By Sumit Mishra & Aashima Garg
Electric vehicles (EVs) are likely to transform mobility patterns, create new opportunities, and redistribute responsibilities within the industry. This may require new orientations as well as stable and forward-looking policies. Cities will require networked transport systems through multimodal integration and redesigning the mobility system to make it sustainable and consumer-oriented. There is an existing ecosystem for conventional vehicles, but for EVs it has to be designed by cultivating each component. This ecosystem involves multiple stakeholders, and would entail development of several competencies, collaborations within electric mobility value chain, and redistribution of services.
Evolving drivers of change: Each stakeholder is pertinent in EV adoption and an interplay is essential for streamlining EVs in existing transport systems. On demand side, the government needs set the vision for vehicle electrification, formulate robust policies, streamline processes, and set standards and specifications. Demand uptake has to be supported by consumers’ perception about usage and sense of association with EVs, and aggregators are expected to play the role of bringing scale and driving operational efficiencies. It is crucial to strengthen supply-side factors by supporting manufacturers, integrating supply chain, encouraging innovation. Power utilities need to assess the impact of EV deployment on the grid through innovation in distribution of power. Financial institutions (to meet the need of fund availability owing to high CAPEX) and energy suppliers (to relieve vehicle operators from responsibility of battery acquisition and charging) also have a major role to play.
Synchronisation: Integrated efforts in a unified direction are important for sustainable and smart electric mobility. The aim should be to bring synergy amongst players involved in electric mobility, encourage innovation, leverage private sector expertise, enhance governance, and distribute risk among players with risk-bearing capacities.
Potential business models: Interventions have to start from public transport, considering its scale and impact on mobility, as well as addressing pollution and congestion. Public transport a lifeline for commuters, but limited last-mile connectivity is a major issue. So, business models need to analyse coexistence of partnerships in EV value chain. Different phases for deploying vehicles will involve planning, actual implementation and subsequent operations, and maintenance of vehicles and supporting infrastructure. Activities such as route planning, demand assessment, tariff fixation and provision of infrastructure (where life of asset is longer than the vehicle or contract period) may be undertaken by the government. Other related tasks—owing to high upfront cost and limited competence of a single player—may be outsourced.
For electric buses, outsourced activities include setting up of charging facilities, procurement of fleet (with or without battery) and O&M. The government can harness expertise of energy suppliers to undertake battery-related operations. Leasing options could also be explored.
For enhancing last-mile connectivity, the government can promote partnerships with manufacturers, aggregators, transport authorities, dedicated associations, while keeping some roles with itself—laying down standards, guidelines and monitoring performance. Revenue risk could be with public or private players, depending on the model.
Charging stations are a bottleneck for EV penetration. An appropriate model for identified players for charging infrastructure may not be based solely on direct revenues from charging, and include indirect revenues from retail sales. Also, since advancements in electric mobility are unravelling, the government can consider leveraging competencies of private players—after learning and exploring the technology, the government may assume more responsibility.
The road ahead: The success of EVs depends upon integration and innovation, rather than sheer investment. There certainly would be multiple business models, but certain fundamental characteristics are essential for success. These non-negotiable success factors include accessibility and reliability of services, consumer safety, operational excellence, and technologically-driven platforms.
(Mishra is director, Garg is consultant, Deloitte Touche Tohmatsu India)