5 Market Situations That Destroy India’s EV Hopes

PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE)’ Scheme brought in a Rs. 10,900 crore subsidy promise for EV vehicles. The Ministry of Heavy Industries stated that, “the key objective is to speed up the transition to electric vehicles by offering upfront incentives for EV purchases and encouraging the development of charging infrastructure”.

The investment, the statements and incidents that are happening in recent times reflect the government’s strong push and excitement around EVs. However, an eagle-eyed view of the automotive market shows that EVs still represent only a tiny portion of the overall vehicle sales.

Of the 26.04 million vehicles sold in 2024, 73.69 per cent were petrol variants. Diesel vehicles accounted for 10.05 per cent, while the remaining 9.87 per cent included vehicles powered by other fuels such as petrol-CNG, hybrid, and compressed natural gas (CNG). EV penetration in the Indian market, despite the push, is only estimated at 7.46%.

In this article, we explore these issues that create a gap between policy ambition and the on-ground reality of EV growth in India. We indicate, in detail, the ground-level challenges that make the transition to EVs extremely difficult, if not impossible, starting with issues around systematic barriers, repair and replacement, infrastructure, recycling and the environment. 

The Systematic Barriers Issue:

The transition to EVs is heavily dependent on two factors – charger types and charging speeds. Before delving into the problems surrounding these two, the science behind charging needs to be thoroughly understood. 

Science Behind:

There are two forms of current – Direct Current & Alternating Current. 

DC – Direct Current is current that flows consistently in a single direction. This is the current that allows electronic devices (appliances, laptops, smartphones) to function. AC – Alternating Current is current that reverses the direction of the flow periodically. This type of current allows for transmission to happen over long-distance, from the power grid. For most appliances to work, AC should be converted into DC via a convertor / an adapter.

With regards EV, there are two forms of charging: DC charging and AC Charging.

DC charging, or Direct Current charging is designed for fast charging. It delivers direct current to the vehicle’s battery, eliminating the need for an onboard converter (a converter that is usually inside the car that converts AC into DC). This results in faster charging times. They can provide 80% charge in almost 30 minutes, depending on the charger’s power rating and the vehicle’s compatibility.

AC, or Alternating Current, uses power from the electrical grid. The vehicle’s onboard charger converts this AC power into DC power to charge the battery. They are the most common type used for home charging and are typically slower than DC chargers, making them suitable for overnight charging at home or in-office parking lots. 

The picture depicts the difference between AC charging & DC charging clearly.

These two different types of charging happen through different types of chargers. Because of this, depending on the types of chargers for EVs, charging times vary.

The industry classified three different levels that indicate the type of charging, the connector used for charging & the time it takes for charging the vehicle.

Level 1 charging is the slowest method of charging an EV. It uses a standard household AC outlet (120-volt), similar to those used for small appliances. This type of charging is convenient because it can be done anywhere there is a household outlet, but it is very slow. 

Level 2 charging is faster and more commonly used for home and public charging. It operates at 240 volts, similar to what is used for electric dryers or stoves. This level of charging can add 12 to 32 miles of range per hour, depending on the vehicle and charger capacity. 

Level 2 chargers can fully charge a BEV in 4 to 10 hours, making them suitable for overnight charging. They often require a dedicated 240-volt outlet installed by an electrician. Type 2 connectors are widely used for Level 2 charging, especially in Europe. 

Level 3 charging, also known as DC fast charging, is the fastest method available. This type of charging is typically found at public stations along highways and can charge an EV to 80% in under an hour

Why is it important? 

The reason why science becomes important is because re-charging an EV demands re-imagination of the existing mechanisms surrounding “re-fueling” a vehicle. 

For an EV to recharge outside a home, there is a need for a place that can either provide a Level 2 charging, if not Level 3 charging. This means, a level 2 / level 3 charging space (with the specific charging outlets) should be constructed. Additionally, such a space should not only be secure (so that no one steals the vehicle) but also should be available for more than 4 hours. Furthermore, if the vehicle requires a different connector than the one that is present at the charging station, charging is a problem.

These challenges are virtually non-existent for fuel-based vehicles. The ability to instantly re-fuel, anytime, anywhere, and the ease of refueling Internal Combustion Engine (ICE) vehicles, combined with the standardized nozzle is one of the biggest factors working in the favour of petrol, diesel and CNG run vehicles.

Gas stations are placed almost everywhere across the country, from the most populated cities like Delhi or Mumbai to a small unheard town like Bhadohi. This reach plays a significant role in elevating the position of  traditional fuel-based vehicles.

EV charging demands a departure from the “instant refuelling” mindset as used in traditional fuel-based vehicles and until such specific requirement is catered to, transitioning to EV is a distant reality. 

The Battery Repair & Replacement issue: 

The running cost of an electric vehicle is estimated to be Rs. 1- 2 per kilometer. The running cost of a petrol vehicle comes around Rs. 7-10 per kilometer. On paper, EV sounds better than fuel based vehicles. However, the real cost unfolds when the cost of battery & repair are considered. 

Once the battery’s life is complete, the price of a new battery is between Rs 55,000 to 70,000 which may even reach 2 lakh for some popular models. The price of a new battery i.e. the replacement cost is more than 50% of the cost of the EV, an amount that is equivalent to the cost of a new petrol based two-wheeler vehicle altogether. 

Even repairing the battery is not a viable option. Fixing EV batteries – Lithium-ion batteries – isn’t like swapping out a flat tyre – it’s a complex job. They are sensitive to physical damage and require careful handling to prevent any harm. 

Not only that, they pose serious safety risks if not handled properly. As a result, finding a trained professionals with the required advanced tools, can mean long wait times, travel to distant service centres – making it an inconvenient affair for the consumer. 

To top it all off, there’s the issue with insurance, where insurance of an EV can be 20-30% more expensive than a petrol vehicle because of the Lithium-ion Battery. 

In a country like India, where most mechanics have never dealt with such heavy voltage batteries and where a lot of consumers are price sensitive in nature, transitioning to EV is asking too much from both consumers and the market in general. 

The Recycling Issue

Fourth and the most underrated issue in transitioning to EVs – What happens to the whopping number of ICE vehicles present in India?

In 2023, India recorded a total of over 2.2 crores registered vehicles out of which just over 2 crore of those constituted petrol and diesel vehicles. These numbers pose a critical question: What will happen to these existing ICE vehicles amid such transition. 

Should a policy be incorporated where ICE vehicles are to be scrapped just like the policy on old vehicles? If so, isn’t it penalising the consumer for purchasing an ICE vehicle when it was legal to purchase? If so, how much would the consumers get for surrendering their ICE vehicle? Is it sufficient to purchase an EV? More importantly, would the demand for EV be adequately met by the producers? Do they have resources and capacity to meet such a demand?

If phasing out the vehicles is the solution, how to go about it? 

Should India adopt a similar ban to the UK? Wherein, the UK announced a ban on the sale of petrol and diesel cars by 2035.

For instance, Meghalaya recently approved a policy to scrap over 13,000 old vehicles-a positive step, but it raises important questions: Do we have a systematic way to scrap these vehicles across the country, and what support is available for people whose vehicles are taken off the road?

What we are trying to say is this: India, while working on its new initiatives like FAME or PM-E DRIVE is overlooking the most fundamental issue in all this – building the mechanisms and infrastructure that enables the gradual transition to take place. 

To complicate things further, a report from Economic Times reveals that a significant number of EV owners are considering switching back to ICE vehicles due to range anxiety (charging anxiety), high maintenance cost and poor resale value. 

Against this backdrop, one cannot but wonder – Is EV really worth it?

The Environment Issue: Sustainable growth for EV

From a climate point of view, battery electric cars registered today in India produce 19-34 percent less greenhouse gas over their full life cycle than average new petrol cars, a benefit that could help India become greener by 2030.

As tempting as it is, one should not overlook the environmental harm that is created by using an EV – battery waste.

As more and more EVs grow in the market & as more and more batteries are replaced (rather than repaired), battery waste is bound to increase. In the absence of a well-functioning battery waste management system, the benefit to the environment is nullified, if not massively offput, by the battery waste created.

While the top lithium recycling companies – Attero Recycling, ACE Green Recycling and Ziptrax Cleantech are contributing in reducing the battery waste, however, these companies usually have to bear high operational costs.

Harm to the environment doesn’t just stop there. It goes beyond battery waste. It demands mining earthly resources and consumption of extraordinary amounts of water. 

The Lithium Problem:

EV batteries need raw materials like lithium and India is exploring lithium mining in Jammu & Kashmir, Karnataka, Rajasthan. However, it could take at least 10 years before production of commercial-scale lithium can happen.

Furthermore, lithium mining is a water-extensive process, requiring approximately 2.2 million litres of water to produce one ton of lithium. This poses significant challenges in regions like Rajasthan where water scarcity is prevalent. In fact, Saleem H. Ali, professor of Energy and the Environment, cautioned that “mining is unstable for Himalayan Terrain and is fraught with risks”.

In 2021, India imported $33 million worth of lithium compounds, including lithium carbonate, mainly from the US (31%), Belgium (28%), Austria, and Singapore (7%)

To reduce the import burden and support eclectic vehicles, the Indian government has launched a 18,100 crore Production Linked Incentive (PIL) scheme for battery production. The scheme which was launched on September 15, 2021 aims to enhance India’s domestic battery manufacturing capacity and manufacturing of advanced Automotive components in India. 

Despite the government’s push to boost domestic battery production and reduce reliance on imports, challenges around lithium-ion batteries remain – such as high costs, limited raw material availability, and charging times. 

In this context, new research and innovations are crucial to finding alternative solutions. Recently, researchers from the Jawaharlal Nehru Centre for Advanced Scientific Research developed a super-fast charging sodium-ion battery that can charge up to 80% in just six minutes and last for over 3000 cycles.

While this is a commendable achievement, gaps like meeting supply demands, integrating sodium-ion batteries alongside existing lithium-ion technology and replacing ICE vehicles, still persist. 

Against this background, where EV demands trading-off environmental harm, we ask you the question – is EV really the future that we should desperately run towards?

The Infrastructure Issue: 

Another issue is to build infrastructure that is ready to accommodate the growing numbers of EVs.

In 2024, India had 12,146 EV charging stations in public spaces operational across the country. Even if we factor in the EV charging stations opened by retailers like Indian Oil, Hindustan Petroleum (HPCL), and Bharat Petroleum (BPCL), which is 10,000 in number (as of 2023), This is TOO LESS to accommodate 5 Million EVs that are in the market now, let alone the 50 million EVs expected to be on roads of India by 2030. 

Indian Oil is leading the way in setting up charging infrastructure. It has established over 6,300 charging stations so far.

The rate of growth of EV charging Stations is far less when compared to the rate of growth of EVs on road. This is because of the several challenges there are in establishing these facilities. 

Installation charges: 

The cost of setting up a single fast charger can range between Rs. 7 to 35  lakhs, depending on the equipment and tech integration. Because of these high upfront costs and uncertain profits, many big players choose to share the burden through partnerships. For instance, Tata Power teamed up with HPCL to install 5000 electric charging stations.

However, even the partnership model becomes less appealing when return on investment is considered.

In this light, undertaking a commitment to establish charging infrastructure in places where there is less demand is onerous. Which means that consumers in areas where EV charging stations are not nearby are less than likely to consider EV. Which further results in private players not willing to create charging stations in these areas. 

It’s a vicious cycle – People don’t switch to EVs because of which businesses won’t invest in charging stations. Businesses will not invest in charging stations, because of which people won’t switch to EVs.   

Dedicated space & electric grid:

Setting up EV charging stations further has two challenges – finding a dedicated space for EV charging and constructing electric power grid. 

While IOC, BPCL & HPCL, along with private players like Jio in partnership with BP Industries have contributed significantly to initiatives like PM E-DRIVE by setting up the charging infrastructure, the heavy capital and time burden of grid upgrades remains a barrier for other potential players. 

Setting up a power grid involves several things – power distribution networks, constant supply of power, charging equipment and equipped infrastructure to operate all these things smoothly. However, India is facing issues with making these power grids well-equipped due to inconsistent voltage levels and frequency variations which can potentially damage EV batteries and other equipment. 

Additionally, there is a need for dedicated space and electrical capacity to support fast charging, which may require upgrades to existing infrastructure. 

One can think of installing charging ports at common parking spaces like – offices, apartments, mall complexes. However,  the power grid has to be beefed up so it can handle lots of cars charging at once without causing blackouts or slowing everything down. 

Whatever it is, the high upfront cost of establishing a power grid combined with inconsistent demand, discourages investments, which further discourages businesses (manufacturers) to consider EV as a serious viable money making product. 

Conclusion:

Akio Toyoda, Chairman of Toyota made an “interesting” statement in the beginning of last year. He said, “battery-propelled full electric vehicles will reach a maximum market share of 30 percent globally, while the rest 70 percent will be divided among hybrids, hydrogen fuel cars and traditional internal combustion engine-powered and diesel cars. 

The statement created a massive uproar. Public perception evolved to a stage where Toyota was considered as a company resisting the change. But that is far from reality. Toyota & its Chairman got it right. EV is NOT the future and its place will probably be limited only to 30%. To chase EV, to nudge the society towards EV is a futile attempt as long as these 5 fundamental issues continue to exist. 

Perhaps the answer lies in adopting hybrids and not full Electrics. But until such a push towards hybrids takes place from an institutional level, EV is a problem for a daily consumer. 

Maybe it’s time to acknowledge, EV can not yet be ‘THE’ future. 

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Arushi Shrivastava [Author]

Pranav Jain [Contributor]