The EV Infrastructure Dilemma: Can India Meet the Demand for Electric Vehicles?

Recognizing the need for urgent action, the Indian government has rolled out several initiatives aimed at bolstering the EV charging ecosystem. The FAME II scheme, which has been extended until 2024, focuses on setting up EV infrastructure in urban areas and providing financial incentives to buyers.

October 09, 2024. By News Bureau

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International Energy Agency

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Indian EV market

EV Infrastructure Development

Mobec Innovation

The electric vehicle (EV) revolution is rapidly gaining momentum globally, with increasing emphasis on clean energy, climate change mitigation, and sustainable transportation. According to the International Energy Agency (IEA), global EV sales surpassed 10 million in 2022, up from 6.6 million in 2021, and this number is projected to reach 230 million by 2030. India, as one of the largest automotive markets in the world, is positioned to be a significant player in this transition. However, the question arises: Can India meet the growing demand for EVs, especially when faced with substantial gaps in EV infrastructure?

The Growth of the Indian EV Market
India's EV market has shown remarkable growth in recent years, driven by policy incentives, public awareness of environmental concerns, and rising fuel prices. The Indian government has set ambitious goals for EV adoption under its Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme. By 2030, India aims to have 30% of private cars, 70% of commercial vehicles, and 80% of two- and three-wheelers powered by electricity. The market for electric two-wheelers has been particularly robust, with a year-on-year growth rate of 185% in 2022, according to a report by the Society of Manufacturers of Electric Vehicles (SMEV).

However, the number of EVs on Indian roads remains a small fraction of the total automotive market. According to the Ministry of Heavy Industries, only 1.3 million EVs were registered in India as of early 2023, a tiny percentage of the 300 million vehicles currently on the road. To achieve the 2030 targets, India will need rapid growth in the sector, and that growth hinges on the development of an adequate and robust EV charging infrastructure.

Current State of EV Infrastructure in India
The lack of sufficient EV charging infrastructure remains one of the most significant barriers to widespread EV adoption in India. As of 2023, India has approximately 6,500 public charging stations, according to the Ministry of Power. In comparison, China, the global leader in EV adoption, has more than 1.15 million public charging points, and the U.S. has over 140,000 public and private chargers combined.

This gap in infrastructure highlights a fundamental dilemma: even if EV adoption accelerates, can India's charging network keep pace with the demand?

The EV Charging Demand-Supply Mismatch
According to a report by NITI Aayog and Rocky Mountain Institute, India will require nearly 2.9 million public charging points by 2030 to support its EV growth targets. This means that India needs to install over 350,000 charging points per year over the next seven years to meet the demand, a daunting challenge given that it has only installed a fraction of that number in recent years.

Moreover, the majority of EV charging infrastructure in India is currently concentrated in urban areas, leaving vast rural regions underserved. This urban-rural divide exacerbates the accessibility problem, particularly in a country where nearly 65% of the population resides in rural areas.

Challenges Hindering EV Infrastructure Development

High Cost of Installation: Setting up EV charging stations, especially fast chargers, involves significant upfront investment. Land acquisition, grid connectivity, and the cost of the equipment make the economics challenging for operators. The Indian government's FAME II scheme offers incentives to install charging stations, but the support is still insufficient to spur the private sector to make large-scale investments.
Grid Capacity Issues: India's electricity grid is already under pressure, with demand often exceeding supply during peak hours. Scaling EV charging infrastructure could exacerbate these challenges. A report by the Central Electricity Authority (CEA) estimates that India’s electricity demand could rise by 100 terawatt-hours (TWh) by 2030 due to EVs, necessitating grid upgrades and significant investments in renewable energy to meet the additional demand sustainably.
Range Anxiety: While electric two-wheelers and small cars have shorter ranges, range anxiety remains a major concern for long-distance travelers. The fear of running out of charge without access to a charging station is a deterrent for many potential EV buyers. Without a dense and reliable charging network, consumer confidence in EVs will remain limited.
Fragmented Policy Implementation: Although the central government has set ambitious targets, the implementation of EV policies varies widely across states. Some states, like Delhi and Maharashtra, have made significant progress by offering subsidies, tax exemptions, and investing in charging infrastructure. However, many other states lag behind, creating a fragmented landscape that lacks uniformity in support and incentives.

Government Initiatives and Industry Collaborations
Recognizing the need for urgent action, the Indian government has rolled out several initiatives aimed at bolstering the EV charging ecosystem. The FAME II scheme, which has been extended until 2024, focuses on setting up EV infrastructure in urban areas and providing financial incentives to buyers. Additionally, the government has set a target to install at least one charging station every 3 km in major cities and every 25 km on highways.

Public-private partnerships are also gaining traction. Companies like Tata Power and NTPC are investing heavily in charging infrastructure. Tata Power, for instance, has installed over 2,000 charging points across India and plans to add 10,000 more by 2025. Similarly, partnerships between energy companies and automakers are expected to accelerate the growth of EV charging networks. Ola Electric, for example, is working on establishing a network of hyperchargers for its two-wheeler EVs across Indian cities.

Global Comparisons and Lessons for India
India’s EV infrastructure development can benefit from studying the models used by global leaders like Norway, China, and the Netherlands. Norway, despite its small size, has one of the highest per capita numbers of charging stations in the world, supported by government subsidies and private sector investments. China’s centralized planning and heavy government investment have led to rapid deployment of charging infrastructure, with a strong focus on urban and semi-urban areas.

India, with its federal structure, needs a coordinated effort between central and state governments, as well as active participation from private players, to emulate these successes.

- Harry Bajaj, CEO, Mobec Innovation