Electric models to account for 13-15% of total two-wheeler volumes by FY25: Icra

The share of electric models in total three-wheeler and bus volumes is expected to grow as well by FY25, according to Icra.

Electric models are expected to account for 13-15% of the total two-wheeler volumes in India by FY25, but the country’s charging infrastructure will need to be bolstered to achieve a healthy electric vehicle (EV) penetration, rating agency Icra said on Wednesday.

The share of electric models in total three-wheeler and bus volumes is expected to grow as well by FY25, according to Icra. The penetration of electric three-wheelers and electric buses is predicted to be over 30% and 8-10%, respectively.

The recent data released by the Federation of Automobile Dealers Associations (Fada) showed that the total retail sales of EVs increased by 218.36% in FY22 as compared to FY21. Category-wise, the passenger vehicles grew 257.18%, two-wheelers 463.61%, three-wheelers 101.23% and commercial vehicles 450.75%.

Although the charging infrastructure is currently at a nascent stage in India with less than 2,000 public charging stations across the country, most of them concentrated in a few states, Icra expects addition of nearly 48,000 charging stations over the next three-four years at an investment of Rs 14,000 crore.

“India remains laggard in EV charging infrastructure penetration. However, like most global counterparts, the policy push has been strong in India as well, to increase the number of EV charging stations. To capitalise on the potential opportunity in the space, several PSUs and private players have also announced plans to foray into charging infrastructure,” said Shamsher Dewan, vice president and group head, Icra.

The Union government had sanctioned nearly 520 charging stations with an outlay of Rs 43 crore under phase I of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME India) scheme. Under phase II, Rs 1,000 crore has been allocated for developing charging infrastructure, with the Ministry of Heavy Industries sanctioning 2,877 charging stations in 68 cities across 25 states and union territories, and 1,576 charging stations across nine expressways and 16 highways.

Icra said that the Union government has proactively amended guidelines for charging infrastructure development in the country with several states also subsidising electricity procurement tariffs for charging stations.

However, the EV charging infrastructure business is capital intensive and even excluding land, the initial upfront cost is approximately Rs 29 lakh, without subsidy, the rating agency said, adding that the operating costs are over Rs 10 lakh/year, making asset utilisation critical. As per the rating agency’s estimates, it would take about four years for an EV charging station to break even based on current expectations of EV penetration and commensurate asset utilisation (30% in four years), without accounting for any subsidy.

“Battery-swapping is an alternative solution instead of developing EV charging infrastructure, especially for commercial applications. This is also currently in the nascent stages in India. Battery swapping is advantageous — it is a quick way of recharging a vehicle and is cost and time-efficient. It reduces the upfront cost of EVs, as battery ownership is replaced by battery leasing. There is increased predictability of battery life due to controlled charging conditions. However, ensuring interoperability, adequate financing availability and maintaining sufficient battery inventory can prove to be challenging,” Dewan said.

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