Investing In Public Charging Unprofitable: Why India's EV Infra Is Lagging

The biggest challenge for 31-year-old Priyans Murarka, as he embarked on a Delhi-Mumbai road trip in December last year in his MG ZS EV, was to find a suitable public charger to charge his electric car. Murarka’s struggle last year during the trip highlights the dismal state of public charging facilities for electric vehicles (EVs) in India.

Murarka was struggling to find a charger compatible with a four-wheeler EV. It is not that there was a dearth of charging stations across Delhi. But Murarka wanted to slow charge his car before the long journey and to his surprise, found that most slow chargers were either incompatible with his vehicle, or were located in gated societies. Slow charging mostly uses an AC charger at 3.6 kilowatt to 7.4 kilowatt, compared to fast charging that uses a DC charger at over 15 kilowatt (kW). After an hour-and-a-half of scanning chargers at 3 am in the morning, and travelling from CR Park to Connaught Place, he finally found one that would suit his needs. 

Murarka’s struggle underlines the larger state of EV charging infrastructure in the country. Charging stations in many metro cities are ubiquitous, but the kind of charger compatible with your vehicle and your needs may not be as easily available as users would want them to be. Which is why Murarka and many like him prefer to charge at home and use public charging stations mostly for road trips. “If you are going to be using your electric car in the city…a significant amount of charging usually happens at home,” Murarka, who runs a company focused on air purification and blogs on his EV experience, told The Core. 

The government is pushing for a wider adoption of electric vehicles (EVs) through policies and incentives. But the necessary compatible charging infrastructure that is required for a consumer to graduate to EVs is still absent in India. We may now see a lot of EV charging stations spread across the cities, but a closer study reveals that they do not have chargers that are compatible with the vehicles. 

Charging infrastructure has failed to keep pace with EV sales. Sales of electric vehicles crossed the 1 million mark in less than nine months in 2023, and have surged 40% year-on-year in the third quarter of this financial year. Against this, the ratio of EVs to public charging stations is severely lacking at 1 station for 182 EVs, according to the ministry of heavy industries in August.

Charging Infrastructure Is Struggling

The high cost of installing a DC charging point has kept several private players from scaling up. Most start-ups are wary of scaling up immediately. As per industry estimates, it costs anywhere between Rs 1.5 lakh to Rs 20 lakh to set up an EV charging station. “DC chargers, known for their high power capacities and infrastructure needs, tend to be more expensive to install. For instance, installing a 60 kW DC charger typically costs around Rs 15-20 lakhs,” Raman Bhatia, founder and managing director of Servotech Power Systems Ltd explained to The Core. An AC charger, which is wall-mounted, is much cheaper to install than DC chargers, he added. 

“It’s the chicken and egg story, whether charging infrastructure comes first or vehicles, because the viability of business is totally dependent on EV density,” EV charging solutions provider Volttic’s founder and chief executive officer Varun Chaturvedi told The Core.

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The lack of compatible charging points are mainly due to the uneven nature of EV adoption. In India. The lower penetration of passenger vehicles in the country also doesn’t incentivise charging solutions players to invest in fast chargers. Most electric two-wheelers and three-wheelers have the capacity to use chargers ranging from 3.3 kW to 7 kW only, while fast chargers are used for passenger vehicles and buses. Currently, about 50% of India’s public chargers are slow chargers, while the other half are fast, Hemal Thakkar, senior practice leader and director at CRISIL, pointed out. 

According to clean energy research firm Mercom India, two-wheeler EVs accounted for 49% of total EV sales in the third quarter of 2023. Three-wheelers made up 45% of the total sales, and four-wheelers represented a mere 5% of the total sales.

Lack of adequate charging points bring into focus whether EV adoption needs to pick pace first or public infrastructure should push for greater adoption. According to Nitish Arora, lead, electric mobility at Natural Resources Defense Council (NRDC) India, and was previously deputy research head at Ola Electric Mobility, public infrastructure needs to come first. Alluding to how the adoption of CNG vehicles in Delhi increased after pumps were installed, he said, “we always believed that charging stations would come first and the vehicles adoption would follow just like for any technology,” Arora told The Core.

Why Are Users Charging At Home?

Several users The Core spoke to said they preferred to charge at home as it was more convenient. According to EV charging solutions provider Statiq, in 2022, 80% of electric charging in India happened at home. 

A closer look at data would reveal that while EV demand across segments is picking up, related charging infrastructure is struggling to keep up. The Indian government wants EVs to comprise 30% of new private vehicle registrations, which would be 8 crore EVs, by 2030. For this, India will need a total of 39 lakh public and semi-public charging stations. That would make the ratio of stations available per vehicle at 1:20. 

While adoption of electric vehicles is growing rapidly, charging infrastructure needs to be planned in a way that is not only accessible to all, but also brings in more potential users. Currently, home charging seems to be the most profitable and preferred segment. Home charging is user friendly as well as profitable for companies, which is why both companies and users prefer it over public charging. Take the case of Sarvottam Kulkarni. The 26-year-old purchased an Ola Electric S1 scooter about eight months back and has never used a public charging point. He hasn’t spotted one in his neighbourhood in Pune’s Kothrud and doesn’t see the need. “Our daily use is not more than 3 km, so we need to charge once every 4-5 days only,” he said. And for this, he uses a 3.3 kW extension cable to plug his scooter in his home. Charging usually takes about 8 hours. 

Some two-wheeler and three-wheeler companies even offer removable batteries, so users can take the battery home, charge it and reinstall it in the vehicles. Most two-wheelers and three-wheelers work on AC slow chargers, which take about 5-8 hours to charge the vehicle. Time is thus a major reason why consumers prefer charging at home. Chaturvedi of Volttic said that the company has been getting a lot of requests from housing societies to install AC charging points. “Most societies don’t have the capacity for DC chargers currently, so we are supplying AC chargers, but we’re not significantly investing in it yet…once we see more penetration of EVs, say in a building of 800, you currently might have 30-40 people with electric vehicles…but as the density will increase, so will the need for fast charging.” 

Tata Power, the market leader in EV charging infrastructure, said in September that home charging was the most profitable segment of its EV charging business, which also includes public charging and fleet charging. “The only space where the returns have not come as yet is the public charging, which is not a very large component at present,” Praveer Sinha, the managing director and CEO of Tata Power had said in an interview with CNBC-TV18 in September. 

Home charging is also economical. Users The Core spoke to said they have not seen any significant change in their electricity bills due to charging of their vehicles at home. Charging costs an estimated Rs 1 per km at home, while it costs Rs 3 per km when charging outside, Murarka pointed out. The charges also depend on whether the charging point operator (CPO) is privately owned or government owned.

As things stand now, public charging stations are harder to develop due to a variety of reasons, including higher costs of setting them up and land acquisition, among others.

Practical Challenges

There are several practical challenges to building adequate public charging infrastructure. The installation of public chargers cannot happen haphazardly. “The moment you talk about charging infrastructure, you require three major components. First is the land, second is the power infrastructure, and third is your hardware and software,” Chaturvedi explained. While there are several companies providing the hardware and software infrastructure, power and land acquisition need to be considered more strategically. 

A fast-charging station, depending on the car model, will still take an hour on an average to charge. In the case of an EV charging station, the station would either need to be near enough to people’s homes or have facilities like a restaurant that people can use while waiting . 

“The expense associated with procuring land is notably high,” Bhatia of Servotech Power Systems, said. “Significant investments are also required for building the necessary infrastructure and ensuring ongoing maintenance for seamless operations,” he added. 

Another major issue is integrating EV charging stations with the power grids, Arora highlighted. “What has been a bigger capital cost for charge point operators is that they need to invest into the upgradation of the distributional grid,” he said. 

Additionally, CPOs have to deal with the risk of vandalism and theft. Available chargers may also not be functional. According to Murarka’s own research, over half the DC and AC chargers by BPCL were faulty. In Delhi, which has the most number of chargers by city, several points are installed by the Energy Efficiency Services Limited (EESL) and use the old Bharat DC-001 standard, which doesn’t work with most new vehicles.

Growth In Public Charging This Year

While there are still miles to go as far as EV infrastructure is concerned, things have ramped up this year. According to estimates by rating agency CRISIL, though there was an addition of barely 400 charging points in the financial year 2022-23, this year, India has already added close to 4,000 public chargers in the span of six-eight months. As of March this year, there were 6,586 operational public charging stations in the country, according to the ministry of heavy industries. This grew to 8,738 in July 2023, as per a statement by the ministry. Currently, there are over 11,000 stations in the country, according to the Bureau of Energy Efficiency’s website.

“In terms of market size, I would expect that the electric vehicle charging station market would grow at a compound annual growth rate of about 25% per year, over the next five years,” Arora said. 

Charging infrastructure has also grown sharply in the six major metropolitan cities. When it comes to charging infrastructure for CCS2 and Type2 chargers, as of September 2023, Delhi ranked first, followed by Bengaluru and Mumbai Metropolitan Region in third place, according to Murarka’s research, surveying data from over 52 CPOs.

Both at a central and state level, there is a concentrated push for better electric charging infrastructure. Under the FAME-II scheme, the government earlier this year, sanctioned Rs 800 crore to oil marketing companies (OMC) including Indian Oil (IOCL), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL), to set up 7,432 fast charging stations across the country. However, there is no direct subsidy or incentives for private charging operators under FAME-II.

Meanwhile, several states have well-fleshed out EV policies which push for both private and government-owned charging stations. “When you look at state EV policies to create an enabling framework, each state supports the initial set of charging and swapping stations where they provide some sort of Capex subsidies and operational subsidies,” Arora pointed out. 

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Maharashtra, which currently has the highest number of charging stations, in its EV policy has set a target of 2,375 public and semi-public charging stations across seven major urban areas and four connecting national highways. It will also provide incentives for slow-charging and fast-charging infrastructure at Rs 10,000 and Rs 5 lakh respectively. 

The Tamil Nadu government recently announced a plan to increase charging points from 400 to 2,000 stations by 2026, and said it would work with its power and distribution arm, as well as with OMCs to boost adoption. Currently, 57% of the charging points are owned by private companies while 43% are publicly owned, CRISIL’s Thakkar pointed out. He also said that he expects the share of private companies only increasing in the future.

Private players have also seen robust growth this year. For instance, Volttic, an EV charging solutions provider which was launched in 2017, turned their first profits in this financial year. The company had about 550 charging units (including public and residential units) in the last financial year, and has close to 800 currently, Chaturvedi told The Core. But this, he added, was due to the company adopting multiple ways to generate revenue, including fleet charging and software subscriptions, rather than only focussing on public charging.

Despite the growth, the chargers we have are grossly inadequate. If, for example, we consider that 80% of vehicles are being charged at home, we have approximately one charger per 50 vehicles currently, Thakkar told The Core. “And if you discard the fact that 80% is charged at home, and look at the population at an overall level, then we are grossly inadequate.”

Comparing this to a global average highlights how poorly we’re faring so far. China has an average of one charger per 2.5 vehicles, while Europe and the United States average about one charger per 15 vehicles. Lack of charging infrastructure should not impede wider EV adoption for India to make a noticeable difference towards clean energy goals.