February 25, 2024

We have been puzzled by the age-old question “Which chicken or egg came first?” for longer than any other. The symbiotic nature between the two is what continues to puzzle us. One cannot exist without the other. The Indian electric vehicle (EV) ecosystem is also similar. It is difficult for policymakers to decide whether EV manufacturing should be encouraged or to create or maintain the necessary EV infrastructure.

Manufacturers such as Mahindra & Mahindra, Tata Motors, and several electric two-wheeler OEMs, including Hero Electric, Ather Energy, and Tata Motors, are launching electric passenger vehicles. However, the most important question for Indian consumers is whether the infrastructure for charging their vehicle is adequate or if it will run out of juice and leave them/her stranded.

An Indian electric car can travel 100-150 km on a single charge. This is even though there aren’t many charging stations available in India. Policymakers might be wise to look beyond India for ideas. Tesla Inc, the “world’s largest car manufacturer”, has established charging stations on American roads every 30 minutes for its customers since 2012. Today, the $28 billion company has also installed similar stations in Europe and America. Notably, the Chinese government has spent more than $60 billion over the past 10 years in building an industry that could meet the demand. The primary focus of this investment was to charge infrastructure.

What is the Indian policymaker to focus on now?

Poor fiscal space means the government must similarly encourage private spending to the one it used in the 1990s to stimulate entrepreneurship in the PCOs and the telecom sector. For an EV charging infrastructure boost, it is important to have better land acquisition laws. They help free up land and attract capital. To attract international and domestic investors, it is also important to reform labour contracts to make them more efficient. Lastly, it has been observed that the issues that the Prime Minister or his office specifically focus on will gather the most steam in the current sociopolitical environment. This political support for India’s electric vehicle ecosystem will only accelerate the country’s EV goals.

Clearer policies are not enough. More research is needed to determine the best business model for India. Although charging stations owned by utility companies and independent charging networks have been successful globally, the Indian consumer will prefer the charging infrastructure model of the automobile manufacturer and the fueling station model. There are also options for charging stations in restaurants, hotels, and malls.

We hope to reduce carbon emissions, fuel consumption and lower power demand. However, the success of EVs in India will depend on two factors first, whether there is a demand among Indian consumers. Second, whether the EV ecosystem can handle the number of cars on the road, the National Capital plans to introduce 2,500 EVs daily to its roads by 2023. However, such an EV presence will require no less than 4MW power. This is a demand that the Delhi Government has not yet been able to meet. There is still much to do, even after installing the hardware. Then comes the need to maintain it effectively.

We can avoid disruption in an industry by adopting indigenised EV manufacturing and charging infrastructure manufacturing. This will also help us achieve a value increase of almost Rs 20,000 crore. Indian policymakers need to urgently consider the potential benefits of this transition and create policies that will help us achieve the goals that we have set.

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