Energy and Extractives Global Practice Group South Asia Region (SAR) Electric mobility in India Accelerating Implementation April 2021   a Energy and Extractives Global Practice Group South Asia Region (SAR) Electric mobility in India Accelerating Implementation April 2021 1 Lorem ipsum Lorem ipsum cology energy green whash. 2 Lorem ipsum Lorem ipsum cology energy green whash. 3 Lorem ipsum Lorem ipsum cology energy green whash. 4 Lorem ipsum Lorem ipsum cology energy green whash. Disclaimer This document has been prepared for the sole purpose of sharing the results of market assessment and resulting insights related to the adoption of electric vehicles in India. This does not endorse individual vendors, products or services in any manner. Therefore, any reference herein to any vendor, product or services by trade name, trademark, manufacturer or otherwise does not constitute or imply the endorsement, recommendation or approval thereof. Copyright © 2021 The International Bank for Reconstruction and Development THE WORLD BANK GROUP 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All Rights Reserved The findings, interpretations and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, or its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. The World Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility whatsoever for any consequence of their use. The Boundaries, colors, denominations, other information shown on any map in this volume do not imply on the part of the World Bank Group any judgment on the legal status of any territory or the endorsement or acceptance of such boundaries. The material in this publication is copyrighted. However, it may be reproduced in whole or in part and in any form for educational or non-profit uses, without special permission provided acknowledgment of the source is made. Requests for permission to reproduce portions for resale or commercial purposes should be sent to the Manager, Energy and Extractives Global Practice (South Asia) at askeex@worldbankgroup.org. The World Bank encourages dissemination of its work and will normally give permission promptly. The Manager would appreciate receiving a copy of or link to the publication that uses this material for its source sent in care of the address listed. Design & Print: Macro Graphics Pvt Ltd  |  www.macrographics.com Contents Acknowledgements vii Acronyms ix Executive Summary xi Summary of Recommendations xvii Outlook for Electric Vehicles and their Electricity Requirements in India xxiii Growth Forecast of E-mobility in India xxiii Impact of Electric Mobility on the Power Sector xxvi Framework and Structure of the Report xxx 1. Power Supply and Grid Infrastructure 1 1.1 Strategic Importance 1 1.2 Current Scenario 1 1.3 Key Market Challenges 2 1.4 Key Issues in Implementation 2 1.5 Recommendations 5 1.6 Further Analysis and Studies Recommended 8 2. Charging Infrastructure Deployment 9 2.1 Strategic Importance 9 2.2 Current Scenario 10 2.3 Key Market Challenges 12 2.4 Key Issues in Implementation 13 2.5 Recommendations 16 2.6 Further Analysis and Studies 19 Contents iii 3. EV Financing 21 3.1 Strategic Importance 21 3.2 Current Scenario 21 3.3 Key Market Challenges 21 3.4 Key Issues in Implementation 23 3.5 Recommendations 23 3.6 Further Analysis and Studies Recommended 25 4. EV Deployment 27 4.1 Strategic Importance 27 4.2 Current Scenario 27 4.3 Key Market Challenges 30 4.4 Key Issues in Implementation 31 4.5 Recommendations 32 4.6 Further Analysis and Studies Recommended 34 5. EV Manufacturing 35 5.1 Strategic Importance 35 5.2 Current Scenario 35 5.3 Key Market Challenges 39 5.4 Key Issues in Implementation 39 5.5 Recommendations 39 5.6 Further Analysis and Studies Recommended 40 6. Mining and Mineral Sourcing 41 6.1 Strategic Importance 41 6.2 Current Scenario 42 6.3 Key Market Challenges 44 6.4 Key Issues in Implementation 46 6.5 Recommendations 47 6.6 Further Analysis and Studies Recommended 47 7. Battery Manufacturing 49 7.1 Strategic Importance 49 7.2 Current Scenario 50 7.3 Key Market Challenges 52 7.4 Key Issues in Implementation 53 7.5 Recommendations 54 7.6 Further Analysis and Studies Recommended 55 iv Electric mobility in India: Accelerating Implementation 8. Battery Recycling and Second Life 57 8.1 Strategic Importance 57 8.2 Current Scenario 58 8.3 Key Market Challenges 59 8.4 Key Issues in Implementation 60 8.5 Recommendations 60 8.6 Further Analysis and Studies Recommended 62 Annexures 63 1. Scope, Research Methodology and Limitations of the Report 63 2. Description of the Chapters 64 3. List of Studies Referred to Assess the Impact of Electric Vehicles on Power Sector 66 4. List of Industry Stakeholders Consulted 67 List of Tables Table 1: Impact of electric mobility on power sector xxvii Table 2: CPO Ownership matrix 12 Table 3: Types of EV chargers for different EV segments 13 Table 4: Market growth in terms of annual sales 27 Table 5: GCC contracts across India in FAME-I 28 Table 6: Outright purchase contracts across India in FAME-I 28 Table 7: Understanding the upfront cost disparity between EV and ICE per vehicle segment 31 Table 8: Average charging time across various vehicle segments available in India 31 Table 9: EV manufacturing policies 35 Table 10: State EV policy highlights 36 Table 11: Battery manufacturing incentives 49 Table 12: Battery cost percentage of total vehicle cost 50 Table 13: India’s estimated, hypothetical battery import cost for 100% electrification of FY19 sales 50 Table 14: List of possible initiatives for demand creation 55 Table 15: Companies working on battery recycling in India 58 Table 16: Typical lithium-Ion battery cell composition 59 List of Figures Figure 1: EV Sales Penetration Trend (2020-2030) xxiv Figure 2: Number of publicly accessible slow and fast chargers in India xxiv Figure 3: Estimated number of Public Charging Stations in India xxv Figure 4: Vehicular Category-wise Electricity Demand by EVs in 2030 in India xxvi Figure 5: Comparison of state-wise EV Charging Energy Charge with ACoS xxvii Contents v Figure 6: Envisioned Evolution of E-mobility Market in India xxxi Figure 7: Special EV charging tariffs in Indian states 2 Figure 8: Comparison of tariffs from different Indian states 4 Figure 9: Percentage share of EV customers indicating charging infrastructure as top enabler 9 Figure 10: Policy and regulatory interventions as well as implementation support by GoI in FY 2018-19 11 Figure 11: Policy and regulatory interventions as well as implementation support by GoI in FY 2019-20 11 Figure 12: Collaborations to develop a sustainable charging infrastructure ecosystem 18 Figure 13: TCO parity with ICE for varying use-cases and vehicle segments 29 Figure 14: Addressable market growth for vehicle categories by 2030 29 Figure 15: End to end emission assessment for EVs compared with ICE vehicles (in varying grid mixes) 30 Figure 16: Fleet surcharge on rides based on INR/ride; can also be looked at from INR/km basis 34 Figure 17: Estimated growth in demand for minerals needed for low-carbon energy technology as a percentage of 2017 production by 2050 41 Figure 18: Cost Components for NMC Battery Pack 42 Figure 19: Comparison of availability of critical minerals in various countries 43 Figure 20: Global lithium production, 2018 45 Figure 21: Global cobalt production, 2018 45 Figure 22: Presence of China in Cobalt and Lithium production 46 Figure 23: Global battery manufacturing capacity by chemistry 51 Figure 24: Cobalt usage reduction in Tesla’s batteries across years 51 Figure 25: Battery value chain 57 Figure 26: Economics of recycling an NMC (111) in China (in US$/kWh) 60 vi Electric mobility in India: Accelerating Implementation Acknowledgements This study was conducted under the guidance of a Associate; Pranjal Bhatnagar, Senior Associate; World Bank team comprising of Amol Gupta, Senior Sahana L, Associate Consultant; Satish Singh, Energy Specialist; Defne Gencer, Senior Energy Senior Associate; Sushovan Bej, Senior Consultant; Specialist; Kavita Saraswat, Senior Power Engineer; and Vikramaditya Singh, Associate Consultant. and Rohit Mittal, Senior Energy Specialist. Useful inputs and perspectives were provided by the EY’s Transport Practice, represented by Mihir The team is grateful to World Bank Group colleagues Shah, Partner; Mohd Anas, Associate; and Roshan who peer reviewed the report: Gerald Paul Ollivier, Toshniwal, Manager. The EY team was supported Lead Transport Specialist; John Richard Drexhage, by ICF, represented by Gurpreet Chugh, Shivali Consultant; and Suvranil Majumdar, Consultant. Dwivedi, and Vikas Suhag. The World Bank team The team is also most grateful to Sandeep Goel, sincerely appreciates the hard work, dedication, Energy Specialist for valuable inputs during the course of the study and review of the drafts. The and collaborative spirit of the EY and ICF teams. team is also thankful to Ritika Rodriguez, Program The World Bank also values the nuanced industry Assistant and Shaukat Javed, Program Assistant, insights provided by the three external Subject Matter for their administrative support in preparation of this Resources (SMRs) on the study – Vinay Bajaj, Advisor report. Simon J. Stolp, Practice Manager, Energy and and Electric Mobility Market Expert; Awadhesh Extractives Global Practice (South Asia Unit) and Jha, Charging Infrastructure and ICT Expert (Vice Rohit Khanna, Practice Manager, Infra Energy Global President, Fortum Charge & Drive India); and Kaustuv Programs, also provided much appreciated guidance Mohapatra, Energy and Grid Planning Expert. and advice on this work. Stakeholder interviews, for the study, were The study was executed by the Ernst and Young LLP carried out by the EY team during the period – (referred to as EY, for the purposes of this report) team September-December 2019 and subsequently led by Ashish Kulkarni, Associate Partner; and Kanv in March- April 2020. Findings of the report were Garg, Director; with support from EY’s global Energy shared and feedback gathered at two virtual Practice experts – Marc Coltelli, E-Mobility Leader; industry stakeholder consultations, leveraging EY’s and Thierry Mortier, Digital & Innovation Lead. proprietary collaboration platform – wavespace, EY’s project delivery team comprised of held on 30th July 2020 and 5th August 2020. Ashish George Kuttickal, Associate Director; We express our gratitude to the support provided Gagandeep Singh, Consultant; Harsh Jain, Senior by EY wavespace team, consisting of Meghna Acknowledgements vii Shrimali, Director; Nazneen Kheriwala, Associate to help low and middle-income countries reduce Director; Abhishek Verma, Assistant Manager; and poverty and boost growth through sustainable Swapnil Rankhambe, Senior Associate, in facilitating energy solutions. ESMAP’s analytical and advisory impactful conversations. The World Bank team is services are fully integrated within the World Bank’s deeply thankful to all the consultation participants country financing and policy dialogue in the energy for sharing their invaluable insights and comments. sector. Through the World Bank Group (WBG), ESMAP works to accelerate the energy transition required Financial and technical support from Energy Sector to achieve Sustainable Development Goal 7 (SDG7) Management Assistance Program (ESMAP) for the to ensure access to affordable, reliable, sustainable work is gratefully acknowledged. The Energy Sector and modern energy for all. It helps to shape WBG Management Assistance Program (ESMAP) is a strategies and programs to achieve the WBG Climate partnership between the World Bank and 18 partners Change Action Plan targets. viii Electric mobility in India: Accelerating Implementation Acronyms 2W Two-Wheeler EVSE Electric Vehicle Supply Equipment 3W Three-Wheeler FAME Faster Adoption and Manufacturing of Hybrid and Electric Vehicles 4W Four-Wheeler FICCI Federation of Indian Chambers of ARAI Automotive Research Association of India Commerce & Industry BEE Bureau of Energy Efficiency GCC Gross Cost Contract BEV Battery Electric Vehicle GIZ Deutsche Gesellschaft für Internationale BRPL BSES Rajdhani Power Limited Zusammenarbeit GmbH BYPL BSES Yamuna Power Limited GoI Government of India CARB California Air Resource Board GSI Geological Survey of India CFA Consumer Federation of America HVIP Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project CNA Central Nodal Agency ICE Internal Combustion Engine CNG Compressed Natural Gas IPDS Integrated Power Development Scheme CVRP Clean Vehicle Rebate Project KABIL Khanij Bidesh India Limited DFI Development Finance Institution LBNL Lawrence Berkeley National Laboratory DHI Department of Heavy Industry LCO Lithium Cobalt Oxide DISCOM Electricity Distribution Company LCV Light Commercial Vehicle DR Demand Response LFP Lithium Iron Phosphate DRC Democratic Republic of Congo LMO Lithium Manganese Oxide DSM Demand Side Management MNRE Ministry of New and Renewable Energy DST Department of Science and Technology MoEFCC Ministry of Environment, Forest and Climate DT Distribution Transformer Change ERC Energy Regulatory Commissions MoHIPE Ministry of Heavy Industries and Public EV Electric Vehicle Enterprises Acronyms ix MoM Ministry of Mines RERC Rajasthan Electricity Regulatory Commission MoP Ministry of Power RMI Rocky Mountain Institute MoRTH Ministry of Road Transport and Highways RTO Regional Transport Office MUD Multi-Unit Dwelling RWA Resident Welfare Association NCA Lithium Nickel Cobalt Aluminum Oxide SDS Sustainable Development Scenario NDC Nationally Determined Contribution SECI Solar Energy Corporation of India NEV New Energy Vehicle SERC State Electricity Regulatory Commission NGCM National Geochemical Mapping SEZ Special Economic Zone NGPM National Geophysical Mapping SIAM Society of Indian Automobile Manufacturers NIP National Infrastructure Pipeline SMEV Society of Manufacturers of Electric NMC Lithium Nickel Manganese Cobalt Oxide Vehicles NREDCAP Non-conventional Energy Development SNA State Nodal Agency Corporation of Andhra Pradesh Limited STEPS State Policies Scenario NSP National Service Provider STU State Transport Undertaking OCPI Open Charge Point Interface ToD Time of Day OCPP Open Charge Point Protocol ToU Time of Use OSCP Open Smart Charging Protocol TWh Terawatt hour OEM Original Equipment Manufacturer ULB Urban Local Body OGP Obvious Geological Potential UPS Uninterruptible Power Supply OpenADR Open Automated Demand Response USAID United States Agency for International PCS Public Charging Station Development PHEV Plug-in Hybrid Electric Vehicle V2G Vehicle-to-grid PSB Public Sector Bank VKMs Vehicular Kilometers PSU Public Sector Undertaking ZEV Zero Emission Vehicle R&D Research and Development x Electric mobility in India: Accelerating Implementation Executive Summary Governments, automotive manufacturers, energy the current heavy dependence on oil imports, with companies, charging infrastructure operators, close to 84% of oil demand being met through mobility service providers, technology providers this route5. The Government of India is therefore, and aggregators across the globe are preparing steadily moving towards a “shared, connected and themselves for a rapid transition from conventional electric” mobility ecosystem to achieve its stated internal combustion engine (ICE) vehicles to electric goals on emissions reductions, energy security mobility.1 Increasing from the current global sales of and industrial development. It is doing so through 2.1 million units in 20192, electric vehicles are expected wide-ranging policy and regulatory measures to to account for nearly 57% of all vehicle sales and encourage EV adoption, creation of public charging over 30% of all vehicle fleet by 20403. International infrastructure and incentivizing domestic EV and experience indicates that the key factors responsible battery manufacturing facilities. for driving this transition are a) conducive policy An analysis was undertaken by the World Bank to and regulatory support across the electric mobility review the development of e-mobility in India, identify value chain, b) technological advancements (new remaining challenges and mitigation measures to and improved battery chemistries, automation in support India’s electric mobility vision. This report retail electricity business) and c) increased customer presents the findings of the analysis and lays out preference for green mobility options (influenced by a set of recommendations for consideration by rising fuel prices and concerns regarding local air different stakeholders. pollution, climate change). The key findings and recommendations are Successful transition to electric mobility is critical summarized below: for India since it already faces severe air-pollution challenges with half of the 50 most polluted cities !! Range anxiety (the fear that a vehicle has being in India4. This will also facilitate in reducing insufficient range to reach its destination and would thus strand the vehicle’s occupants) 1 The terms electric mobility, electromobility and e-mobility will be used interchangeably in the report. Unless otherwise mentioned, it would be a critical factor for EV uptake will refer to road-based commute based on electric vehicles in urban in India. Therefore, charging infrastructure areas, as defined by various Governments globally and wherever applicable needs to precede the deployment of EVs. 2 International Energy Agency – Global EV Outlook 2020 Ensuring reliable power supply, adequate grid 3 Bloomberg New Energy Finance (BNEF) 4 2019 World Air Quality Report - Region & City PM 2.5 Ranking by IQAir 5 The Economic Times, updated on May 05, 2019 Executive Summary xi infrastructure and viable business models for DISCOMs may therefore be mandated to setting up charging infrastructure will play a establish a simplified and fast-track approval major role in large scale deployment of EVs. process for smart EV chargers. The process !! Development of electric mobility ecosystem for EV charger approvals could become part of in India may follow a different growth “Ease of Doing Business” matrix for DISCOMs. trajectory as compared to developed or !! Given the evolving nature of EV deployment, economically varied global EV markets. In the state regulators are still in the process India, the transition is expected to be driven of developing an understanding of issues. by private two-wheelers and public three- Regulatory mechanisms to review network wheelers that dominate the shared mobility augmentation plans, approve investments space. This also makes the battery swapping and provide tariff and other incentives to model significant for India as it reduces upfront encourage EV deployment need to be EV cost and increases commercial run time of formulated. the e-vehicle (which is often worked in multiple !! Central and state governments can leverage daily shifts). electric mobility to increase the share of !! While EV penetration will not have any renewable energy in the power grid and major impact on electricity generation and to reduce carbon intensity of energy and transmission infrastructure, the distribution transport sector. Government investment in network will require investments – for distribution grid planning and upgradation to enhanced technical planning and upgradation support deployment of EVs can integrate more of network. The additional electricity demand distributed energy resources into the network. likely to arise from EV charging could range Through appropriate demand response between 2% to 4% of total demand by 2030, program and Time of Day (ToD) tariffs, EV which is not significant. However, uncontrolled charging loads could be shifted to off-peak and EV charging could cause disruption in the high RE generation periods. electricity distribution network, through increase in peak demand, overloading, phase !! Coordinated approach between electricity, imbalance, power quality issues and power transport and urban planning departments is losses. Though such impacts are expected necessary to undertake city level integrated to be localized and concentrated mainly in mobility planning. City level electricity network the urban areas, DISCOMs would need to planning and timely upgradation of electricity upgrade their technical planning skills and infrastructure in potentially high EV-demand tools and use digital technologies to monitor locations will help in accelerating EV adoption the network. Investments for procurement while avoiding network disruption. This will of planning tools, training and network require significant coordination between upgradation would be necessary. multiple state departments (energy, transport and land), city municipalities, fleet operators and !! While uncontrolled EV charging could lead to other relevant entities. Network planning will an increase in peak demand at distribution require robust technical capabilities and data level, smart charging is a boon for distribution regarding EV growth forecast, charging pattern network operators. Smart EV chargers, with forecast (broken down to vehicle segments), suitable communication and control protocols, demographic assessment, transport flow can help manage the disruption of distribution assessment, to name a few. Currently, there is a network and even improve power quality by lack of institutional capacity to undertake such supporting voltage and reactive power control assessments. of distribution networks. DISCOMs may also utilize smart charging of EVs to support their !! Central and state governments should Demand Side Management (DSM) programs. accelerate charging infrastructure xii Electric mobility in India: Accelerating Implementation deployment by taking a technology agnostic procurement, information technical services approach and encourage private sector (ITS) and gross cost contracts (GCC) must be investments. Globally, the lack of access reviewed to make them less risky and less to convenient and affordable charging onerous to private sector e-Bus contractors. infrastructure is seen as a top barrier towards !! State governments should aggregate EV adoption. Realizing this, the Government e-Bus procurement across cities to achieve of India has allocated INR 1,000 crore (US$ procurement efficiency, better prices, quick 137 million6) towards charging infrastructure deployment and development of robust service deployment under the FAME-II scheme. The network by OEM. Currently, e-Bus procurement government may also devise mechanisms for initiatives happen at city-level which leads to fiscal incentives under FAME-II scheme to flow fragmentation and smaller size contract sizes. towards private sector charge-point operators Further, the technical and managerial capacity to drive innovation, rapid proliferation and cost at the city government level is low. This causes reduction in the EV charging space. delays in e-Bus procurement, leading to !! 2W and 3W segments contribute to 50% of eventual delay in deployment and utilization the total subsidy outlay and 96% of the total of FAME-II funds. Aggregation of demand and number of vehicles targeted under FAME-II consolidated procurement can lead to better scheme7. Faster adoption in these segments prices and OEM commitment. Drawing long- will lead to overall success of the FAME-II term e-Bus procurement contracts will also scheme. The benefits of FAME-II subsidy and go a long way in providing demand clarity to Goods and Services Tax (GST) reduction needs OEMs and help in achieving scale and overall to be extended towards battery swapping development of the e-Bus ecosystem. infrastructure also. This will enable faster !! State governments may create long- adoption of EVs in the 2W and 3W segments. term, timebound phasing out targets to Further, the relative lack of EVs on Indian roads encourage EV transition among large taxi creates a lack of confidence among potential fleets and logistics fleets. EVs are currently consumers. This can be alleviated through economically viable compared to ICE vehicles access to cheaper commercial financing or in in certain transport applications (like 4W taxis the short-term increasing the subsidy quantum in Tier-1 cities and fleet use of 2W, 3W). Due per EV while keeping the total subsidy outlay to comparatively heavier usage (in terms of under FAME-II scheme constant. The additional kilometers), taxi fleets and urban logistics incentive will make the EV option much fleets also result in much higher carbon more compelling and the following demand emissions. Hence, it is recommended that will create confidence in other potential central and state governments work with the consumers, leading to overall achievement of the objectives of FAME-II scheme. taxi and urban logistics industry to develop long-term transition roadmaps and phase- !! State governments should review the overall wise transition targets. ecosystem of bus service delivery and !! Innovative EV financing coupled with intensive bring in efficiencies in e-Bus procurement. The poor financial health of State Transport use of EVs will be a precursor for large- Undertakings (STUs) increases the payment scale EV deployment. Cost-conscious Indian risk for e-Bus operators and investors. It consumers are skeptical to buy EVs due to high is recommended that overall ecosystem upfront cost, therefore EV financing through of bus service delivery including funding, innovative business and ownership models are necessary to reduce the upfront cost of EVs. 6 US$ 1 = INR 73 High utilization applications of EVs, such as in 7 Scheme for Faster Adoption and Manufacturing of Electric Vehicles in India Phase II (FAME India Phase II), available on www.fame2. fleets, achieve total cost of ownership (TCO) heavyindustry.gov.in parity with ICE vehicles quickly. TCO parity Executive Summary xiii is seen to be achieved with an average daily should proactively initiate skilling and re-skilling utilization of around 90-110 kms for 2W; 100- programs for workers in the industry. 120 kms for 3W and 220-240 km for 4W. !! Central government may support private !! Central government should increase quantum sector mineral sourcing and investments and timeliness of access to micro-credit for in mines globally through government-to- e-2W and e-3W under the MUDRA scheme. government (G2G) facilitation rather than The initiative of the central government to undertaking public investments. The demand support micro-credit for e-2W and e-3W for batteries is expected to grow rapidly through the MUDRA scheme is appreciable. with increased adoption of electric vehicles However, there are still certain issues in the (EVs). Recycling and reuse of EV batteries is quantum and timeliness of credit received, imperative to ensure a sustainable evolution especially since many recipients have poor towards electric mobility. The continuously credit history and banks are often hesitant to evolving battery technology poses stranded- extend micro-credit under the MUDRA scheme. asset risk to public investments in mines To accelerate e-2W and e-3W adoption, the globally. Further, a reliable supply chain of key central government may supplement current minerals may attract companies to establish initiatives with low-cost, long-tenor financing battery manufacturing units in India to cater from development financial institutions (DFIs). to the rising demand from EVs. Using its Risk reduction mechanisms such as portfolio- bilateral relations with mineral-rich countries, level guarantees by DFIs, vehicles warranties Government may facilitate the private sector and buyback guarantee by OEMs will help to enter into partnerships/joint ventures with in creating confidence among lenders to global mining companies to ensure continuous provides loans for EVs. supply of various strategic8 and rare earth9 !! Central government may encourage EV minerals essential for manufacturing of uptake through increasing quantum of batteries. incentive per vehicle (while keeping the total !! Central government may encourage the subsidy outlay constant) and by providing battery manufacturing industry through support for the retrofitting of existing provision of long-term roadmap, incentives, vehicles. Government may encourage the R&D support and demand creation organized EV retrofitting market and increase initiatives. Lack of adequate domestic organizational capacity of certification battery manufacturing could result in import institutes for safety considerations. dependence. However, the current lack of !! The central government may create a long- demand visibility in downstream applications term roadmap for transition of automotive such as EVs and stationary storage do not industry towards EVs and design skilling and provide enough confidence to the private re-skilling programs to create employment sector to setup battery manufacturing in India. opportunities. The central government may Hence, it is recommended that the government work with the automotive industry and create may provide a clear long-term roadmap for a long-term industry transition roadmap for automotive and power industry to create each vehicle segment. The roadmap must demand. Given the importance of automotive also include disincentives (emission penalties, sector for the Indian economy, the government scrappage incentives) for operating old ICE may provide direct and indirect tax benefits vehicles in order to encourage people to buy to the battery manufacturing industry. This EVs. Further, the advent of EVs which have 8 Strategic minerals are tin, cobalt, lithium, beryllium, germanium, less than 1/100th the number of components gallium, indium, tantalum, niobium, selenium and bismuth compared to ICE vehicles could cause job losses 9 Rare earth elements are 17 elements which have extremely less economically exploitable mineral ore deposits; neodymium and in auto-component sector. The government samarium are used in permanent magnets of motors xiv Electric mobility in India: Accelerating Implementation may be coupled with R&D support to create assessments through government- new battery technologies suitable for Indian industry-academia collaboration on electric climatic conditions. mobility. Further research is required in !! The central government should promote various areas such as creation of mobility battery recycling through mandates on used- transition roadmaps, implementation plans, battery collection and incentive support. assessment frameworks, financing models With many EV batteries reaching end-of-life, and provide implementation support to battery reuse and recycling will become a multiple stakeholders for accelerating EV significant area of concern. Second life EV adoption in India. batteries could be used in applications such as Several policies and schemes such as National behind the meter, uninterrupted power supply Mission on Transformative Mobility and Battery in residential and other buildings, and micro- Storage, the Phased Manufacturing Plan, Faster grid applications. While experience indicates that such use of battery is likely to develop as Adoption and Manufacturing of Electric Vehicle an unorganized market, regulations could be Scheme II, state-level policies and various fiscal framed to require battery manufacturers and incentives are already introduced by India for faster sellers to collect used batteries and maintain EV adoption. However, despite efforts by the central a database of all the batteries sold and and state governments to spur electric mobility collected. Further impetus to this area may be uptake and domestic manufacturing, various market provided through innovation-challenge grants and implementation challenges exist currently for improved battery design facilitating easy in this transition. The following section gives a dismantling and recycling of batteries. brief on the identified key issues and the suitable !! Central and state governments should recommendations to accelerate EV adoption in move towards implementation-focused India. Executive Summary xv Summary of Recommendations The following eight chapters of the report, each dedicated to the one value chain segment of the EV value chain, provide details on strategic importance, current scenario, challenges, recommendations and further required studies. A summary of those recommendations against each value chain segment is provided below. No. Issue Recommendation Stakeholder(s) Timeline Power Supply and Grid Infrastructure 1 Lack of adequate grid capacity Undertake grid augmentation in State Short term at distribution transformer level high potential areas through better governments, for installation of charging coordination among departments in state energy infrastructure and lack of state-level and city-level governments departments, coordination among state DISCOMs, departments to undertake state urban city planning and grid impact departments assessments 2 Lack of capacity among Build technical capacity among SERCs SERCs, Short term DISCOMs to undertake EV and DISCOMs in cooperation with DISCOMs forecasts, demographic transport departments to plan, execute assessments, transport flow and regulate investments for EV-related assessments and other grid infrastructure studies to effectively plan grid infrastructure upgradation for EVs 3 Lack of mandate on Develop guidelines to mandate MoP, CEA, CERC, Short term communication protocols for installation of smart chargers with state energy smart charging suitable communication protocols departments 4 Lack of dynamic, Facilitate load shifting by introducing MoP, CERC, Short medium comprehensive ToD/ToU ToD/ToU tariff mechanism SERCs, term programs to shift EV charging DISCOMs demand to off-peak hours and enable RE integration Summary of Recommendations xvii No. Issue Recommendation Stakeholder(s) Timeline 5 Financial health of DISCOMs Allow cost recovery of capital and SERCs, Short term remains weak and limits their operational costs incurred by DISCOMs DISCOMs ability to invest in network for grid augmentation due to EV upgrades to accommodate EV charging through ARR filings charging 6 Lack of freely available DISCOMs should publish a map of DISCOMs Short term information regarding distribution assets along with available availability of grid capacities capacities in the public domain for installation of charging infrastructure by charge point operators and fleet operators 7 Lack of clarity on EV tariffs and Introduce time-bound waiver of fixed/ CERC, SERCs, Short term associated charges across demand charges and other surcharges DISCOMs states on EV tariff 8 Lack of supporting adequate Undertake policy and regulatory CERC, SERCs, Short term policy and regulatory support interventions to encourage use of DISCOMs to encourage use of renewable renewable energy for EV charging energy for EV charging including: a) reduction of open access threshold for procurement of RE; and b) mandate DISCOMs to set-off all EV charging demand in a certain year through RE purchase additional to existing RPO obligation Charging Infrastructure Deployment 1 Lack of FAME-II subsidy support Devise mechanisms for fiscal incentives DHI, MoP Short term for charging infrastructure under DHI’s FAME-II subsidy to flow flowing to the private sector towards private sector charge-point companies operators to drive innovation, rapid proliferation and cost reduction through efficient deployment in natural spaces such as homes, office, shopping places, gas stations 2 Lack of enough scale and Charging infrastructure installation DHI Short medium density of chargers in should be focused on top EV-demand term potentially high EV-demand cities in the early stages of the market. cities which leads to lack of The expansion to other cities should be consumer confidence in public done based on holistic assessments to EV charging infrastructure understand the type of public charging infrastructure required 3 Lack of subsidy support for In line with battery swapping getting DHI, MoF Short medium battery swapping model included under MoP guidelines, provide term (esp. in e-2W, e-3W segments) subsidy support for battery swapping model in the FAME-II scheme 4 High GST for swappable Reduce GST on swappable batteries, MoF Short term batteries sold separate from charging service and battery swapping vehicles (including spare service from 18% to 5% in line with GST batteries) and battery swapping rates for EVs, EV chargers and factory- services fitted batteries in EVs xviii Electric mobility in India: Accelerating Implementation No. Issue Recommendation Stakeholder(s) Timeline 5 Lengthy and inefficient approval Establish a simplified and fast-track CERC, SERCs, Short medium process followed by DISCOMs approval process for EV chargers DISCOMs term for EV chargers; lack of and rate DISCOMs on the process for institutional accountability for getting EV charger approvals as part timely approval of EV chargers of ease of doing business matrix for and installation of associated DISCOMs infrastructure 6 High cost of enhancing LT Encourage DISCOMs to incur grid SERCs, MoHUA Short term level grid infrastructure for EV infrastructure upgradation cost and chargers (at homes, workplaces, provide “plug and play” connections to commercial and public spaces) charge point operators (CPOs) 7 Inability of potential EV users to Mandate Residential Welfare MoHUA, SERCs, Short term set-up EV charging in multi-unit Associations (RWAs) under MUD’s DISCOMs dwellings (MUDs) purview to allocate parking spaces and allow separate metering connections for EV users EV Financing 1 Inadequate payment security Review the GCC contracts and balance MoRTH, state Short medium for investors and lenders and the risks between contractor and transport term onerous requirements on employer. A detailed World Bank Study departments, city performance security for e-Bus is ongoing on this topic municipalities contracts under gross cross contract (GCC) model 2 Fragmented e-Bus procurement Standardize financial conditions and MoRTH, state Short medium initiatives among cities leading specifications in procurement contracts; transport term to cost inefficiency in public bus aggregate procurement at state level departments, city procurement; and draw out long term procurement municipalities plan staggered over years Lack of long-term demand clarity for e-Bus OEMs leading to small scale production and high unit costs 3 Lack of quick and collateral-free Support micro-credit access for e-2W MoF, DHI Short medium micro-credit for e-3W and e-2W and e-3W to micro-finance institutions10 term through MUDRA scheme 4 High perceived risk by banks Supplement lower-cost, longer-tenor PSBs, NBFCs, Short medium and hesitance in providing DFI financing to support micro-credit micro finance term loans for e-2W, e-3W; provision access for e-2W, e-3W and work closely institutions of loan at high interest rates with OEMs to explore additional risk and short repayment periods reduction models such as extended due to high risk perception warranties, buy-back offers and residual value guarantees to increase confidence among financiers about EVs 10 Micro Units Development and Refinance Agency Ltd. [MUDRA] is an NBFC supporting development of micro enterprise sector in the country. MUDRA provides refinance support to Banks/MFIs/NBFCs for lending to micro units having loan requirement up to 10 lakhs. MUDRA provides refinance support to micro business under the Scheme of Pradhan Mantri MUDRA Yojana. Summary of Recommendations xix No. Issue Recommendation Stakeholder(s) Timeline EV Deployment 1 High upfront cost of EVs Increase the quantum of FAME subsidy DHI Short term per EV, rather than targeting more EVs with lesser subsidy with a focus of most sustainable vehicle segments. Commercial financing should also be explored to reduce the cost parity with ICE counterparts and accelerate adoption 2 Lack of high-quality EVs in India Allow import of up to 25,000 EVs per DHI, MoF Short term and poor consumer perception OEM at zero or reduced customs duty regarding performance and based on existing investments made by range of EVs the OEMs operating in India 3 Lack of incentives for retrofitting Develop regulations to encourage the DHI, ARAI Medium term and inadequate certification organized EV retrofitting market and infrastructure to tackle increase organizational capacity to upcoming retrofitting demand ramp-up the certification infrastructure for safety considerations 4 Absence of disincentives/ Mandate fleet transition trajectories MoRTH, state Medium long mandates for large fleet for certain “obligated entities” such as road transport term operators (which are large fleet operators for certain vehicle governments, responsible for major portion of segments over fixed timelines city municipalities vehicular pollution) to transition towards EVs 5 Lack of any preferential Provide higher incentives for MoRTH, DHI Medium term incentive for replacing old ICE replacement of old vehicles with EVs vehicles with EVs rather than compared to ICE vehicles under the another ICE vehicle planned Vehicle Scrappage Policy EV Manufacturing 1 Lack of clear long-term Create a long-term industry transition DHI Short medium roadmap for automotive roadmap with strict enforcement of term industry’s transition to electric intermediate targets vehicles 2 Economic over dependence on Develop a clear, technology-agnostic DHI, NSDC, Short medium auto-components sector transition roadmap for auto-component Ministry of Skills term industry with a focus on innovation; Development and design skilling programs and Entrepreneurship re-skilling programs to tackle the lack of EV specific skills and job losses respectively Mining and Mineral Sourcing 1 Non-availability of battery Support private sector mineral sourcing DHI, MoM Medium term minerals in India and investments in mines globally Continuously evolving battery through government to government technology goal post which (G2G) facilitation rather than poses stranded-asset risk to undertaking public investments public investments in mines globally xx Electric mobility in India: Accelerating Implementation No. Issue Recommendation Stakeholder(s) Timeline Battery Manufacturing 1 Lack of long term industry Provide long term policy clarity and firm DHI, NITI Aayog, Short long roadmap and policy target commitments in downstream MoP term commitment for domestic applications such as electric vehicles battery manufacturing and and battery storage power systems in a downstream applications technology agnostic manner High dependency on imported oil which increases India’s current account deficit (CAD) 2 Lack of long-term support Provide long term demand creation DHI, MoP Medium long for demand creation in incentives and favorable regulatory term downstream applications such support for the electric vehicles and as EVs and battery storage power sector power systems 3 Lack of cost competitiveness Provide direct tax benefits (corporate DHI, MoF, NITI Short medium of Indian battery manufacturing tax and MAT reduction) for specific time Aayog term compared to other global hubs period to attract battery manufacturers (esp. China) to India 4 Risk perception among battery Support battery OEMs in setting up DHI, NITI Short medium OEMs regarding multiple battery manufacturing facilities through Aayog, State term clearances required and provision of trunk infrastructure and Governments availability of adequate trunk single window clearance infrastructure 5 Global battery manufacturers Implement a stable customs duty DHI, MoF, NITI Short medium have already made investment regime on battery imports in Aayog term commitments in other countries consultation with automotive OEMs and battery OEMs 6 Inadequate battery localization Increase investment in battery R&D and DHI Short term (for Indian conditions) and testing infrastructure to test current testing infrastructure for the and new battery technologies for local same conditions 7 Inadequate testing Increase investment in testing DHI, ARAI Short medium infrastructure and consumer infrastructure and ensure strict testing term concerns around promised standards to alleviate consumer vs. real world battery concerns around battery performance performance and safety Battery Recycling and Second Life 1 Absence of specific regulatory Impose extended producer MoEFCC, DHI Short term framework on collection and responsibility (EPR) norms on battery recycling of lithium ion batteries manufacturers and mandate battery from automotive applications sellers to maintain a database of all the batteries sold and collected Summary of Recommendations xxi No. Issue Recommendation Stakeholder(s) Timeline 2 Insufficient recovery rate and Provide innovation-challenge grants to DHI Short medium purity of battery minerals during encourage development of innovative term various recycling procedures designs for battery packaging 3 Current unattractive business Provide fiscal and non-fiscal benefits MoEFCC, DHI, Medium term case for establishing battery for companies setting up urban mining MoF recycling units companies 4 Lack of demand for recycled Encourage use of recycled batteries in MoP, TRAI Medium long batteries in applications where grid-connected energy storage projects term they can meet the desired and telecom towers performance requirements 5 Lack of awareness among Implement an information, MoEFCC, DHI Medium long consumers and battery communication and education program term intermediaries on benefits of on battery recycling and second life battery second life and battery targeted at end consumers recycling xxii Electric mobility in India: Accelerating Implementation Outlook for Electric Vehicles and their Electricity Requirements in India Around 14% of the global greenhouse gas emissions 1. Growth Forecast for EVs in India is attributed to the transport sector and nearly 72% of transport sector emissions are accounted for by According to Society of Indian Automobile road-based transport. Therefore, if the transition to Manufacturers (SIAM), nearly 21.5 million11 internal EVs is made in a way to reduce aggregate emissions, combustion engine (ICE) vehicles were sold in it presents a substantial emission-reduction potential fiscal year 2019-20 in India. As per Society of for countries, also enhancing their declared Manufacturers of Electric Vehicles (SMEV), around contributions to the Paris Agreement. Road-based 0.15 million electric vehicles (EVs) were sold in FY20, transport represents around 40% of the global oil which excluded the sale of e-rickshaws12. With no demand. Countries dependent on imported oil, such official data, owing to the largely unorganized sector as India and China, view electric mobility transition of e-rickshaws, it is estimated that around 90,000 as a potential opportunity towards gaining energy units could have been sold in FY20. Of the total independence. number of vehicles sold, the majority were two- wheelers, accounting for nearly 80% of ICE vehicle sales and 97.5% of EV sales. Based on total ICE GROWTH FORECAST OF sales and EV sales, it is clear that annual EV sales as percentage of total vehicle sales is currently below E-MOBILITY IN INDIA 1% in India. Forecasting the growth of electric mobility in India The Global EV Outlook 202013 estimated that India is crucial for estimating its impact on the power could achieve 30% EV sales penetration around 2030 sector of the country. Several noted studies as a consequence of existing policies and it could have been undertaken in this regard. A list of reach 55% if aggressive measures are implemented such studies referred for this project is present in to achieve the goal of limiting the global temperature Annexure 3. Overview of main findings from recent rise to below 1.7-1.8°C. A report by NITI Aayog and studies and analyses on the growth forecast of EVs Rocky Mountain Institute (RMI)14 estimated EV sales and EV charging infrastructure in India are presented below. 11 Society of Indian Automobile Manufacturers (SIAM) 12 Bloomberg Quint 13 Global EV Outlook 2020 14 India’s Electric Mobility Transformation – NITI Aayog & Rocky Mountain Institute Outlook for Electric Vehicles and their Electricity Requirements in India xxiii Figure 1:  EV Sales Penetration Trend (2020-2030)15 90 80 70 EV sales penetration (%) 60 50 40 30 20 10 0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 3-wheelers 2-wheelers Cars (commercial) Cars (Private) Buses penetration trend based on the effect of FAME-II accessible slow and fast chargers in India is depicted scheme, other electric mobility supporting policies in the figure given below. in India and stakeholder consultations with industry experts. Figure 1 depicts the EV sales penetration Figure 2: Number of publicly accessible slow and fast projected from 2020 to 2030, it is projected that by chargers in India18 2030 in India, EV sales penetration will be 80% for No. of Chargers % of fast chargers 2 and 3-wheelers, 70% for commercial cars, 40% for 2000 12 buses and 30% for private cars. A total of approximately 10% 91 1800 80 million EVs are expected to be sold in 2030, of 10 1600 that 70% are 2-wheelers and 3-wheelers, rest are 1400 7% 8 cars and buses. 1200 1000 5% 6 In the FAME-II scheme16, out of the total fund of 800 4 US$ 1.3 billion, nearly 35% is allocated for e-Buses 600 400 25 1736 and 25% for electric 3-wheelers which are aimed at 25 2 200 327 public transportation. Therefore, transition of public 0 222 0 transportation towards e-mobility is one of the top 2017 2018 2019 priorities for the central government. Slow chargers Fast chargers Cars (Commercial) 2. Growth Forecast for EV It can be observed that the number of fast chargers Charging Infrastructure in India is minimal as compared to the number of slow By the end of 2019, there were 1,827 publicly chargers. To increase the availability of public accessible EV chargers in India, of which only chargers, the Ministry of Heavy Industries sanctioned 5% were fast chargers17. The growth of publicly 2,636 charging19 stations across 62 cities in India under the FAME-II scheme in January 2020. Out 15 India’s Electric Mobility Transformation – NITI Aayog & Rocky of the 2,636 charging stations, 1,633 would be fast Mountain Institute 16 Department of Heavy Industries 18 Global EV Outlook 2020 17 Global EV Outlook 2020 19 Ministry of Heavy Industries & Public Enterprises xxiv Electric mobility in India: Accelerating Implementation charging stations and remaining 1,003 would be Presently, many electric car or electric 2-wheeler slow charging stations. owners charge their EVs at home but according to research, 60-70% of Indian vehicle owners do not The Government of India aims to promote EV have a dedicated parking space at home24. With adoption by providing public charging infrastructure lack of dedicated parking spaces for vehicles, public every 3 kms within cities and at every 25 km on charging will be more prevalent in future in India, as national highways; and facilitating destination compared to home-charging. charging across multi-storied buildings and commercial centers. Considering only the minimum requirements laid down by MoP20 regarding density/ 3. Growth forecast for batteries in distance between two public charging stations India (PCS), the estimated number21 of PCS for roll-out of EV public charging infrastructure in India is depicted The evolution of electric mobility has spurred an in the figure given below. increase in the demand for batteries which will lead to large-scale manufacturing and cost reduction of batteries. Research indicates that energy density of Figure 3: Estimated number of Public Charging batteries will increase from 200-250 Wh/kg in 2018 Stations in India22 to 400-500 Wh/kg in 2025 while the price will fall 40000 4,242 from US$ 176/kWh in 2018 to anywhere between 30000 US$ 100/kWh and US$ 75/kWh in 202525. The 20000 increasing energy densities and falling battery costs 9,880 32,563 will lead to EVs reaching price parity between 2025 10000 and 2029, depending on the vehicle segment26. 627 635 641 0 Phase 1 Phase 2 Phase 3 According to a FICCI and RMI report27, to meet (up to 2022) (up to 2025) (up to 2030) the demands of a 100% EV market by 2030, India Urban Area Highways would require at least 800 GWh of batteries per year. The domestic market for EV batteries in India is estimated to be US$ 300 billion between 2017 If India is estimated to have around 50,000 charging and 2030. stations by 2030, with nearly 2,50,000 publicly accessible charging points23, then this will entail an investment opportunity worth US$ 6 billion for 4. Growth Forecast for Electricity public and private sector organizations and result in Consumption from Electric increased demand for electricity and associated grid infrastructure. Mobility Various studies have different estimates of the electricity demand from EV charging based on 20 Ministry of Power 21 EY Analysis – Assumptions for Phase – 1: 9 Mega cities and 12 varying growth scenarios. A study by Brookings corridors; Phase – 2: 12 state capitals and 35 state highways connecting major cities; Phase – 3: remaining Indian urban land India estimated that the electricity demand could area and under construction highways/expressways. Considered vary from 37 TWh under 33% penetration of EV 1 PCS per 3x3 grid in cities and 1 PCS at every 25 km on both sides of highways. Each PCS could have one or more EV chargers sales in 2030 to 97 TWh under 100% penetration as specified in the MoP guidelines. The data on area of cites and population considered from 2011 census. 22 EY Analysis 23 EY Analysis - As per Ministry of Power guidelines on public charging 24 Stakeholder Consultation stations (cumulative of every Charging Infrastructure technology as 25 BloombergNEF Report per MoP guidelines and standards) and national priority for rollout of 26 BloombergNEF EV Public Charging Infrastructure. 27 Enabling the Transition to Electric Mobility in India – FICCI & RMI Outlook for Electric Vehicles and their Electricity Requirements in India xxv of EV sales in 203028. The electricity demand was Impact of electric estimated based on estimated EV stock, annual vehicular kilometers (VKMs) per vehicle in 2030 and mobility on the power performance of EVs (km/kWh)29. sector Figure 4: Vehicular Category-wise Electricity Demand The impending increase in EV penetration will by EVs in 2030 in India30 inevitably cause a rise in electricity demand if there is no significant fall in demand from other sectors. The 54.4 30 60% Electricity Demand (TWh) integration of EV charging infrastructure with the grid 25 50% Milieage (km/kWh) 20 40% creates both challenges and opportunities for the power sector. 28 15 26 30% 19.2 10 20% 16 16 Table 1 gives an overview of the key impacts of EVs 9.4 9.4 10 5 11 10% 9 8 on the three stages of electrical power supply to the 5 0.8 4 0 0% 2W 3W Taxis Cars Buses consumers. 2030 (LB) 2030 (UB) Milieage (km/kWh) Each of the impacts on the power sector are explained in detail in the following sections. It is observed that the highest electricity demand is from e-Buses and they also have the least 1. Impact of Electric Mobility performance efficiency (km/kWh). Buses and cars constitute more than 50% of the demand followed on Power Generation and by 3-wheelers, 2-wheelers and taxis. Transmission In 2030, according to Global EV Outlook 202031, in Being a growing economy, India is witnessing India, the electricity demand from EVs is expected to increasing electricity consumption in all the economic be approximately 33 TWh under the STEPS32 scenario sectors. With the rise of e-mobility, the electricity and nearly 83 TWh under SDS33 scenario. consumption on account of EVs will rise but is expected to be minor when compared to overall power demand from other sectors. The Global EV Outlook 202034 estimated that the share of electricity consumption attributable to EVs in India by 2030 is 2% under the STEPS and 3% 28 Electrifying Mobility in India – Brookings India under SDS scenarios35. In another study by LBNL, 29 The analysis has been carried out for intra-state kilometres travelled by passenger vehicles. EV penetration was calculated based on the range of annual BEV energy consumption36 NEMMP 2020 targets and the author’s calculations. Scenarios in 2030 is 62–103 TWh and the peak load is 19–39 defined: UB – Upper bound (Ambitious scenario), LB – Lower Bound (Modest scenario). FY 2014-15 has been considered as the base GW37. This energy demand is projected to constitute year. Active vehicles per 1000 persons (2030): 2W – 212; 4W – 63; Buses – 3; 3W – 17. Annual intra-city VKMs/vehicles estimated (2030): 34 Global EV Outlook 2020 Cars – 4,908; Taxis – 12,093; Buses – 9040; 2W – 4,073; 3W – 11,175 35 Electricity demand from EVs was evaluated with the Mobility model 30 Electrifying Mobility in India – Brookings India (IEA, 2020); total final electricity consumption from (IEA, 2020) and 31 Global EV Outlook 2020 – The electricity demand was from EVs was IEA (forthcoming) evaluated using the Mobility Model (IEA 2020) 36 2015 is the base year. Only 2W and cars are considered for this 32 State Policies scenario (STEPS) - Illustrates the likely consequences study. Growth in sales of vehicles from 2015 and 2030 is calculated of existing and announced policy measures. Estimated EV share based on sales trends between 2000 and 2015. Total BEV energy of vehicle sales in 2030: 2/3Ws – 44%; LDVs – 6%; Buses – 7%; consumption is based on BEV stock, vehicle kilometres and BEV Trucks – 1% efficiency. The range of energy consumption is provided by changing 33 Sustainable Development Scenario (SDS) - Based on limiting the these parameters by +/-25%. global temperature rise to below 1.7-1.8 °C with a 66% probability to 37 Techno-Economic Assessment of Deep Electrification of Passenger reach net zero emissions by 2070. Estimated EV share of vehicle Vehicles in India - Ernest Orlando Lawrence Berkeley National sales in 2030: 2/3Ws – 67%; LDVs – 26%; Buses – 24%; Trucks – 2% Laboratory xxvi Electric mobility in India: Accelerating Implementation Table 1:  Impact of electric mobility on power sector No. Elements of Impact on power sector power sector 1 Generation and yy Additional energy demand due to EV charging would be between 2% and 4% transmission yy EVs are flexible loads and therefore their charging time could be coordinated with RE generation for effective utilization of RE power yy Owing to minor increase in additional energy demand, no major impact is expected on the transmission sector due to EV growth 2 Distribution yy At DISCOM-level, uncontrolled EV charging could contribute around 12% increase in peak demand by 2030 yy Uncontrolled EV charging could cause overloading, phase imbalance, power quality issues and power losses yy With suitable EV tariff, both the consumers and the DISCOMs would benefit from EV penetration yy In future, smart EV chargers, with suitable communication and control protocols, could also support voltage and reactive power control yy At the consumer’s end, uncontrolled and uncoordinated EV charging could lead to voltage drop, voltage flicker and power outage due to false tripping of relays less than 4% of the aggregate country-wide demand Contribution (NDC) targets under the Paris Climate projected in 2030. If growth rates remain consistent Agreement, India will have to encourage the use of with these projections, it can be concluded that at an electricity from renewable energy for EV charging. EVs aggregate level, no major additional investments will are flexible loads and therefore their charging time be required in generation capacity to cater to energy could be coordinated with RE generation for effective demand from EVs. On the other hand, planned EV utilization of RE power. Through attractive time of day charging could help in optimum utilization of existing tariffs, EV charging could be shifted to night-time when generation assets. the wind power generation is high or during daytime when the solar power generation is high. EVs can reduce lifetime CO2 emissions compared to fossil-fuel based vehicles by an average of 29% The impact of EVs on the transmission sector is to 79% depending on the emissions intensity of proportional to its impact on the generation sector the grid. As per a European study, even for an EV since the sizing of transmission network is usually driven in Poland (coal-dominant grid) with a battery based on the planned generation capacity. Since the manufactured in China (coal-dominant grid), the additional energy demand due to EVs is less than 4%, lifetime emissions are 22% lower than diesel cars which does not necessitate a significant increase in and 28% lesser than petrol cars38. The increase in power generation. No major impact is expected on renewable energy generation and EV adoption the transmission sector due to EV growth. offers India a compelling opportunity to decarbonize the power sector and transport sector, together. 2. Impact of EVs on Power India has committed to ambitious renewable energy Distribution targets of 175 GW by 2022 and 500 GW by 203039. The EV charging stations are connected to the To effectively utilize the planned renewable energy grid at the distribution level and this presents both assets and to further meet its Nationally Determined opportunities and challenges to the distribution sector. However, in the absence of effective 38 European Federation for Transportation and Environment 39 MNRE planning and grid-management techniques, the Outlook for Electric Vehicles and their Electricity Requirements in India xxvii challenges could outweigh the opportunities for the simulation showed that there were at least 30 the power distribution utilities. As discussed in the overloading44 instances observed for any DT each previous section, although the increase in additional year and except on DT all the other DTs reached their energy demand due to EVs is only around 4% at overloading capacity before 2030. the national level, cities in our country are going to With suitable EV tariff, both the consumers and witness disproportionate increase in peak demand the DISCOMs would benefit from EV penetration. at DISCOM level. Presently, there are 22 states and union territories To analyze the impact of EV penetration at DISCOM (UTs)45 which have announced EV tariffs and in most level, a study was undertaken by Deutsche cases, the EV tariff have a flat energy rate. It was Gesellschaft für Internationale Zusammenarbeit also observed that in most of the cases the EV tariffs GmbH (GIZ)40 for BSES Yamuna Power Limited (BYPL). were higher than residential tariffs and lower than The projected peak demand41 for 2030 is 2,943 MW commercial tariffs. In order to boost EV adoption, with a CAGR of 6% as per historical growth, without seven states46 have announced that there will be no considering EVs. The additional energy requirement demand charge. In the National Tariff Policy 2016, with EV penetration for 2030 is 1,517 MW, an increase it has been specified that the electricity tariff must of 13.8% in the energy consumption from 2019-20. progressively reflect the cost of supply and therefore Considering BYPL’s current load factor of 0.48, the tariffs should be within ±20% of the average cost the peak demand contribution of EVs is 361 MW, of supply (ACoS)47. Figure 5 illustrates the state-wise which translates to 12.3% increase in peak demand comparison between EV charging energy charges in the year 2030, from 2019-20, on account of EV and ACoS.48 charging. This study also estimated the additional Aggregate Revenue Requirement (ARR) for 2030 is Figure 5: Comparison of state-wise EV Charging of 12.3% owing to investment in grid augmentation Energy Charge with ACoS for inclusion of EVs. 9 8 A white paper released by United States Agency for 7 6 International Development (USAID) in partnership 5 (INR) with Ministry of Power (MoP)42, distribution network 4 analysis was undertaken for BSES Rajdhani Power 3 Limited (BRPL) in Delhi. The impact of network loading 2 1 on select feeders and distribution transformers (DTs) 0 was analyzed for various levels of EV penetration Maharashtra Uttar Pradesh Delhi Himachal Pradesh Gujarat Madhya Pradesh Karnataka Andhra Pradesh Telangana Odisha Punjab Assam Jharkhand Chhattisgarh Goa scenarios43 for the next 10 years. The results of 40 Impact Assessment of Large-Scale Integration of Electric Vehicle Charging Infrastructure in the Electricity Distribution System – GIZ and PRDC 41 For this study, three existing feeders in Delhi were shortlisted on the basis of technical parameters such as presence of EV charging ACoS EV Charging Energy Charge (Min) stations, solar rooftop penetration, loading of the feeder and other EV Charging Energy Charge (Max) critical parameters. The conclusions drawn from the simulation studies of the three feeders are used to extrapolate the outcomes at DISCOM level for 2030. 44 Overloading instance: Situation whenever the loading of any DT 42 Electric Vehicle Charging Infrastructure and Impacts on Distribution crosses 70% of the rated DT capacity Network – USAID 45 Alliance for an Energy Efficient Economy 43 Key Assumptions: Net EV load on each DT in the base year of 46 Andhra Pradesh, Bihar, Chhattisgarh, Delhi, Punjab, Telangana and simulation (2019) is 165 kW (corresponding to 50 E-Rickshaws); Uttar Pradesh Target of 30% EV penetration by 2030; CAGR of EV load - 30%; 47 Ministry of Power cumulative load growth (EV and consumer) – 5%; spare capacity of 48 A New Entrant to India’s Electricity Consumer-basket EV: Impact on each DT is difference of 70% of rated capacity and actual loading Utility Cost of Supply and the Need for a New Approach for Tariff- of the DT Setting – Shakti & AEEE xxviii Electric mobility in India: Accelerating Implementation It can be observed from the figure that the Transformers can be safely overloaded for short deviation of EV energy charges from ACoS varies durations; however, its life is reduced if the from -44% in Delhi to 16% in Odisha. It is evident operation is not balanced with extended periods that majority of the state energy regulatory below the load rating. Studies from the US, where commissions (SERCs) have announced EV tariff 25 kVA transformers are common, show that which are lesser than the ACoS, in order to promote overloading due to uncontrolled EV charging EV adoption. reduces transformer’s expected life to 6.7 years from a typical life of 20.5 years50. Smart charging of EVs present an increase in the volume of controllable load which can support 2. Phase imbalance demand side management (DSM) programs by DISCOMs. In the future, smart EV chargers, with Charging multiple EVs with single-phase chargers suitable communication and control protocols, at the same grid connection point on the same could also support voltage and reactive power phase, may lead to a phase imbalance. Three- control. The USAID study49 also mentions that with phase EV chargers do not contribute to phase the presence of suitable market structures, EVs can imbalances. provide demand response/ancillary services which would benefit the utilities/aggregators and the EV 3. Increase in peak load owners. As discussed above in the GIZ study, the increase in The increase in peak demand adversely affects the peak demand could be around 12.3% for a DISCOM distribution network leads to a range of issues such in Delhi. This peak handling is a major concern as overloading, system imbalances, power quality for the power utility particularly in case of parallel issues and power losses which are discussed charging. below. 4. Power system losses 3. Technical Challenges in Power The variable component of power system losses increases with EV charging, due to increased load Distribution requirements. The period of peak load is significant, The key requirements for integration of charging as variable losses are proportional to the square of infrastructure with the grid are communication, current. This non-linear relationship means that the grid stability, load management and data security. losses due to high market EV adoption rates could The key challenges faced in this regard are briefly become an important issue for power network explained as given below: operators. 1. Overloading of distribution transformer 5. Issues in power quality When an EV is plugged in to a charger and it charges Harmonic studies were undertaken as a part of the at maximum power, there is an additional load on the GIZ study51 to study the impact of EVs on power distribution transformer (DT) and the corresponding quality. EV battery chargers use power electronic feeder. Low voltage feeders and distribution devices to convert AC to DC power. This conversion transformers are most sensitive to overloading from EV clusters as these components do not benefit from 50 Impact Assessment of Large-Scale Integration of Electric Vehicle Charging Infrastructure in the Electricity Distribution System – GIZ spatial diversity. and PRDC 51 Impact Assessment of Large-Scale Integration of Electric Vehicle 49 Electric Vehicle Charging Infrastructure and Impacts on Distribution Charging Infrastructure in the Electricity Distribution System – GIZ Network – USAID and PRDC Outlook for Electric Vehicles and their Electricity Requirements in India xxix process can cause voltage and current harmonic 9. Issues with power supply at the distortion. During the charging period, the EV consumer’s end charge controller moves through different charging phases and during this the Total Harmonic Distortion Uncontrolled and uncoordinated EV charging (THD) of the current drawn by EV will change as a could lead to voltage drop, voltage flicker and function of time. When EVs frequently connect and power outage due to false tripping of relays on the disconnect from high power DC chargers, it will consumer’s end. In the GIZ study52, it was observed generate more harmonics and can lead to serious that when the EVs are connected closest to the power quality issues. substation, EV penetration of up to 42% could be accommodated without any voltage limit violations. 6. Reactive power issues When EVs are connected at households farthest from the substations, only 28% of EV penetration could be As the energy stored in the battery is in the form accommodated without violating the voltage limit at of DC, conversion must take place from AC to DC the consumer’s end. through the AC-DC converter. These converters have power factor limits and lower the power factor, The penetration of EVs will have both technical and higher will be the reactive power flow. Reactive commercial impacts on the power sector. Suitable power flows in the line and it burdens the grid by policy and regulatory interventions are necessary raising the total current of the system. The increased to mitigate the issues arising from integration of EVs current translates into higher heat losses and affects with the grid. Incentives aligned with what is suitable the lifespan of the assets. to the grid will have a big impact on the future load growth. This report sheds light on all the segments 7. Lack of protocols for communication and involved in the development of the electric mobility control market in India, in the framework and structure as explained in the following section. The CEA has proposed Open Charge Point Protocol (OCPP) to be used as communication protocol between electric vehicle supply equipment (EVSE) Framework and and central monitoring system (CMS) in the utility. OCPP protocol does not help the CMS to actively structure of the report control EV charging based on the grid conditions. Considering the scope, lens and objectives of the Presently in India, there are no standards or current study, this report explores in detail the communication protocols specified for active control impact of future EV adoption on the power sector in of EV charging. India. Subsequently, the report examines the wider electric mobility ecosystem and divides it into eight 8. Complicated demand forecasting due to segments involved with the development of electric variable demand mobility market in India. The prerequisite for this EV evolution is power supply and grid infrastructure EV charging depends on several factors such as which would lay the foundation for deployment of EV battery capacity, battery SOC, departure time, charging infrastructure. EV financing would help in charger’s capacity, charger availability and driver’s overcoming the hurdle of high upfront cost for EV preferences. With so many dependent factors, it is complicated to predict the future load growth 52 Impact Assessment of Large-Scale Integration of Electric Vehicle Charging Infrastructure in the Electricity Distribution System – GIZ for EVs. and PRDC xxx Electric mobility in India: Accelerating Implementation Figure 6: Envisioned Evolution of E-mobility Market in A. Strategic importance: Strategic importance India for India or sector. Analyzes issues such Power supply and as economic impact, emission reduction, grid infrastructure affordability, energy security and more. 1 Charging Battery recycling 8 2 infrastructure B. Current scenario: Current government and second life deployment policies, schemes and regulations, proposed government interventions and existing market scenario. Battery 7 3 EV financing manufacturing Envisioned C. Key market challenges: Challenges arising evolution of e-mobility market in India due to structural factors of a sector such as fixed and variable costs, affordability, demand, supply, technology maturity, etc. Mining and 6 4 EV deployment mineral 5 D. Key Issues in implementation: Challenges sourcing in implementation of government policies, EV manufacturing schemes, or initiatives or private sector initiatives. deployment which would lead to demand for EV E. Recommendations: Policy recommendations manufacturing in India. The manufacturing industry to the Government of India to address would attract investment in mineral sourcing the identified market and implementation which would then facilitate battery manufacturing. challenges. With a large number of EV batteries reaching their end-of-life, battery resuse and recycling would gain F. Further analysis and studies: Topics identified importance. Further, second life applications of during the study which were not covered batteries could then serve in grid upgradation and due to scope boundaries and require further stability. Therefore, the order of the eight chapters research or analysis. is structured to understand this unique cyclical This framework and structure would provide evolution of the electric mobility market in India, detailed insights to the readers on the development which is depicted in the illustration given in Figure 6. of electric mobility market in India, beginning The report explores each segment (in each chevron) with the first chapter on power supply and grid in detail across the six sub-sections (A-F) as explained infrastructure. below the illustration. Outlook for Electric Vehicles and their Electricity Requirements in India xxxi CHAPTER 1 Power Supply and Grid Infrastructure 1.1 Strategic Importance !! Reduction in cost of creation of grid energy storage infrastructure As charging infrastructure is critical for uptake of EVs, !! Renewable energy integration similarly, availability of adequate grid infrastructure is critical for deployment of charging infrastructure. Globally, there have been concerns around the 1.2 Current Scenario ability of city-level power distribution grids to In India, the more progressive and enterprising accommodate (often large and unpredictable) utilities have begun taking on initiatives to prepare loads, peak power surge, voltage and frequency their grids and infrastructure to EV charging53: fluctuations, asset degradation and more, from EV charging. Interviews with EV charging industry reveal !! BESCOM is developing an app for EV users to that availability of grid-capacity at ideal locations is locate chargers and charging tariffs (half-hourly or hourly)54. among the top barriers towards successful charging infrastructure deployment. !! MSEDCL is planning to set up an EV Charging Infrastructure Operations Centre55 to monitor Hence, it becomes important for DISCOMs to installation, charging activity, health of local undertake grid studies and reinforcement activities. grid and infrastructure and more56. Globally, some progressive utilities are proactively !! BYPL, with GIZ’s support, conducted a undertaking such initiatives and regulatory detailed grid impact study to assess current commissions are also enabling them through grid readiness and future requirements for appropriate tariff pass-through mechanisms. Further, charging in Delhi57. innovative approaches such as smart charging, V2G, ToU pricing and others are being leveraged to enable stable grid operations and also to leverage renewable energy for EV charging. Leveraging these approaches for grid management can yield certain 53 Focus of all the policies is on manufacturing, DISCOM planning and other initiatives have not been dealt with in the policies. benefits such as: 54 BESCOM 55 MSEDC !! Avoidance of increase in T&D losses 56 Bids were invited in September 2019. Even though the tender was scrapped, MSEDCL is currently working internally to develop the !! Peak load management, improved QoS and centre. reliability 57 BYPL CHAPTER 1: Power Supply and Grid Infrastructure 1 Figure 7:  Special EV charging tariffs in Indian states58 State EV Charging tariff (INR/kWh) Punjab 4 Gujarat 4.1 Goa 4.2 Delhi 4.5 Karnataka 4.85 Chhattisgarh 5 Himachal Pradesh 5 Kerala 5 Telangana 5 Maharashtra 5.06 Orissa 5.7 Andhra Pradesh 6 Madhya Pradesh 6 Haryana 6.2 Jharkhand 6.25 Assam 6.9 Uttar Pradesh 7.7 !! State Governments have introduced special 2. Financial health of DISCOMs remains EV charging tariffs, which are lower than weak and limits their ability to invest commercial and even lower than residential in network upgrades to accommodate tariffs in some states. EV charging Barring a few private sector-led utilities most state- 1.3 Key Market Challenges owned utilities (DISCOMs) remain in poor financial health. The DISCOMs cumulatively incurred losses 1. Lack of assessments to analyse the EV worth INR 28,369 crores in FY1959 and their combined adoption trends and associated grid impacts debt is estimated at INR 2.28 lakh crores in FY1960. The process of grid upgradation is performed This limits their ability to invest in network upgrades in response to demand and development in the to accommodate EV charging. DISCOM’s region rather than being based on anticipation or forecasts. Therefore, in a business- 1.4 Key Issues in Implementation as-usual scenario, grid upgradation will be slow, due to low initial demand of chargers, and will be not be 1. Lack of support from DISCOMs to charge- able to keep pace with charger deployments once point operators in provision of LT level the demand rises. infrastructure While several states are promoting use of electric As per the Electricity Act and prevailing grid vehicles, only a few DISCOMs have undertaken codes, LT (low voltage) level upgrades (distribution studies to assess impacts of EV charging on the transformers) need to be undertaken by the electricity network. 59 News Articles 58 Respective State SERC Tariff Orders (Refer to Annexure 4) 60 News Articles 2 Electric mobility in India: Accelerating Implementation concerned utilities/DISCOMs, and the cost can be capacity to undertake grid-modelling assessments, recovered through demand charges to the users. impact assessments and network planning on However, due to their poor financial condition, account of EV charging. sometimes DISCOMs are either unwilling to incur expenditure in distribution transformers or delay 4. Lack of mandate for communication such expenditures by several months or insist that protocols for smart charging the charge point operators (CPOs) make the needed A grid simulation study jointly conducted by Shakti investments in order to get electricity connection61. Foundation and TERI shows that uncontrolled and This significantly hurts the profitability of CPOs and uncoordinated charging may lead to overloading of the investor sentiment in the EV charging market. the distribution system62. The MoP guidelines and For example, though stakeholder consultations, it the CEA regulations63 only specify the safety and was revealed that in certain major cities, the CPOs standards to be followed for the front-end connection were directed by the DISCOMs to themselves incur between the EV and EVSE. However, there are distribution transformer related infrastructure costs; no standards or protocols mandated for backend even though as per prevailing norms this kind of communication between the EV charger and the LT-level infrastructure cost should be borne by the distribution system operator. This communication DISCOM itself. Such additional infrastructure cost will be vital to maintain grid safety. equals the cost of the EV charger itself (15-20 kW DC charger) and effectively doubles the capex incurred, 5. Lack of regulatory mechanism for thus severely affecting the financial viability of the EV DISCOMs to recover investments in charging business. charging infrastructure Presently, with lack of demand for charging infrastructure 2. Lack of institutional funding mechanism and the consequent lack of revenue, investments in for undertaking grid impact studies and grid infrastructure augmentation are difficult to be pilots related to ToU pricing, V2G, etc. borne by utilities and charge point operators (CPOs). Currently there is no provision under the FAME-II Based on studies and examination led by the Bureau to allocate funds to DISCOMs to undertake studies of Energy Efficiency (MoP) on the investment required and pilots that will facilitate charging infrastructure for setting up public charging infrastructure, it was and associated-grid investments. Due to regulatory, observed that of the total investment about 40-50% technological and demand uncertainty, getting such was needed for grid augmentation vis-à-vis the funding secured in tariff orders through SERCs is also transformer and the cabling64. This effectively doubles a major challenge for DISCOMs. the cost of setting up charging infrastructure and renders the business model unviable. 3. Lack of Smart Grid infrastructure in the To overcome this situation, DISCOMs must be current grid system to support EV charging required to upgrade or set up the necessary grid activities and retain grid health infrastructure. Smart Grid Infrastructure can enable ToD pricing, However, currently the DISCOMs are not allowed remote monitoring of chargers, assess grid health to socialize the grid augmentation cost for EV through back-end centers and more; such enablers charging65. One of the barriers towards socializing are currently missing in most grid systems, making 62 Electric Vehicles: Perspective of DISCOMs And Stakeholders - Shakti it all the more difficult in preparing for intermittent Sustainable Energy Foundation & TERI loads from EV charging. Also, the DISCOMs lack 63 Central Electricity Authority 64 EY’s analysis with BEE 61 Stakeholder consultation 65 Stakeholder Consultation CHAPTER 1: Power Supply and Grid Infrastructure 3 these costs is the relatively low utilization forecast 7. Lack of clarity on variable EV tariffs and (<40%-50%) over the next 3-4 years, due to low associated charges across states demand in early stages of the market. With such low utilization, it will be difficult to justify the socialization In total, 22 states including Union territories in of the such expenses. Also, low utilization of such grid India have notified a special EV tariff. Out of the 22, infrastructure would increase the level of technical there are 15 states and UTs which have announced losses which it will have to make up for from other demand charges for EV charging whereas the other revenue sources.66 seven states have announced no demand charges to boost EV adoption67. As of April 2020, only two 6. Varying quantum of grid capacity regulatory commissions have announced ToD tariff available for charging infrastructure due to for EV consumers. A comparison of EV tariff with varying weather conditions other category tariffs for 10 states is depicted in the figure given below. Availability (or unavailability) of grid capacity for EV charging operations is not a constant feature of the While special EV charging tariffs are on an average urban grid throughout the year. It depends on the ~35% lower compared to commercial tariff rates, time of the year or the season. For example, from residential tariffs are still ~13% lower than EV charging stakeholder consultations it was revealed that for tariff in most of the states. There is no uniformity more than two-third duration of the year, the grid regarding categorization of EV charging. Depending in New Delhi is underloaded (spare capacity is on the state, EV is currently categorised as non- available), while for the rest of the year, the grid is residential, commercial, non-industrial or bulk supply. loaded to nearly its rated capacity (no spare capacity There is also lack of clarity on whether taxes, non- available). These variations are caused due to varying tariff surcharges and Power Purchase Adjustment weather conditions; for instance, hot summer months Charges (PPAC) are applicable over and above the witness nearly full loading of the grid due to heavy special EV tariff. demand for air conditioning. Figure 8:  Comparison of tariffs from different Indian states68 10 8 6 4 2 0 Gujarat Karnataka Delhi Madhya Andhra Haryana Maharashtra Telangana Uttar Kerala Pradesh Pradesh Pradesh EV Charging Tariff Residential Tariff Commercial Tariff Industrial Tariff 67 Dissecting India’s Electricity Tariff Landscape for EV – AEEE report 66 Stakeholder Consultation 68 Respective tariff orders of the states 4 Electric mobility in India: Accelerating Implementation 1.5 Recommendations !! The Nodal Agency or the DISCOM in every State could lead the necessary cross-departmental 1. Undertake grid augmentation in high preparation activities, in close coordination with potential areas through better coordination Transport and Urban planning departments, for among state departments EV infrastructure planning, such as: !! The DISCOMs could invest in grid augmentation yy Estimation of traffic flows within the city to speed up the process of installing charging yy Modelling of EV adoption trends stations. This requires a coordinated approach and consumer behaviour (numbers, among transport, energy and urban planning neighbourhoods, EV types, battery departments to undertake location-specific capacities, charging times, etc.) planning for deployment of EV chargers. yy Demand forecasting !! Ministry of Power (MoP) could consider yy Identification of optimal charging locations providing funds to DISCOMs under the yy Cost assessment Integrated Power Development Scheme (IPDS) to properly plan charging infrastructure across yy Enhancement of local grid infrastructure the cities. 2. Build technical capacity among SERCs !! State Government should nominate competent and DISCOMs to plan, execute and authorities across relevant state departments to enable timely coordination and results. regulate investments for EV-related grid Suitable studies undertaken as part of “smart infrastructure cities” planning under AMRUT scheme could !! CERC and relevant ministries under GOI be leveraged for grid planning. could undertake a comprehensive technical Case precedent Providing Technical Assistance Grants to develop EV charging infrastructure US Department of Energy’s Clean Cities Programme offers technical assistance grants to cities to develop EV charging infrastructure plans. Termed as “Clean Cities Community Readiness and Planning for Plug-In Electric Vehicles and Charging Infrastructure” award and totalling US$ 8.5 million, it has helped 50+ cities across 24 states to develop “PEV Readiness Plan” in 2011. The detailed plans included crucial aspects such as – Demand forecast, Location assessment, permit process streamlining, grid infrastructure plan, etc. Select Content on Power Grid and Electric Utility Policy and Planning Available in Readiness Plans69 No. Plan Select Highlights 1 Kansas City 70 Grid impact modelling and utility grid plan 2 Maui71 Time of use incentives and smart grid 3 Michigan72 Utility preparedness and grid impacts 4 Texas Triangle 73 Consumer Awareness, Regulatory Strategy 5 New York City74 Time of use EV metering, V2G Further to this, EV charging infrastructure investments by DISCOMs in the USA rose to US$ 1.5 billion in the first quarter of 2020 alone and a majority of this approved funding was for grid augmentation to facilitate deployment of EV chargers75 rather than investing in the itself. 69 US Department of Energy 70 Electrify Heartland 73 Texas Triangle 71 Maui EVA 74 New York 72 Plug-in Ready Michigan 75 Getting to 20 Million EVs by 2030 - The Brattle Group CHAPTER 1: Power Supply and Grid Infrastructure 5 capacity building programme for SERCs. This grid. In future, smart chargers would also facilitate programme will enable SERCs to: V2G and provide ancillary services to the grid76. a. Increase awareness of EV adoption trends (demand growth, infrastructure 4. Facilitate load shifting by introducing ToD/ requirements, etc.) ToU tariff mechanism b. Supporting DISCOMs requesting for Utilities/SERCs could design special tariff programs additional investments in EV-related grid such as ToD and ToU tariff for EV charging, with reinforcements to promote EV demand and ensure grid safety the objective of shifting demand to off-peak hours by offering discount to consumers who charge EV c. Allow necessary studies and pilots required during off-peak hours. Depending on the availability to be undertaken of the grid, utilities can create incentives to promote !! State Governments could undertake a EV charging at times that would benefit the grid (load comprehensive technical capacity building balancing, RE integration, etc.). In future, real-time programme for DISCOMs. This programme will electricity pricing tariff could be introduced for EV enable DISCOMs to: charging with dynamic tariff signals. Major US utilities a. Increase awareness of EV adoption such as SCE, SDG&E, PG&E have been offering trends (demand growth, infrastructure special EV charging tariffs77. requirements, etc.) b. Prepare the tariff order filings from DISCOMs 5. Allow cost recovery of capital and requesting for additional investments in operational costs incurred by DISCOMs EV-related grid infrastructure for grid augmentation due to EV charging c. Undertake necessary studies and pilots infrastructure installation required to be undertaken for grid impact assessment, ToU pricing, RE integration of As discussed earlier, the investment in grid EV charging and other necessary measures augmentation for setting up a charging station is close to 40%–50% of the total investment. This doubles the 3. Develop guidelines to mandate cost of charging infrastructure and the service offered installation of smart chargers with suitable to the consumers. communication protocols A joint study between Shakti and TERI estimates There is a requirement for seamless communication that if the full investment is socialised to all between the EV, EVSE and grid for controlled and the consumers, the impact on tariff will be of coordinated charging. Smart chargers would help INR 0.0040/kWh, whereas it will be of INR 0.1970/ in deferring expensive grid augmentation costs by kWh when it is charged only to EV users78. Since managing the EV load effectively and will prevent the environmental benefits of e-mobility are overloading the grid. societal, it could be justified to socialize the cost of investment in EV infrastructure to all consumers. Mandatory ICT protocols and standards must be SERCs could allow the cost to be passed through in place for continuous communication between to the consumers through the ARR, subject to EV, EVSE and the grid. With suitable ICT protocols certain thresholds of infrastructure utilization such as ISO 15118, OCPP, OCPI, OSCP and Open established through detailed project reports ADR, interoperability of EVs and chargepoints can undertaken at that time. be ensured. Adoption of these protocols will assist in billing, handling registration, EV smart charging, 76 Forum of Regulators providing chargepoint information, operating 77 BNEF: U.S. Utilities Offer Multiple Electric Car Charging Rates 78 Electric Vehicles: Perspective of DISCOMs and Stakeholders - chargepoint, reservation, roaming and managing the Shakti Sustainable Energy Foundation & TERI 6 Electric mobility in India: Accelerating Implementation Case precedent Allowing utility investments as tariff pass-through North America Regulators across North American markets have also allowed utility investments as tariff pass- through, given the system benefits of EVs79. Expert interviews reveal that this has been a result of extensive awareness creation among respective Energy Regulatory Commissions (ERCs) in different states by: 1. Grant funding by states 2. Information sharing by Progressive ERCs 3. Ex-ERC officials acting as change-agents 4. Engagement with power utilities and wider EV industry 6. DISCOMs should publish a map of Bihar, Chhattisgarh, Delhi, Punjab, Telangana, and distribution assets along with available Uttar Pradesh have announced no demand charges capacities in the public domain under EV tariff. It is recommended that DISCOMs should collect and 8. Undertake policy and regulatory share granular information regarding distribution interventions to encourage use of assets at the city level (including available capacities) renewable energy for EV charging with the fleet operators and charge point companies so that the latter can plan optimal deployment of The environmental benefits of leveraging renewable charging infrastructure across locations. This initiative energy for EV charging are well established (Section D). will also help tackle the issue of under-utilization of Based on stakeholder consultations, two important distribution assets. recommendations are made to achieve the same: a. SERCs should reduce the open access 7. Introduce time-bound waiver of fixed/ threshold for procurement of renewable demand charges and other surcharges on energy by CPOs. This should be combined with EV tariff a provision for CPOs to aggregate electricity demand from their chargers at the city- level/ SERCs should categorize EV charging as a special DISCOM-level to be eligible for open access category in their tariff schedule. To promote EV RE procurement even through fragmented adoption in the initial years, SERCs should waive off demand at charging stations. the fixed/demand charges and other surcharges over For example, a CPO having 10 charging stations and above the specified EV tariff. Although, demand in New Delhi with a load of 100-150 kW each charge is used by DISCOMs to compensate for the should be eligible to aggregate a demand surge in EV power demand, it could be waived off for more than 1 MW aggregated demand and thus initial 2–3 years to enable charging service as a viable become eligible to cross the threshold demand business opportunity. The EV tariff must be structured level for RE procurement through open access. after considering the aspects such as uneven load b. SERCs could create a provision for DISCOMs requirement and bidirectional power flow which which will require the latter to set-off all the would enable EVs to be leveraged as distributed EV charging demand in a certain year with energy sources (DERs) using V2G technology. RE procurement. This RE procurement would Presently, seven states80 namely Andhra Pradesh, be in addition to their existing RPO fulfilment requirement. In this scenario, all the EV 79 Forum of Regulators charging demand could be deemed as served 80 Dissecting India’s Electricity Tariff Landscape for EV – AEEE report by renewable energy. CHAPTER 1: Power Supply and Grid Infrastructure 7 This initiative will provide DISCOMs with the flexibility !! Develop a model framework for undertaking to manage the grid in a manner that is conducive grid planning and grid impact assessments; technically and in line with their current grid these frameworks can then be used for operations. This will also minimize the EV-charging deployment at state and city level. specific grid requirements such RE forecasting, RE !! Undertake grid impact assessment and scheduling, RE banking and other complexities that necessary grid upgradation in all major cities arise from the intermittency of RE sources. and towns where EV charging infrastructure is expected to be deployed in the next 2-3 years. 1.6 Further Analyses and Studies !! Undertake detailed assessment of skills Recommended and capabilities required to be built within SERCs, State Energy Departments and The Government could consider undertaking further DISCOMs for effective planning and creation work on the following aspects: of an EV-ready grid. !! Undertake detailed studies to understand !! Undertake detailed assessment of policy software capabilities and digital tools employed and regulatory interventions required to by utilities globally (such as by Enel X and EDF encourage use of renewable energy for EV in Europe) to support charging activities and charging. grid management. 8 Electric mobility in India: Accelerating Implementation CHAPTER 2 Charging Infrastructure Deployment 2.1 Strategic Importance charging to OEMs, operators and vehicle owners in the e-mobility space. This has been captured below: EV charging is an indispensable activity for operating EVs. Major consumer surveys reveal that a lack of Figure 9: Percentage share of EV customers indicating charging infrastructure as top enabler81 accessible charging infrastructure is one of the top Developing e-mobility barriers to EV adoption, along with the high capital cost markets consider chargers (in comparison with ICE vehicles) and range anxiety. the top enabler for adoption 50 Consequently, deployment of a reliable, accessible, 44% 45 % share considering chargers as available and affordable charging network in the 40 34% Established e-mobility markets country has a considerable strategic importance. 35 consider chargers the 3rd highest enabler for adoption top enabler 30 From Figure 9, it is clear that developing e-mobility 25% 22% 25 20% markets consider availability of charging stations as 1st 18% 20 the top enabler for EV adoption. Even more mature 1st 15 1st e-mobility markets consider it as the third highest 10 3rd 3rd 3rd enabler for EV adoption. 5 0 Additionally, key factors across charging segments Italy Korea India USA Germany China and technology reveal the strategic importance of Survey position of chargers as an enabler Charger yy Suitable locations keeping user convenience in mind will lead to higher utilization requirement in yy China has close to 6,00,000 public chargers (predominantly GB/T) – mostly set up by suitable locations the state and provincial authorities; a lot of those chargers suffer from severe under- utilization82; this could be due to states installing chargers at available locations rather than suitable and convenient ones for users Robust charging yy Tesla’s Supercharger network (Tesla’s proprietary standard) has been ascribed as leading network is a factor for its record sales83 requirement to sell yy Volkswagen, another major global automaker is following suit by installing 2,800 chargers more EVs (CCS standard) across 17 of the largest US cities by 2019 and invest US$ 2 billion in charging infrastructure 81 Deloitte Consumer Survey 2018 82 China’s public chargers are only used for 15% of the time on average 83 Tesla Superchargers CHAPTER 2: Charging Infrastructure Deployment 9 Importance of yy Chargers and access to fast charging is rated as top criteria when buying EV – Survey of public charging to EV owners in USA, 201784. Lack of public charging ranked as third major reason for not influence purchase buying an EV – Survey of potential EV buyers in the USA, 2016 decision yy 60-70% of Indian vehicle owners do not have dedicated parking space85, thus making public charging an important segment in India Importance of yy According to industry experts, 93% of EV charging by personal users, in the 2W and 4W home charging segment, happens at home in India86. These chargers are mostly slow chargers87 yy There is a need to focus on home charging of 2Ws and 4Ws for urban users (assumed to be the early adopters of EVs), especially the ones living in multi-storied residential areas Renewed focus on yy Given the economic and demographic scenario of India, the e-2Ws and e-3Ws will battery swapping continue to constitute as a large segment of vehicles in India yy There is a need to support battery swapping model which is a proven technology for commercial 2Ws/3Ws88 and gives several advantages to the EV users such as reduced downtime (for charging) and reduced upfront purchase cost Digital interventions yy The accessibility and visibility of charging and battery swapping stations, can be improved to improve utilization through digital technologies which can enable extensive mapping of demand areas, of charging analysis of consumer patterns, monitoring of vehicle and charge usage, etc. infrastructure and yy There is a need to promote such digital interventions to improve the operational efficiency battery swapping of the charging and battery swapping stations, hence improving their utilization besides stations contributing to consumer satisfaction From the above figure, it is clear that developing was specified and the selection of the charging e-mobility markets consider availability of charging standard was left open to the discretion stations as the top enabler for EV adoption. Even of the charging infrastructure operator in more mature e-mobility markets consider it as the December 2018. third highest enabler for EV adoption. !! Bureau of Energy Efficiency (BEE) designated as the Central Nodal Agency (CNA) for charging infrastructure in February 2019. 2.2 Current Scenario !! Formulation of guidelines by the Ministry of The Government of India has taken various Housing and Urban Affairs (MoHUA) towards initiatives to accelerate investments in charging allotting 20% parking space in residential infrastructure. The key initiatives are mentioned and commercial building for EVs. It is a non- below. binding guideline to the local municipalities to implement and monitor allocation of parking !! Delicensing of EV charging business and spaces in February 2019. opening it to private sector companies in April 2018. !! Provisioning of INR 1,000 crore for charging infrastructure as part of GoI’s flagship !! Formulation of guidelines and standards on FAME-II scheme for electric mobility sector in EV charging. No particular charging standard March 2019. 84 China’s public chargers 85 Industry interviews !! Invitation of proposals for installation of 86 Ather Energy charging infrastructure across 62 cities in 87 Home charging here considers charging of lithium-ion based 2Ws August 2019. and 4Ws. It also considers charging of lead-acid batteries in earlier variants of electric 2/3Ws which were majorly taking place at home !! Invitationof proposals for installation of and new charging models of lithium-ion based electric 2 and 3 wheelers used for commercial purposes (where the driver takes the charging infrastructure across 80+ cities by battery home to charge). DHI for subsidy disbursement under FAME-II 88 Sun Mobility’s partnership with Smart-E (3W); Ola mobility’s swapping operations in ride-hailing (2/3Ws) scheme in August 2019. 10 Electric mobility in India: Accelerating Implementation !! Formulation of revised guidelines and FY 2018-19 and FY 2019-20 have been shown in standards on EV charging in October 2019. Figure 10 and 11. !! Sanctioning 2,636 EV charging stations under Besides government initiatives, a number of private FAME-II scheme in January 2020. sector companies have emerged in the last two !! Ministry of Road Transport and Highways years in the charging infrastructure domain, with the (MoRTH) has directed all the states and Union likes of Exicom, Delta and Tritium as charger OEMs; Territories to allow sale and registration of and Fortum, Magenta Power, Tata Power, Volttic EV electric vehicles (EVs) without batteries, to charging and many others as CPOs. Different business encourage battery swapping89. models are being pursued by each company governed A timeline of initiatives that have been undertaken by their investing capability, technology competence, by the government for policy and regulatory strength of partnerships and risk- taking propensity. interventions as well as implementation support in Since the market is at early stages of development, no Figure 10:  Policy and regulatory interventions as well as implementation support by GoI in FY 2018-19 MoP issues CEA amends MoP Clarification guidelines for technical standards on EV setting-up EV for connectivity to DHI notifies charging as a charging DGRR 2013 FAME-II service infrastructure scheme June April May December February February February March 2017 2018 2018 2018 2019 2019 2019 2019 MoP designates MoP designated BEE MoHUA R&R issues BEE as nodal as Central nodal notifies changes to agency under Agency guidelines to National Tariff CEM’s EVI initiative for EV charging allot 20% of Policy (EV30@30) infrastructure their parking space for charging EVs Implementation initiative Policy and Regulatory initiative Figure 11:  Policy and regulatory interventions as well as implementation support by GoI in FY 2019-20 BEE explores VGF for BEE sets-up PMU Preparation of SBD MoP issues setting-up charging for EV charging for hiring revised guidelines infrastructure through infrastructure Implementing to include Battery SNAs roll-out Agencies by SNAs Swapping April June September October October October June 2019 2019 2019 2019 2019 2019 2020 CEA amends MoP issues Evaluation of measures relating revised guidelines charging to Safety and for charging infrastructure Electric Supply infrastructure 2018 proposals Regulations 2010 received by DHI under FAME-II Implementation initiative Policy and Regulatory initiative 89 Ministry of Road Transport and Highways (MoRTH) CHAPTER 2: Charging Infrastructure Deployment 11 private charge point operators had a public network of the chargers, lead to the lower profitability for of more than 100 chargers as of January 2020. the early stage service providers. Even mature markets, such as USA and Europe, charge point A typical charging infrastructure operator business operators are setting up wide charging networks, model can be represented by the following whereas the current utilization still doesn’t secure ownership table: profits90. Table 2:  CPO Ownership models CPO owns chargers CPO does not own chargers CPO owns land Tesla provides charging through its fully - owned ultrafast charging network CPO does not Fortum partners with petrol pumps, car ChargePoint (USA) provides charging operation own land dealerships etc. who provide land and mapping services to public charger owners CPOs usually price their charging services as 2. Lack of affordable access to convenient INR/kWh or INR/time. There is no regulatory cap on and feasible charging sites for charge-point the tariff that can be charged to the end customer. operators and other players However, in case of public charging stations set up utilizing government subsidy under the The feasibility of a charging station is based on three FAME scheme, the end tariff (or service charge as pillars: referred by the MoP) will be regulated by the State !! Accessible locations, for ease of approach Nodal Agency. for the consumers along with presence of such chargers in the vicinity of residential and commercial complexes such as malls, 2.3 Key Market Challenges restaurants, supermarkets and offices !! Infrastructure availability, i.e., locations backed 1. Lack of profitability in charging by power and road infrastructure for operations infrastructure business for players in the lending to the reliability of the chargers and early stages of the ecosystem !! Appropriate charging technology, i.e., Charging infrastructure, inherently as a business, lacks specifications of the chargers should be profitability and a business case in the early stages of determined based on demand assessments. the market – this is due to low utilization of assets For example, locations having large number (low demand) and high cost of trunk infrastructure of e4W owners, should have a higher density (chargers, wiring, transformers, land and more). The of chargers relevant to e4W (CCS or CHAdeMO current FAME-II scheme for subsidy disbursement or Bharat Standard chargers depending on type of cars prevalent in the area), whereas on deployment of charging infrastructure, provides a location having more e2W and e3W subsidy on the capital cost of the chargers and not owners, should have a higher density of slow the trunk infrastructure. There have been scenarios chargers (relative to the e4W chargers which in which the trunk infrastructure costs almost similar will be of higher power rating and unusable to the capital cost of the chargers, if it includes for e2Ws and e3Ws). Table 3 refers to vehicle deployment of a separate transformer and the segments and charging technologies suitable associated infrastructure. for them. This capital cost of deployment of chargers and the trunk infrastructure, along with the lower utilization 90 Based on consultations with experts in the UK 12 Electric mobility in India: Accelerating Implementation Table 3:  Types of EV chargers for different EV segments91 No. Electric vehicle segments Slow chargers Fast chargers Connectors 1. Two-wheeler : On-board charger of 92 15 A socket or smart Bharat DC 001, Battery - 2.5 kW to 3 kW charger swapping 2. Three-wheeler93: On-board charger 15 A socket or smart Battery swapping - of 2.5 kW to 3 kW charger – Bharat AC 001 3. Cars Mahindra e2o: On-board 15 A socket or smart Bharat DC 001 GB/T charger of 2.5 kW to 3 kW charger – Bharat AC 001 Nissan Leaf, Mitsubishi, Kia AC Level 2 DC Level 1 and DC CHAdeMO (Japanese) Level 2 BMW, GM, VW, Ford, Audi, AC Level 2 DC Level 1 and DC CCS1 and CCS2 Porsche Level 2 Tesla - Tesla Super charger - 4. Buses94 AC Level 2 DC Level 2 or battery GB/T swapping 3. Lack of consumer awareness initiatives only PSUs and government agencies have been for information exchange among the selected for provision of subsidies. Also, where population on the advantages of EVs and the PSUs and government agencies could submit the use of charging infrastructure proposals directly to DHI, the private organizations were required to send their proposals through the The myth and knowledge gaps surrounding EVs and urban local body (ULB). This creates a non-level charging infrastructure such as charging time, range playing field in a market that is open to private sector anxiety, safety hazards due to EV chargers, hinder organizations as well. its adoption. The lack of nation-wide, state-wide or manufacturer-initiated campaigns and roadshows Besides, PSUs are able to secure locations, which are to promote EVs and to impart knowledge around primarily in the ownership of state agencies, on the EV chargers, leads to the lack of adoption by the basis of MOU whereas Private sector struggles to get potential vehicle buyers. those locations from state agency even at suitable payment. This creates a huge non level playing field. 2.4 Key Issues in Implementation 2. Lack of sufficient scale and density of chargers in potentially high EV-demand 1. Lack of FAME-II subsidy support for cities due to broader, country-wide, charging infrastructure flowing to the private deployment scope of government’s FAME-II sector companies scheme In the first tranche of FAME-II funds towards charging Currently, the government funds for charging infrastructure, 2,636 charging stations have been infrastructure development are being used to set sanctioned by DHI in January 2020. In this process, up infrastructure in 62 cities. This will provide, on average, only 40 chargers per city. It has been 91 ISGF - Electric Vehicle Charging Stations Business Models for India 92 PluginIndia observed that lack of adequacy and density of 93 PluginIndia chargers leads to lack of consumer confidence in 94 AEEE and Shakti Sustainable Energy Foundation - Charging India’s Bus Transport public charging infrastructure. To boost customer CHAPTER 2: Charging Infrastructure Deployment 13 confidence in charging stations, a dense charging due to lack of awareness at DISCOM level, procedure network is required, especially in homes, offices, for grant of supply for EV charging is ambiguous in shopping outlets and existing parking. several geographies. Considering the current state of affairs of real estate 3. High GST for swappable batteries sold developers, investment in charging infrastructure separate from vehicles (including spare in new multistoried buildings is perceived to have batteries) and battery swapping services regulatory risk due to variance in interpretation of the Currently the GST applicable on EVs and EVSE Supply Code. Also, on average the connected load (charging equipment) is 5%. The GST for factory- in an ordinary household is around 6 kW, while the fitted batteries in EVs is also 5%. However, the GST rating of the EV charging can be from 3W up to 7 kW. on swappable batteries is high, at 18%. In addition, This increase in load (infrastructure upgradation) the GST on EV charging and battery swapping might require permission for additional load or a new service is 18%. This is counter-productive since it connection from the DISCOM along with installation disproportionately affects the auto-drivers, delivery of a separate meter. This process is often long and personnel and other people at the lower end of the accompanied with lack of adequate awareness income segment. Also, given that the business of among ground level staff/officials. charging infrastructure operators and battery swap operators is unviable in the early stages of the market, 6. Lack of alignment in charging it becomes important that the taxes applicable on the infrastructure subsidy and vehicle subsidy end consumers be reduced to the minimum possible, program to facilitate adoption in users. A major portion of FAME-II scheme subsidies are allocated towards 2W and 3W segments. As a 4. High cost of enhancing LT-level grid percentage of the total FAME-II subsidies, 2W segment infrastructure for EV chargers (at homes, accounts for 20% and 3W segment accounts for 25%. workplaces, commercial & public spaces) On the other hand, 4W segment accounts only for Currently, cost associated with the enhancement 5.5% of the total FAME-II subsidy fund. of LT-level grid infrastructure, if required, for EV Under FAME-II, the subsidies are aimed at public chargers is required to be incurred partially (50%) transport, e-2W and e-3W, but it must be noted that or in full by the user. This cost can be high and can these vehicles do not have fast charging capacity deter investments in EV charging, especially for fast (~ maximum of 0.2 C or 0.3 C charging rate) which is chargers for 4 wheelers. a major concern. Slow charging of e-2W and e-3W, at the most require 15 A socket. 5. Inability of potential EV users to set-up EV charging in multi-unit dwellings (MUDs) However, in terms of charging infrastructure, more than 80%95 of the fund allocation is towards chargers A challenge in home charging segment is difficulty suited only for 4W segment (high powered chargers in obtaining permits by RWAs (resident welfare not suitable for 2W and 3W). Therefore, there is a associations) for EV charging in multi-storied mismatch between FAME-II demand subsides to EVs buildings. Such hindrances are often unlawful, based and charging infrastructure96. on unsubstantiated concerns and often a result of lack of awareness. Also, in housing societies, the parking lot belongs to the RWA and therefore there is a need for legal clarity about who will own the 95 Stakeholder Consultation charging infrastructure in the parking lot. In addition, 96 Stakeholder Consultation 14 Electric mobility in India: Accelerating Implementation 7. Lack of subsidy support for battery swapping However, in India, since the government’s focus model (esp. in e2W, e3W segments) through the FAME-II scheme is only towards commercial and public transport vehicles (taxis in The FAME-II scheme of DHI does not include 4W segment), home charging has not been included. subsidy support to battery swapping. Further, the This hinders the growth of EV adoption among MoP guidelines on charging infrastructure neither personal EV buyers. includes reference to battery swapping nor includes it as a possible mode of charging in the definition 9. Absence of a national level portal for of charging infrastructure. Hence, battery swapping aggregating location of charging stations for operators cannot avail EV tariffs (since the DISCOMs ease of consumers have to comply with MoP guidelines to offer it). A key market challenge is that independent charging In addition, relatively low awareness at RTO level networks are being developed which display chargers offices impedes registration of battery swappable installed and owned by respective charging companies. vehicles since there are no updates in the Motor In the absence of a National Service Provider (NSP), Vehicle Rules and regulations regarding registration there is no common platform to get access to all the of the same. chargers or share information regarding them across all charging networks. Eventually, this might result 8. Lengthy and inefficient approval process in a situation which requires EV users to sign up for followed by DISCOMs for EV chargers; multiple apps and multiple subscriptions to be able to lack of institutional accountability for timely access chargers by different companies in different approval of EV chargers and installation of locations and cities. associated infrastructure Due to lack of awareness at DISCOM level, procedure 10. Lack of regulatory interventions to for grant of supply for EV charging is ambiguous. organize the e-3W charging market CPOs are setting up charging stations in multiple Though DISCOMs and regulators are witnessing cities and many states have announced special EV challenges due to illegal charging of e-3W that is tariff but implementing the EV tariff on ground has contributing to AT&C losses, minimal effort is being been a constraint due to operational problems97. taken to organize the market. e-3W is a segment There needs to be process simplification for availing that has been mushrooming across cities in India EV tariff. with good penetration in Tier II and Tier III cities In the developed countries (the USA, Norway, the due to lower cost of acquisition and operations. UK, etc.), it is seen that 80%-90% of EV charging As a result of lack of awareness and inadequate (4W segment) happens at people’s homes (home organized charging provisions the e-3W drivers charging). The proportion of EV home charging have little to no option but to charge wherever they in India is similarly high (>90%)98 since most of the find a point to charge. The current FAME-II scheme early-generation EV buyers hail from financially has no provision for creation of charging stations/ well-off section of the society (owing to affordability hubs specifically for e-3Ws. constraints for 4W EVs). Recognizing this dynamic, many countries (UK, Germany, France, etc.) have 11. Lack of collaboration among the included home charging segment in their charging stakeholders for developing a sustainable infrastructure subsidy programs. charging infrastructure ecosystem The Ministry of Power’s charging infrastructure 97 Stakeholder Consultation 98 Stakeholder Consultation guidelines and standards have nominated various CHAPTER 2: Charging Infrastructure Deployment 15 State Nodal Agencies (SNAs) for the development of Due to the tender-driven, low cost approach of charging infrastructure ecosystem in the respective PSUs, the resulting charging infrastructure might states. be installed at places which are cheaper to install (government offices, municipal parking lots, petrol With reference to the allocation of FAME-II subsidy stations, etc.) but are inconveniently located and will allocation towards deployment of charging suffer from severe underutilization of the chargers infrastructure, 2,636 charging stations have (and hence, valuable public funds). Another risk been sanctioned by the Department of Heavy could arise from the selected government PSUs Industries (DHI) in January 2020. Where the PSUs not being able to sign bilateral/contracts with and government agencies could submit proposals commercial entities (malls, restaurants, office directly to DHI, the private organizations were spaces, etc.) due to the highly customized and required to send their proposals through the ULB, fragmented approach (rents, revenue- sharing even in the presence of SNAs. model, etc.) required for each kind of location. Also, As the process lacked proper communication due the dynamic nature of EV charging technology channels, many private players faced a challenge and continuously evolving standards, PSUs may in forwarding their proposals through ULBs or be at a risk of investing public funds in the wrong their proposals stood to be rejected. The lack of charging technology, unless they work in close collaboration among the stakeholders, such as ULBs, collaboration with the automotive OEMs. DISCOMs, charging infrastructure manufacturers and Lastly, the service-oriented and technology- operators, would hinder development of a sustainable intensive nature of the EV charging business (mobile ecosystem in the country. applications, memberships cards, customized rates, In addition, battery swapping, a proven and etc.) might require significant capabilities at the commercially viable mode of charging batteries for end of municipal corporations, which may not be 2W and 3W segments is not included under the ambit in a strong position to deliver such digital-enabled of charging infrastructure fund. This has been one of services. the contributors towards inadequate infrastructure for e-2W and e-3W and thus lower than expected 2.5 Recommendations demand for them. 1. Devise mechanisms for fiscal incentives 12. Lack of alignment between charging under DHI’s FAME-II subsidy to flow towards demand and government sponsored private sector charge-point operators to charging infrastructure deployment drive innovation, rapid proliferation and cost A challenge observed globally (especially in China) reduction in the EV charging space with PSUs installing charging infrastructure relates The Department of Heavy Industries (DHI) could to the non-optimal location of chargers. Global provide equal opportunity and same qualification research reveals that people prefer chargers to be procedures to private sector charging companies in places where they would naturally spend time in future rounds for awarding subsidies under rather having to go out of their way and waiting just FAME-II scheme. This will ensure a level playing for charging their vehicle. This implies that the EV field ensuring private sector investment. Further owners prefer chargers in malls, restaurants, etc. mechanisms should be conceptualized to support instead of waiting for one to two hours at charging private sector participation in EV charging to drive stations in public parking lots, gas stations or other innovation, cost reduction and alternate business inconvenient locations. models. 16 Electric mobility in India: Accelerating Implementation 2. Charging infrastructure installation should utilization could be monitored through relevant be focused on top EV-demand cities in telematics data99. the early stages of the market; expansion to other cities only when top cities have 4. Reduce GST on swappable batteries, achieved a certain density and saturation charging service and battery swapping level of public EV charging infrastructure service from 18% to 5% in line with GST rates for EVs, EV chargers and factory-fitted Currently, the government funds for charging batteries in EVs infrastructure development are being used to set up infrastructure in 62 cities. This will provide, on The government can also look at other services such average, 40 chargers per city. as GST on ride-hailing, rides in Ola and Uber (at 5%), as precedence to dissolve such misalignment in the To boost customer confidence in charging stations, applicable GST for swappable batteries, charging a dense charging network is required. Hence, it is infrastructure service and battery swapping service. recommended that the program should focus on 10 cities with high demand potential for electric mobility. 5. Establish a simplified and fast-track On average, it will enable the setting up of a dense approval process for EV chargers. Also rate network of ~240 chargers per city and drive customer the DISCOMs on their process for providing confidence. Further, holistic demographic as well as EV charger approvals as part of the ease of demand assessments need to be done to assess doing business matrix for DISCOMs the type of chargers that need to be deployed for 2 wheeler, 3 wheeler and 4 wheeler at locations such Due to lack of awareness at DISCOM level, procedure as home, office, shopping outlet and existing parking. for grant of supply for EV charging is ambiguous. It is recommended that the Forum of Regulators develop 3. In line with battery swapping getting a standard framework procedure for the DISCOMs included under MoP guidelines, provide to follow. Further, the FAME-II funds for awareness subsidy support for battery swapping model creation should be utilized to create full awareness at in the FAME-II scheme levels within DISCOMs to ensure quick approvals and support for EV chargers. DHI should include battery swapping under the ambit of FAME-II. This will provide strong impetus to e-2W Also, the approval process guidelines and the and e-3W while also reducing costs and increasing results achieved should be included in the “Ease of incomes for auto- drives, delivery personnel and other Doing Business” matrix for the DISCOMs. This will economically burdened sections of the society. encourage the DISCOMs to adopt and constantly improve their processes. In order to make minimal policy and regulatory changes, the swappable battery could be provided 6. Encourage DISCOMs to incur grid along with the vehicle and the subsidy could be infrastructure upgradation cost and provide provided to the OEM just like it is currently being “plug and play” connections to charge point done for vehicles with factory-fitted batteries. The operators (CPOs) OEM could pass on the subsidy to the battery swap operator, which would in turn reduce the price of The Ministry of Power’s charging infrastructure swapping service and ultimately pass the benefit guidelines and standards have nominated various onto the end consumer. As an alternative (for the State Nodal Agencies (SNAs) for the development of long term), the subsidy could be directly provided to the battery swapping operator and the battery 99 Stakeholder Consultation CHAPTER 2: Charging Infrastructure Deployment 17 Figure 12: Collaborations to develop a sustainable For instance, project preparation and execution charging infrastructure ecosystem100 towards deployment of charging infrastructure at strategically important locations can consider collaboration amongst: !! ULBs for identification of key land parcels for parking and charging. Te ch Power and no !! SNAs to coordinate among the ULBs, DISCOMs ls Utilities log de yC Oil and the charge point operators to facilitate Mo onfig Transport Marketing V ia b l e B u s i n e s s Utilities Companies and accelerate the process of deployment, urations through initiatives such as single window City clearance for approvals and clearances for charging station deployment. OEMs Technology Providers !! Transport experts/fleet operators (like Ola, Urban Uber, etc.) for identification of high demand Utilities areas across the city. Vi ab !! DISCOMs for identification of augmentation sin Bu le of the distribution infrastructure in identified Model s ess demand areas. !! State energy department for provision of necessary funds and approvals required for charging infrastructure ecosystem in the respective infrastructure augmentation by DISCOMs. states. Each state government should utilize the !! Charge point operators for identifying and institutions authorized for development of charging deploying charger technologies viable for infrastructure ecosystem in their respective states. identified locations. Case precedent Successful project preparation and coordination by SREDAs State renewable energy development agencies/corporations (like NREDCAP, RERA, etc.) have been successful in the project preparation, coordination and implementation activities for solar parks and other solar deployment initiatives in their respective states101. The SNAs should be empowered by the state 7. Mandate Residential Welfare Associations government and be made responsible for necessary (RWAs) under MUD’s purview to allocate coordination and implementation activities. parking spaces and allow separate metering Simultaneously, SNAs can play a vital role of connections for EV users collaborating with stakeholders such as ULBs, DISCOMs, CPOs, swapping operators and others to State governments could make it unlawful for RWAs create “plug and play” infrastructure for EV charging. to withhold approvals for home charger installation (in multi-storied buildings); appropriate regulations 100 EY Analysis. Technology Providers are essentially the Charge-point and consumer protection measures should be in operators, battery swapping operators, which SNAs (DISCOMs in most cases) should enlist in finally deploying charging infrastructure place to ensure streamlined installation process of at the city- and state-level. home chargers for EV owners. 101 NREDCAP 18 Electric mobility in India: Accelerating Implementation New buildings could be designed to mandatorily have !! Techno-commercial impact study of integrating power source for EV charging infrastructure in the renewable energy and energy storage systems parking space. States governments and SERCs could with charging stations (and battery swapping mandate DISCOMs to process charging infrastructure stations). related permits and approvals in a timely manner. !! Consultation study with international experts on best practices for developing V2G (vehicle to grid)/V2H (vehicle to home)102 2.6 Further Analysis and Studies technologies, as well as other charging The government can undertake further work on the technologies such as inductive charging and following aspects: portable charging. !! Consumer behavior studies and demographic !! Study to understand the economic impact studies to gauge new trends in terms of time due to reduction of GST/taxes on the services spent on roads, parking areas, weekend charged to EV users for EV charging by the activities, preferred charging spots, acceptable Charging infrastructure operators. charging wait-times and more. !! Study for development of financial instrument !! Consultation study with international experts to promote deployment of EV charging on best practices for enabling home charging infrastructure and battery swapping. especially for multistoried residential owners. 102 V2H technology is essentially V2G technology; here only the location of connection is defined CHAPTER 2: Charging Infrastructure Deployment 19 CHAPTER 3 EV Financing 3.1 Strategic Importance 3.2 Current Scenario EVs cost anywhere between 1.5 to 2 times more In India, financing of electric vehicles has made some when compared to their ICE equivalents across progress. In segments where favorable financing 2W, 3W, 4W and bus segments. Even though most is unavailable, authorities have turned to DFIs and vehicle segments with EV variants now achieve global funds to support their electric enterprises: TCO parity at typical daily utilization103 (kms/day) as !! Only three to four financial institutions are seen in various applications, the higher upfront cost currently extending loans to e-Bus operators, remains a significant barrier for consumer adoption. according to market experts. The higher capital cost also implies that the !! Tamil Nadu Government signed an INR financing burden (in the form EMIs) is unsustainable 1,580 crore financial assistance program considering the same, short tenor loans available with the German development bank KfW for for cheaper ICE vehicles. This necessitates the 500 e-Buses and BS-VI emission compliant existence of flexible and favorable financing options buses104. for EVs specially in the public transportation sector !! Few start-ups such as RevFin and Three Wheels (E-buses, 3Ws, 4Ws). United are innovating micro-financing in e-2W, Besides this, balancing of certain contractual e-3W and e-4Ws through psychometric loan obligations (like payment security) are also important analyses and long- term credit facilities to support thousands of auto, rickshaw drivers, to make investment in electric bus-based public delivery personnel and more105. transport segment more attractive to investors and private bus operators. Lastly, it is important to explore mechanisms to provide micro-credit to potential 3.3 Key Market Challenges e-2W and e-3W drivers since they may not be able to afford the upfront cost and may not have credit 1. High upfront cost of electric vehicles history. Yet they would benefit significantly from the The cost of electric vehicles is 1.5 to 2 times more reduced operating expense, increased daily income when compared to an ICE equivalent. The higher and significantly better health outcome. upfront cost is a big deterrent to potential buyers. 103 TCO thresholds calculated - 2W: 90-110 kms/day; 3W: 100-120 kms/ 104 Tamil Nadu and KfW day; 4W: 220-240 kms/day; Buses: 180-220 kms/day 105 RevFin CHAPTER 3: EV Financing 21 2. Credit risk faced by financial institutions EVs should be eligible for flexible, long-term financing while lending higher amounts to EV buyers of 6-12 years depending on vehicle utilization, to make their deployment commercially viable. For Banks are faced with a larger credit risk while example, studies done by India Innovation Lab for offering loan for an EV as compared to an ICE Green Finance reveal that the additional capex of vehicle to the same buyer (with same credit profile). an e-Bus compared to a similar diesel bus would This is because of the high upfront cost of electric be recovered after six to nine years of operations vehicles. Small fleet operator or the personal buyer depending upon the daily usage (kms run). may find it difficult to buy such cars due to financing challenges106. 5. Poor/Unavailable credit history of e-Bus operators leading to additional financial and 3. High perceived risks by financial operational risk for auto OEMs institutions for extending EV loans and high interest rates In India, GCC model110 for operations of buses is fairly recent and the operationalities are being Due to a lack of long operational history and explored amongst the stakeholders. Until now, the uncertainty in residual values of EVs, banks are dominant model has been for STUs (state transport hesitant to extend credit to potential EV buyers. undertakings) to own, operate and maintain the This situation is aggravated in the case of e-2W buses themselves. Hence, there are few operators and e-3W buyers who may not have a credit history. with significant presence and financial history. This Consequently, the volume of credit offered is low. makes it difficult for e-Bus operators to participate In cases where credit is offered, the terms are worse in the e-Bus tenders and avail finance from banks to compared to those offered on ICE vehicles. Industry purchase e-Buses. consultations reveal that the loan quantum for EV As a result, large OEMs (bus manufacturers) must loans in major banks is low (70% of vehicle cost step in and provide additional guarantees on behalf compared to 90% for ICE vehicles), interest rates of bus operators, thus increasing their balance are high (14%-26% compared to 10%-16% for ICE sheet liabilities. In many cases, they are also vehicles) and the repayment period is low (a year- required to be a part of the tripartite agreement and-a-half to two years compared to four to five between the bank, the e-Bus operators and years for ICE vehicles). themselves, thus increasing the financial and operational risk for them. 4. Lack of flexible, long-term financing options for EV buyers 6. Significant counter-party risk for operators Most commercial banks (such as SBI107, HDFC108 and running e-Buses under GCC model others109) provide vehicle loans for personal segment According to a MORTH’s annual report 2018-19, (2W, 4W) and commercial segment (4W taxis, buses, the 55 STUs in India reported a combined loss of trucks) buyers with a maximum repayment period of INR 14,213 crore in the FY 16-17. This exposes the typically five years. e-Bus operators bidding for contracts under GCC The higher capital expenditure (capex) for EVs model to significant counter-party risks. cannot be serviced with these financial products. 106 Economic Times 110 Under the Gross Cost Contract Model, the OEM provides the 107 SBI electric bus as a service to the transport authority or customer. The 108 HDBFS OEM charges an INR/km fees from the customer for operating and 109 Bank Bazaar maintaining the electric bus. 22 Electric mobility in India: Accelerating Implementation 3.4 Key Issues in Implementation society, with 80% of earning between US$ 200 to US$ 400 per month111. According to various estimates, 1. Inadequate payment security for investors there are close to 1.5 million e-rickshaws running in and lenders and onerous requirements on India112. Industry leaders and entrepreneurs believe performance security for e-Bus contracts that this number could be much higher (up to five under gross cross contract (GCC) model times more) if financing was available to the drivers who typically hail from tier-3 and tier-4 towns and do According to market experts, FAME-II subsidy has not have credit history or CIBIL scores to make them the potential to facilitate GCC operations close to eligible for loans by commercial banks113. They also INR 30/km as seen in the case of BYD Goldstone lack any collateral to be applicable for loans. in Bangalore; instead, contracts are being awarded at INR 70/km and INR 51/km since operators are To move towards inclusive financing, in the absence required to secure high performance securities (close of credit history of borrowers, various innovative to 10% of project cost – as observed in e-Bus tenders solutions are required for loan appraisal beside in Jaipur and Mumbai) as part of the contracts. This strong micro- finance programs. Some start-ups inflates the upfront cost for the OEMs who are not such as RevFin, SMV Green Solutions and others able to fully benefit from the subsidy. are deploying a combination of measures such as psychometric analysis, biometric verification and 2. Operational uncertainties for E-bus vehicle monitoring to appraise loan applications by operators e-rickshaw drivers in the absence of credit history. E-bus operators must finance heavy upfront costs emerging from procurement of e-Buses and 3.5 Recommendations setting up of a charging infrastructure in the bus 1. Review the GCC contracts and balance depot. Considering how e-Bus operators have little the risks between contractor and employer experience in operating electric buses at a large-scale, uncertainties such as overcrowding, air- conditioning, Reviewing current GCC contracts, we recommend climate and terrain might thwart the operator’s ability the state transport departments and STUs to consider to make good on agreed conditions with the STU and the following recommended actions: would also translate into a loss of revenue. !! Reducing “Performance Security” in GCC contracts for operators, to avail full benefits of the 3. Fragmented e-Bus procurement initiatives FAME-II subsidy; STUs may consider reducing among cities payment security to 5% for e-Bus contracts in the short-term (three to five years)114: Currently, e-Bus procurement is being led by the various state and city-level transport undertakings yy GCC contracts, as observed in e-Bus tenders awarded in Kolkata, Bengaluru separately. This leads to cost inefficiency in public and Ahmedabad usually include a 10% procurement. Also, a lack of technical and managerial payment security for the operator to the capacity at the city government level for e-Bus authority/STU. procurement leading to delay in deployment and yy To allay concerns of STUs, in light of utilization of FAME-II funds. reduced performance security in e-Bus contracts, (1) market participation should 4. Lack of quick and collateral-free micro- be encouraged amongst more operators credit for e-3W and e-2W 111 Shakti Foundation Most e-vehicles in India are e-rickshaws and are 112 Shakti Foundation 113 Inc 42 driven by people from relatively poor sections of the 114 Stakeholder Consultation CHAPTER 3: EV Financing 23 Case precedent Solar PPAs - reduced payment securities for operators • A precedent here would be solar PPAs115, which have payment securities close to 1-5% of total project size. • For diesel bus contracts, payment securities may vary between 5-10%116, this can be replicated in e-Bus tenders for an initial period of two to three years, to support operators. and, (2) capacity building of STUs can be Further, long term procurement plans should be drawn considered, so that STUs can step in when out by STUs with commitment made for staggered operators fail to perform. procurement across the period (six to eight years). yy In addition, the bank guarantees should This kind of certainty will enable the e-Bus OEMs be maintained on a depreciating basis. to strike supply agreements, financing agreements, For example, in a contract for 10 years, the increase scale and in-turn drive down costs for the bank guarantee could decrease by 10% STUs. The flexibility of the business model in e-Bus every year. tenders could be increased by allowing participation yy Predictability in EV power tariffs for the of bus fleet aggregator/leasing companies. duration of the GCC contract should be provided; currently there is no clarity around 3. Support micro-credit access for e-2W and the exact tariff which will be applicable e-3W to micro-finance institutions117 through throughout the contract duration. MUDRA scheme yy Also, GCC contracts for both operations with fast chargers and battery swapping could In the current scenario of the MUDRA scheme, be considered. The contracts may remain individuals can avail micro-financing for 2Ws and technology agnostic or could have scope 3Ws. But according to secondary research and for either technologies (in the current case: industry consultations, drivers seeking micro- charging and swapping). Further, there could financing for their vehicles face delays in application be more flexibility in the business model approval, required to offer collateral and in many followed under e-Bus contracts by allowing cases, not offered loans at all. Also, there is participation of bus fleet aggregators, considerable lack of interest among banks to offer leasing companies and more. EV loans under the MUDRA scheme. It is hence recommended that the on-ground implementation 2. Standardize financial conditions and of micro-credit program for e-2W and e-3W under specifications in procurement contracts; MUDRA scheme should be closely monitored and aggregate procurement at state level and adequate support should be provided to banks for draw out long term procurement plan offering collateral free and have expedited loan staggered over years approvals to potential buyers118. To ensure procurement efficiency, STUs should standardize specifications and financial conditions in procurement contracts. The demand can be further aggregated at the state-level rather than the city-level 117 Micro4 Units Development and Refinance Agency Ltd. [MUDRA] is to increase the scale and drive down costs. an NBFC supporting development of micro enterprise sector in the country. MUDRA provides refinance support to Banks/MFIs/NBFCs for lending to micro units having loan requirement up to 10 lakhs. MUDRA provides refinance support to micro business under the 115 RUMSL Scheme of Pradhan Mantri MUDRA Yojana 116 SUTP India 118 Pradhan Mantri Mudra Yojana 24 Electric mobility in India: Accelerating Implementation 4. Supplement lower-cost, longer-tenor DFI on sale of petrol and diesel; conduct cost- financing to support micro-credit access benefit analysis and assess the economic for e-2W, e-3W; and work closely with impact on exchequer. OEMs to explore additional risk reduction !! Study with e-Bus operators and STUs to models such as extended warranties, buy- understand the technological, operational back offers and residual value guarantees risks in running e-Buses and the challenges in to increase confidence among financiers getting access to finance at affordable rates and with convenient terms. about EVs !! Economic feasibility studies for creation of a To increase interest among banks and to reduce partial- risk sharing fund/partial-risk guarantee lending risks, long term DFI financing could be fund at state government-level or PSB-level leveraged to provide portfolio-backed guarantees, alongside DFIs. risk-pooling and other risk reduction mechanisms. !! Pilots to study the benefits of a battery leasing In addition, models could be explored by banks, model in e-Buses and the conditions requisite other lending institutions and DFIs whereby vehicle for smooth functioning of financial institutions OEMs, service providers also contribute to de-risking backing such an operating model with other through extended warranties, buy-back offers and players such as e-Bus operators, auto-OEMs residual value guarantees, etc. and STUs. !! Methods to increase the disbursement of micro- 3.6 Further Analysis and Studies credit loans to 2 and 3-wheeler drivers through MUDRA scheme; assess if re-appropriation of Recommended funds is required under the scheme to provide The government could undertake further work on the additional focus for EVs. following aspects: !! Study to understand global micro-credit !! Financial products for EVs to provide flexible programs for consumers with no credit loan terms and long-term repayment tenor for history or bank accounts; learnings could be EV buyers. synthesized for an electric-3W program to allow low cost financing options for drivers !! Feasibility study for developing an electric with poor/unavailable credit history. mobility fund through the application of cess CHAPTER 3: EV Financing 25 CHAPTER 4 EV Deployment EV Deployment 4.1 Strategic Importance taking a severe toll on the environment; in 2019, alone, a leading Indian cab aggregator clocked: Globally, conventional mobility is associated with high !! 1.2 billion kms on 3Ws carbon emissions and fossil fuel consumption. As a growing market, India’s national fleet of 2W, 3W, 4W, !! 366 million kms on intercity 4W services bus and other commercial vehicles are expected to !! 166 million kms on 2Ws grow rapidly between now and 2030. If the impending !! 6 billion kms across all vehicle segments on addition of vehicles in India is done through EVs offer rather than ICE, significant carbon emissions and oil import dependence can be reduced. In a business-as-usual scenario, the potential emissions would reach to more than 600 million Considering current market growth rate and tonnes of CO2 per year by 2030 from motorized conditions, vehicle fleets could grow in the following transport alone, according to NITI Aayog and RMI’s manner by 2030. report121. Table 4:  Market growth in terms of annual sales Apart from environmental benefits, EV’s low operational costs would mean higher disposable Vehicle Annual sales Annual sales income for driver-cum- owners in 2W, 3W, 4W and LCV segment (2018-19)119 (2030)120 fleets. While these benefits today can only be realized 2-wheelers 21 million 46 million at subsidized upfront costs, the right technology fit 3-wheelers 0.7 million 1.6 million and technological know-how, technology innovation 4-wheelers 3.3 million 6.5 million and falling costs from EV deployment promise to yield significant benefits in future. Small CVs 0.5 million 1.4 million Buses 0.08 million 0.22 million 4.2 Current Scenario In addition, leading cab aggregators are already The Indian EV ecosystem has witnessed growing clocking high number of kilometers annually and adoption of EVs in ICE vehicle fleets. This has either been in the form of public transportation such as 119 SIAM (Society of Indian Automotive Manufacturers 120 CAGR used for projection is the CAGR between 2015-19; the value electric buses and electric rickshaws, or, commercial for different segments are: 7% (2W), 8% (3W), 6% (4W), 10% (SCV); and 10% (Bus) 121 NITI Aayog and Rocky Mountain Institute CHAPTER 4: EV Deployment 27 Table 5:  GCC contracts across India in FAME-I City Agency Contract type Supplier Cost (INR/km) Bengaluru Bengaluru Metro GCC (12 m AC) Goldstone-BYD 37.35 Transportation Corporation Mumbai BEST Undertakings GCC (9 m AC) Goldstone-BYD 57 Hyderabad Telangana State Road GCC (9 m AC) Goldstone-BYD 36 Transport Corporation Ahmedabad Ahmedabad Janmarg GCC (9 m AC) Ashok Leyland 48 Limited Limited Jaipur Jaipur City Transport GCC (9 m AC) Tata Motors Limited 70 Services Limited Table 6:  Outright purchase contracts across India in FAME-I City Agency Contract type Supplier Cost (INR) Indore Atal Indore City Transport Outright purchase (OP) (9 m) Tata Motors Limited 85,00,000 Services Limited Lucknow Lucknow City Transport OP (9 m) Tata Motors Limited 85,00,000 Services Limited Kolkata West Bengal Transport OP (9 m) Tata Motors Limited 77,00,000 Corporation Limited Kolkata West Bengal Transport OP (12 m) Tata Motors Limited 88,00,000 Corporation Limited Jammu Jammu and Kashmir State OP (9 m) Tata Motors Limited 99,00,000 Road Corporation Guwahati Assam State Transport OP (9 m) Tata Motors Limited 99,00,000 Corporation fleets in employee transport, logistics and ride- who owns, operates and maintains the hailing sector (across 2W, 3W, 4W and buses). Some e-Buses123. of the steps taken toward adoption in both spheres !! NITI Aayog in early 2019, introduced the Model of public transport and commercial fleets are as Concession Agreement for Electric Bus Fleets follows: in Cities. The tool was envisioned to support !! Deploying EVs in public transportation: STU targets and project bankability for private operators who will own and operate yy Through FAME-I, GCC contracts were the buses124. awarded in Hyderabad, Ahmedabad, Mumbai, Jaipur, Bengaluru (both 9 and 12 !! By 2019, India already had electric rickshaws meters) and outright purchase bids were numbering close to 2 million. This number also awarded in Indore, Lucknow, Kolkata, continues to grow due to low upfront cost of Jammu, Guwahati (mostly 9 m buses)122. lead acid batteries and low running cost; as per the industry, newer electric rickshaws are yy Pune’s PMPML, in 2019, deployed 133 li-ion based125. e-Buses. This was done in partnership with e-Bus OEM Olectra Greentech (and BYD), 123 Pune e-Bus experiment 124 NITI Aayog’s Model Concession Agreement 122 LBNL and UITP 125 Stakeholder Consultation 28 Electric mobility in India: Accelerating Implementation !! Deploying EVs in commercial fleets (employee Figure 13: TCO parity with ICE for varying use-cases transport, ride-hailing, logistics) and vehicle segments yy EEE taxis (~200), Blu Smart (~1000) and Vehicle segments and use cases Parity Use case Ride- ETS Deliveries Lithium-cabs (~1200) are leading all-electric with ICE utillization hailing Indian upstarts providing ride-hailing and employee transport services. yy Ola, after its Nagpur pilot is focusing on 2Ws and 3Ws (and battery swapping); and Uber, which has partnered with Blu Smart and EEE taxis and is also exploring the 2W/3W 50 100 150 200 250 300 space for deployment. yy Amazon (10,000 EVs by 2025) and Flipkart Daily utilization in kms/day (40% of last-mile fleet by 2020) both have committed to short-/medium-term EV Figure 14: Addressable market growth for vehicle targets for their logistic fleets and associated categories by 2030 vendors. yy Big Basket – Euler logistics, GATI – 46 7 Annual New Sales (in Mn) IKEA, Hero- electric – Swiggy and other 60 partnerships have made progress with EV 30 deployment for grocery, furniture, food and 2.1x 1.9x 3 other deliveries. 21 2 22 31 1.4 3.2 2.2x yy Smart-E – Sun Mobility have partnered in 14 9.4 1 2.3x 9.9 the 3W ride hailing segment, deploying 0.5 2.8x 0.2 1.4 3.3 0.1 Smart-E’s fleet since April 2018 when phase 1 began with 500 EVs. 2W 3W 4W LCV Bus In the face of certain regulatory impediments, other business models and deployment Annual sales (2019) Annual sales (2020) categories such as micro- mobility have sprung Addressable market - USD Bn up, which rely on the Government’s Rent-a- Motorcycle-Scheme. Some of these start-ups vehicle segments; based on annual new sales are Bounce, ONN Bikes and Drivezy. in 2030 and an EV penetration per vehicle segment, we estimate the addressable markets !! Measuring the ability of top use-cases to as follows127: accommodate EVs for operations By 2030, segments such as 2Ws and 4Ws Current EV models, their performance and cost, will form an addressable market of ~US$ 25 yield certain TCO parity thresholds for various billion and ~US$ 20 billion, respectively, this vehicle segments. Use-cases are measured126 would include both personal and commercial for their ability to run the vehicles (daily vehicles. Other segments such as SCVs could utilization in kms/day) and hence their ability to have three times increase in the addressable accommodate current EV options (with limited market for players; bus sales include both for range, smaller batteries and more): !! Assessing the addressable market for EV 127 SIAM; Segment CAGR between 2015-19 has been taken as: 7% (2W), transition by 2030 across vehicle segments 8% (3W), 6% (4W), 10% (SCV); and 10% (Bus); Average ticket size (cost) assumed for most popular vehicle option in the segment; Considering this, businesses are slowly moving for example, for 4W segment, the highest selling vehicle is Maruti Suzuki’s Swift DeZire (~INR 7,00,000); EV penetration of new sales in to capitalize on market opportunities across 2030 are assumed to be: 80% (2W,3W); 30% (4W, SCV); 40% (Buses); US$ to INR rate assumed to be INR 75.75, as on 07 April 2020; Ashok 126 EY Analysis on top e-mobility use-cases Leyland and Tata Motors sales data, The Climate Finance Lab CHAPTER 4: EV Deployment 29 Figure 15:  End to end emission assessment for EVs compared with ICE vehicles (in varying grid mixes)128 250 Life cycle emissions in gCO2 eq/km 200 -29%* 150 -56% -57% -58% 100 -62% -63% -65% -67% -77% -79% 50 0 Petrol Diesel Poland Germany Italy Netherlands UK Belgium Spain France Sweden EU-27 Scenario where average EU electricity is used to produce the batteries and the cars *CO2 savings compared to the average of both diesel and petrol emissions CO2 emissions in 2030 Driving (fuel/electricity production and use) Car production Battery production private and STU applications and to capture The current Covid-19 situation seems to have this market, private players will have to adopt accelerated this process and increased the E-buses as well. awareness further. For example, in a survey of 200 UK consumers in April, Venso Automotive !! Assessing ability of EVs to reduce lifetime CO2 emissions Solutions, a fleet management company, found that an additional 45% of respondents were The strategic importance for EV deployment is considering buying an EV after seeing how more toward preventing carbon emissions than clear the air can be. In conjunction with the 17% benefiting from low operational costs (which is consumers who had already decided to buy an not being currently realized in most cases). EV, this means that 62% of UK consumers in There are increasing concerns in the more this particular survey are willing to go electric. established markets (of Europe and the USA), While further research is certainly required on where EVs are being charged on the existing this subject, it can be inferred that despite the grid mix (renewable vs. other sources), that adverse short-term impacts on EV-related auto EVs may not play a vital role in reducing carbon sales and supply chains, the long-term effects emissions as envisioned before. on EV adoption could be more favorable. However, research reveals that EVs can reduce lifetime CO2 emissions by an average of 29% 4.3 Key Market Challenges to 79% depending on the emissions intensity of the grid. Even for an EV driven in Poland (coal- 1. High upfront cost of EVs which acts as a dominant grid) with a battery manufactured barrier to adoption in China (coal-dominant grid), the lifetime emissions are 22% lower than diesel cars and Most business models for top use-cases such as 28% lesser than petrol cars. This is depicted in ride-hailing, employee transport and deliveries Figure 15. have individuals or small vendors owning the vehicles. Given the high upfront cost and the Globally and in India, the awareness of EVs and associated infrastructure required to operate EVs, their potential societal benefits is increasing. individual drivers are usually unwilling to own/ 128 European Federation for Transportation and Environment operate them. 30 Electric mobility in India: Accelerating Implementation Table 7: Understanding the upfront cost disparity Table 8: Average charging time across various vehicle between EV and ICE per vehicle segment segments available in India Vehicle ICE cost EV cost Disparity Vehicle Battery* Usual Fast Slow segment (INR lacs)^ (INR lacs)^ (EV/ICE %) segment (kWh) range* charging** charging** 2-wheelers 0.5 1.2 240% (km) (hours) (hours) 3-wheelers 1.5 2.5 167% 2 wheelers 3-5 60-100 0.5 3-6 4-wheelers 7 15129 215% 3 wheelers 3-5 40-80 0.5 3-6 Buses 50 150 300% 4-wheelers 15-25 120-160 0.5-2 6-7 LCVs^^ - - - Buses 180-300 180-220 4-6 - Note: ^The companies for cost of vehicles include models of Ather/ LCVs^^ - - - - Okinawa, Kinetic Green, Mahindra and BYD/Ashok Leyland for 2W, 3W, 4W and buses respectively Note: *The companies for range and battery size assumptions include ^^ LCVs have no electric vehicle options in market hence data on LCV currently available EV models in India of Ather/Okinawa, Kinetic operations is not available Green, Mahindra and BYD/Ashok Leyland for 2W, 3W, 4W and buses respectively ** The charging standard assumption for fast charging includes Type 2 2. Lack of high-quality EVs in India and AC fast, DC001 Bharat standard, CHAdeMO and CCS. For slow charging, poor consumer perception regarding the charging standard assumption is AC001 Bharat standard; Fast charging in 2Ws only considered for Ather Energy performance of EVs ^^ LCVs have no electric vehicle options in market hence data on LCV operations is not available Keeping with budget constraints, in an extremely price- sensitive market, newly fabricated EVs and state-level, regulatory impediments to avail are known to have lower volumetric and payload those benefits remain. Few of the regulatory capacities than required for their logistics obstacles are: applications. This leads to reliability issues for fleet operators, additional EVs (more EVs than !! RTO registrations and licenses need to be corresponding ICE vehicles) must be procured and secured on a city-by-city basis, depending maintained to carry out operations smoothly. on base of operations. When coupled with inadequate understanding of EVs at the RTO level, this often implies separate liaising with 3. High downtime for EV drivers across several RTO offices across cities for fleet vehicle segments operators, thus causing delays in launching The table below describes the downtime a driver EV-based operations. faces with fast and slow charging of their vehicle. !! Inadequate pace of requisite ARAI The fact that the time spent charging could otherwise certifications of battery swappable EVs and be spent earning revenue, has become a major retrofitting kits. impediment to EV adoption. !! Onerous tender eligibility criterion for private charge point operators to set up public chargers. 4.4 Key Issues in Implementation 1. Policy and regulatory impediments for 2. Lack of long-term policy targets for fleet deployment of electric vehicles adoption in ride-hailing and logistics While India has issued multiple policy pieces to There are no long-term policy targets set by the support EV adoption in fleets, both at national government to support EV adoption; mandates are not present in terms of: 129 4W models such as Mahindra E-Verito and Tata Tigor have been considered as they are predominantly being used by commercial !! Clean miles driven by fleets for timelines such fleets; EV options such as Hyundai Kia and Tata e-Nexon have also been considered in such applications as 2025, 2030, 2035 and beyond. CHAPTER 4: EV Deployment 31 !! Rebates and credits program for fleets aiming1. Increase the quantum of FAME subsidy to achieve mandates. per EV, rather than targeting more EVs !! Regulations to mobilization demand in tier 1, 2 with lesser subsidy, with a focus of most and 3 cities. sustainable vehicle segments, to reduce the cost parity with ICE counterparts and Government can take inspiration from its CNG accelerate adoption transition mandates for city buses and taxis. FAME-II is targeting an appreciable number of EVs 3. Lack of incentives for retrofitting and to be subsidized: 1 million e-2Ws, 500,000 e-3Ws, inadequate certification infrastructure to 55,000 e-4Ws and 7,090 e-Buses. If the number tackle upcoming retrofitting demand of EVs targeted under the scheme were to reduce while keeping the overall subsidy outlay constant, Retrofitting has the potential to reduce cost to the the government could subsidize EVs to a further driver in both fixed battery and battery swapping extent on per-vehicle basis (more than 20% of capex, models. However, players in the segment, usually as per FAME-II currently). This may provide additional smaller and regional, need support for the expensive incentive to end-users and fleets to rapidly purchase testing infrastructure. There should also be an EVs, as more and more use-cases will become viable incentive mechanism to encourage retrofitting. and could benefit from lower cost of operations130. Another benefit would be the awareness created 4. Absence of disincentives/mandates for among consumers by witnessing a large number large fleet operators (which are responsible of EVs on road. This accelerated demand will also for major portion of vehicular pollution) to increase the learning curve of EV manufacturers and transition towards EVs help them reduce costs through the increased scale Various large fleet operators such as leading cab of operations. aggregators are already clocking high number of kilometers (billions) annually which is taking a 2. Allow import of certain number of EVs severe toll on the environment. However, there are per OEM at zero or reduced customs duty no mandates/disincentives/incentives to ensure based on existing investments made by the their transition towards EVs. OEMs in India The government could allow for annual imports of 5. Lack of any preferential incentive for certain number of EVs (lets say 25,000) per OEMs replacing old ICE vehicles with EVs rather at zero or reduced customs duty in the short- to than another ICE vehicle medium-term. This would reduce the upfront France has recently introduced “conversion prime”, of cost of such EVs. More importantly, the high- an additional premium subsidy applicable to buyers performance imported EVs would raise the profile who decommission/scrap their old ICE vehicle for of EVs in consumer psyche and create a confidence replacement with an EV. Providing this additional in EV technology among potential buyers. In the incentive ensures higher environmental benefits by the interest of retaining and encouraging manufacturing removal of an ICE vehicle from the transport system. investments, this duty waiver could be designed on the basis of existing investments made by OEMs operating in India. 4.5 Recommendations Recommendations suggested below mainly target vehicle segments: 4Ws, LCVs and 3Ws. 130 Stakeholder consultation 32 Electric mobility in India: Accelerating Implementation 3. Develop regulations to encourage the trajectories for bigger fleets such as Uber and organized EV retrofitting market and increase Ola. The mandates could be in the form of: organizational capacity to ramp-up the certifi- yy Defined metric for transition for fleets: cation infrastructure for safety considerations Percentage zero-emission miles driven for 2022, 2025, 2030 and beyond for each Retrofitting has the potential to reduce cost to the vehicle class and segment (2/3/4Ws, LCVs driver in both fixed battery and battery swapping and more) models. The Department of Heavy Industries is yy Defined benefits and rebates: (1) for fleet recommended the following actions to facilitate the operators and OEMs to support them growth of retrofitting market: in meeting mandated deadlines; (2) for !! Expediting certification of retrofitting kits individual drivers to replace their old ICE through ARAI for wider recognition of retrofitting vehicles for EVs as an e-mobility solution for driver-cum- yy Defined scope of the policy: Policy could owners; while ARAI is engaged in certification be for taxis, light-commercial vehicles, of retrofitting kits, the testing facilities at ARAI medium/heavy commercial vehicles; the may need to provide some support to small government can also define cities for first, retrofitting players to undertake the often- second and third wave of transition (Tier 1 expensive testing infrastructure. cities for example can begin in the short- to medium-term) !! Developing a separate subsidy scheme or accommodate retrofitting of 3Ws/4Ws/LCVs in !! Dedicated funds could be set up for facilitating FAME-II scheme (2020-22). achievement of EV transition targets (facilitate procurement of EVs and chargers). Such 4. Institute fleet transition trajectories for dedicated funds can be set up through multiple certain “obligated entities” such as large avenues: fleet operators for certain vehicle segments yy GST charge on rides: Government can place over fixed timelines 4-wheeler rides in a higher GST bracket (from 5% to 12%) to accrue funds for a clean !! MoRTH, State Transport Departments and DHI mile mandate scheme to support fleets could set realistic mandates to define transition converting their vehicles to EVs. Case precedent Clean-mile mandates for light and heavy commercial fleets California Air Resource Board’s (CARB)131 The mandating body may consider California Air Resource Board’s (CARB) regulations on reducing greenhouse gas emissions from light-commercial, light-private and heavy commercial vehicles. CARB specifically included the following: • US$ 200 million for the Clean Vehicle Rebate Project (CVRP), including increased rebates for low-income consumers. (CVRP promotes clean- vehicle adoption by offering rebates for the purchase or lease of new, eligible zero-emission vehicles, including electric, plug-in hybrid electric and fuel cell vehicles.) • US$ 75 million for transportation equity projects, including the Enhanced Fleet Modernization Plus-Up/Clean Cars 4 All Program (incentives for lower-income drivers to scrap and replace older, high-polluting cars with zero-emission cars), Clean Mobility Options, Agricultural Worker Vanpools and the new Clean Mobility in Schools Project • US$ 180 million for Clean Truck and Bus Vouchers (HVIP and Low NOx Engine Incentives) and the Zero- and Near-Zero Emission Freight Facilities Project. The government can also look at trajectories set for CNG conversion in the past and benefits offered in the form of gas subsidy to support OEMs, vendors and consumers in the transition. 131 California Air Resource Board CHAPTER 4: EV Deployment 33 Figure 16: Fleet surcharge on rides based on INR/ride; old ICE vehicles with EVs, as part of MoRTH’s vehicle can also be looked at from INR/km basis scrappage guidelines and policy. The government IIIustrative could look at global cases such as that of France, Fleet Surcharge where “conversion primes” are added as additional premium to EV buyers who decommission their ICE 100+crore INR 5/- INR 500 vehicles. Also, a scrappage policy for EVs would crore force the industry to decide the residual value of EVs, Rides per year Contribution Electric-Mobility by Ola & Uber per ride Fund which could encourage financiers to provide finance for EVs133. 8000+ or 25,000+ Fast-chargers Electric-cars subsidized 4.6 Further Analysis and Studies Additional environmental tax on vehicle Recommended based on their pollution characteristics. Recommendations suggested below mainly target yy Surcharge/Contribution per ride: vehicle segments: 4Ws, LCVs and 3Ws. Alternatively, the private fleet companies could be encouraged to set up such !! Study to understand the scope for retrofitting funds towards meeting their transition. For and its potential to support Government and example, Ride-hailing and taxi companies Industry targets for electrification; the study can add a surcharge on their 3W/4W can shed more light on the size of the subsidy rides to support drivers to switch to EVs. scheme, demand figures and technology For illustration purpose, a surcharge of solutions. INR 5/ride in Ola or Uber (which combined !! Study to assess the increase in testing do more than 1 billion rides a year in India) capacity required at institutes such as ARAI could yield an INR 500 crore fund for and ICAT to undertake the increased volume procuring EVs and chargers. Alternatively, of homologation tests and other procedures a surcharge can be included on an INR/km on account of different vehicle and battery basis to yield a similarly sized fund. combinations that will emerge from wide spread of the adoption battery swapping model. 5. Provide higher incentives for replacement !! Study to assess risk sharing (warranties, of old vehicles with EVs compared to guarantees, etc.) between OEMs, battery swap ICE vehicles under the planned Vehicle operators, fleet operators and consumers in Scrappage Policy the battery swapping model. The government could provide higher incentives to !! Studies to understand creation of different fleet operators and personal users replacing their types of EV transition roadmaps; global case- studies such as UK’s Road to Zero transition Case precedent roadmap (2040) and California’s134 roadmap for commercial fleets can be looked at to devise an Creating a fund by levying surcharge EV transition strategy and targets with regional Creating a fund by levying surcharge132 and time constraints. Uber London unveiled a “Clean Air Plan initiative” to !! Techno-commercial assessment to amend the go all electric in London by 2025 by raising GBP 200 vehicles scrappage policy to allow EVs to run million. This fund will be created through charging GBP 0.15/mile as a surcharge on regular rides. Uber expects beyond 15 years since they emit no emissions 20,000 drivers to upgrade to EVs by end of 2021 by irrespective of their age. utilizing the collections from this fund. 133 Stakeholder Consultation 132 Uber Clean Air Program 134 California Air Resource Board 34 Electric mobility in India: Accelerating Implementation CHAPTER 5 EV Manufacturing 5.1 Strategic Importance Approximately 18% of all vehicles manufactured in India are exported138. Considering the industry’s EV manufacturing giants such as China, US and high contribution to India’s economy, the global Germany have launched national-level plans for transition from ICE vehicles to electric vehicles and promoting domestic EV manufacturing to achieve dependence on exports, the industry could be at export-competitive manufacturing competence and risk of reducing employment opportunities and to serve domestic and global demand for EVs. GDP contribution, therefore, setting-up local EV manufacturing and supporting supply chains could Table 9: EV manufacturing policies be of strategic importance to India. Country/Region EV manufacturing policy China135 yy Enforcing EV manufacturing 5.2 Current Scenario mandates on large OEMs to !! India currently has 29 OEMs registered with the increase vehicle supply DHI, Government of India which manufacture yy Other national-level and province-level R&D support electric 2Ws, 3Ws, 4Ws and buses eligible for government subsidy under FAME–II139. US136 yy Enforcing EV manufacturing mandates on large OEMs to !! The electric 4W segment has limited options increase vehicle supply with just five models from Hyundai, Tata Germany137 yy Providing upfront federal Motors, Mahindra and MG Motors. More subsidies in the form of direct models from these manufacturers and Maruti cash of up to US$ ~10,000 Suzuki are expected to be launched in India in the period 2020-22. Setting-up a domestic EV manufacturing ecosystem !! The electric 3W segment, however, has could be of strategic importance to India as well numerous models varying in manufacturer type (large OEMs to medium-sized enterprises), to retain automobile industry’s high economic performance, batteries (lead acid or lithium contribution. ion), etc. There are a large number of players 138 The Indian automotive industry is currently reeling from a dip in sales 135 Centre for Strategic and International Studies in FY 2020, which have plunged by 18% as compared to sales in 136 US Department of Energy FY 2019 137 Fleet Europe 139 Department of Heavy Industries, Government of India CHAPTER 5: EV Manufacturing 35 in the unorganized sector as well and the yy Phased Manufacturing Program (PMP): The total e-3W fleet in India has always been a PMP, introduced by the DHI, Government contentious subject. The unorganized sector is of India in 2019, lays out the government’s mostly involved in producing low-cost electric plan to stimulate domestic manufacturing rickshaws which utilize lead acid batteries and and assembly of EVs and EV components do not require Government registration due in India by inverting the Basic Customs to low speed and smaller batteries. Hence, no Duty (BCD) across EVs and EV components. definitive statistics are available of the total As per PMP, the Government of India has increased the BCD on completely built units number of rickshaws on the road. (CBUs) to 50%, while keeping it low for !! The electric 2W segment has the most completely knocked down units (15%) and manufacturers and models available. Both various key EV components (waived) such lead acid and lithium ion battery-powered 2Ws as regenerative brakes and control units. are available. Both established OEMs such yy FAME-II: Localization requirements: To as Hero Electric, Bajaj etc. and new entrants promote local EV manufacturing, the DHI, such as Okinawa, Ather, etc. are present in the Government of India has also mandated market. a minimum percentage localization !! The electric bus segment has seen some activity criterion for EVs applying for subsidy under due to procurement of electric buses by states FAME-II. The current localization criterion and city transport authorities. OEMs such as stands at 40% and 50% of total vehicle Tata Motors, Ashok Leyland, Goldstone-BYD, cost for buses and other vehicles etc. are present. respectively (2W, 3W and 4W). !! The Government of India, considering !! Apart from the initiatives by the Government the strategic importance of domestic EV of India, several State Governments have manufacturing, has introduced the following introduced their EV policies which provide fiscal initiatives to transition the Indian auto incentives for promotion of EVs and domestic manufacturing such as: EV manufacturing. Table 10: State EV Policy Highlights No. State Description 1 Andhra yy Separate tariff included (INR 6.95/kWh) for EV charging Pradesh yy Goal of 1 million EVs and 0.1 million slow and fast EV charging stations by 2024 yy Plans to stop registration of petrol and diesel cars by 2024 in the upcoming capital city of Amaravati yy All government vehicles, including corporations, boards and government ambulances to be electric by 2024 2 Bihar yy 15% subsidy on base price for first 1,00,000 EVs yy Incentive of Rs. 10,000 to e-rickshaw using lithium ion battery yy Manual paddle rickshaw to be upgraded/converted to electric by 2022 yy Exemption from registration fees and road tax yy Top-up subsidy of Rs. 8,000 if user is below poverty line or SC/ST category yy 25% capital subsidy for first 250 public charging stations yy Common charging points in residential areas, societies, bus depots, public parking areas, railway stations and fuel pumps yy Fast charging stations at every 50 kms on national/state highways 36 Electric mobility in India: Accelerating Implementation No. State Description 3 Chandigarh yy Government vehicles to be converted to all electric by 2025 yy All electric 3-wheeler auto, corporate vehicles, cabs and school buses by 2030 yy Subsidy of Rs. 20,000 for first 3,000 buyers of electric 2- and 3-wheelers yy First 1,000 EV buyer to get 1-year insurance for free yy Group purchase incentive of Rs. 30,000/vehicle yy 30% EVs parking slots in new parking spaces yy Subsidy of 30% on installation of home charging stations yy 15% subsidy for setting up public charging stations yy Dedicated EV charging lane in every sector of the city yy Incentivize battery recycling by providing Rs. 2,000/passenger vehicle and Rs. 20,000/ e-bus to battery recycling facility operator 4 Delhi yy Incentive of Rs. 5,000/kWh of battery capacity/vehicle, maximum up to Rs. 30,000/vehicle yy Delivery service providers to convert 50% of their 2-wheeler fleet to electric by 2023 and 100% by 2025 yy All new home/workplace to have 20% electric vehicle holding capacity (with required infrastructure) yy 100% grant for purchase of charging equipment for first 30,000 charging points yy 100% of net SGST accrued to Government shall be provided as reimbursement to the energy operators yy Charging station within 3 km travel from anywhere in Delhi 5 Gujarat yy 100,000 electric vehicles to be deployed during policy period across all categories with maximum share coming from electric 2-wheelers and 3-wheelers yy Research & Development centre for EV industry yy State Level Investment facilitation Centre for facilitating manufacturing units 6 Karnataka yy Separate tariff (INR 4.85/kWh) for EV charging yy 100% of three and four wheelers moving goods to transition to electric by 2030 yy Attract investments of INR 31,000 crores (US$ 4.2 billion140) yy Incentives for first 100 fast chargers 7 Maharashtra yy Target to increase number of EV registrations to 0.5 million yy Incentives and provisions for EV buyers of private/public passenger vehicles for five years yy Attract investments of INR 25,000 crores (US$ 3.4 billion141) for manufacturing 8 Madhya yy 1% motor vehicle tax for first 15,000 EVs/total EV 2-wheelers in 5 years, whichever less Pradesh yy Registration fees exemption for 22,500 EV 2-wheelers or total EV 2-wheelers in 5 years yy 1% motor vehicle tax for first 5,000 e-rickshaw/total e-rickshaws in 5 years, whichever less yy Exemption of vehicle registration fees for 7,500 shared e-rickshaw/total e-rickshaws in 5 years, whichever less yy 100% waiver in parking charges at all Urban Local Body run parking stations for 5 years yy 1% motor vehicle tax for first 5,000 EV auto rickshaw/total EV auto rickshaw in 5 years, whichever less yy Exemption of vehicle registration fees for 7,500 EV auto rickshaw/total EV auto rickshaw in 5 years yy 1% motor vehicle tax for first 2,000 EV 3-wheeler goods carrier/total EV 3-wheeler goods carrier in 5 years yy Exemption of vehicle registration fees for 3,000 goods carrier/total EV goods carrier in 5 years, whichever less 140 Exchange rate as of September 2020 141 Exchange rate as of September 2020 CHAPTER 5: EV Manufacturing 37 No. State Description yy 1% motor vehicle tax for first 6,000 EV cars/total EV cars in 5 years, whichever less yy Exemption of vehicle registration fees for 9,000 EV cars/total EV cars in 5 years, whichever less yy 1% motor vehicle tax for first 1,500 EV buses/total EV buses in 5 years, whichever less yy Exemption of vehicle registration fees for 2,250 EV buses/total EV buses in 5 years, whichever less yy Small Charging stations: 25% subsidy for first 300 stations (up to Rs. 1,50,000) yy Medium Charging stations: 25% subsidy for first 100 stations (up to Rs. 2,00,000) yy Large charging stations: 25% subsidy for first 100 stations (up to Rs. 10,00,000) yy Charging station at every 50 kms on highways 9 Punjab yy 25% share of electric 2-wheeler in new sales over the policy period yy 25% share of electric 3-wheeler (auto) in new sales in target cities over policy period yy 100% waiver on permit fee and motor vehicle tax during policy period for 3-wheeler goods carrier and 3-wheeler auto yy 25% share of electric 4-wheeler in new sales over the policy period yy 100% electric fleet in government departments and 100% waiver on motor vehicle tax for corporate fleets yy 25% of bus fleet under Transport department to be electric yy 25% capital subsidy for first 1,000 charging points yy Punjab E Mobility Centre of Excellence for skill development, R&D, collaboration 10 Tamil Nadu yy Attract INR 50,000 crore (US$ 6.8 billion142) in investments and create 0.15 million jobs in the electric mobility segment yy Special incentives to the EV and component manufacturers creating employment opportunity for at least 50 people yy 100% refund of State GST (SGST) for EVs made and sold in Tamil Nadu until 2030 yy Capital subsidy of 15% and 20% for investments in EV manufacturing and battery production, respectively till 2025 yy 15% subsidy on the cost of land for EV or parts production project in the state’s industrial parks. For projects started in southern districts, the investors will get 50% subsidies until 2022 11 Telangana yy State Transport Corporation has set a target of 100% electric buses by 2030 for intra-city, intercity and interstate transport yy Government vehicles (owned and contractual) to switch to all electric by 2025, in phased manner. Permits for private operators with EV fleet operations 12 Uttarakhand yy 100% exemption of permit for commercial vehicles for first 100,000 vehicles yy 100% exemption on Motor vehicle tax for first 100,000 buyers yy Training reimbursement to organizations imparting skill development at Rs. 1,000/month for 50 trainees 13 Uttar Pradesh yy 1,000 EV buses for public transportation by 2030 yy Green routes in major cities for 70% EV public transportation yy All government vehicles to be electric and 50% EV in private transportation in major cities by 2024 yy Encourage adoption of EV for goods transport in major cities yy 100% waiver on vehicle registration fees across all vehicle category during policy period and 100% road tax exemption for electric 2-wheelers and 75% for other EVs for first 1,00,000 buyers yy Promote adoption of EV in goods transportation with an aim to achieve 50% EV in goods transportation in major cities by 2024 and all cities by 2030 yy 25% capital subsidy for first 100 charging stations yy 20% subsidy to institutes providing training on EV and battery repair, maintenance 142 Exchange rate as of September 2020 38 Electric mobility in India: Accelerating Implementation 5.3 Key Market Challenges 3. Economic overdependence on auto- components sector 1. Dependence on imports for EV battery cells due to lack of a robust domestic supply The auto-components sector contributed to chain US$ 57 billion annual turnover, 4% of India’s exports and 5 million jobs in FY19146. Potential revenue loss Most Indian EV OEMs have not been able to and job loss in auto-component’s sector may be completely localize their manufacturing value chains high since EVs use about 1/100th the number of and are hence dependent on imports, particularly components compared to an ICE counterpart. from China, for batteries (packs and cells) and certain other components. This dependence leaves the Indian EV manufacturing industry vulnerable to supply 5.4 Key Issues in Implementation shortages. While some large OEMs are able to work 1. Lack of clear long-term roadmap for with their suppliers and achieve full localization (except automotive industry’s transition to electric battery cells), the sector-wide localization is yet to be vehicles achieved and will require significant investments in R&D, innovation and testing infrastructure. Also, due Currently, no clear targets and timelines exist to lack of scale in the initial stage, the investment for the auto manufacturing industry in India to required for testing will be huge in the initial years gradually transition from ICE manufacturing to EV and will be required to be amortized over the next manufacturing. No clear incentives exist for the auto few years143. manufacturing industry to make the transition. Global auto manufacturing hubs such as China and the USA, 2. Reduced focus of auto OEMs on EVs due have an incentive/disincentive mechanism for OEMs to government’s push for BSVI fuel norms to transition to EV manufacturing. The GoI had mandated Auto OEMs in February 2016 Such mechanisms coupled with demand-side to transition to BSVI fuel with stricter emission norms, subsidies have resulted in an increase in available effective April 2020. This timeline was four years products/models, competition amongst local OEMs shorter than the earlier prescribed timeline of April and as a result, higher uptake of EVs in these 2024 in the then prevailing Auto Fuel Policy 2025 countries. and involved skipping the BSV norms altogether144. Such a short transition timeline was unprecedented 5.5 Recommendations (three to four years in India vs. typically 7-10 years in Europe)145 and required an investment in the range 1. Create a long-term industry transition of INR 60,000–70,000 crores (US$ 8.2–9.6 billion) roadmap with strict enforcement of by the auto OEMs. Compliance with the BSVI norms intermediate targets required investing in the technology and significant changes in procurement and manufacturing Manufacturing mandates along a tradable credits processes which may have led reduced focus by program are one of the most effective ways to auto OEMs on EVs. increase EV adoption in a country147. China and several states in the USA (including California) have successfully leveraged a form of ZEV mandates to drive automotive OEMs towards increasing the numbers of available EV models. 143 Stakeholder Consultation 144 News Articles 146 ACMA 145 DNA India 147 Centre for American Progress (CAP) CHAPTER 5: EV Manufacturing 39 Case precedent ZEV and NEV policies to incentivize local manufacturing US and China • The auto industries in both, the US and China, contribute to ~3%148 and ~7.5%149 of the GDP. Both US and China have a similar credit system programs (ZEV Policy in the US and NEV Policy in China) to incentivize local manufacturing and sales of electric vehicles (BEVs and PHEVs). • California’s ZEV Policy mandates all OEMs selling vehicles in California to domestically manufacture a minimum number of EVs (PHEVs and BEVs). California’s ZEV Policy mandates all OEMs selling more than 4500 vehicles per year to achieve a minimum number of credits per year. • Credits are earned by manufacturing EVs (PHEVs and BEVs) or by trading with other applicable OEMs. The minimum number of credits required is a function of the domestic sales of the OEM and credits earned for an EV manufactured/sold is dependent on various factors such as range, speed, power train etc. • California Government plans to gradually increase credit requirements from 4.5% in 2018 to 22% in 2025. The ZEV mandate is expected to increase the market share of EVs in California to 8%. Ten other states representing 30% of all car sales in the US have also introduced the ZEV mandates. The Government of India (Department of Heavy 2. Develop a clear, technology-agnostic Industries) could work together with the SIAM, transition roadmap for auto-component SMEV and other industry bodies to develop an EV industry; design skilling programs and manufacturing transition roadmap mandating major re-skilling programs to tackle the lack of Indian OEMs to gradually transition a portion of EV-specific skills and job losses respectively their manufacturing capacity to EV manufacturing in the medium- to long-term. The roadmap could Considering the high potential job losses and revenue clearly mention the eligibility criteria for the OEMs losses associated with EV transition, a transition (minimum vehicles manufactured per year), the roadmap for the auto-component industry along with minimum number of EVs to be manufactured by skilling and re-skilling programs should be prepared. the OEM (based on percentage of ICE vehicles manufactured), the credits earned by manufacturers 5.6 Further Analysis and Studies per EV manufactured and timeline for transition. The credits generated can be made tradeable to Recommended disincentivize major OEMs which do not transition. The government could undertake further work on the Introducing such a mandate could: following aspects: !! Provide clarity to the manufacturers on !! Collaborate with SIAM, SMEV and other industry government’s long-term priorities bodies to assess the sector-wide impact (transition propensity, impact on revenues, !! Accelerate the manufacturing transition profitability, employment, etc.) and timelines of !! Increase the number of available models a possible manufacturing transition mandate. !! Increase cost-competitive models in the !! Collaborate with SIAM, SMEV and other industry market bodies to identify emerging technologies in the electric mobility space requiring incentives and Countries with high levels of auto manufacturing promotion by the Government of India. such as the US and China have implemented such !! Assess the challenges in technology mandates. development and innovation in EV & battery 148 The Balance sectors in India in collaboration with SIAM, 149 CIEC and Cornell University SMEV and Auto OEMs. 40 Electric mobility in India: Accelerating Implementation CHAPTER 6 Mining and Mineral Sourcing 6.1 Strategic Importance global demand for lithium, a key metal in lithium ion batteries, will be 10 times its demand in year The rise in global EV adoption is resulting in the 2017. Figure 17 depicts that minerals required in EV rising demand of various strategic150 and rare earth151 manufacturing will be the most in demand among minerals essential for manufacturing of EVs and minerals required in low-carbon technologies. lithium ion batteries. It is estimated that by 2050, Battery performance is highly dependent on the Figure 17: Estimated growth in demand for minerals battery chemistry and this in turn is driven by material needed for low-carbon energy technology as composition153. EVs are expected to account for a percentage of 2017 production by 2050152 about 85% of lithium demand and 65% of cobalt demand in 2025 from 50% and 52% respectively 965% in 2017154. Percentage growth in demand Although, lithium and cobalt are crucial for battery manufacturing, only 14% of the cost of battery pack 585% accounts for mining, sourcing and processing. Figure 18 shows the manufacturing cost breakup of 383% lithium-ion battery. 240% 173% Across the globe there are examples of countries 108% which have emerged as battery manufacturing 60% 37% hubs even without having reserves of these critical Molybdenum 11% Aluminium 9% Manganese 4% Copper 7% elements. Figure 19 shows the availability of critical Nickel Lithium Cobalt Graphite Indium Vanadium Silver Neodymium elements in various countries. We can observe that Brazil and Australia have abundant reserves but neither country is a hub for battery manufacturing. Minerals for low-carbon enetgy technology On the other hand, Japan and South Korea have 150 Strategic minerals are tin, cobalt, lithium, beryllium, germanium, poor or no reserves of these minerals, yet they have gallium, indium, tantalum, niobium, selenium and bismuth 151 Rare earth elements are 17 elements which have extremely less economically exploitable mineral ore deposits; neodymium and 153 MERCK - Lithium-Ion Battery Performance: Dependence on Material samarium are used in permanent magnets of motors Synthesis and Post‑Treatment Methods 152 World Bank report on Climate-Smart Mining: Minerals for Climate Action 154 EY Report: Produce or Procure? CHAPTER 6: Mining and Mineral Sourcing 41 Figure 18:  Cost Components for NMC Battery Pack155 169.8 Pack Production cost 19.7 67.4 Pack housing 39.4 51% Pack assembly Battery management system 11.2 Module control 8.4 Module housing 5.6 Thermal management 2.8 4.3 82.7 Cell 14% assembly 19.5 58.9 29% Cell production Other cell and 19.9 34% active material Component on (in USD / kWh) 39.0 cost 21% electrode manufacturing 6.7 34% Processing 71% Cell material 4.0 cost 13.6 24.2 4.1 66% CAM cost Mining, 56% Processing material 10.6 CAM raw 66% 14% sourcing and material 44% Raw material processing Raw material cost Raw material processing cost Refined raw material cost Elctrode production costs Admin costs Margin and mark-up Cathode active material (CAM) Other material cost Cell production costs Admin costs and R&D costs Cell total cost Pack material cost Pack production costs Total battery pack cost Cell raw material costs Mining, material Component on Pack sourcing and electrode Cell assembly assembly processing manufacturing emerged as battery manufacturing giants through is crucial for India to develop an ecosystem for robust technology innovations, global supply chains battery manufacturing, technology development and long-term sourcing contracts. and facilitating sourcing of raw materials through the global supply chain. It is widely observed that global battery manufacturers generally work with a global network of raw mineral suppliers, processed mineral suppliers and 6.2 Current Scenario component suppliers. This facilitates customizing the Apart from the estimated lithium reserves of around components to their specific requirements and helps 14,000 tonnes in Mandya district of Karnataka156, in moving the suppliers in lockstep with the frequent discovered by researchers at Atomic Minerals innovations in battery technology. Therefore, it 155 BNEF 156 The Economic Times 42 Electric mobility in India: Accelerating Implementation Figure 19:  Comparison of availability of critical minerals in various countries157 Graphite Cobalt Nickel Lithium South Africa Turkey United States+ Canada Colombia Cuba Guatemala Mexico Australia New Caledonia* P&G China Indonesia Philippines India Zimbabwe Madagascar Mozambique DRC Tanzania Zambia Portugal Argentina Brazil Chile Russia North Latin America Oceania Asia Africa Europe America 2017 Production Production dominated by China; India has significant graphite production : Turkey has significant reserves level but little production DRC and China largely control mine production/reserves and refined cobalt production respectively Production profile is well split across geographies Reserves are located in Chile, Argentina, Australia, China and Bolivia. Australia will be the largest National reserves lithium supplier as deposits in Chile/Argentina face issues in ramping up production Directorate, there is no information about any other under the remaining resources category. Although lithium reserves in India. As per the last update of the entire demand is met through imports, nickel the National Mineral Inventory in April 2015, there is also recovered as a by-product during refining is no production of cobalt in the country and the of copper. entire demand is met through imports. As on 1st April 2020, there were 45 million tonnes of cobalt158 It is noteworthy that India has rich bauxite mineral base which have been classified as remaining resources, and it is one of the largest producers of aluminum implying that it is not economically viable for in the world and the overall installed capacity is 41 mining. It is estimated that there are 188.86 million lakh tonnes159 in 2017-18. There is a total of 1.51 billion tonnes of nickel ore in India, but it is entirely placed tonnes of copper reserves in India and the production of copper ore was 3.68 million tonnes160 in 2017-18. 157 EY Analysis, USGS 159 Indian Minerals Yearbook 2018 158 National Mineral Inventory 160 Indian Minerals Yearbook 2018 CHAPTER 6: Mining and Mineral Sourcing 43 A total of 194.89 million tonnes of graphite reserves plant’s capacity to 30 GWh in due course166. Libcoin are present across the country with production of is a consortium comprising Magnis Energy, Duggal 33,558 tonnes161 in 2017-18. Although, India has rich Family Trust and Charge CCCV(C4V) and has plans to mineral resources, it does not have enough reserves build large lithium-ion battery giga-factories globally. of critical elements. The current scenario of sourcing With the rise in battery manufacturing plants in India, critical elements is heavily dependent on imports there is a need to have a robust and reliable supply of which indicates that there is a global supply chain in raw materials through global supply chains. place to cater to the demand for critical elements. The Government of India launched Khanij Bidesh 6.3 Key Market Challenges India Limited (KABIL) to identify, invest and acquire global reserves to meet India’s future demand of 1. Lack of adequate demand for lithium the critical minerals such as lithium, nickel, cobalt, batteries to justify the huge investments etc. The Khanij Bidesh India Ltd. (KABIL) is a joint required for domestic manufacturing venture company set up by a consortium of three India currently has a small demand from EVs for Central Public Sector Enterprises, namely: National lithium ion batteries. To put it into perspective, in Aluminium Company Ltd. (NALCO), Hindustan FY19, the sales of e-4W in India was 3,600 units only Copper Ltd. (HCL) and Mineral Exploration Company against global EV sales of ~2 million in 2019167. The Ltd. (MECL)162. The KABIL team visited mines in overall demand lithium ion battery from EVs was Argentina, Bolivia and Chile in February 2019 and below 2 GWh in FY19168 against the global EV-based now the follow-up activities are underway although lithium ion battery demand of 160 GWh169. Such a there has not been any breakthrough yet in terms small quantum of demand and lack of clarity on future of strategic agreements with these countries for demand has kept the battery OEMs away from making mineral procurement. However, India and Australia investments in battery manufacturing, especially in have recently signed an MOU for supplying critical cell manufacturing, in India. minerals to India including lithium, cobalt, zircon, antimony, tantalum and other rare earths163. 2. Unavailability of battery minerals in India A few private companies in India have announced Due to lack of data on potential lithium reserves in plans to set-up lithium ion battery manufacturing plants India, there is a lack of confidence in investors to in India. TDSG is the India’s first lithium-ion battery invest on lithium exploration in the country. Since manufacturing plant in Gujarat which is being set there are no lithium battery cell manufacturing up joint venture between Suzuki Motor Corporation companies in India, there is no demand for domestic (50% equity stake), TOSHIBA Corporation (40%) raw lithium. Therefore, the government has not yet and DENSO Corporation (10%) to manufacture and invested in exploration of the potential of lithium supply lithium-ion battery to Maruti Suzuki and Suzuki reserves in India. This is a vicious cycle where the Motor in Gujarat164. Tata Chemicals has acquired investors would not come forward without knowing land in Dholera, Gujarat165 to set up the lithium-ion the potential and the government might not invest in cell manufacturing plant. As of January 2019, Bharat expensive exploration exercise if there is no demand Heavy Electricals Limited (BHEL) and Libcoin were in from the market for raw lithium. The stakeholders from a dialogue to build a 1 GWh lithium ion battery plant battery storage industry have also voiced opinion that in India. MoHIPE recently quoted plans of scaling the India has not explored whether there are adequate 161 Indian Minerals Yearbook 2018 162 Ministry of Mines 166 Saur Energy 163 Minister for Resources, Water and Northern Australia 167 Global EV Outlook 2019 164 TDSG 168 EY analysis 165 Live mint 169 BNEF 44 Electric mobility in India: Accelerating Implementation Figure 20: Global lithium production, 2018 Figure 21: Global cobalt production, 2018 4% 10% 28% 12% 41% 217 kmt 147 kmt 72% 33% kmt: kilo metric tonnes (1000 metric tonnes) kmt: kilo metric tonnes (1000 metric tonnes) Australia Chile Argentine China Others DRS Others reserves of lithium and therefore they are not aware restrictions, economics and infrastructure. These of its potential in the country. factors also result in concentration of critical minerals in only a few regions. China accounts for nearly one- 3. Geographical concentration of global third of the global demand for lithium given that reserves it manufactures the largest number of batteries in the world. The dominance of China over cobalt and As of 2018, nearly 41% of the global lithium production lithium production is depicted in Figure 22. was in Australia and Chile produced 33%. China has emerged as a leading manufacturer of Close to 80% of global lithium production is EVs and batteries and therefore controls significant concentrated in the three South American countries portion of global lithium supply and a higher share and Australia170. of the refined cobalt market than any other nation. Also, 51% (3,600,000 MT) of the world’s total cobalt Globally, it also holds 75% electrolyte market, 75% reserves are located in the Democratic Republic of anode materials market, 62% cathode materials Congo while contributing to 72% of global cobalt market and 45% of the separators market171. production, as of February 2020. 5. Continuously evolving battery technology 4. Concentrated ownership of mines and goal post poses stranded-asset risk to processing plants of key mineral reserves public investments in mines globally globally It must be noted that lead acid battery is the oldest Apart from uneven distribution of mineral reserves, rechargeable battery with a history of 150 years and supply is also constrained by several factors such has retained its market share over years due to its as technical challenges (in geology and extraction), cost-effectiveness and low self-discharge of 40% per politics, laws, environmental regulations, land 170 Resource Capital Report 171 Clean Technica CHAPTER 6: Mining and Mineral Sourcing 45 Figure 22:  Presence of China in Cobalt and Lithium production172 80% 50% All the 45% 34% refined 30% cobalt Refined content in 25% Lithium Mine cobalt chemical Mine supply chemical 1% supply supply 5% ownership production owned by Mine supply and o take Chinese owned by agreements Cobalt mine Lithium mine Chinese output output from companies China China China’s position in the battery raw materials market year 173. The evolution of lead acid batteries has not business and return on investment. There are no fiscal been as rapid or as volatile as lithium ion batteries. incentives provided to the private sector companies Over the past 25 years, Li-ion batteries have that engage in exploration activities176. improved and patents in this field have increased In addition, the government’s key scheme for almost threefold from 2010. In 2015 alone, nearly supporting EV adoption (FAME-II scheme) has a 4,800 patents174 were filed for the research activity timeline of support of only three years (FY19-FY22), undertaken in li-ion technologies. with no visibility on possible extension of support. Owing to such rapid pace of innovations, there is a Such short timeframe for the subsidy support towards significant risk in investing, owning and operating mines EV adoption adds further uncertainty to investors related to key battery minerals. Battery chemistries and making large battery manufacturing investments with their compositions are continuously changing. Tesla, long payback periods. for example, reduced the cobalt content in its battery by 88% from 2010 to 2018175 to tackle the challenges of 2. Lack of government initiatives for public unstable supply and volatile prices. private partnerships There is no restriction on private sector companies 6.4 Key Issues in Implementation to undertake explorational activities, but they are not given any mineral concessions other than 1. Lack of policy and regulatory support for those through auction. Further, there are no fiscal private sector investment incentives provided or government partnerships The involvement of private sector in mining sector offered to the private companies which could in depends on the availability of baseline geoscientific turn reduce the risk on investment for expensive data, public access to the data, ease of doing explorational activities. 172 EY Analysis (Produce or Procure?) 173 Battery University (compared to NiCd Batteries) 174 Future of Batteries – Arthur D Little 175 BNEF 176 National Mineral Exploration Policy: Base paper for discussion 46 Electric mobility in India: Accelerating Implementation 6.5 Recommendations !! Evaluate entry into long-term preferential trade agreements with countries rich in reserves to facilitate procurement of minerals for 1. Support private sector mineral sourcing battery manufacturers and EV manufacturers and investments in mines globally establishing manufacturing units in India. through government to government (G2G) !! Ensure procurement of minerals through facilitation rather than undertaking public responsible sourcing network (devoid of investments child labor and human rights abuse) and New lithium mines are being discovered across the from mines which employ sustainable mining globe, for instance, reserves amounting to 60% of techniques. global reserves, as on 2018, are estimated to be discovered in Australia, the USA, Canada and Mexico 6.6 Further Analysis and Studies by 2027177. Also, significant advancements are being made in lithium extraction technologies. As an Recommended example, Albemarle, the largest global lithium miner, The government could undertake further work on the is expected to increase lithium extraction efficiency following aspects: by 56%178. With such developments, the industry !! Assess the bottlenecks in mining sector for believes that there are sufficient lithium reserves on the stakeholders and undertake measures the earth’s crust to power EVs globally179. to expedite the completion of National Aero- Geophysical Mapping Project182, National Furthermore, an integrated global supply chain Geochemical Mapping (NGCM), National has emerged for lithium and other battery minerals Geophysical Mapping (NGPM)183 programs. whereby major battery manufacturers and global It is also essential to prepare the Obvious mining companies are entering into long-term lithium Geological Potential (OGP) maps on priority for supply agreements now (for 7-10 years) compared to critical minerals. short-term agreements (for two to three years) almost !! Capacity building programs with national and four years ago180. These developments combined international research organizations for north- with relatively low contribution of minerals in final south and south-south knowledge exchange product price (<15%), have meant that concerns on global best practices in exploration and of battery manufacturing OEMs around mineral sustainable mining of critical minerals. sourcing are low181. !! Economic feasibility analysis to study the In line with this, the Government of India should take an impact of reduction in import duty of raw overview of whether the global demand for batteries materials on the exchequer. can be met with present global reserves. Support !! Identify the amendments or new additions from the government in the form of bilateral trade required in trade-agreements with mineral- agreements would help the domestic manufacturers rich countries to secure supply for current and to access minerals from foreign countries. The key future battery manufacturers in India. actions recommended are: 177 BNEF 178 BNEF 179 Industry consultation 180 BNEF 182 Ministry of Mines 181 Industry consultation 183 National Mineral Exploration Policy – Base paper for discussion CHAPTER 6: Mining and Mineral Sourcing 47 CHAPTER 7 Battery Manufacturing 7.1 Strategic Importance Setting-up a domestic battery manufacturing ecosystem could be of strategic importance to India Globally, countries such as China, the US and Germany as well to: have launched national-level plans promoting domestic battery manufacturing184 to achieve export- !! Maintain automobile industry’s high economic competitive manufacturing competence and serve contribution domestic and global demand for EV batteries. The automobile industry contributes to more Table 11: Battery manufacturing incentives than 7% of India’s GDP and roughly 49% of its manufacturing GDP188. It also employs Country Battery manufacturing incentives 30 million people directly or indirectly189. China185 yy Increasing entry barriers for foreign Considering the industry’s high contribution to manufacturers by subsidizing vehicles India’s economy, the global transition from ICE powered by batteries manufactured vehicles to electric vehicles, batteries’ high in China value share (30-50%) in an EV and India’s yy Creating demand through EV subsidies and a vast state-funded lack of domestic battery manufacturing, charging infrastructure network it should be of strategic importance for yy Other national-level and province- India to set up local battery manufacturing. level R&D support The auto OEMs would also prefer to US186 yy Direct funding (grant and debt) or have battery manufacturing close to the tax benefits to companies across the EV manufacturing units (approximately within battery manufacturing value chain 100 km radius)190. Germany187 yy Direct funding (grant) to multiple vehicle OEM – battery manufacturing !! Reduce risk of import dependence on consortiums based on technical batteries competence One of the key drivers for Government of 184 Scope includes component manufacturing, cell manufacturing India to promote EV uptake is India’s high and pack assembling (including battery management system). Only vehicle and power sector applications of batteries have been dependence on imported oil. India currently considered. Other applications such as consumer electronics, naval and aerial applications etc. have not been considered 185 Centre for Strategic and International Studies 188 SIAM 186 US Department of Energy 189 Rocky Mountain Institute 187 BNEF 190 Stakeholder Consultation CHAPTER 7: Battery Manufacturing 49 Table 12: Battery cost percentage of total vehicle cost as diesel and petrol in the transportation sector193. 2W 3W 4W Bus In a hypothetical scenario where all the 2W, Average 1.5 3 25 240 battery capacity 3W, 4W, SCVs and Buses sold in FY19 were (in kWh)191 electric, the import bill for the EV batteries will amount to US$ ~25 billion (as highlighted Average battery 45,000 90,000 7,50,000 72,00,000 cost (in INR) below in Table 13). Average vehicle 75,000 2,20,000 13,00,000 1,50,00,000 India currently has no cell manufacturing cost (in INR) capacity while China currently holds almost Battery cost % 60% 40% 57% 48% two-thirds of global battery manufacturing of vehicle cost capacity and is a global exporter. !! Leverage the global industrial opportunity to meets ~80% of its crude oil requirement boost GDP and create jobs through imported oil and therefore expects to reduce this dependence through proliferation The annual global battery demand is projected of EVs. EV sector in India is still in the nascent to reach ~2600 GWh, ~14 times the current Table 13: India’s estimated, hypothetical battery import cost for 100% electrification of FY19 sales India’s hypothetical annual battery imports (at 100% EV sales for FY19 and 100% battery import dependence) Vehicle segment Annual sales Battery size Annual battery Annual battery import194 (in million) (in kWh) requirement (in GWh) (in US$ billion) 2W 21 1.5 31.5 5.5 3W 0.7 3 2.1 0.4 4W 3.3 25 82.5 14.4 Small CVs 0.5 10 5 0.9 Buses 0.08 240 19.2 3.3 Total 140.3 24.5 stage and therefore the present demand for demand, by 2030195. This rise in demand EVs and batteries can be met through imports. presents opportunities for nearly US$ 260 However, an EV uptake in India without a billion investment196 and creation of 10 million domestic battery manufacturing industry poses jobs197. the risk of transferring a part of India’s import dependence from oil to foreign-manufactured 7.2 Current Scenario batteries. India’s average annual oil import bill over the past decade (FY2010 - FY2020) !! Globally, China leads with the highest has been US$ 107 billion. About 40% of this battery manufacturing capacity (75% of oil consumption (quantity wise)192 was used 193 Petroleum Planning and Analysis Cell, MoPNG, Government of India 191 Hero Optima (2W), Tata Tigor (4W), Mahindra eTreo (3W) and 194 US$ 175 per kWh assumed for battery cell cost Olectra K9 (bus) considered for prices. INR 30,000 per kWh used as 195 World Economic Forum battery cost 196 Setting up 1 GWh lithium ion battery manufacturing capacity requires 192 Ministry of Petroleum and Natural Gas (Indian Petroleum & Natural US$ 100 million in capital. Source: NITI Aayog Gas Statistics 2015-16) 197 World Economic Forum 50 Electric mobility in India: Accelerating Implementation Figure 23: Global battery manufacturing capacity !! Even for NMC, the technology is in continuous by chemistry development to reduce the dependence on scarcely available cobalt. Manufacturers are gradually transitioning towards lower cobalt 18% chemistries - from NMC (1,1,1) and NMC (6,2,2) to NMC (8,1,1) as technical and financial feasibility is achieved. Tesla too has reduced cobalt 2% content in its batteries by 88% since 2010 and is aiming to reduce it by 97% by 2021198. 7% 367 GWh 55% Figure 24: Cobalt usage reduction in Tesla’s batteries across years Cobalt units in Tesla’s batteries 17% 100 12 <3 Cobalt units Cobalt units Cobalt units 2010 2018 2021 NMC LFP NCA LMO N/D !! India currently has 2 GWh capacity of global capacity), followed by the US (9%) assembling battery packs. However, it lacks and South Korea (7%). The sector is led by any manufacturing capacity for battery cells five manufacturers - LG Chem, CATL, BYD, which comprise up to 35% of the battery cost Samsung SDI and Tesla – which capture 41% and are the most technologically intensive of the global capacity. Companies such as component in a battery. CATL, LG Chem and Samsung SDI are pure !! All Indian OEMs currently use imported battery vendors and provide different types of battery cells in their vehicles. Indian OEMs battery products to electric vehicle OEMs and have the manufacturing capabilities to locally stationary storage project developers. While manufacture all EV components except battery Tesla and BYD are vertically integrated as their cells. Investment for battery assembly is not a manufactured products are mainly intended huge challenge, but cell manufacturing would to meet the internal demands from their need large amount of investment because EV divisions. the cell market is fragmented by multiple cell !! The battery manufacturing value chain can be technologies. divided into four main value segments. The key !! The Government of India, considering component of the battery, the cell (including all the strategic importance, has undertaken raw materials and components), can constitute the following supply-side initiatives to up to 50% of the battery’s cost. attract investments in domestic battery manufacturing. !! NMC and LFP chemistries, with 55% and 17% of the existing 367 GWh global lithium- yy Setting up of a National Mission on ion cell manufacturing capacity, are the Transformative Mobility and Battery existing chemistries of choice amongst global Storage: battery manufacturers. However, the battery Launched in March 2019 with an Inter-Ministerial chemistries are in a status of continuous Steering Committee consisting of representation flux with new chemistries being evolved for high efficiency, cost effectiveness and other (Secretaries) from all key ministries such as MoRTH, considerations. 198 BNEF CHAPTER 7: Battery Manufacturing 51 MoP, MNRE, MoHIPE and DST and is chaired by CEO, yy Identified and acquired encumbrance-free NITI Aayog. It is responsible for providing policy land recommendations for developing a domestic EV and yy Requisite trunk infrastructure such as battery manufacturing ecosystem199. electricity, water, road connectivity, etc. at the project site !! Scheme for incentivizing establishment of domestic battery manufacturing200: yy Other state-level tax benefits The Union Cabinet has approved the A grand challenge amongst the states is Production-Linked Incentive (PLI) Scheme planned to be conducted to match states with in the 10 key sectors for Enhancing India’s suitable manufacturers202. Manufacturing Capabilities and Enhancing !! To ensure demand for domestic content, the Exports – Atmanirbhar Bharat. Advance Department of Heavy Industries, Government Chemistry Cell (ACC) Battery is one of the these of India has also mandated a minimum key sectors with a financial outlay of US$ 2.4 percentage of localization criterion for EVs billion over a five-year period. The scheme for applying for subsidy under the FAME-II ACC battery implemented by NITI Aayog and scheme. The current localization criterion Department of Heavy Industries will incentivize stands at 40% and 50% of total vehicle cost for large domestic and international players in buses and other vehicles respectively (2W, 3W establishing a competitive ACC battery set-up and 4W). in the country. As per NITI Aayog, Advanced Chemistry 7.3 Key Market Challenges Cells (ACC) and batteries are defined as new generation cells and batteries such as lithium 1. Lack of domestic supply chain for cells polymer, lithium iron phosphate, lithium and cell components cobalt oxide, lithium titanite, Lithium Nickel Manganese Cobalt, Lithium Manganese oxide, The battery manufacturing value chain consists of Metal Hydride, Zinc air, Sodium air, Nickel Zinc, mineral processing, component manufacturing, cell Lithium Air and other chemistries that may be manufacturing and pack assembling. Of the four notified by the government from time to time. value chain segments, India currently has extremely limited manufacturing capabilities (2 GWh) and that Alongside the scheme, the Government has also too only in assembling battery packs. China, on the launched a phased manufacturing plan (PMP) other hand, has a global dominance across the value which effectively inverts the basics custom duty chain. Two-thirds of cell manufacturing and cell- (BCD) structure applicable on batteries and component manufacturing capacity lies in China. battery components thereby making it more These local supply chains have been developed by feasible to manufacture batteries domestically promoting Chinese battery manufacturers through than importing. policies such as mandatory domestic procurement of !! Proposing the introduction of single-window batteries by OEMs and battery manufacturer-specific clearance mechanism for manufacturers201: fiscal incentives. The NITI Aayog is in discussions with various The robust domestic supply chains and the huge states to provide state-level incentive packages manufacturing scale make Chinese manufactured consisting of: batteries globally cost competitive. Battery packs assembled in India are 15-20% more expensive than 199 PIB release 200 Stakeholder consultation 201 Stakeholder consultation 202 NITI Aayog consultation with Indian industry 52 Electric mobility in India: Accelerating Implementation a battery pack imported from China203. Given the applications such as electric vehicles and energy lack of scale in domestic demand, manufacturing storage. capacities in India are 10 to 20 times smaller than in China; at such scale difference, the manufacturing 2. Global battery manufacturers have cost turns out to be 15%-20% higher in India already made investment commitments in compared to China. other countries The US and the European Union have also ensured The existing annual global lithium-ion cell the development of an end-to-end domestic manufacturing capacity is 367 GWh. Over 75% of battery manufacturing supply chain by funding this capacity lies in China, followed by US (33 GWh, and incentivizing battery players across the value ~9%) and South Korea (27 GWh, ~7%). According chain204 including component suppliers, material to the announced plans and under construction processors etc. manufacturing battery manufacturing plants, the existing annual cell manufacturing capacity is 2. Lack of clear demand visibility for battery expected to increase by 237% to 1,238 GWh by manufacturing industry 2023. This addition of 871 GWh over the next 3 years will witness expansion of existing capacities in China As mentioned above, battery packs assembled in (61% of all capacity additions will be in China), Europe India are [15-20%] more expensive than a battery (13% of all capacity additions) and US (11% of all pack imported from China. This has driven Indian EV capacity additions). manufacturers away from domestically assembled battery packs. The existing cost difference was 3. Inadequate battery localization (for Indian aimed to be bridged by subsidies provided under conditions) and testing infrastructure for the FAME-II scheme for domestically sourcing at least same 50% of EV components. India currently imports 100% of battery cells205. However, the subsidy levels under current FAME-II However, the cell technologies developed abroad scheme are inadequate to cover the cost of more (China, Japan, South Korea, USA) are generally expensive India- made batteries, thus driving Indian optimized for relatively colder climate and may not EV manufacturers, particularly e-2W OEMs, to procure be suitable for hot and humid climatic conditions in cheaper Chinese batteries and forego subsidy in India. For example, the ideal temperature range for order to manufacture cost competitive EVs. operating Li-ion batteries is between 15 to 35 degree Celsius. The cycle life of Li-cell begins degrading 7.4 Key Issues in Implementation rapidly beyond this range. According to research, at 15 degree Celsius, an LFP cell loses around 7% 1. Inadequate R&D support on Advanced capacity after 2,628 cycles while at 45 degree Celsius, Chemical Cells (ACC) and batteries it loses 22% capacity after only 1,376 cycles206. India has always been dependent on the imported With such high temperatures constantly observed batteries for fulfilling its growing distributed energy in large parts of India during summer, battery needs. The increasing dependence on batteries for performance could be impacted, if not optimized various applications would require an enhanced for Indian conditions. Losses in battery capacity approach on the R&D of batteries for different will reduce the vehicle range and hasten battery replacement. Further, the speed of charging may 203 Stakeholder Consultation 204 American Recovery and Reinvestment Act, 2009 – 111th US 205 Department of Science and Technology, Government of India Congress 206 Auto Tech Review CHAPTER 7: Battery Manufacturing 53 have to be reduced to avoid battery overheating, sector along with adequate policy and fiscal support thereby increasing the time required for charging. and ensure that tenders are not cancelled. Such firm Even power discharge rate may need to be reduced commitments for battery demand creation are critical at high temperatures thus reducing top speed and to provide confidence to companies to invest battery acceleration. In extreme cases, the vehicle operations manufacturing sector in India. may have to halted until the battery pack cools While implementing the above, the government down, otherwise overheating might cause severe should adopt technology agnostic approach and safety risks207. These factors highlight the need for avoid putting too many constraints or specifications investments in R&D towards developing indigenous for subsidy eligibility and subsidy computation. battery technologies that are optimized for Indian conditions. 2. Provide long term demand creation incentives and favorable regulatory support 7.5 Recommendations for the electric vehicles and power sector 1. Provide long term policy clarity and Demand, the primary driver for setting-up battery firm target commitments in downstream manufacturing, can be stimulated through applications such as electric vehicles government programs, policy measures and and battery storage power systems in a regulatory mechanisms. Globally, major battery technology agnostic manner manufacturing hubs such as China, the US, etc. have strong government-led demand creation The ticket sizes of battery manufacturing investments programs and regulations across the vehicle and are quite large (< US$ 1 billion for 10 GWh) due to grid segments. requirement of scale for cost effective production and to compete with similarly large (or larger) global A few possible demand creation initiatives across the battery suppliers. Further the payback periods vehicles and power sector applications are enlisted are long. To justify such large and long- term in the Table 14. investments, demand clarity and policy direction is EV demand creation initiatives have been discussed very important. in detail in the EV deployment segment. Government should provide a clear long-term roadmap for battery manufacturing and electric 3. Support battery OEMs in setting up vehicles sector and enshrine certain targets through battery manufacturing facilities through a formal policy declaration. Such a roadmap could provision of trunk infrastructure and single aim to provide clear targets of the Government window clearance of India for expected manufacturing capacity, Across the battery manufacturing value chain, investments, incentives, timelines and demand sourcing and production are mostly dependent on generation support. The government should also the manufacturer’s supply relations, manufacturing increase the duration (years) and budget (INR crores) capacity, technology and business competence. of FAME-II scheme intended to provide support These value segments therefore require minimal to for adoption of electric vehicles and creation of moderate government support, particularly since charging infrastructure. success in these value chain segments depends on In addition, the government should provide firm the manufacturer’s competence. trajectory for battery storage projects in the power The government should support battery OEMs through provision of trunk infrastructure. Battery 207 Stakeholder consultation 54 Electric mobility in India: Accelerating Implementation Table 14:  List of possible initiatives for demand creation 5. Increase investment in battery R&D develop new battery technologies optimized No. List of possible demand creation initiatives for local conditions Power sector demand creation initiatives The Government of India should include funding 1. Introduction of regulations to enable market or provide incentives for peaking capacity, ancillary towards R&D for indigenous battery technologies services and V2G in the FAME-II scheme or other suitable schemes. 2. Introduction of clean peak mandates (renewables + Challenge grant programs should be initiated and battery) for utilities wherein a percentage of peak opened to public and private sector organizations demand of a utility are required to be met by engaged in battery R&D. Further, technical renewable energy collaborations and knowledge-exchange program 3. Provision of incentives for rooftop solar + battery with R&D labs and organizations in other countries installations should be supported. 4. Release of firm-trajectory for renewable + battery storage tenders by public-sector power 6. Increase investment in testing producers infrastructure and ensure strict testing 5. Introduction of replacement mandates for DGs on standards to alleviate consumer concerns islands and isolated areas around battery performance and safety Power sector demand creation initiatives 6. Introduction of EV transition trajectory for ride- Currently only government funded testing labs hailing and logistics fleets are eligible to conduct testing. This has often led to constrained testing capacity209. To support 7. Promote electric 3W retrofitting through easier testing and subsidy provision its ambitions in electric vehicles and battery manufacturing sector, the government should increase investments in testing infrastructure. It manufacturing parks could be set up, providing could also allow private sector labs to conduct all requisite trunk infrastructure208, as in the case certain types of testing while ensuring integrity in the of solar parks, can be developed by the state process through accreditation and strict monitoring. governments. And a single window clearance mechanism should be implemented for provision of The government should also ensure that certain all regulatory, environmental and other clearances. strict standards for determining performance. Such parks will encourage domestic manufacturing Otherwise a difference could emerge between and job development and can also be used for OEMs claims of battery range and the real-world setting-up recycling plants. performance, which will significantly undermine consumer confidence in EVs. 4. Implement a stable customs duty regime on battery imports in consultation with 7.6 Further Analysis and Studies automotive OEMs and battery OEMs Recommended A suitable and stable customs duty regime which The government could undertake further work on the enables domestic manufacturing opportunities following aspects: should be implemented by the Government over a 5 !! Possible cost-competitiveness of developing to 10 years period (instead of just a one to two years a li-ion battery ecosystem in India for period). This will support the industry in planning for domestically manufactured batteries against capacity, investments and pricing. imported batteries. 208 Land, power, water, drainage, connectivity with highway & port 209 Stakeholder consultation CHAPTER 7: Battery Manufacturing 55 !! Economic impact (additional incentives to claimed performance and real-world be allocated) due to inclusion of material performance. processing and cell component manufacturing !! Existing capacity of policy makers, regulators, under the NITI Aayog battery manufacturing grid operators, transmission and distribution scheme. organizations on ancillary services. Design !! Development of pricing and incentive capacity building programs suited to the needs frameworks for ancillary services. Conduct of the above-mentioned stakeholders. assessments to determine pricing for different !! Economic impact (additional incentives to be services across different states. allocated) of introducing the demand creation !! Assessment of battery performance standards initiatives mentioned in the recommendations with a view to reduce the variation between section. 56 Electric mobility in India: Accelerating Implementation CHAPTER 8 Battery Recycling and Second Life 8.1 Strategic Importance used batteries is an expensive process and strong demand is required to justify capital investments. The key elements in a lithium ion battery such as Around the world, close to 96% of the lead acid lithium, cobalt, nickel, manganese and aluminum batteries are recycled210. The corresponding can be recovered through recycling processes. But recycling percentage for li-ion batteries is only the transportation, disassembly and recycling of around 5% globally. Figure 25: Battery value chain Few battery shapes/chemistries are not suitable for repurposing 50%-70% capacity left No longer fit for repurposing Battery use in EV Repurposing Recycling Auto Key sectors and stakeholders Auto OEMs Auto OEMs Auto OEMs Power management P&U Battery manufacturers Power generation cos. EV charging infra provider EV charging infra provider Battery Recyclers Mineral trading cos. Metal and mining cos. M&M Telecom infra Recycling not very profitable currently, largely being done under regulatory pressure Electric Vehicles Grid Co-location Behind the Uninterrupted Micro-grids storage meter power supply (UPS) Use-cases Available Batteries as the Batteries used Batteries in Batteries used Batteries used Batteries used key power sources to support conjunction by households by companies to electrify for EV’s mass energy with renewable to guarantee to provide back remote provision sources power supply up services locations 210 IESA CHAPTER 8: Battery Recycling and Second Life 57 An estimated 11 million tonnes of batteries would a business case for reuse214. If done properly, reuse reach end of life and they would have to be discarded and recycling, both would be more economically by 2030211. In view of this, both from sustainability and environmentally benign than new li-ion battery and energy security perspectives, battery recycling energy storage packs. This would set up exciting becomes important. possibilities for the Indian domestic market and for other developing countries. Focus on recycling and The battery value chain of use, reuse and recycle is reuse is expected to increase as it would directly depicted in Figure 25212. support circular economy initiative in India. Battery recycling is important for India as it has extremely limited reserves213 of critical minerals 8.2 Current Scenario required to manufacture lithium ion batteries. To reduce the burden of importing raw materials, it is The battery recycling ecosystem in India is still essential to recover as much as possible of the raw in its nascent stage. Some of the key issues and components from the used batteries. Recycling will developments in this sector are given below. also help solve the problems of waste disposal and !! Lithium-ion batteries dominate the global pollution due to hazardous chemicals present in market of rechargeable batteries. In India, a batteries. Further, mining and purification processes few companies are involved in lithium battery consume high energy and therefore recycled metals recycling. The list of companies involved can reduce energy consumption and emission of in lithium battery recycling is given in the greenhouse gases from these processes. table below: Second life of batteries is refurbishment of used From the table, we can see that mechanical and batteries. Only if sufficient number of EVs are sold hydrometallurgy are two dominating recycling in the country, the end-of-life batteries would make technologies implemented in India. It must Table 15: Companies working on battery recycling in India215 No. Recycler Location Recycling capacity Technology Partnership (in MTA*) 1. Tes-Amm Chennai/Singapore 1200 Mechanical and Recupyl (Singapore) Hydro-metallurgy 2. Attero Recycling Noida 5000 Electro and Hydro- In-house patents metallurgy 3. SungEEL HiMetal Anantapur 5000 Hydro-metallurgy In-house patents 4. E-Parisaraa Bengaluru 2000 Mechanical SungEEL India 5. EcoReco Mumbai 1200 Mechanical Nippon Recycling 6. Eco Tantra Pune 350 Mechanical Nippon Recycling 7. Eximo Recycling Vadodra/Surat 1200 Mechanical N/A 8. Surbine Recycling Jamnagar 1500 Electro and Hydro- In-house patents metallurgy *Metric Tonnes per Annum 211 BNEF 212 EY Analysis 214 Stakeholder Consultation 213 National Mineral Inventory 215 India Energy Storage Alliance (2019) – Battery Recycling 58 Electric mobility in India: Accelerating Implementation be noted that the key advantage of these lithium-ion batteries. The table below lists the content technologies is low energy consumption216 but of metals in lithium-ion batteries. these techniques are also highly resource-intensive Therefore, it is not economically viable to recycle it and therefore strongly influenced by economic as compared to sourcing raw lithium. Presently, the constraints217. salvaged value of metals is low as compare to cost of !! In September 2019, Tata Chemicals launched recycling; this compounded with lack of demand for lithium ion battery recycling operation in recycled lithium hydroxide and nickel makes recycling Mumbai. Li-ion battery recycling could recover unviable in most cases. valuable metals like lithium, cobalt, nickel and manganese at 99% plus purity218. 2. Technology challenges and safety !! In February 2020, the Ministry of Environment, concerns Forest and Climate Change released the draft rules219 titled Battery Waste Management Around the world, the existing battery recycling Rules, 2020. It was a significant step towards infrastructure is geared towards lead acid battery delegating responsibilities to stakeholders recycling. There have been instances where fires across the value chain. have been reported when lithium ion batteries undergo recycling processes221. Due to the chemical 8.3 Key Market Challenges composition of lithium-ion batteries, it can cause runaway thermal reaction222 if exposed to excessive 1. Currently unattractive business case for heat from inside or outside the cell. establishing battery recycling units Lithium cells contain organic electrolytes which It must be noted that lithium-ion battery recyclers are flammable and therefore any damage to the would have to first assess the used batteries and cell leads to discharge which generates heat and designate them for reuse or recycle based on the causes explosion. Due to uncertainty around battery type of minerals and their quantities present in the technology, there cannot be a standardized process battery. This process consumes time, energy and of recycling and all battery chemistries are not suitable is expensive. Further, Lithium comprises of only for repurposing. 3.84% to 7.86% of the active cathode material of Table 16: Typical lithium-ion battery cell composition220 Active cathode NMC(111) NMC(622) NMC(811) LCO NCA LMO LFP material 34.1% 31.8% 31.1% 35.3% 30.4% 40.1% 32.2% Elemental composition of active cathode material Lithium (Li) 7.86% 7.82% 7.79% 7.09% 7.22% 3.84% 4.40% Cobalt (Co) 20.21% 12.07% 6.02% 60.21% 9.20% - - Nickel (Ni) 20.13% 36.07% 47.93% - 48.87% - - 216 ScienceDirect - A Mini-Review on Metal Recycling from Spent Lithium Ion Batteries 217 MDPI 218 Tata Chemicals Limited 219 Battery Waste Management Rules 2020 221 Resource Recycling 220 Cambridge Core: MRS Energy and Sustainability – Volume 5 222 Battery Power Online CHAPTER 8: Battery Recycling and Second Life 59 8.4 Key Issues in Implementation 3. Lack of awareness among consumers and battery intermediaries on benefits of battery 1. Absence of specific regulatory framework second life and battery recycling on collection and recycling of lithium ion batteries from automotive applications Consumers are not aware of the process for collection of used batteries, which could lead In India, there are no battery collection centers set to unsafe disposal of batteries. There is also a up to collect used batteries. This leads to unsafe perception among consumers that recycled minerals disposal of batteries leading to fires and battery may not be of the same quality as virgin minerals explosions in garbage dumps. Transport, storage and therefore recycled products are not efficient or and disassembly form a large part of battery safe. Poor marketing of second-life materials and recycling costs. Also, there are chances of used lack of consumer awareness may prevent the sale of batteries getting crushed, punctured or dropped products made from recycled materials. during transportation. Disassembly of battery packs could also damage batteries because of the use 4. Insufficient recovery rate of battery of permanent assembly methods during product minerals with high purity during various designing. recycling procedures 2. Lack of demand for recycled batteries Popular recycling practices such as Hydrometallurgy in applications where they can meet the (popular in Asia), Pyrometallurgy and Pyro-hydro desired performance requirements all yield high recovery rates (90-100%) for minerals such as cobalt, nickel and copper. However, The batteries that have reached end of life in recovery rates are not the same as purity. Battery- electric vehicles could be used for stationary grade minerals such as Lithium, needs extremely energy storage applications depending on the high purity which may not be achieved easily health of the battery. Presently, in India there is no and economically. The economic aspect is more market for second-life application batteries which prominent especially if sales for recycled batteries could be used in various applications as mentioned are low223. in Figure 26. 8.5 Recommendations Figure 26: Economics of recycling an NMC (111) in 1. Impose Extended Producer Responsibility China (in US$/kWh) (EPR) norms on battery manufacturers 15 and mandate battery sellers to maintain 10 4.3 a database of all the batteries sold and 5 2.3 2.1 collected 0 4.9 17.2 -5 If the collection rate for used batteries is low, then US$/kWh -10 it will lead to low recycling rate in the country. -15 Collection of used batteries need to be managed -20 12.7 -25 in a more organized manner. Without knowing the -30 background of the battery, it would be difficult to -35 assess it for second life applications. The key actions -34.9 -40 recommended for efficient battery collection are: Nickel Recycling Lithium Cobalt Copper Other Profit 223 BloombergNEF; PV-Magazine: Lithium-ion recycling rates 60 Electric mobility in India: Accelerating Implementation Case precedent be dismantled easily. The need is to develop a li-ion battery that has effectively balanced Patented compression assembly method for three core considerations: health and safety, easy dismantling of batteries second life applications and marketability. Aceleron,224 the UK !! Consider compulsory labelling of battery Lithium-ion batteries are designed with their patented chemistry on the outside of the battery pack compression assembly method which is easier to disassemble and dismantle. This allows for single parts casing for safe handling of the battery during or cells of their batteries to be repaired or replaced transportation and recycling. when they no longer function. Aceleron also tests the battery packs, to determine which cells can still be 3. Provide fiscal and non-fiscal benefits for used. After this, the company will repackage the cells for whichever second-life application it is most suited. companies setting up battery recycling units Aceleron is currently targeting electronic bikes, canal boats, caravans, coaches and home energy storage Although there is not enough volume in India, it can applications for their batteries. still become a global hub for recycling225. Considering the unattractive business case for establishing battery recycling units, the Government of India !! Consider mandating used battery collection should provide fiscal and non-fiscal benefits, for initial by battery manufacturers and sellers from the three to five years, to kickstart and scale-up battery consumers. Sellers could be directed to set recycling centers in India. The fiscal benefits could up battery collection centers at all their retails include providing tax breaks and capex subsidies outlets. while the non-fiscal benefits could include providing !! Consider mandating sellers to maintain land, trunk infrastructure and fast-track approvals a database of all the batteries sold and for setting up battery recycling units in India. collected. Implementation of an electric vehicle scrappage !! Evaluate penalizing battery manufacturers policy in future will help determine the residual and sellers who do not comply with battery value of used batteries and help further develop collection targets specified in the Battery the sector. Waste Rules 2020. 4. Encourage use of recycled batteries in 2. Provide innovation-challenge grants grid-connected energy storage projects to encourage development of innovative When lithium-ion battery reaches its end-of-life, it designs for battery packaging is possible that only a few cells within the battery Manufacturers must innovate to design products pack are not fit for use. Business models could be without the use of permanent assembly methods developed for reusing or repackaging used batteries (such as spot-welding), to facilitate the dismantling for less demanding applications such as stationary process and subsequent material recovery. Although energy storage. Support from the government to there is no standardized process for battery recycling create demand for second-life batteries would attract presently, in future recycling companies could investment in this sector: develop a standardized process to optimize recycling !! Consider implementing grid-connected of batteries: battery energy storage system projects in all !! Assess provision of grants for organizations/ the states. individuals who work on innovative designs for battery packaging such that the batteries can 224 Aceleron 225 Stakeholder Consultation CHAPTER 8: Battery Recycling and Second Life 61 5. Implement an information, 8.6 Further Analysis and Studies communication and education program on Recommended battery recycling and second life targeted at end consumers The government could consider undertaking further work on the following aspects: Creating awareness among consumers will help !! Conduct techno-commercial assessment for in battery collection and safe disposal of used use of second-life batteries in the ancillary batteries. As mentioned above, presently majority services and grid- storage market. of the batteries are reaching landfills every year and polluting the environment: !! Evaluate implementing a pilot grid-storage project with second-life batteries and study the !! Inform the consumers on battery collection impact on the grid. mechanism because low collection rate will not attract investment into battery recycling. !! Undertake capacity building programs with national and international research !! Advertise the benefits of second-life batteries organizations for north-south and south-south in print media, social media and electronic knowledge exchange on best practices in media. Dispel misconceptions regarding the recycling and repurposing of used batteries. performance and safety issues around recycled and second-life products. !! Conduct industry consultations to assess the possible incentive mechanisms for !! Consider promoting the use of second-life establishment of recycling facilities. batteries as UPS systems for homes and offices. !! Consider undertaking an assessment study on the impact of providing tax breaks and imposing tax penalties/fines for non- compliance by battery recycling companies, on the exchequer. 62 Electric mobility in India: Accelerating Implementation Annexures 1. Scope, Research Methodology 2. To identify existing market and implementation challenges across the Indian e-mobility value chain. and Limitations of the Report 3. To recommend potential policy and regulatory a) Scope of the project interventions to address the identified To support India’s ambition on electric mobility, challenges. a study was initiated by The World Bank’s India While the study has its genesis in the power sector, Energy Practice to understand the main drivers of during research for the study and consultations the electric mobility (e-mobility) from the power with multiple stakeholders, it became evident sector perspective. Further it was aimed to assess that the dynamic interactions between the the implications of electric mobility and associated various segments of the value chain and relevant charging infrastructure on the power sector. To government policies will determine the scale at this end, an overview of different segments of the which India can meet its e-mobility ambitions. It e-mobility value chain was undertaken. Broadly, the was also identified that coordinated action on study had the following three key objectives: multiple fronts (across various ministries and 1. To explore the following across the global and departments in central and state governments Indian electric mobility markets: and various private sector organizations) will be needed to meet desired EV adoption goals. !! Policy and regulatory interventions by Therefore, the report starts with power sector governments to spur electric mobility across specific observations and then briefly covers the value chain, key learnings from them and other critical areas, which will have a bearing on their impacts. how e-mobility will scale-up. !! Existing and future technologies across vehicles, charging infrastructure and batteries. b) Research methodology !! Existing and future/innovative business models across EV fleet operations and EY conducted desk research, interviewed 20+ charging infrastructure operations. industry representatives and conducted industry stakeholder consultations as follows: !! Existing and future battery manufacturing capacities, battery technologies, Government !! Extensive desk research on policies, programs and policies for support and key regulations, technologies and business models manufacturer profiles. across China, US, Europe and India. Annexures 63 !! Interviewed 20+ representatives from yy While the study has conducted comparison government ministries, city authorities, state of various Lithium battery technologies, it utilities, global and Indian battery manufacturers, does not aim to recommend a preferred automotive OEMs, EV fleet operators and other technology for the present and future market industry participants. applications. !! Conducted 2 industry virtual stakeholder !! Recommendations consultations along with the World Bank with yy The study analyzes the electric mobility representation from DISCOMs, global and sector predominantly from the power sector Indian battery manufacturers, automotive perspective and does not explore future OEMs, EV fleet operators and other industry impact of EV adoption in areas such as participants. transport systems and urban planning. yy Recommendations have been developed c) Limitations of the report from the policy and regulatory perspective Considering the potential breadth of such a cross- only. Recommendations on preferred sectoral and cross-functional study, EY undertook the technologies, financing models, business study while keeping in accordance with the following models and operational models are boundary conditions: excluded. yy Recommendations on capacity building !! Vehicle segments and training requirements have not been yy Plug-in hybrid electric vehicle (PHEVs), hybrid included. electric vehicle (HEVs) or battery electric yy Fiscal impact of recommendations on the vehicle (BEVs) in the 2-wheeler, 3-wheeler central government’s and state governments’ and 4-wheeler, LCVs (Light commercial vehicles) and buses have been considered. budgets has not been considered. yy Medium and Heavy commercial vehicles Recommendations are made on select areas of future (MCVs and HCVs) have been excluded. research which could help in further acceleration of yy Other non-road transport applications in EV adoption in India. sectors such as agriculture, mining and aviation have been excluded. 2. Description of the Chapters yy Ferries and ships (used for water-based transport) are also excluded. The eight chapters of the report are each dedicated !! Charging infrastructure technologies to one value chain segment and provide details yy Charging infrastructure technologies across the six sections. The order of the chapters (including battery swapping) mentioned in the is in line with the stages involved in the evolution of Ministry of Power’s Charging Infrastructure electric mobility in India. A brief definition of each of Guidelines have been included. the segments is provided below: yy Technologies such as wireless charging, !! Chapter 1: Power supply and grid infrastructure overhead cable charging have been yy Energy supply refers to the provision of excluded. electrical energy at desired locations through !! Battery technologies necessary energy infrastructure such as yy Lithium-based chemistries such as NMC, transformers, meters, cables, substations NCA, LFP, LTO, etc. have been included. and ICT equipment. Fuel cells, Hydrogen fuel are considered yy Grid management refers to the efficient only in “Module 2: Technology Landscape” management of energy infrastructure but are excluded from other modules. through various techniques (such as ToD 64 Electric mobility in India: Accelerating Implementation pricing, V2G, demand response, etc.) to (traction motors, battery packs, power enable cost-effective and stable operations electronics, onboard chargers, cooling of the grid. These techniques are explained systems, etc.) and their assembly into a in Module-5. vehicle. For the purpose of this report, battery pack production is treated as a !! Chapter 2: Charging infrastructure deployment separate section above. yy Charging infrastructure deployment refers to the planning and physical installation !! Chapter 6: Mining and mineral sourcing of charging equipment with the desired yy Mining is the process of the extracting technology specifications at convenient valuable minerals or other geological locations for users. The charging equipment materials from the Earth. In the context of provides electrical energy for recharging EV batteries, mining refers to extraction of batteries used in the EVs. The equipment lithium, cobalt, nickel and graphite226. allows a battery to be charged while it is yy Sourcing refers to the process of identifying inside the vehicle by plugging it into the suppliers for a particular mineral in the raw electricity source or by removing it from the or processed form, securing the supplies vehicle and charging separately (battery and successfully contracting to get the swapping). minerals delivered. !! Chapter 3: EV financing !! Chapter 7: Battery manufacturing yy EV Financing refers to the process of yy Battery manufacturing refers to the process appraisal and disbursement of funds of production of individual cell components (grants, loans, etc.) by financial institutions (cathodes, anodes, electrolytes, separators, and Governments to enable the purchase etc.), production of cells and assembly of of EVs (across vehicle segments). The cells to form battery packs. financial institutions could include public !! Chapter 8: Battery recycling and second life and private commercial banks, NBFCs and development financial institutions. yy Battery recyling refers to process of collection, disassembly, material !! Chapter 4: EV deployment extraction and processing for further use yy EV deployment refers to fulfilment of of battery components. It also includes transportation demand through EVs (2W, 3W, repurposing (using required physio- 4W and buses) in the personal segment, fleet chemical procedures) and re-deployment segment and public transport segment. of batteries in second-life applications !! Chapter 5: EV manufacturing such as grid storage, etc. yy EV manufacturing refers to the process of production of individual vehicle components 226 EY Analysis, USGS Annexures 65 3. List of Studies Referred to Assess the Impact of Electric Vehicles on Power Sector No. Name of the report Organization 1. Study on Impact of Electric Vehicles on the Grid Forum of Regulators (2017) 2. Impact Assessment of Large-Scale Integration Deutsche Gesellschaft für Internationale of Electric Vehicle Charging Infrastructure in the Zusammenarbeit (GIZ) GmbH (2019) Electricity Distribution System 3. Techno-Economic Assessment of Deep Electrification Ernest Orlando Lawrence Berkeley National of Passenger Vehicles in India Laboratory (2017) 4. Charging Up India’s Electric Vehicles Florence School of Regulation (FSR) (2019) 5. Electric Vehicles: Perspective of DISCOMs and Shakti Sustainable Energy Foundation & TERI (2020) Stakeholders 6. Impact of Plug-in Electric Vehicles on Power Indian Institute of Technology Kanpur (IIT-K) (2019) Distribution System of Major Cities of India: A Case Study 7. Electrifying Mobility in India Brookings India (2018) 8. Enabling the Transition to Electric Mobility in India FICCI and RMI (2017) 9. Charging India’s Four-Wheeler Transport Shakti Sustainable Energy & AEEE 10. Electric Vehicle Grid Integration in the U.S., Europe International Council on Clean Transportation and China (ICCT) (2013) 11. Global EV Outlook 2020 International Energy Agency (2020) 12. Getting to 20 Million EVs by 2030 The Brattle Group (2020) 13. Towards A Clean Energy Economy NITI Aayog & Rocky Mountain Institute (RMI) (2020) 14. India’s Electric Mobility Transformation NITI Aayog & Rocky Mountain Institute 15. Electric Vehicle Charging Infrastructure and Impacts United States Agency for International Development on Distribution Network (USAID) 16. A New Entrant to India’s Electricity Consumer- basket Shakti Sustainable Energy & AEEE EV: Impact on Utility Cost of Supply and the Need for a New Approach for Tariff-Setting 66 Electric mobility in India: Accelerating Implementation 4. List of Industry Stakeholders Consulted No. Nature of organization Organization name Person Designation 1. Battery manufacturer Exide-Leclanche Stefan Louis CEO 2. Battery manufacturer Panasonic Atul Arya Head - Energy Systems Division 3. Battery manufacturer LG Chem Prashant Kumar Senior manager 4. Auto OEM Mahindra Electric Uttam Nagaraj Manager 5. Auto OEM Ashok Leyland Karthick Athmanathan VP - EV solutions 6. Auto OEM Bajaj Auto Suresh Kuttan DGM 7. Auto OEM Hero Electric Sohinder Gill CEO 8. Charging Infrastructure Magenta Power Maxson Lewis CEO Operator 9. Battery Swap Operator Sun Mobility Yuvraj Sarda Head of Strategy 10. State Government Karnataka Udyog Mitra M R Shashidhara Head 11. DISCOM BESCOM (Bengaluru) CK Sreenath DGM 12. Auto OEM Mahindra Electric Satish Rajagopalan Head of Strategy & BD 13. Think-tank World Resources Institute O P Agarwal CEO 14. Auto OEM Olectra BYD Naga Satyam ED 15. Financing Solutions Provider Tata Capital Pankaj Sindwani Chief Business Officer 16. Auto OEM Ashok Leyland Kartik Ganesan Head of Sales & Marketing 17. Auto OEM PMI Photon Sanjay Dey CFO 18. Charging Infrastructure NN4 Energy Ankit Singhvi Co-Founder Operator 19. Battery Swapping Operator Sun Mobility Ajay Goel COO 20. Mobility Service Provider SmartE Goldie Srivastava Co-Founder CEO 21. Mobility Service Provider Ola Electric Nitish Arora Policy Lead 22. Financing Solutions Provider Three Wheels United Cedrick Neba Tadong CEO 23. Mobility Service Provider BluSmart Anmol Jaggi CBO 24. Mobility Service Provider Lithium Urban Vikash Mishra Business Head 25. Auto OEM Kinetic Green Shaam Jagtap GM 26. Mobility Service Provider eBikeGO Irfan Khan Founder & CEO Annexures 67 No. Nature of organization Organization name Person Designation 27. DISCOM and Charging BSES Rajdhani Abhishek Ranjan Head - Renewables & Infrastructure Operator DSM 28. Battery manufacturer Tata Chemicals Rino Raj COO 29. Battery Technology Advisor Vinay Bajaj Electric Mobility Market Consultant Expert 30. Battery manufacturer Exide Leclanche Mehul Shah Head of Transportation Business 31. Battery manufacturer Exide Leclanche Ketan Chitnis Head of Industrial Business 33. DISCOM and Charging Tata Power Sandeep Head of EV, HA and ESCO Infrastructure Operator Businesses 34. DISCOM and Charging Tata Power Manasvi Head of New Business Infrastructure Operator Services 35. DISCOM TPDDL Shishir AGM 36. Charging Infrastructure Fortum Awadhesh Jha Vice President Operator 68 Electric mobility in India: Accelerating Implementation Energy and Extractives Global Practice Group South Asia Region (SAR) @WorldBankIndia @WBG_Energy www.worldbank.org/en/topic/energy www.worldbank.org/en/country/india