 0.2%. Electric scooters fare slightly better at 0.4% of overall two-wheeler sales -- a worrying sign for the government despite incentives like reducing GST on electric vehicles to 5%, providing income tax benefits and waiving road tax. To promote EV uptake, the government should consider waiving highway toll fees for EVs, perhaps till 2025.

Global trends indicate that EV penetration is about 3% of the overall sales. The EV market in the European Union grew by over 40% in 2019 compared to the previous year. The EU countries are offering an environmental bonus for car-makers and purchase price subsidies for EV buyers.

India has set a goal that by 2030, 30% of cars sold annually should be EVs. But to realise this goal, the buyer, government, and the industry need to play their respective parts effectively.

Economics of electric car purchase

In any car segment, EVs cost at least 20-30% more than their petrol and diesel counterparts. However, the running cost of an EV would just be 15-18% that of a petrol car. Sample this: The current petrol price is about Rs 83-85 per litre. Petrol price has increased 20-30% every five years since 2000 and this trend is expected to continue. The prevailing per-unit electricity rate for domestic consumption is Rs 5-7. Charging an electric car with 250-300 km range would cost about Rs 220-250 per month.

With few moving parts, electric car maintenance costs 20-30% of that of petrol cars. When we consider these aspects along with the income tax benefits, the extra cost paid for the electric car can be recovered in 2.5-4 years. Essentially, over five years, the EV becomes cheaper compared to regular cars. But the big challenge today is the unavailability of compelling EV alternatives in the compact car segment (comprising 70-75% of the overall car market) that can provide a decent range of 250 km per charge. The other big challenge is the availability of infrastructure.

For an existing car-maker to build a significant presence in the EV market, it should invest in EV technologies and adapt to the needs of the Indian market. A recent report states this would involve Rs 3.5 lakh crore Capex investment from all the car-makers over the next 5-7 years. A large part of this expenditure is likely to be used for acquiring companies in the EV space. Will these companies undertake such expenditure instead of protecting their current business?   

Charging infrastructure

Charging infrastructures in cities have improved significantly over the past year. For example, Bengaluru’s electricity provider Bescom has installed DC fast-charging infrastructure in 12 locations across Bengaluru. Also, some car-makers are offering anytime emergency charging for their customers within city limits.

It still takes 30 minutes to over an hour to obtain a meaningful range in the car. The government has planned for charging stations with 50KW capacity every 25 km on highways. In addition, there are plans for 100KW charging stations every 100 km, catering to heavy-duty EVs like trucks and buses. 

Statistical analysis in the EU and the US indicate that the number of cars per public charging station must be five to 10 to avoid queuing at charging stations. Currently, in India, there are about 650 charging stations, compared to three lakh in China.

India has about 22 cars per 1,000 people, compared to the US with 980 cars and China with 164 cars per 1,000 people. An International Energy Agency (IEA) report indicates that India’s car market is poised to grow significantly to 175 cars per 1,000 people by 2040.

 Assuming 60-70 cars per 1,000 people by 2030 in India and considering the government’s target of 30% cars as EVs, we will have over 2.5 crore EVs. Even if we consider 25 lakh electric cars by 2025, the number of public charging stations required will be about 4-5 lakh. The government should aggressively work on improving the public charging infrastructure through a PPP model. The biggest challenge is the availability of reliable power supply at these charging stations, especially along highways. The government must incentivise and push for solar-based charging stations. The solar-based pilot phase on the Delhi-Chandigarh highway must be expanded across the country. This will give confidence to the public about the government’s proactive action in establishing infrastructure.


India needs to invest in alternative technologies like induction charging. Essentially, highways will have a charging lane, and EVs driven on this lane get charged wirelessly, removing range anxiety completely. This is an interesting concept, but in the present form is expensive.

Any research on creating an affordable mass-market solution for highways, parking lots, etc., will revolutionise India’s EV market.

Another area for research is on developing mass-market solid-state batteries for EVs.

While FAME (Faster Adoption and Manufacturing of Hybrid and EV) schemes are a step in the right direction, the government must create a strong EV ecosystem to help India become a leading player in the EV manufacturing and components space.

The government must play a significant role for India to march towards zero-emission. This must be supported by car-makers, providing compelling alternatives for people to switch to EV.

(The writer is a Bengaluru-based ICT professional and EV enthusiast)

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