World Sustainability Day 2023: While EVs rev up to rule the roads, hurdles like charging networks, battery innovations, and cost stand in their way
The road to the widespread adoption of electric vehicles (EVs) is full of challenges, ranging from charging infrastructure and battery technology to affordability. To steer the EV industry in the right direction, it is essential to understand the prospective consumers and segment them into two primary categories. This approach will lay the groundwork for a cleaner, greener, and more sustainable future. Come join us on this exciting journey as we explore the road ahead for EVs.
EVs for Personal Use
The EV market faces three major challenges: charging infrastructure, battery technology, and cost-effectiveness. When it comes to EVs designed for personal use, the reliance on charging infrastructure mainly revolves around the home setting. Most people who use EVs for personal purposes have the convenience of charging at home or at their workplace (if available), creating what is called "captive charging spots." Public charging infrastructure is less critical in this context due to its high cost, and many personal-use EVs provide sufficient range for daily use.
As a result, people who use electric vehicles for personal use tend to use public charging stations less frequently. Instead, their focus is on the second challenge: battery technology. They value batteries that are long-lasting and durable and often seek warranties or guarantees that cover up to 7 or 8 years to ensure that their electric vehicle batteries remain strong. The third challenge is related to the cost and affordability of electric vehicles.
Electric vehicles (EVs) are better for the environment, but they are generally more expensive than traditional internal combustion engine (ICE) vehicles. To make them more affordable, subsidies are offered, but price-sensitive consumers are still unsure about the financial viability of EVs. Such consumers weigh the initial cost of an EV against the long-term savings and tend to prefer lower upfront costs or a level playing field with ICE vehicles. Since personal-use EVs typically don't require heavy asset utilization for daily driving distances, significantly reducing upfront costs can greatly promote EV adoption in this category.
When it comes to addressing the challenges associated with electric vehicles (EVs), one crucial factor to consider is the availability of charging infrastructure. Personal EV owners usually find it convenient to have a home charging solution. On the other hand, apartment dwellers can benefit from a community garage parking-based setup as it can ease the pressure on public charging infrastructure. Moreover, deploying charging infrastructure in public places such as malls and theatres can be a convenient option for EV owners who frequent such places. By providing charging options both at home and in public areas, we can alleviate the burden on the charging infrastructure.
Battery technology in the four-wheeled EV sector has notably stabilised, with leading brands offering warranties of up to eight years, providing personal EV users with peace of mind. In the competitive two-wheeler market, battery longevity remains dynamic. Still, it is optimistic that warranties can support batteries for four to five years, addressing the battery technology challenge for personal two-wheel EVs. Concerning cost and affordability, government subsidies are pivotal in narrowing the price gap between EVs and traditional internal combustion engine (ICE) vehicles. A discernible trend is emerging as consumers increasingly favour EVs over ICE engines, signifying that the challenge of cost and affordability is diminishing, especially in personal EV use. The momentum is undeniably shifting toward an electric future.
Businesses Transitioning to EVs:
Companies and organisations aiming to incorporate electric vehicles into their fleets and operations. The business sector in India stands as a pivotal driver of electric vehicle (EV) adoption. With an astounding annual delivery count of 5 million, this customer segment is transforming the EV landscape. The financial implications are striking, particularly for businesses. Deliveries using internal combustion engines (ICE) cost approximately 10 rupees per kilometer, but with EVs, the cost dwindles to just 1 rupee per kilometer. This significant cost reduction enhances the economic viability of EVs for businesses across various sectors, including e-commerce giants like Amazon and Flipkart, last-mile and middle-mile goods carriers, and local intracity transport services. In the backdrop of 5 million annual deliveries, EVs have become an attractive choice for cost-conscious businesses, reshaping the landscape.
Intracity transport forms the core of their operations, and adopting electric vehicles presents a cost-effective and eco-friendly solution. Delivering with EVs proves tenfold more economical than relying on traditional ICE engines, emphasising the compelling financial case for businesses to transition to electric mobility. The Indian government has set an ambitious target to have 70% of all business vehicles operating as electric by 2030.
This projection assumes that businesses will naturally gravitate toward EVs, even if the initial purchase cost is slightly higher. The business sector is set to accelerate the adoption of electric vehicles, driven by the imperative of cost savings and the environmental benefits they offer. Within the distinctive realm of businesses transitioning to electric vehicles (EVs), three significant challenges take center stage: charging infrastructure, battery technology, and cost-effectiveness. In terms of charging infrastructure, unlike personal EV users who often rely on home or workplace chargers, businesses require an expansive public
charging network. Their operations extend beyond central hubs, necessitating on-the-go charging flexibility. Therefore, companies heavily rely on accessible and robust public charging infrastructure, with cities boasting advanced charging networks witnessing higher EV adoption rates.
The second challenge revolves around battery technology. Businesses demand resilient batteries to meet India’s high-temperature conditions, fast charging capabilities, and the capacity for multiple charge-discharge cycles within a single day. This need for temperature tolerance, swift charging, and high-frequency cycling sets business EVs apart from personal-use vehicles. Regarding cost and affordability, businesses are willing to absorb slightly higher upfront.
EV costs. Their decision-making centers on a comprehensive Total Cost of Ownership (TCO) calculation, considering initial purchase costs and anticipated operational expenses over 5 to 10 years. Operational savings play a pivotal role in determining EV affordability for businesses. Thirdly, companies seek financing options, as they typically acquire multiple vehicles. They require convenient leasing or financing through banks, including access to
EMIs or loans, facilitating fleet scaling. Hence, business customers primarily seek readily financeable and leasable EVs. This three-pronged approach—comprehensive charging infrastructure, robust battery technology, and accessible financing options—is instrumental in fostering EV adoption among businesses.
Businesses transitioning to electric vehicles (EVs) focus on three key solution strategies. Firstly, they advocate for the establishment of an extensive network of public chargers, with an emphasis on fast-charging capabilities. Business operations cannot afford prolonged charging times, as downtime results in financial losses. Hence, fast charging is pivotal, necessitating batteries that can sustain rapid charging without degradation, which forms the core of their second solution. Businesses need storms that can endure frequent, fast charging without compromising longevity.
Additionally, as many operate in hot climates, thermally resistant batteries are a priority to ensure consistent performance. In terms of cost and affordability, businesses employ a Total Cost of Ownership (TCO) approach, factoring in initial purchase costs and long-term operational expenses over 5 to 10 years. Financing and leasing options are central concerns, as they often acquire multiple vehicles and require support from banks and financiers.
These batteries must inspire confidence, ensuring predictable performance. These three solution strategies—fast charging, durable batteries, and accessible financing options—are the driving force behind businesses’ adoption of electric vehicles.
(Pankaj Sharma is Co-Founder and Director at Log9 Materials.)