Jogging on a treadmill: The tale of India's charging infrastructure

Bankability biggest hurdle for public charging stations over low usage, indefinite breakeven period

The progress of India’s charging infrastructure is akin to jogging on a treadmill. No matter how long you run, the distance appears only on the screen: You are still on the belt. For Indian companies setting up public charging stations (PCSes), the narrative is similar — the charging points multiply, but the needle on utilisation and profits moves little.

It has been over two decades since Reva launched India’s first commercial electric vehicle (EV). But India still has one of the fewest PCSes among major economies. At the same time, it is one of the fastest-growing EV markets. That begs the question, why are financiers hesitant and investors circumspect? PCSes are bleeding — there is much better earnings visibility for a small petrol pump for the same investment that goes into a PCSes, interviews with several industry officials show.

“Given the relatively high capital cost of close to Rs 30 lakh per PCSes and relatively high operating costs, utilisation becomes critical,” said Vinutaa S, sector head at ratings agency

ICRA.  Utilisation is low at around 10-15 per cent, she said. Industry sources peg it as low as 5 per cent, with customers complaining of several non-working chargers.

“If you spend Rs 50 lakh on a small petrol pump, there’s much more visibility to breakeven than you get from setting up a couple of PCS of 60Kw each,” said Ashish Deswal, founder, EarthtronEV. Moreover, one can fill 20 cars for the time it takes to charge a Nexon. But Deswal is still betting on the future of electrification. Earthtron has 250 charging stations serving fleets and PCSes, is targeting 1,000 facilities by December 2024. But Deswal is counting on committed fleet operators to drive earnings, rather than wait for walk-ins.

Bankability is the biggest hurdle for PCSes because low usage and an uncertain breakeven period has put off financiers. Abhijeet Sinha, project director, National Highways for EVs, says his job is to make EV mobility bankable. He set up India’s largest charging station in Gurgaon as part of a pilot project, and is now tasked to turn 5,500 kilometre (km) of national highways into e-highways. A 3-year breakeven, and a 30 per cent utilisation prompted HDFC Ltd to lend Rs 3,672 crore, the first of its kind, Sinha says.

“Financing a petrol pump is an established process. You get a license, banks run after you,” said Sinha, programme director for Ease of Doing Business. “Everyone knows how much the petrol pump is earning — break-even, ROI, utilisation. But nobody in this country knows how much a charging station makes.’’

However, before we delve deeper into the economics of India’s charging points — a prime reason behind the country’s ratio of EVs to PCS trailing at 1:400 at the beginning of 2023 compared to 7 in case of China and 20 for the US — let us see where we stand globally. India will need 1.32 million charging points till 2030, to achieve a 1:40 ratio of charging infra to EVs, the Confederation of Indian Industry said in a report. The International Energy Agency projects India’s charging points in 2030 at a more modest 300,000 in its Global EV outlook 2023 report. That compares to 7.6 million chargers in China. Public charging infrastructure is key for EV adoption, especially in countries where two-wheelers and three-wheelers dominate, and where urban population density is high with lower access to dedicated parking, IEA said. India’s 17,093 public charging points as of September account for 0.6 per cent of the global total, according to OMI Foundation and IEA.

It is a chicken and egg story, Vinutaa said. China solved this problem by directing state resources years ago to create a sprawling charging infrastructure even while administering subsidies to EVs. But New Delhi focused on EV makers while ignoring the cabling on which these vehicles run, industry officials said. 

Earthtron’s PCSes in the National Capital Region (NCR), and a few others in southern states, which along with Maharashtra account for most of India’s chargers, clock 30-35 per cent utilisation, driven by their locations. Rahul Walawalkar, president of India Energy Storage Alliance, says that the biggest challenge is the need to have a proper strategy to deploy these chargers.

PCSes can become viable if volumes surge, says Raptee Chief Executive Officer (CEO) Dinesh Arjun, which is launching a premium e-motorbike next year. Charging networks must be more reliable, and detailed information about their availability should be made available to customers, he said. Also, the PCS business model largely depends on the subsidised tariffs at which electricity is supplied by states, ranging from Rs 4.5-8/Kwh. Charging rates average Rs 15/Kwh. Once these subsidies disappear, and commercial rates kick in, the business model comes under more pressure unless backed by sufficient volumes. 

The only way that charging networks can get financed is if usage is attractive or multiple parties are sharing the charging infra, said Pankaj Gupta, CEO, Mufin Green Finance, which has financed Rs 400 crore for EVs and some charging infrastructure. “Until any of these don’t happen, it’s very risky to fund charging infrastructure.” 
 

Earthtron’s Deswal concurs. He finds fleet charging more viable than PCSes. Utilisation levels clock 40-45 per cent on the strength of power offtake guarantees from fleet operators, assuring a reasonable return.

Sinha sees the future of India’s EV mobility in fleet charging, battery and car swapping, generating 80 per cent of revenues from non-charging streams in his projects, much like how multiplexes earn from selling popcorn than from selling movie tickets. 

He is less bullish on PCS compared to fleet charging.

Sinha’s pilots on the Delhi-Agra and Delhi-Jaipur highways demonstrated the viability of charging infrastructure, which fetched him a project to build 111 charging stations along 5,500 km of highways. The projects are complex — they stretch across 2 acres of land, and along with chargers contain banks, food courts, battery swapping outlets, EV showroom, car swapping stations, and conference room among others.