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This does not endorse individual errors) in the contents. vendors, products or services in any manner. 2 Electric Mobility Market Assessment, Business Model and Action Plan in India Table of Content Acknowledgements 11 Acronyms 13 ExecutiveSummary 15 1.  Electric Mobility Market Overview 37 Overview..................................................................................................................... 38 Background................................................................................................................ 38 Approach adopted for the study.............................................................................. 42 Report structure......................................................................................................... 52 2.  Market Assessment 53 Introduction................................................................................................................ 54 India’s Transport sector............................................................................................ 54 Market opportunities and barriers.......................................................................... 57 3.  2/3W and Cars 65 Introduction................................................................................................................ 66 Market overview and priority segments................................................................. 66 Priority markets......................................................................................................... 73 Market barriers and proposed intervention........................................................... 77 4.  E-buses 82 Introduction................................................................................................................ 83 Market overview and priority segments................................................................. 83 Learnings from previous experience....................................................................... 89 3 Electric Mobility Market Assessment, Business Model and Action Plan in India 5.  Charging Infrastructure 115 Introduction.............................................................................................................. 116 Market context......................................................................................................... 116 Charging infrastructure value chain...................................................................... 118 Current market overview........................................................................................ 122 Priority markets....................................................................................................... 127 Market barriers and proposed intervention......................................................... 130 6.  Financing Solutions 133 Introduction.............................................................................................................. 134 Funding and Financing barriers ............................................................................ 134 Identification of Financial Options .......................................................................... 136 Appraisal of Financial Options................................................................................ 140 Summary................................................................................................................... 146 7.  Impact of Action Plan Recommendations 147 Introduction.............................................................................................................. 148 Need to transition towards EVs ............................................................................. 148 Impacts of proposed action plan and financing interventions........................... 149 ANNEXURES 160 A. Approach for market and TCO assessment .................................................... 161 B. Comparison of India’s EV policy with international examples ...................... 171 C. Details of Action Plan Recommendations ........................................................ 174 D. Appraisal Methodology for proposed investment options ........................... 190 E. Approach for Stakeholder consultation ........................................................... 202 4 Electric Mobility Market Assessment, Business Model and Action Plan in India Figures Figure ES.1: Key Levers.................................................................................................... 18 Figure ES.2: Selected business models.......................................................................... 20 Figure ES.3: Comparison of EV penetration rates in FY30 across the BAU and Alter- nate scenarios................................................................................................................... 22 Figure ES.4: EV Funding and Financing Barriers........................................................... 31 Figure ES.5: Report overall approach: Prioritization of action plan recommenda- tions.................................................................................................................................... 34 Figure ES.7: Prioritized action plan recommendations for e-bus adoption ............ 35 Figure ES.6: Prioritized action plan recommendations for e-2W, e-3W and e-4W.... 35 Figure ES.8: Prioritized action plan recommendations for charging infrastructure.36 Figure 1.1: Summary of approach adopted for the study........................................... 42 Figure 1.2: EV market assessment model components............................................... 43 Figure 1.3: Electric mobility market segments in India................................................ 44 Figure 1.4: EV universe- primary markets...................................................................... 45 Figure 1.5: Business model decision tree...................................................................... 47 Figure 1.6: Overall EV ecosystem.................................................................................... 48 Figure 1.7: Prioritization of action plan recommendations......................................... 50 Figure 1.8: Impact vs complexity framework of recommendations........................... 51 Figure 2.1: Charging infrastructure market segments................................................. 62 Figure 3.1: TCO analysis cost components.................................................................... 69 Figure 3.2: Selected business models............................................................................ 77 Figure 3.3: Prioritization framework for e-2W, e-3W and e-4W action plan recom- mendations........................................................................................................................ 78 Figure 4.1: TCO Analysis of EV with subsidies (9-m intracity, 12-m intracity and 12-m intercity) and Diesel buses (INR per km) ....................................................................... 85 Figure 4.2: TCO Analysis of EV with and without subsidies (9-m intracity, 12-m intra- city and 12-m intercity) and Diesel buses in 2022 (INR per km).................................. 86 Figure 4.3: E-buses parked in a depot in Santiago (left); E-bus being charged by ENEL energy infrastructure.............................................................................................. 95 Figure 4.4: Contractual model in the Metbus-ENEL-BYD partnership for e-bus de- ployment............................................................................................................................ 95 5 Electric Mobility Market Assessment, Business Model and Action Plan in India Figure 4.5: Business model structure- State agency as fleet aggregator with charging infrastructure unbundled............................................................................... 102 Figure 4.6: Business model structure- OEM as fleet aggregator with charging infra- structure unbundled....................................................................................................... 103 Figure 4.7: Proposed framework for decision-making on selection of suitable busi- ness models..................................................................................................................... 107 Figure 4.8: Prioritization framework for e-bus action plan recommendations....... 108 Figure 4.9: Potential TCO improvement across alternate business models with con- tinued FAME subsidy (INR/km)...................................................................................... 112 Figure 5.1: EV value chain.............................................................................................. 119 Figure 5.2: National charging infrastructure forecast by charger type and location- Private vehicles (business-as-usual scenario).............................................................. 125 Figure 5.3: Prioritized action plan recommendations for charging infrastructure.130 Figure 6.1: Funding and financing barriers................................................................. 135 Figure 6.2: Mapping of Financial Options.................................................................... 140 Figure 6.3: Appraising the impact of the financial options – private vehicles (e-2W/e- 3W/e-4W) by FY2030....................................................................................................... 142 Figure 6.4: Appraising the impact of the financial options – -e-buses..................... 144 Figure 7.1: EV sales penetration- BAU vs Alternate scenario in FY2030 .................. 152 Figure 7.2: Annual Investment in EVs by FY 2030- BAU vs Alternate scenario ....... 153 Figure 7.3: National charging infrastructure forecast by charger type and location (Alternate scenario) ........................................................................................................ 154 Figure 7.4: Cumulative carbon savings at national level from increased EV penetra- tion under BAU and alternate scenario across FY2022-30 (Well to Wheel).............. 157 Figure 7.5: Cumulative savings on fuel (in million litres) and associated import bill (INR Bn) across FY2022-30: Alternate scenario............................................................ 158 Figure 7.6: Job creation with EV penetration under BAU vs Alternate scenario...... 159 Figure A.1: Market assessment approach overview.................................................. 161 Figure A.2: TCO analysis cost components................................................................. 164 Figure A.3: Global battery price; India battery prices for 2W and 4W market seg- ments ($ per kWh)........................................................................................................... 167 Figure D.1: Appraisal approach for investment options............................................ 190 6 Electric Mobility Market Assessment, Business Model and Action Plan in India Figure D.2: Logical Calculation Flow (Vehicle Discount Scheme as an example).... 191 Figure D.3: Appraisal approach & methodology to arrive at the final results for e-bus using “Wholesale market de-risking instrument” as an example................... 196 Figure D.4: Lender Loss Profile As the Recovery Value Decreases (First Loss Facility). 198 Figure D.5: Lender Loss Profile As the Salvage Value Decreases (No Facility)........ 199 Figure D.6: Lender Loss Profile As the Salvage Value Decreases (Second Loss Facili- ty)...................................................................................................................................... 200 Figure D.7: Lender Loss Profile As the Salvage Value Decreases (No Facility)........ 201 Figure E.1: List of stakeholders consulted during the project................................... 202 7 Electric Mobility Market Assessment, Business Model and Action Plan in India Tables Table ES.1: EV penetration by market segments as a percentage of total vehicle sales from FY 19-FY 21...................................................................................................... 17 Table ES.2: Comparison of EV stock numbers in FY30 across the BAU and optimized scenarios............................................................................................................................ 22 Table ES.3: Comparison of E bus stock across the BAU and Alternate scenarios..... 27 Table ES.4: 2030 charging infrastructure forecast- Alternate scenario (in thousand charger points).................................................................................................................. 30 Table ES.5: Benchmarking Steer estimates of decarbonization (tank-to-wheel) un- der alternate scenario with other studies for FY 2030................................................. 33 Table 2.1: EV penetration by market segments as a percentage of total vehicle sales from FY 19-FY 21............................................................................................................... 56 Table 2.2: Challenges faced by private vehicle market segments.............................. 58 Table 2.3: Challenges faced by e-bus market segments: Intra-city, inter-city and mo- fussil................................................................................................................................... 61 Table 2.4: Challenges faced in charging and swapping business models................. 63 Table 3.1: SWOT analysis of selected business models and potential players......... 67 Table 3.2: TCO in INR per km across market segments (for Mumbai)....................... 70 Table 3.4: Year-wise market share of battery swapping and battery charging for e-3W passenger fleet........................................................................................................ 71 Table 3.5: EV annual sale projection in terms of number of vehicles and as a % of total vehicle sales of 2/3W and cars for India in business-as-usual (BAU) scenario.. 72 Table 3.6: EV stock numbers and total investment value of e-2W, e-3W and e-4W for India in business-as-usual (BAU) scenario..................................................................... 72 Table 3.7: Summary of financial viability assessment of business models............... 75 Table 4.1: e-bus projection in terms of number of vehicles and as a % of total ve- hicle annual sales for India in business-as-usual (BAU) scenarioSource: Secondary research (FY19-21) and Steer estimates(FY25, FY30).................................................... 88 Table 4.2: EV stock numbers and total investment value of e-buses for India in busi- ness-as-usual (BAU) scenario from FY23-30Source: Steer estimates.......................... 88 Table 4.3: Key proposed recommendations related to contracting and tendering in the existing GCC model.................................................................................................... 91 8 Electric Mobility Market Assessment, Business Model and Action Plan in India Table 4.4: High-potential business models along with estimation and reasons for cost savings........................................................................................................................ 93 Table 4.5: Findings from Santiago based on our business model analysis framework ............................................................................................................................................ 96 Table 4.6: Proposed roles and responsibilities framework across the alternate busi- ness models....................................................................................................................... 98 Table 4.7: Key contracts and agreements to be part of the five high-potential busi- ness models....................................................................................................................... 99 Table 4.8: Mapping secondary business models with implementation contexts... 101 Table 4.9: Action plan roadmap and barrier addressed for e-buses ....................... 109 Table 4.10: e-bus projection in terms of number of vehicles and as a % of total vehi- cle annual sales for India in Alternate scenario........................................................... 113 Table 4.11: EV stock numbers and total investment value of e-buses for India in the Alternate scenario from FY23-30................................................................................... 113 Table 5.1: Approaches for EV charging stations in India ........................................... 120 Table 5.2: EV charging attributes market segment-wide........................................... 124 Table 5.3: Cost of different charger types .................................................................. 125 Table 5.4: Installation costs (As a proportion of charger costs) ............................... 125 Table 5.5: 2030 charging infrastructure forecast- Business-as-usual scenario (in thousand charger points) .............................................................................................. 126 Table 5.6: Business model for charging and swapping infrastructure .................... 129 Table 5.7: Action plan roadmap and barrier addressed for charging and swapping infrastructure .................................................................................................................. 131 Table 6.1: Financial options to address funding and financing barriers.................. 138 Table 6.2: Appraisal of investment options: Station viability (recommended options) ................................................................................................................................................ 145 Table 7.1: Impact of policy changes on TCO (INR/km)-Mumbai ............................... 150 Table 7.2: Improvement in TCO in alternate scenarios vs BAU scena: Mumbai .... 150 Table 7.3: Cumulative TCO savings (in INR million) (Difference in alternate and BAU 9 Electric Mobility Market Assessment, Business Model and Action Plan in India scenario) .......................................................................................................................... 151 Table 7.4: EV annual sale projection in terms of number of vehicles and as a % of total vehicle sales of 2/3W and cars for India in the Alternate scenario................... 151 Table 7.5: EV stock numbers and total investment value of e-2W, e-3W and e-4W for India in business-as-usual (BAU) scenario................................................................... 152 Table 7.6: Charging infrastructure forecast for 2030- Alternate scenario (in thou- sand charger points)....................................................................................................... 154 Table 7.7: Emission norms of different vehicle categories........................................ 155 Table 7.8: GHG emission standards for electricity generation (kgCO2/kWh).......... 156 Table 7.9: Benchmarking Steer estimates of decarbonization (tank-to-wheel ) under alternate scenario with other studies for FY 2030...................................................... 156 Table A.1: Model assumptions ..................................................................................... 163 Table A.2: Summary of key cost assumptions for TCO analysis............................... 165 Table A.3: Financing cost assumption.......................................................................... 166 Table A.4: Average Trip Length of Selected Cities (in km).......................................... 166 Table A.5: Battery price assumption for the years 2022, 2027 and 2030 (in INR per kWh).................................................................................................................................. 167 Table A.6: Key action plan recommendations impacting EV market demand........ 168 Table A.7: Key assumptions for TCO Analysis of buses............................................. 170 Table B.1: Comparison of India’s FAME policy with international examples........... 171 Source: Steer Analysis.................................................................................................... 171 Table C.1: Action Plan recommendations and steps for e-2W,e-3W and e-4W market segments.......................................................................................................................... 174 Table C.2: Action plan recommendations and steps for e-buses............................. 179 Table C.3: Action Plan recommendations and steps for charging and swapping in- frastructure...................................................................................................................... 185 Table D.1: Key assumptions for TCO Analysis of buses............................................. 194 Table D.2: Wholesale Market De-risking instrument.................................................. 194 Table D.3: Second Loss Facility..................................................................................... 195 Table D.4: Investment Option Assumptions - First Loss Facility Illustrtaion............ 197 Table E.1: List of consultations held on action plan recommendations.................. 203 10 Electric Mobility Market Assessment, Business Model and Action Plan in India Acknowledgements This study was conducted under the The team is grateful to the experts who guidance of a World Bank Group team led peer reviewed the report: Yang Chen, Sr. by Gerald Ollivier, Lead Transport Specialist, Transport Specialist; Alice Thuillier, Sr. Pratibha Bajaj, Investment Officer, and Investment Officer; Juan Samos Tie, Principal Daniel Pulido, Sr. Investment Officer, and Industry Specialist; Muneeza Alam; Sr. comprising of Mani Khurana, Senior Energy Transport Economist; Ravi Gadepalli, Public Specialist and Rishi Kothari, Transport Transport Consultant; Nikhil Aggarwal, Specialist, Kartik Gopal, Sr. Infrastructure Electric Vehicle (EV) Financing Consultant; Specialist, Firdaus Haque, Operations and Shyamasis Das, Charging Infrastructure Officer, Gautham Nallavari, Investment Consultant. The team greatly valued the Officer, Suvranil Majumdar, Senior Transport guidance from Shomik Mehndiratta, Practice Consultant and Genevieve Dutta, Program Manager, Transport, Simon Stolp, Practice Assistant. Manager, Energy, World Bank, and Diep Nguyen-Van Houtte, Sr. Manager, IFC, The World Bank Group expresses immense throughout the assignment. gratitude to NITI Aayog and partnering state government departments of Maharashtra, The team greatly valued the guidance from Tamil Nadu, Madhya Pradesh and Kerala Wendy Jo Werner, Country Manager, IFC and for providing their valuable inputs during Arnab Bandyopadhyay during the Decision workshops on the outputs of the Study Review Meeting for this activity. which enhanced the comprehensiveness and depth of our action plan recommendations. Stakeholder interviews were carried out by Particular thanks are extended to Mr. the Steer and UITP team during the period Sudhendu Sinha, Advisor, NITI Aayog and of the study (September 2020-August 2021), Mr. Randheer Singh, Director, NITI Aayog including through a series of workshops. for their valuable guidance throughout the The World Bank Group team is deeply assignment and in finalizing the document. thankful to all participants for sharing their The study has been executed by a team valuable insights about the challenges and from Steer Group (referred to as Steer for opportunities in the EV industry as well the purposes of the report) led by Andrew as key inputs for assessing the viability of Mellor, Associate Director; regional team business models; it helped in adding rigor to leader Serbjeet Kohli, Director; Matt Bull, the results from modelling and analysis done Associate Director; Rupa Nandy, Head UITP for the study. India; Chantal Shearing, Associate supported by team of analysts comprising of Mansha This activity is a combination between an Sehgal, Senior Consultant; Prashanth IFC Upstream Project aimed at removing Udayakumar, Senior Consultant; Vaibhav barriers to scale up private investment Gupta, Principal Consultant; Arsh Aggarwal, in e-mobility in India through policy and Principal Consultant; Shipra Bhatia, regulatory reports and business model Consultant and Arushi Chopra, Consultant. changes and innovation under part of The World Bank team appreciates the effort, IFC’s Early-Stage Project Development hard work and dedication of the Steer team. (Upstream) Unit and grants from the World 11 Electric Mobility Market Assessment, Business Model and Action Plan in India Bank, the Mobility and Logistics Trust Fund (MOLO), and ESMAP. The Energy Sector Management Assistance Program (ESMAP) is a partnership between the World Bank and 18 partners to help low and middle-income countries reduce poverty and boost growth through sustainable energy solutions. ESMAP’s analytical and advisory services are fully integrated within the World Bank’s country financing and policy dialogue in the energy sector. Through the World Bank Group (WBG), ESMAP works to accelerate the energy transition required to achieve Sustainable Development Goal 7 (SDG7) to ensure access to affordable, reliable, sustainable and modern energy for all. It helps to shape WBG strategies and programs to achieve the WBG Climate Change Action Plan targets. 12 Electric Mobility Market Assessment, Business Model and Action Plan in India Acronyms Abbreviation Full form ARAI Automotive Research Association of India BEST The Brihanmumbai Electricity Supply and Transport BHEL Bharat Heavy Electricals Limited CAPEX Capital Expenditure CaaS Charging as a Service DISCOM Distribution Company DoM Directorate of Mobility (Kerala) DoT Department of Transport DT Distribution Transformers e-2W Electric two wheelers e-3W Electric three wheelers e-4W Cars e-bus Electric buses EESL Energy Efficiency Services Limited e-LCV Electric Light Commercial Vehicle EMI Equated Monthly Instalment e-mobility Electric mobility e-rickshaw Electric rickshaws EV Electric Vehicles EVSE Electric Vehicle Supply Equipment FAME Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles FY Fiscal Year GCC Gross Cost Contract GST Goods and Services Tax ICE Internal Combustion Engine IFC International Finance Corporation IRR Internal Rate of Return JnNURM Jawaharlal Nehru National Urban Renewal Mission KUIDFC Karnataka Urban Infrastructure Development and Finance Corporation kWh Kilowatt hour 13 Electric Mobility Market Assessment, Business Model and Action Plan in India Abbreviation Full form LCV Light Commercial Vehicle MCA Model Concession Agreement MPSRTC Madhya Pradesh State Road Transport Corporation MSRTC Maharashtra State Road Transport Corporation MTC Metropolitan Transport Corporation (Chennai) NEMMP National Electric Mobility Mission Plan NTPC National Thermal Power Corporation Limited OEM Original Equipment Manufacturer OPEX Operating costs PHEV Plug-in Hybrid Electric Vehicle PMPML Pune Mahanagar Parivahan Mahamandal Limited PPP Public Private Partnership PSU Public Sector Undertaking PT Public Transport PTA Public Transport Authority REIL Rajasthan Electronics and Instruments Limited RTO Regional transport office SECI Solar Energy Corporation of India SPV Special Purpose Vehicle STU State Transport Undertaking TANGEDCO The Tamil Nadu Generation and Distribution Corporation Limited TCO Total Cost of Ownership TNUDF Tamil Nadu Urban Development Fund TNSRTC Tamil Nadu State Road Transport Corporation ToD Time of Day TOU Time of Use VGF Viability Gap Funding 14 Electric Mobility Market Assessment, Business Model and Action Plan in India   Executive Summary   Executive Summary The deep economic transformation of India GW by 2030 while meeting 50% of its energy will be accompanied by rapid growth in demand from renewables.34 passenger and freight demand and require a transition to more sustainable transport To drive EV adoption, the government solutions. Transport demand is expected to has introduced several policy initiatives increase by 2.7 times over 30 years1. While targeting the entire value chain at the transport has been instrumental to India’s national and state levels. At the national past growth, it has been accompanied by level, NITI Aayog is leading the mission on severe air pollution challenges, with half of the Transformative Mobility and Battery 50 most polluted global cities being in India, Storage to promote clean, connected, shared, heavy dependence on oil imports (82%), and sustainable and holistic mobility initiatives. rapidly growing carbon emissions. Sustainable The Faster Adoption and Manufacturing development, as pursued by the Government of Electric (FAME) subsidy scheme5 targets of India, calls for a transport transition that 7000 e-Buses, 500,000 e-3 Wheelers, 55000 decouples the need for motorized transport e-4 Wheeler Passenger Cars (including from economic growth, shifts transport to Strong Hybrid) and 1 million e-2 Wheelers. more efficient modes, and accelerates the The Production Linked Incentive (PCI) for uptake of zero-emission vehicles. National Programme on Advanced Cell (ACC) Battery Storage (NPACC) intends to boost In this context, electric mobility indigenous battery manufacturing capacity.6 (e-mobility) is anticipated to play a major Most state governments have implemented role in India’s transport transition during complementary initiatives to drive EV this decade. The Government of India has adoption with 18 states having finalized their been steadily moving towards a “shared, EV policy while another 6 are drafting their connected and electric” mobility ecosystem own. to achieve its stated goals on emissions reductions, energy security and industrial Nonetheless, from a market penetration development. It is doing so through wide- perspective, as of 2021, India remains in ranging policy and regulatory measures to its early phase of adoption, compared to encourage EV adoption, creation of public its ambitious targets. The Government of charging infrastructure and incentivizing India has set out its vision of achieving 30% domestic EV and battery manufacturing of all vehicle sales to be electric by 2030, facilities2. This transport transition is but current sales for cars and electric two- accompanied by a complementary energy wheelers (e2W) represented only only 0.2 transition. During the recent 26th Conference percent and 1.3 percent of sales in 2021 of Parties (COP26) held in November 2021, respectively (Table ES.1). Given the current India committed to a net-zero carbon target level of penetration, achieving the adoption by 2070 and reaffirmed climate mitigation targets will require concerted action that measures to be achieved by 2030, pledging to moves India rapidly from a phase of initial increase non-fossil energy generation to 500 adoption to one of accelerated transition. 1   India’s Transport Transition, Deloitte for World Bank (2022). 3   https://ukcop26.org/cop26-goals/ accessed on 30 December 2021 2   Electric Mobility in India: Accelerating Implementation, World Bank 2021. 4   https://www.ceew.in/news/cop-26-ceew-unpacks-indias-2070-net-zero- target-and-other-climate-mitigation-measures accessed on 30 December 2021 5   https://fame2.heavyindustries.gov.in/ 6   https://pib.gov.in/PressReleasePage.aspx?PRID=1717938 accessed on 20th August 2021 16 Electric Mobility Market Assessment, Business Model and Action Plan in India   Executive Summary Table ES.1: EV penetration by market segments as a percentage of total vehicle sales from FY 19-FY 21 Source: SIAM Database, FADA7 Penetration Penetration Penetration Mode FY 19 FY 20 FY 218 % % % e-2W 126,000 0.9% 152,000 0.9% 149,000 1.3% e-3W 100,000 14.3% 90,000 14.1% 88,000 34% e-4W 3,600 0.11% 3,400 0.12% 5,900 0.2% e-bus 400 0.04% 600 0.08% 1,850 11.7% Note: 3W numbers do not include e-rickshaws. Historical data is available at an aggregated market segment of 2W, 4W and 3W, and is disaggregated for the forecast period; EV Penetration % estimated with total sales reported by FADA Accelerating adoption at scale requires a detailed look at three main factors of adoption: competitiveness compared to internal combustion engine (ICE) vehicles, access to charging infrastructure and access to financing. Competitiveness is determined by the operational range, dependability, and the cost of EVs, all of which are evolving rapidly. The cost efficiency of EVs relative to ICEs, as measured by the total cost of ownership (TCO) over the vehicle lifetime9, varies significantly across vehicle and market segments, driven by characteristics such as typical operating range,10 particulars of each city,11 or the attractiveness of ICE alternatives12. Access to dependable charging infrastructure requires major new investments, which are slowed by complex coordination and challenging economics given current low EV penetration. Access to finance is essential to spread the higher upfront cost of EVs over time and align the cash flow associated with EVs ownership with that of ICE options, but remains very limited in scale at this point. Actions across five dimensions can enhance those factors but require a coordinated effort at many levels. As a new technology cutting across sectors, EVs require systemic adjustments to governance and institutions, policies and regulations, procedures and procurement, energy infrastructure, and funding and financing approaches (Figure ES.1). EV implementation requires a high level of coordination, both vertical (national, states and urban local bodies) and horizontal (industry, transport, energy, urban, environment). Designating nodal agencies at the central and state levels to drive the policies and plans promoting EV adoption is a critical measure to achieve such coordination, as exemplified by Delhi. This recommendation applies across all EV segments discussed in this report. 7   FADA Releases FY20-21 & April’21 Vehicle Registration Data, Federation of Automobile Dealers Associations, 10 May 2021 8   https://www.autopunditz.com/post/ev-sales-decline-over-19-percent-in-fy2021-to-2-36-802-units accessed on 1st March 2022 9   Includes upfront purchase costs, registration costs, operating costs including charging/fuelling costs, loan repayment costs and road tax. 10  With heavier usage, EVs become more attractive than ICEs due to lower operation and maintenance costs. E.g., fleet operators have higher average daily trip lengths as compared to personal users. 11  For instance, Nagpur has shorter average trip lengths than Pune which could result in lower vehicle use. Chennai has much higher per capita 2W ownership than Mumbai which could create economies of scale and render associated services such as charging facilities more viable. 12  For instance, the large increase in fuel price over the past year made ICE alternatives less attractive. 17 Electric Mobility Market Assessment, Business Model and Action Plan in India   Executive Summary Figure ES.1: Key Levers • Procurement policy and plan • Business models • Procedural requirements Procedural & Procurement • Funding sources • National/State EV policy • Subsidies Funding & Policy & • Applicable Taxes/fees • Financing instruments Financing Regulatory • Vehicle permits • Charging/swapping infrastructure policy • Environmental standards & regulations Governance & Urban Institutions Infrastructure • Institutions • Charging infrastructure • Procurement availability • Transition plan • Alternate/second use for emobility of battery • Installed capacity and infrastructure • Future energy plans Expanding on the World Bank publication on Accelerating Implementation of Electric Mobility in India (April 2021), this report evaluates each vehicle and market segment considering their unique characteristics. Analytical models based on key cost drivers for each segment were used to project market penetration in a range of scenarios (from business-as-usual or “BAU” to comprehensive implementation of recommendations). A deep dive analysis was undertaken for three states (Maharashtra, Tamil Nadu, and Madhya Pradesh) across ten of their largest cities, then aggregated at the state and national levels for a comprehensive picture. 18 Electric Mobility Market Assessment, Business Model and Action Plan in India   Executive Summary The following two scenarios were assessed as last mile connectivity. The rest of the three- a part of this study to estimate the impact of wheeler (3W) vehicle segment is now set to the key action plan recommendations, with be at the forefront of the e-mobility story of associated Action Plan recommendations India. Likewise, two-wheelers (2W), which described at the end of the Executive account for 70-80% of total vehicle market and Summary: experience rapid growth (over 10% per annum in the past decade), are expected to be a key • A Business-as-Usual (BAU) scenario driver in India’s e-mobility transformation. representing a continuation of central and state government policies as of TCO is already favourable for e-2W and January 2022 without any additional e-3W markets. e-2W fleet and e-3W (fleet and concerted effort to drive EV penetration. goods) market segments have either matched It incorporates the impact of declining or beaten the TCO of ICE counterparts due battery prices and FAME subsidy and State to longer average trip lengths, offering high EV policies implemented till January 2022. potential to drive EV adoption. In comparison, In this scenario, the business models the e-2W personal segment currently offers continue to operate under the constraints moderate potential with a TCO that is now elaborated in Chapter 2. similar to that of ICE counterparts, while • An Alternate scenario assuming e-4Ws (fleet and personal) remain significantly implementation of key action plan more expensive than ICE counterparts, recommendations with coordinated thereby offering lower immediate potential to approach across policy initiatives at drive adoption. central and state level, institutional re- alignment and unlocking of affordable Even so, pursuing BAU would mean falling financing for e-mobility by adopting short of targets for all but e-3Ws. Despite innovative solutions to bring access declining costs of batteries, and existing to financing at par with ICE financing, central and state government subsidies, EV including risk sharing facilities, buyback sales penetration rates are not expected to guarantee, help to buy approach, interest meet targets in a BAU scenario. Financing, subvention schemes for disbursing policy, and regulatory hurdles are partly to subsidized credit to e-3W and e-2W blame. Limited financing availability, high players. financing costs and high down payments for 2Ws and 3Ws deter EV purchase compared to ICEs. The current structure of vehicle 2W, 3W and car market assessment permits hinders the development of fleet- based business models. For instance, 2Ws are India’s e-mobility adoption is following a not classified as transport vehicles, and the different trajectory from that observed in number of permits issued to passenger 3Ws many other parts of the world, with two and is capped, restricting fleet sizes. Exclusion of three wheelers emerging as the first growth certain vehicle segments from subsidies, e.g., segments. The introduction of battery- EVs sold without batteries, and higher taxes powered low speed rickshaws (e-rickshaw) imposed on separate battery sales, hinder in several states of India (with an estimated the development of battery swapping models 2 million operational vehicles across the which could boost user convenience and country in FY21) has already electrified part of reduce range anxiety. 19 Electric Mobility Market Assessment, Business Model and Action Plan in India   Executive Summary Fleet-based ride hailing, and last mile delivery models offer the maximum potential for scalability and relative TCO advantage in the 2W, 3W and car vehicle segment and can be complemented by battery-as-a-service (BaaS) solutions. To achieve TCO competitiveness, higher km coverage is required to offset the significant upfront cost, which can be achieved in fleet-based models. The decoupling of the battery cost from the vehicle can accelerate the upfront cost parity for the end user. BaaS includes battery swapping, leasing, or subscription models. It can improve operational efficiency for fleets and improve user convenience across all segments. Figure ES.2: Selected business models Source: Steer representation • e-2W ride hailing fleet • e-3W ride hailing fleet • e-4W ride hailing fleet • e-2W freight fleet • e-3W freight fleet • e-4W employee shuttle A three-pronged approach with fine- • Facilitate access to competitive tuning of policies and regulations can financing. Targeted funding and accelerate EV adoption: comprehensive measures to unlock access to commercial financing are required to • Foster uptake by fleet-based that end. Targeted government funding businesses. Policy and regulatory can lower the upfront cost or financial cost changes can remove constraints on of EVs, and address remaining TCO gaps fleet-based business models. Quick wins with ICE vehicles, enhancing commercial include allowing e-2Ws to be classified bankability. Scrapping programs or EV as transport vehicles (allowing them to funds established and funded through be used in commercial fleet operations), levies on ICE vehicles and fuels can allowing e-3W permits to be granted to provide such incentives sustainably in both drivers and corporate fleet operators support of the EV transition. Unlocking and aggregators and removing the cap commercial financing requires including on permits for e-3Ws up to desired EV financing as priority sector lending, penetration levels. Such uptake will create creating effective solutions to reduce a critical mass of demand for heavily used the perceived default risks associated vehicles and lead to enhanced quality, with this emerging technology, fostering technological options, dependability, financial mechanisms like asset leasing and reduce the cost of available models, companies that provide financing at scale, thereby accelerating penetration for and building awareness and capability in personal usage. the commercial financing ecosystem to finance EVs. 20 Electric Mobility Market Assessment, Business Model and Action Plan in India   Executive Summary • Create a level-playing field for BaaS. A level-playing field across EV charging options is required to facilitate the emergence of an innovative EV ecosystem. For BaaS, and in particular swapping, this would involve aligning GST on battery sales, extending subsidies to EVs sold without batteries in both national and state programs, and fostering the emergence of BaaS ecosystems of sufficient scale to allow for efficient deployment and availability. Photo credits: Bounce 21 Electric Mobility Market Assessment, Business Model and Action Plan in India   Executive Summary Careful implementation of action plan recommendations is expected to boost EV penetration significantly relative to BAU, as shown in the table below and would translate in a major difference in the EV stock reaching 69 million in the alternate scenario (accumulated capital expenditure of US$158 billion) compared with 27 million in BAU, based on the modelling carried out as part of this study. Figure ES.3: Comparison of EV penetration rates in FY30 across the BAU and Alternate scenarios Source: Steer estimates EV30@30 Alternate BAU 3W Freight 52% 40% 71% 3W Fleet 55% 27% 4W Fleet 17% 4W Personal 15% 9% 2W Fleet 46% 20% 2W Personal 35% 15% 0% 10% 20% 30% 40% 50% 60% 70% 80% Table ES.2: Comparison of EV stock numbers in FY30 across the BAU and optimized scenarios Source: Steer estimates Market Total Investment Value EV Stock Segment (INR Million) BAU Alternative BAU Alternative 2W personal 16,616,000 39,781,000 1,998,000 4,686,000 2W Fleet 5,566,000 15,568,000 413,000 1,156,000 4W Personal 2,050,000 3,484,000 2,824,000 4,351,000 4W Fleet 346,000 597,000 465,000 745,000 3W Fleet 1,790,000 2,282,000 506,000 637,000 3W Freight 661,000 850,000 249,000 320,000 Total 27,029,000 62,562,000 6,455,000 11,895,000 22 Electric Mobility Market Assessment, Business Model and Action Plan in India   Executive Summary Bus Market Assessment Bus fleet electrification across public Bus markets can be classified into three and private segments is impeded by its broad categories based on the differences current economics, existing subsidies, in the typical daily utilisation which lack of charging infrastructure, limited strongly influences the TCO: (i) Intracity domestic production and technological buses operate within city limits in urban challenges. Without subsidies, e-buses areas; (ii) Mofussil buses (an extension of have an estimated 14% to 18% higher intracity bus services) operate services to TCO than ICE vehicle as of 2022, and a far-flung suburbs and neighbouring districts; much higher upfront cost. Combined with and (iii) Intercity buses that operate weakened financials of bus operators due between urban areas. to the COVID-19 pandemic, this precludes access to financing at scale, short of Bus services are managed and/or securing government support to fill the operated by the public and private gap. The exclusion of private buses from sectors. State Road Transport Undertakings the FAME-II subsidy scheme limits the (STUs) manage public sector buses in cities current market mostly to a few STUs. Lack and in some states, inter-city transport as of readiness of depot, charging and grid well. Some STUs operate their own buses, infrastructure to support e-bus operations while others outsource operations to private is another obstacle, since bus operators players. Most STUs in India are unprofitable are not yet versed in the development of and focus on sustaining current operations such infrastructure. The low level of e-bus rather than replacing or augmenting fleets. penetration to date (about 1850 e-buses sold As a result, the STU’s share of buses has in fiscal year 21) has led to limited increases been declining. Private sector buses make in domestic production capacity. Further, up more than 90% fleet countrywide, plying while lessons are starting to emerge from as contract carriage, school buses and the early adoption of e-buses under FAME-I, employee buses. Electrification of private STUs and operators are still in the process sector bus fleets through an enabling of understanding how to plan and operate investment environment is therefore key to e-buses as part of their overall fleet and accelerate the pace of e-bus adoption in the select the right technologies. country. 23 Electric Mobility Market Assessment, Business Model and Action Plan in India   Executive Summary TCO parity for e-buses relative to ICEs Early adoption of e-buses in India has been is expected to be achieved in the next dominated by STU service contracting 2-4 years with continuing subsidies, and highlighted several contracting gains from economies of scale and challenges. India’s e-bus market is currently technological improvements. Parity is dominated by public sector procurement due likely to be achieved first for routes with to the availability of FAME II subsidies only higher annual distance operated such as for public operators. FAME-II can provide intracity and mofussil services, followed by subsidies for up to 7,000 buses, under a shorter range intercity services. Long range gross cost contract (GCC) model. Its initial intercity services which are dominated by implementation till June 2021 underlined private operators are constrained by battery several challenges: (i) insufficient readiness range and lack of charging facilities on route. and preparation of the contracting authorities; Economies of scale through aggregating fleet (ii) insufficient bid timelines; (iii) distortive procurement, and contractual improvements capital subsidies and guarantee requirements; (for public sector buses) can reduce costs (iv) limited depot readiness; (v) imbalanced and help achieve parity. Further reductions risk-sharing (utilization, electricity costs); (vi) in battery prices owing to technological limited payment security; and (vii) imbalanced improvements could accelerate the approach to dispute resolution. Those achievement of TCO parity. resulted in higher costs than anticipated, challenges in achieving financial closure and multiple retenders. Market feedback also highlighted a lack of scale economies in e-bus procurement, maintenance, and financing and mismatch between the roles and specializations of various stakeholders in the e-bus ecosystem. FAME-II is valid up to 2024 and was recently revamped to enhance contracting and achieve scale economies, through combined tendering for larger metropolitan areas. Photo credits: UITP 24 Electric Mobility Market Assessment, Business Model and Action Plan in India   Executive Summary A four-pronged approach can accelerate e-bus A single fleet procurement can service adoption focused on closing the cost gap multiple, separate operations contracts. with ICE buses, fostering a market attractive For instance, a state government, with to manufacturers, building capacity, and an established EV policy, could aggregate facilitating access to finance: demand for e-buses across different cities. Once procured, the fleet could be • Improve the existing e-bus distributed across several operations procurement regime for public contracts to be signed between STUs transport services through a and private operators, across the revised GCC Model or alternative different cities. This also allows the business models, or both. The report transfer of financial, capital cost and recommends several contracting and technology risks from the operator to the tendering improvements13 to the current aggregator. In such case, the aggregator GCC regime estimated to reduce TCO can achieve economies of scale and revealed through tender by 10 to 15 access pools of financing targeting percent compared to values achieved lease type operations. Such unbundling in early 2021. It also outlines alternate requires an already well-established business models centered around fleet STU institutional capacity to manage aggregation, supplemented by unbundled interfacing risks and continuous capacity energy provision and optional leasing building of all stakeholders. A centralized options. Projections suggest that business contract management and procurement models centered on fleet aggregation, cell can be established to facilitate such as implemented in countries like Chile, an approach. could yield significant cost savings in • Facilitate access to competitive the order of 15-25 percent. The contract financing. Targeted funding and recently tendered by CESL can be seen as comprehensive measures to unlock a combination using improved contracting access to commercial financing are and demand aggregation. required to accelerate a transition to • Unbundle fleet procurement and e-buses, both public and private. Shared operations to encourage scale mobility, leveraging on bus transport, economies. The current GCC framework will play a major role in India’s transport bundles fleet procurement and transition. While improvements in STU operations. Contracts are typically limited procurement can bring e-buses close in size, as they are confined to a particular to parity with ICE buses with subsidies, geographical area (e.g., a city), thereby support to private e-buses would be limiting economies of scale. The report equally warranted from a policy point reviews fleet aggregator models, under of view, to close the TCO gap with ICE which the aggregator (which can be a buses. This can be achieved through national, state, or creditworthy private lowering GST and other taxes across entity) undertakes fleet procurement, the e-bus supply chain, extension of financing and (optionally) maintenance. subsidies under FAME to private sector 13  The recommendations cover bid timelines, subsidy design, bank guar- antee requirements, eligibility criteria for operators, payment security, performance penalties, and responsibility for the provision of supporting infrastructure. 25 Electric Mobility Market Assessment, Business Model and Action Plan in India   Executive Summary buses, establishing and leveraging EV Government intervention is essential funds based on fees collected on ICE initially to drive the transition to e-buses 2/3W and cars, and fostering commercial considering the existing TCO gap. Initially, exploitation of depot land through public funds are best spent on cities with public-private partnerships. On the the highest potential impact on air quality, financing side, government can enhance GHG emissions and congestion, and on the bankability of contracts by STUs, putting in place elements that can accelerate offer de-risking instruments to banks the transition of the private sector to and private investors in the context e-buses (charging and financing access). The of STU contracts or facilitate access report proposes a framework for selecting to commercial financing by private the most suitable business model(s) operators until a target level of e-bus for a state or a city based on a systemic stock penetration is achieved. review of institutional readiness, financial • Foster the rollout of e-bus charging capacity, and potential for aggregation in infrastructure. Availability of charging procurement. Government’s investment infrastructure at state level ensures in e-bus service procurement for public that operators can readily switch to operations could act as pump-priming the e-buses. This is critical to support e-bus sector with increased competition and intercity e-buses which require both improved manufacturing capacity which origin-destination and on route charging should help bring down the upfront costs infrastructure. Alternate business model and attract private sector operators to switch combinations and the action plan in to e-buses Chapter 3 recommend unbundling of charging infrastructure through policy mandates and involvement of the private sector. The development of network of charging-as-a-service (CaaS) providers can improve charging infrastructure provisions, tapping on companies with the requisite specialist capabilities and investment potential. Such networks are anticipated to require some public sector support in its initial years, until demand materializes. 26 Electric Mobility Market Assessment, Business Model and Action Plan in India   Executive Summary Implementation of the prioritized action plan recommendations is expected to tackle the three key problems mentioned above – improved competitive position of EVs relative of ICE, better access to charging infra and better access to financing, which would translate in a major difference in the E-bus stock reaching 98,000 buses in the alternate scenario (accumulated capital expenditure of US$17 billion) and a sales penetration of 50% in 2030 compared with 52,000, and 22% in BAU, based on the modelling carried out as part of this report. Table ES.3: Comparison of E bus stock across the BAU and Alternate scenarios Source: Steer estimates Total In- vestment Market Segment FY23 FY24 FY25 FY30 Value (INR Mn) BAU 11,000 16,000 22,000 52,000 700,000 Alternate Scenario 15,000 23,000 31,000 98,000 1,303,000 Charging infrastructure markets The scarcity of public charging infrastructure is a major constraint to Provision of adequate charging EV adoption in India. There are only 1640 infrastructure is a key enabler for EV operational public charging stations in India, adoption across modes and market with the nine mega cities (population of segments. Charging infrastructure is over 4 million) accounting for almost 60% of the backbone of any electric mobility the installed chargers. This is far below the implementation. Provision of adequate, estimated 4.2 million chargers (excluding affordable, accessible, and reliable charging 15 Amp chargers) needed by 2030 across networks is a pre-requisite for mass EV various locations in a BAU scenario. There adoption and could help promote awareness are numerous initiatives being taken by both and reduce range anxiety among potential public and private players in deployment of EV users. All business models and market charging infrastructure across the country. segments of charging and swapping The recent announcement by the Department infrastructure such as residential, office, of Heavy Industries (DHI) to deploy nearly captive, public and swapping stations are 2,700 charging stations across 62 cities under expected to play a key role in mass uptake public procurement model is expected to of EVs. For the general public, the priority catalyze the expansion of the public charging is to facilitate charging at locations where network. The Ministry of Power has also people naturally park already for many hours, announced plans for chargers across 69,000 supplemented by a network of public fast petrol stations, of which 22,000 are expected charging facility allaying concerns over range. to be installed in the next 5 years. 27 Electric Mobility Market Assessment, Business Model and Action Plan in India   Executive Summary A four-pronged approach can accelerate charging infrastructure rollout: • Extend government support to enhance the viability of business models for public charging infrastructure and e-bus charging. Lowering fixed costs in the initial rollout of charging facilities enhances the business case for charging. This can be achieved through the provision of land at concessional prices, capital subsidies and viability gap funding for public charging infrastructure. As discussed in the previous section, it is recommended that the government invests in intercity charging infrastructure to drive the adoption of intercity e-buses. • Support alternative business models to accelerate EV adoption in fleet- based models. Captive charging and battery swapping solutions are Photo credits: UITP expected to serve the charging needs of Challenges differ across market segments. commercial fleet operators. This is where Uncertainty in initial demand for charging commercial business opportunities infrastructure and difficulty and cost of already exist, although financial returns securing land in urban areas currently are tied to the level of utilization of these discourage private investment in public charging facilities. Commercial viability charging stations or charging depots for will improve as EV penetration rates e-buses. Administrative complexity slows across various vehicle markets increase, down the rollout of charging in residential but in the coming 3 to 5 years, access to areas. Limited financial capacity of DISCOMS commercial financing at scale is expected slow down adjustments that may be to require some initial government required to the local distribution network. support until the market matures. Swapping solutions face a non-level playing • Facilitate grid connection. The public is field both in access to subsidies and taxes. expected to mostly charge at residential Lack of consistent tariffs across locations and office locations, and where it already increases risks and reduces the commercial parks regularly. This demand can be viability of business models. addressed by amending development control regulations at such locations, integration of charging in city parking policies, and creation of a single-window facility to coordinate and facilitate the rollout of charging options with separate metering for EVs. 28 Electric Mobility Market Assessment, Business Model and Action Plan in India   Executive Summary • Create a level-playing field for BaaS energy infrastructure such a power line and and charging options. A level-playing predictable electricity tariff, availability of field across EV charging options is concessional finance for longer tenure to required to facilitate the emergence of provide commercial support to the business an innovative EV ecosystem. For BaaS, models. and in particular swapping, this would involve aligning GST on battery sales, Careful implementation of action plan extending subsidies to EVs sold without recommendations combined with the batteries in both national and state volume of EVs expected under the Alternate programs, and fostering the emergence Scenario would lead to a need for an of BaaS ecosystems of sufficient scale estimated 8.6 million chargers (excluding to allow for an efficient deployment and 15 Amp chargers), or 36 million chargers availability. For fleet charging, it means (including 15 Amp chargers) for a total aligning tariff policies to allow the best investment of US$2.9 billion (urban only). solutions to emerge from the market. • Foster co-ordination with Energy Departments. Mass deployment of charging infrastructure at different locations requires coordinated action involving different government departments at the city or state level as setting up of charging stations requires availability of affordable land at strategic locations, provision of supporting Table ES.4: 2030 charging infrastructure forecast- Alternate scenario (in thousand charger points) Source: Steer estimates Type of Total Resi- Cap- Battery Total Charger Office Public Investment dential tive Swapping Chargers required (INR Mn) 15 Amp 27,100 120 420 - - 27,640 55,000 AC001 3,960 80 620 440 1,940 7,040 27,000 Type2AC 1,220 30 40 40 - 1,330 69,000 Bharat DC - - 8 2 220 230 59,000 001 CCS2 - - - 4 - 4 4,000 Total 32,280 230 1,088 486 2,160 36,244 214,000 29 Electric Mobility Market Assessment, Business Model and Action Plan in India   Executive Summary Financing solutions Increasing the flow of affordable financing into the EV market is crucial to increase penetration. As is typical with an emerging technology, the current market for EV financing is still in its infancy and is characterized by various funding and financing barriers across EV market segments. These barriers must be overcome to allow much needed investment to flow into the sector which in turn can increase the supply of affordable financing to business and individual borrowers. The funding and financing barriers identified in the figure below are not entirely unique to EV financing and can also be seen in the conventional ICE vehicle financing market in India. However, EVs add an extra layer of complexity in terms of credit risk. This is particularly the case given the interdependency with public charging infrastructure which, if underprovided for, can undermine the operations of high utilization business models where EVs have a TCO advantage (e.g. fleet businesses). As such, lenders have to carefully appraise whether the charging interface is effectively managed before making a firm commitment, to avoid a business risk that is challenging to manage and could increase credit risk. Additionally, the asset life of what is a nascent technology is still to be fully discovered and understood by financiers, with unknowns in terms of battery life, uncertain maintenance requirements and a low base of mechanical capacity and expertise to provide effective lifecycle and after-sale maintenance. This can result in uncertainty around residual value which in any vehicle financing is often the key element of lender security. This is exacerbated by an immature and shallow second-hand market for EVs, meaning lenders cannot rely yet on market valuations like those in the large second-hand market for ICE vehicles. The higher upfront purchase cost of EVs also present potential challenges to financiers. All other things being equal, higher purchase prices results in larger loan sizes for borrowers. This can be a particular challenge in the light vehicle segments (e-2W/e-3W) where the TCO advantage of EVs is higher but the creditworthiness of potential borrowers is often low. As a result, borrowers may not be able to access the higher capital required and/or be able to afford the commensurate increase in vehicle deposits and interest rates associated with larger loan amounts. This situation also presents a challenge for financiers in terms of the additional liquidity required to meet the higher financing requirement. Much lending in the vehicle finance sector is undertaken through thinly capitalized NBFCs already facing liquidity challenges due to non- performing loans and high underwriting costs. This can result in challenges in NBFCs accessing affordable wholesale funding. Indian policymakers could adopt a range of potential financial options to unlock the flow of affordable finance into the EV sector. If unaddressed, these funding and financing barriers (and the impact they have in tightening credit conditions for EV financing) will have a detrimental impact on delivering India’s EV penetration targets. A laissez-faire approach of allowing the market to gradually adjust to the new technology and the associated financial 30 Electric Mobility Market Assessment, Business Model and Action Plan in India   Executive Summary Figure ES.4: EV Funding and Financing Barriers Source: Steer review Funding and Impact: High cost Financing & limited access constraints to finance Business/ Supply side High interest counterparty Asset risk constraints rates risk Tight gearing Liquidity Utilisation risk Asset life risk restrictions (low challenges loan to value) Fragmentation Operations and High upfront Limited supply and underwriting maintenance costs of finance costs Shallow Counterparty Inadequate Short debt secondary risks policy signals tenors market risks will result in an extended period of financing costs and lower the TCO. Such adjustment that is unlikely to support the guarantees can also cover more vehicles step-change in penetration required by than direct subsidies as only potential government targets. Policymakers in many losses on loans are covered, bringing countries are faced with the same reality down the cost per vehicle compared and are having to formulate a catalytic policy to subsidy schemes. First loss facilities response to overcome these barriers and have been shown to be efficient for all stimulate market growth. Risks can be better vehicle types. As an illustration, allocating discovered, understood, and effectively the same amount of public funding in managed by lenders, with some support and a wholesale market first loss facility risk protection. For this purpose, a range would increase the number of EVs by an of potential financial solutions have been estimated 19% over providing a simple proposed in this report aimed at unlocking the vehicle discount is provided, thereby EV financing market: increasing overall budget efficiency. Each INR 75m ($1m) of government funding • Debt mobilization through de-risking invested in such first loss facilities would is the most efficient way to deploy generate between 12,000 and 17,000 public funds. Government can guarantee additional vehicle sales over the period lenders against default by businesses or 2022 and 2030 compared to the base line. individual borrowers. This would reduce 31 Electric Mobility Market Assessment, Business Model and Action Plan in India   Executive Summary • Government funding is critical for public charging infrastructure, given the uncertainty in demand in the medium term. Government investment in charging infrastructure can drive EV sales, and unlock cheaper financing for businesses by lowering business risks. Investment in charging infrastructure will also boost investor confidence and signal the government’s intent to promote EV adoption. An estimated 22,000 to 33,000 additional EV sales are expected for each INR 75 m (US$1 million) of government funding for charging. • Government can leverage development financial institution (DFI) funding strategically to complement debt mobilization and direct subsidies. While the systemic impact of DFI funding could be low, equity investments could facilitate market entry for innovative firms, and have a demonstrative effect for domestic lenders and investors. 32 Electric Mobility Market Assessment, Business Model and Action Plan in India   Executive Summary Impact of action plan recommendations 56 million tonnes of cumulative well-to-wheel carbon savings in India across FY2022-30 India’s transport sector amounts to about 13% of total CO2 emissions (IEA, 202114). The land transport sector accounts for 87% of these emissions.15 The analysis estimates well-to-wheel16 carbon savings of 16 million tonnes in FY2030 which factors in the carbon contribution of ICEs and battery operated EVs. Tank-to-wheel carbon savings were also reviewed for comparison with other studies, as shown in the table below: Table ES.5: Benchmarking Steer estimates of decarbonization (tank-to-wheel) under alternate scenario with other studies for FY 2030 Source: Change in CO2 emissions-New Policy scenario (2030); CSTEP, CEEW, IRADe, PNNL, and TERI (2019). Comparison of Decarbonisation Strategies for India’s Land Transport Sector: An Inter Model Assessment. New Delhi: TERI; *Average emissions across the alternate sources Carbon savings Steer CSTEP PNNL CEEW IRADe TERI Reference emissions 2030 566* 630 376 378 833 615 (million tonnes) • e-2W: 38% • e-2W: 30% Electrification of Transport • e-4W:17% • e-4W: 3% fleet (sales penetration) by • e-3W: 65% • e-3W: 50% 2030 • e-bus: 50% • e-bus: 10% Reduction from electrification 6% 2.5% 26% 1.2% 6.6% 8.1% of transport (%) Carbon savings from 32 16 98 5 55 50 electrification (million tonnes) Electrification of the sector to predicted levels could result in 6% reduction tank-to- wheel carbon emissions from the sector (assuming the average of 566 million tonnes in 2030). The Steer estimate is on the conservative side as it only seeks to estimate direct benefits from EV adoption. EV uptake combined with other decarbonization strategies such as modal shift from private to public or shared transport modes, travel demand management strategies, and use of other alternative fuels such as blending bio-ethanol in petrol or diesel would reduce transport emissions even further. The impact of decarbonization is directly linked to vehicle ownership and growth trends in each state and at the national level. If action plan recommendations are implemented with the financing solution of a wholesale market first loss facility, it would lead to a cumulative well-to-wheel carbon savings of 56 million tonnes across FY2022-30, saving a treatment cost of INR 28 billion, with the highest impact coming from 2W, 3W and e-buses. 14  308 MT out of 2310 MT in CO2 emissions. IEA website accessed November 4, 2021. 15  Comparison of Decarbonisation Strategies for India’s Land Transport Sector: An Intermodal Assessment NITI Aayog, USAID, Shakti Foundation, 2019 16  Well-to-wheel emissions include all emissions related to fuel production, processing, distribution, and use. In the case of gasoline, emissions are produced while extracting petroleum from the earth, refining it, distributing the fuel to stations, and burning it in vehicles. In contract, Tank-to-Wheel (TTW) refers to a subrange in the energy chain of a vehicle that extends from the point at which energy is absorbed (charging point; fuel pump) to discharge (being on the move). 33 Electric Mobility Market Assessment, Business Model and Action Plan in India EV adoption is also expected to result in significant reduction in fuel usage. Mass deployment of EVs across sectors could potentially result in cumulative fuel savings of 59 billion liters during FY 2022-30. Fuel savings primarily result from transition to e-2W, e-3W and e-4W. Switching petrol-based 2Ws to EVs contributes to about 50% of total fuel savings, followed by diesel-based 3Ws contributing about 30%. EV penetration in e-4W and e-bus segments each result in about 10% of total fuel savings. Figure ES.5: Report overall approach: Prioritization of action plan recommendations Source: Steer representation THEORY OF CHANGE <1% 10% 30% Incresed EV sales penetration levels Intermediate Inputs Activities Outputs Outcomes Impact Outcomes Changes in policies Creating right De-risking business Increased private Growth in EV Greater investment and regulations governance models and contact investment, more job penetration; India flows in EVs; to allow for structure, regulatory structures, improved opportunities and moves closer improved urban business models environment and user perception growth of EV to its long-term mobility; reduced providing affordable leading to higher EV technologies and goal of clean and carbon footprint and financing penetration businesses sustainable transport pollution levels. modes Alternate >30% EV sales EV30@30 Policy & Regulatory BAU penetraation in 2W and 3W 52% Prioritisation of action plan 3W Freight 40% Governance & Institutions 71% 3W Fleet 47 million tonnes 55% of carbon 27% savings 4W Fleet Urban Infrastructure 17% 4W Personal 15% 62,300 million 9% litres fuel savings Funding & Financing 2W Fleet 46% 20% 35% 23million jobs Procedural & Procurement 2W Personal 15% created 0% 10% 20% 30% 40% 50% 60% 70% 34 Electric Mobility Market Assessment, Business Model and Action Plan in India   Executive Summary Figure ES.6: Prioritized action plan recommendations for e-2W, e-3W and e-4W Source: Steer representation Categorize 2W as Priority 1 recommentations Priority 2 recommentations 1 transport vehicles High 2 2 Consistent GST 1 6 7 Increase cap on 3W 3 registeration 3 Open permit for e-3W 8 4 up to a cap 4 9 Allow battery swapping 5 5 in FAME and state EV policies Impact 6 Reduce financing cost Priority 3 recommentations Priority 4 recommentations 10 Include EV in priority 7 sector lending 11 Allow permits to fleet 8 operators Develop nodal EV cells 9 at national and state levels Create EV fund-finance 10 incentives Additional scrappage 11 benefits to purchase Low Complexity High EVs Figure ES.7: Prioritized action plan recommendations for e-bus adoption Source: Steer representation 1 E-Bus pilot operations High Priority 1 recommentations Priority 2 recommentations 4 Seperate funding for in- 7 2 frastructure readiness 3 6 Programme approach 3 for e-bus implementation 2 4 Consistent GST regime Balanced subsidy 1 5 structures 5 Impact Favourable financing 6 ecosystem Priority 3 recommentations Priority 4 recommentations Contractural improve- 8 7 ment to improve bankability 9 10 Capacity building in 8 e-bus operations Contract management 9 and prosurement cell Alternate revenue 10 souces-feebate scheme for e-bus fund Low Complexity High 35 Electric Mobility Market Assessment, Business Model and Action Plan in India   Executive Summary Figure ES.8: Prioritized action plan recommendations for charging infrastructure Source: Steer representation Government land pool- Priority 1 recommentations Priority 2 recommentations 1 ing for public charging High station 1 4 Seperate meters for EV 2 charging 5 EV policy to include all 3 technologies 2 6 Uniform EV tariff for all 4 charging use cases Depot charging infra- 3 5 structrue accessible to Impact all operators Priority 3 recommentations Priority 4 recommentations Amend development 6 control regulations for office/home charging 7 Allow demand aggre- 7 gation for accessing renewable energy Low Complexity High 36 Electric Mobility Market Assessment, Business Model and Action Plan in India 1. Electric Mobility Market Overview Photo credits: Ather Energy 1. Electric Mobility Market Overview Overview Background The purpose of the study is to assess The Government of India is committed current electric mobility market conditions to sustainable growth in the power and and outline a viable market roadmap for transport sector particularly by embedding increasing uptake of electric vehicles (EVs) in renewable energy in electric mobility India. The background section in this chapter provision to meet its decarbonization goals. presents a brief on India’s position with India has participated in the United Nations respect to adoption of electric mobility to Framework Convention on Climate Change meet its climate change targets. This chapter and the Paris Agreement. During the recent also provides a summary of the approach 26th Conference of Parties (COP26) held followed in this report with respect to the in November 2021, India has committed following: towards becoming net-zero carbon target by 2070 and other climate mitigation measures • Market assessment for forecasting to be achieved by 2030. COP 26 is a penetration of new vehicle sales by 2030 commitment for countries to come forward • Key action plan interventions required with emission reduction targets by 2030 at national and state level to accelerate and becoming net zero by 2050 through a transition to EVs combination of measures such as phasing out coal, curtailing deforestation, switching • Impact of implementing key action plan to electric vehicles and encouraging recommendations on EV penetration, investment in renewables. India has pledged decarbonization, fuel savings and job to phase down coal-based power and creation increase non-fossil energy generation to 500 GW by 2030 while meeting 50% of energy demand from renewables.1 2 Photo credits: Ather Energy 1   https://ukcop26.org/cop26-goals/ accessed on 30 December 2021 2   https://www.ceew.in/news/cop-26-ceew-unpacks-indias-2070-net-zero- target-and-other-climate-mitigation-measures accessed on 30 December 2021 38 Electric Mobility Market Assessment, Business Model and Action Plan in India 1. Electric Mobility Market Overview Road transport is a leading contributor to commercial financing for battery storage and global carbon emissions. Many governments e-mobility markets for transition to clean globally are looking to reach ‘net-zero’ mobility in India. NITI Aayog in partnership emissions from the sector by 2050 with a with UK government has launched e-AMRIT focus on avoiding unnecessary motorized (Accelerated e-Mobility Revolution for India’s travel, shifting demand to more efficient Transportation) to be a one-stop destination modes like public transport, and accelerating for raising awareness about electric mobility the transition towards cleaner fuels such as and informing the consumers about the electricity or hydrogen. benefits of switching to electric vehicles.4 There are several policy initiatives being taken India’s National Electric Mobility Mission by the Government of India to create an Plan (NEMMP) in 2013 has been developed ecosystem fostering mass scale adoption of to provide the roadmap and framework electric vehicles. for adopting a full range of electric mobility solutions for India which would also enhance • The Government of India has approved the nation’s crude oil security.3 India is an outlay of INR 18,100 crore for five among the few countries that support the years for implementation of Production global EV30@30 campaign, which targets Linked Incentive (PLI)5 scheme under the at least 30% new vehicle sales to be electric National Programme on Advanced Cell by 2030. The government is creating an (ACC) Battery Storage (NPACC), which enabling environment through various policy is intended to establish an indigenous initiatives such as Production Linked Incentive manufacturing capacity of 50-gigawatt (PLI) Scheme and Faster Adoption and hour (GWh) of ACC. Each selected ACC Manufacturing of Electric (FAME) and subsidy manufacturer will have to set-up a facility programs. Also, state governments are of at least 5 GWh with a cap of total developing complementary policy initiatives subsidy at 20 GWh. The beneficiary would to provide further support to e-vehicle ensure a domestic value addition of manufacturing and utilization. A key factor 25% within two years and raise it to 60% for the success of e-mobility is provision of domestic value addition within 5 years reliable, accessible, and affordable charging either at mother unit or integrated unit or solutions for each market segment. at a project level in case of hub and spoke structure.6 To enable the growth of the e-mobility market • The Government of India issued a and develop sustainable business models for PLI scheme for Automobile and Auto electric mobility in India, NITI Aayog is leading Component Industry on 23 September the national mission on Transformative 2021 with a budgetary outlay of INR Mobility and Battery Storage to promote 25,938 crore for Advance Automotive clean, connected, shared, sustainable and Technology (AAT) products manufactured holistic mobility initiatives. This Mission in India from 1st April 2022 for a period of includes preparation of a roadmap to leverage five years. This scheme is being offered the size and scale of the ecosystem of electric to existing automotive players as well mobility and mobilize private capital and 3   National Electricity Mobility Mission Plan (NEMMP), 2020, Department of 4  https://e-amrit.niti.gov.in/about-the-portal accessed on 21 February 2022 Heavy Industry, Ministry of Heavy Industries & Public Enterprises 5  https://pib.gov.in/PressReleasePage.aspx?PRID=1717943 accessed on 21 February 2022 6  https://pib.gov.in/PressReleasePage.aspx?PRID=1717938 accessed on 20th August 2021 39 Electric Mobility Market Assessment, Business Model and Action Plan in India 1. Electric Mobility Market Overview as new investors looking to enter So, what does it take to convert the vision the sector. It has two components- and such policies into a rapid uptake of EV? the ‘Champion Original Equipment First, a good understanding of what is driving Manufacturer (OEM) Incentive Scheme’ and will drive market penetration of EVs by which is also a sales value-linked vehicle type and market segment, considering incentive applicable on advanced the competitive position of EV versus their automotive technology components of internal combustion engine (ICE) counterparts vehicles, Completely Knocked Down / in terms of Total Cost of Ownership (TCO). Semi Knocked Down kits and vehicle Achieving cost parity will drive adoption and aggregators. As on January 2022 a total access to financing. Second, ensuring that of 115 companies filed application under the existing institutional, legal and regulatory the scheme and 20 applicants have been framework are fine-tuned to allow those approved under the Champion OEM markets to rapidly blossom. Third, easy access initiative.7 to charging options adapted to each market • Ministry of Road Transport and Highways segment. Fourth, access to financing at scale (MoRTH) has issued a draft -‘Motor and on terms that are at least matching that Vehicles (Registration and Functions of of ICE vehicles. Vehicle Scrapping Facility) Rules’ in March 2021 which is focused on laying down The World Bank Group (WBG) is supporting procedure for establishing registered NITI Aayog in undertaking a series of actions vehicle scrapping facilities for all types of to build the market and enabling the automotive waste products.8 The policy ecosystem to encourage growth in the electric is expected to boost new vehicle sales by mobility market over the short, medium phasing out older polluting vehicles. The and long term. The aim of this study is to 10 higher fuel price coupled with incentives recommend measures that would promote offered under Central and State early market development for unlocking the government policies would promote shift market to meet the targeted sales penetration towards cleaner fuels including electric of electric vehicles. Through this initiative, vehicles. the NITI Aayog and WBG seek to identify and catalyze early investments and promote • Ministry of Power has issued the revised private capital by deploying available financing consolidated guidelines and standards instruments to kickstart some of the selected for developing Charging Infrastructure business models and accelerate delivery of for Electric Vehicles. The guidelines real change on the ground in the EV market include provisions for setting up private space. and public charging stations. It also provides guidance on land use and This study focuses on assessing market access, electricity tariffs, role of state and potential and key upstream barriers to central government and timelines for uptake of the e-mobility market across installation of public charging stations.9 2/3W and cars, e-buses and charging 7  https://www.pib.gov.in/PressReleasePage.aspx?PRID=1797610#:~:tex- 10  Program for Transformative Mobility and Battery Storage (P172223), Pro- t=This%20scheme%20will%20facilitate%20the,this%20category%20of%20 gram Information Document (PID), the World Bank, May 08, 2020 the%20scheme. accessed on 21 February 2022 8  Draft of Motor Vehicles Registration and Functions of Vehicle Scrapping Facility) Rules 2021, Ministry of Road Transport and Highways, Notification dated 15 March 2021, New Delhi 9  Charging infrastructure for electric vehicles (EV)- the revised consolidated guidelines and standards, Ministry of Power, Government of India, 14 January 2022 40 Electric Mobility Market Assessment, Business Model and Action Plan in India 1. Electric Mobility Market Overview infrastructure. A range of business 2 million operational across the country in models were prioritized for each market FY21) has already electrified part of last mile segment and an action plan roadmap connectivity. The rest of the three-wheeler has been developed to create the right (3W) vehicle segment is now set to be at the enabling environment for the downstream forefront of the e-mobility story of India. investments to be unlocked and for these Likewise, two-wheelers (2W), which account business models to achieve success. It for 70-80% of total vehicle market, are focuses on developing an accelerated path expected to be front-runners in adoption of to achieve the targeted EV penetration EVs. The EV transition will require innovative sought in EV30@30 campaign11 by financial solutions. NITI Aayog has recently recommending the most impactful policy published a toolkit of solutions to mitigate changes and by unlocking affordable risks and market barriers for mobilizing EV financing into the sector. financing. In this direction, a first-loss risk sharing facility is under development as India’s e-mobility revolution is following a requested by NITI Aayog to the World Bank different trajectory from that observed in to offer risk cover to Non-Banking Financial many other parts of the world, with electric Companies (NBFCs) and Banks to improve two and three wheelers emerging as the first their confidence in lending to EV priority growth segment. The introduction of battery- sectors. This instrument would act as a powered slow speed rickshaws (e-rickshaw) guarantee in event of delay in payments or in several states of India (estimated to be defaults on EV loans and is expected to bring financing costs down.12 Mobilising finance for EVs in India EV financing is faced by range of financing challenges such as high financing costs, low loan- to-value ratios, short loan tenures and limited financing options. Financial institutions are not lending to the sector due to associated asset and business model risks such as limited technological understanding, uncertainty of resale value, policy risk and perceived product quality resulting low confidence in financing the EV markets. NITI Aayog is working towards introducing measures that could facilitate EV financing such as setting up a USD 300 million first loss risk sharing instrument with the World Bank which would act as hedging and guaranteeing mechanism for banks and NBFCs to manage delays or defaults on EV loans. This is expected to bring the financing costs down by 10-12%. To promote other enabling measures such as incentivizing financial institutions to support the risk sharing instrument, NITI Aayog has proposed Reserve Bank of India (RBI) to include of EVs as a priority sector for lending by scheduled commercial banks. This would mandate the banks to allocate a certain proportion of the level of credit towards EVs. Inclusion of EVs as a priority sector is expected to increase investor confidence by aligning market signals with central and state government’s policy vision, improve access to finance for NBFC by providing opportunity for co-origination and co-lending between banks and NBFCs, guide financial institutions to increase credit penetration and accelerate EV adoption by providing access to finance. 11  https://www.cleanenergyministerial.org/campaign-clean-energy-ministeri- 12  Banking on Electric Vehicles in India: A blueprint for Inclusion of EVs in al/ev3030-campaign accessed on 18 September,2021 Priority Sector Lending Guidelines, NITI Aayog, RMI India, January 2022 41 Electric Mobility Market Assessment, Business Model and Action Plan in India 1. Electric Mobility Market Overview Approach adopted for This study focuses on identifying the necessary actions and specific business the study models which represent the most promising opportunities in terms of investment The Government of India has set out its returns and scalability in the short, medium EV30@30 vision of achieving a target of and long term to kickstart the multiplier 30% EV penetration in all vehicle sales by growth in EV sales penetration from the 2030.13 It has been developing key policy current levels of under 1%. The challenges initiatives focused on achieving this goal, in the EV industry are quite steep, therefore however, without a concerted effort towards the solutions developed in this study removing bottlenecks in high potential market are equally radical to bear results in the segments India may fall short to the 30% sales short term while opening up business penetration target. opportunities in medium to long term. The following schematic summarizes the approach taken for this study. Figure 1.1: Summary of approach adopted for the study Source: Steer representation Busiess and Appraisal of Impact of Market Action plan financial financial proposed assessment roadmap models options recommendations • TCO analysis • Decision tree • Prioritize • Evaluate the • Analyze impact framework to action plan funding and of action plan • Barriers to EV adoption shortlist potential recommendations financing barriers recommendations business models based on their for selected and availability of • EV penetration for private impact on reducing business models affordable financing estimation investment key bottlenecks identify and on EV penetration, • charging and ease of appraise financial TCO savings, • Financial viability infrastructure implementation options based on decarbonization, assessment estimation their impact on EV fuel savings and job penetration creation Deliverable Deliverable Deliverable Deliverable Deliverable Estimated EV pene- Recommended busi- Recommend road- Recommend options Estimation of eco- tration and charging ness models which map for enabling for investment in the nomic and social infrastructure have potential to factors critical to sector which pro- value addition from requirement across be front-runners in success and mass vides the best value transition to EVs modes and market adoption of EVs for uptake of selected for money segments at a na- commercial business business models tional level 13  Higher targets are considered for market segments like 2 and 3 wheeler markets when planning sector interventions. 42 Electric Mobility Market Assessment, Business Model and Action Plan in India 1. Electric Mobility Market Overview Approach for market assessment Overall, 2W and 3W markets are expected to grow the fastest by FY25 in terms of EV The study built a bottom-up picture of the sales. This is primarily driven by progress overall vehicle market and its anticipated towards TCO parity or advantage which EVs evolution over the forecast horizon years have either already achieved or are likely (FY25, FY30). In this assessment, a deep to achieve relative ICE vehicles within this dive analysis was done for the four states period. Each vehicle and market segment selected for this study- Maharashtra, Tamil has been evaluated taking into consideration Nadu, Madhya Pradesh and Kerala (e-buses) their individual distinct characteristics to forecast the level of EV penetration across their largest cities. EV penetration To arrive at market assessment results, was assessed at an individual city level for a multi-dimensional EV forecast model each vehicle (2W, 3W and 4W) and market has been developed incorporating socio segment (‘personal’ or ‘fleet’) in selected economic and demographic factors along cities within those states. The results were with incentives offered under current then scaled up across the selected states policies at central and state level, impact and to national level to develop an overall of declining battery prices and constraints picture of the e-mobility market. under which each market segment operates which is further described in Chapter-2. Figure 1.2: EV market assessment model components Source: Steer representation Current market assessment for selected cities in each state (Base Year) Passenger Freight/Cargo (Further segregated by personal/shared, fleet) (Goods carrier) 2W 3W 2W 3W Cars Buses (Last mile (Goods auto) delivery) • Population • Travel characteristics • Industry source benchmarks • Urbanization • Level of motorization • Fleet owned by key players • Per capita income or ownership for • Population • Travel characteristics each category • Vehicle Saturation • National and state EV policies for buses 43 Electric Mobility Market Assessment, Business Model and Action Plan in India 1. Electric Mobility Market Overview The key market segments evaluated in the delivery services. EV market space has been presented in • Freight/ cargo delivery: With increase in the figure below. All the market segments e-commerce businesses and hyperlocal evaluated need to be complemented with deliveries, the demand for last mile provision of adequate charging facilities, delivery services has increased across therefore, business models for charging markets such as food delivery, parcel/ infrastructure are also covered as a part of courier market and grocery delivery. As the study. a result, the majority of commercially Figure 1.3: Electric mobility market segments in India plying 2Ws are catering to the delivery Source: Steer representation market segment. • Personal • Ride hailing Three-wheelers: This is a commercial • Rental vehicle used either in ride hailing segment • Freight/Cargo delivery and cargo delivery. • Ride hailing • Ride hailing: 3Ws historically have • Freight/Cargo delivery been an important intermediate public transport mode in cities, catering to • Personal first and last mile connectivity needs • Ride hailing as well as to short to medium distance • Employee shuttle services trips in the absence of adequate public transport provision. Currently, slow • Intracity bus routes speed electric rickshaws (e-rickshaws) • Intercity bus routes are more prevalent for providing last • Mofussil mile connectivity, however they have not been incorporated in this market Two-wheelers: This is primarily divided assessment as they are not formally between personal and fleet market registered in several states and often do segments. The fleet segments involve the not comply with the safety parameters following: for an L5 3Ws. • Ride hailing: As a part of shared • Freight/ cargo delivery: With an mobility, this caters to passenger increase in demand for urban freight mobility in form of bike taxis for services, 3Ws have become an important providing last mile connectivity. mode for deliveries. They are a more Aggregator platforms such as Ola and suitable cargo vehicle for e-commerce Uber are already operating such ride deliveries of non-perishables. There hailing services in many metropolitans has been significant investment in this across the country. mode by larger players such as Amazon, Flipkart and Reliance, who use them in • Rental: 2W rentals are primarily used their delivery fleet. for providing last mile connectivity. More recently with increase in COVID 19 cases leading to decline in shared mobility Four-wheelers: They are primarily used for demand, many rental platforms have meeting personal commute requirements offered their 2Ws for providing last mile of individuals or for providing ride hailing 44 Electric Mobility Market Assessment, Business Model and Action Plan in India 1. Electric Mobility Market Overview as taxis. Commercial fleet market segments • Charging infrastructure: Development evaluated in this market assessment include: of adequate charging and swapping network is a pre-requisite for mass • Ride hailing: These are taxis or cabs, uptake of EVs. This includes all charging commercially used as a transport mode solutions such as residential, office, via a ride hailing aggregator platform. public, captive charging models as well Ola and Blu Smart are examples of as battery swapping solutions focused on organizations which have deployed cars e-3W passenger fleet segment. (e-4W) in their taxi fleets. Figure 1.4: EV universe- primary markets • Employee shuttle services: These Source: Steer representation are provided to meet employee transportation needs and have recently Charging infrastructure gained momentum in electric mobility market, with Lithium operating a fleet of about 1500 cars providing such services to large corporates including Google. Bus: This market segment is evaluated based on the distance and region covered by the bus. The three segments evaluated under the study include: 2/3W and cars Buses • Intracity buses which operate within city limits Vehicle ownership forecast • Mofussil buses (an extension of intracity As part of this study, Steer has developed bus services) that operate services to far- a bespoke approach to forecast vehicle flung suburbs and neighboring districts ownership for each city. The growth in • Intercity buses that operate between vehicle ownership (rate per 1,000 people) is different cities closely linked to the growth in population in the area of influence and of economic Selected EV market segments activity as represented by city/district GDP. Given the above markets, the following However, as vehicle growth cannot continue key market segments are evaluated in this indefinitely, a saturation level of ownership report: is defined. The main inputs used are: • 2/3W and cars: This includes e-2W, e-3W and e-4W market segments such as • Population growth; personal, passenger fleet and last mile • City level per capita economic growth; delivery fleet. • E-buses: Intercity and intracity bus Initial and saturation level for each mode’s markets are operated across both public ownership. (State Transport Undertakings) and private sector players 45 Electric Mobility Market Assessment, Business Model and Action Plan in India 1. Electric Mobility Market Overview The model formulation to predict vehicle EV penetration ownership was: The output from the vehicle ownership model, i.e. the number of new vehicles registered/sold was then split between ICEs and EVs based on a logit choice model. The key input for estimating EV penetration is the total cost of ownership (TCO) of a Where: vehicle. Total cost of ownership of a vehicle – VO = Estimated vehicle ownership reflects the sum of all costs involved in the (vehicles/inhabitant); purchase, operation and maintenance of a – Sw = Saturation Level (as per given vehicle during its lifetime. Since India assumptions); is known to be a very price sensitive market, – Growth driver = Per capita (GSDP/ the TCO is a key factor influencing consumer Population) in case of 2-wheelers choice. and 4-wheelers, population in case of 3-wheeler passenger auto and 4-wheeler The projection for EV penetration rates were passenger fleet/ taxi and GSDP for 3 conducted exclusively for each shortlisted wheeler cargo fleet; city by individual market segments in the – Pop = Population (million inhabitants) selected four states-Maharashtra, Tamil – a= intercept; b=slope Nadu, Madhya Pradesh and Kerala. The EV penetration calculated were multiplied The parameters of the model, intercept by the total fleet size to give the EV market and slope were derived using historical forecast for each city. Since the market ownership and growth driver data for the assessment model is developed in detail period FY16 to FY20. Current market size with city level assessments, they were was estimated on the basis FY20 data and extrapolated to arrive at state level and India growth trend for each market segment level EV penetration. was estimated based on trends observed over the last 3 to 5 years (subject to the availability of data14 ). The vehicle ownership numbers are then used to arrive at total vehicle population in each city. The year-on- year difference in the vehicle population is assumed to be the vehicle sales/registration. 14  Note: In certain cities, especially in Madhya Pradesh, the latest vehicle registration data available is for FY18. We have requested the respective state departments to supply the missing data but for the purposes of this exercise, the FY20 number has been estimated assuming a continuation of past trends. 46 Electric Mobility Market Assessment, Business Model and Action Plan in India 1. Electric Mobility Market Overview Approach for selection of business Over 50 business models across market models segments and modes were assessed Priority markets for EV adoption have been and mapped with qualitative inputs from selected on the basis of a decision tree extensive stakeholder discussions and framework with a succession of potential quantitative parameters, such as TCO and gateways or enabling actions which could, market penetration potential to shortlist respectively, either obstruct or enhance viable business models. For each shortlisted the viability of each business model. The business model, detailed financial model framework illustrated below is adapted for analysis with alternate project structuring each market segment, depending upon was undertaken to select the business the parameters that have most impact on models with most viable commercial its viability to select high growth potential proposition. The alternate business models models. and results of financial viability assessment for high potential 2W, 3W and fleet models is presented in Chapter-3. Figure 1.5: Business model decision tree Source: Steer representation Policy & Market Residual value Technology Texation Bankability regulation readiness Expectations • Focussed vehicle category • Applicable permits on business models • Daily range for viable TCO versus ICE State’s policies or local authorities don’t allow EV • Market size- in the market Aggregation potential segment • Charging Range too short infrastructure for viability with solutions current battery technology • GST rate on financial v operating lease v purchase No obligation Obligation to provide/ on DISCOM High cost of (public • Acceptable installation network) counterparty risk low demand or Dedicated (Financier) depot Scope to • Payment assurance charging offset GST for operator paid against that on revenues • Assured secondary market demand or RV guarantee Small Security of Business or Fleet owner aggregator operator 47 Electric Mobility Market Assessment, Business Model and Action Plan in India 1. Electric Mobility Market Overview Approach for developing action plan roadmap Action plan steps presented in this report are based on assessment of enabling environment factors which are considered critical to the success of business models. The desired features of the EV ecosystem are grouped under five broad headings, presented in the figure below. Figure 1.6: Overall EV ecosystem Source: Steer representation • Procurement policy and plan • Business models • Procedural requirements Procedural & Procurement • Funding sources • National/State EV policy • Subsidies Funding & Policy & • Applicable Taxes/fees • Financing instruments Financing Regulatory • Vehicle permits • Charging/swapping infrastructure policy • Environmental standards & regulations Governance & Urban Institutions Infrastructure • Institutions • Charging infrastructure • Procurement availability • Transition plan • Alternate/second use for emobility of battery • Installed capacity and infrastructure • Future energy plans 48 Electric Mobility Market Assessment, Business Model and Action Plan in India 1. Electric Mobility Market Overview The absence of critical features may restrict sharing facilities, buyback guarantee, or delay market development. Several help to buy approach, interest of these aspects cut across all market subvention schemes for disbursing segments, although some features are subsidized credit to e-3W and e-2W relatively more important within specific players. Such an approach can be made market segments which are presented in more effective by a focus on specific detail in Chapter-2 for key market segments business models and market segments based on feedback from stakeholder that are likely to drive EV adoption, consultations. including 2W, 3W and fleets. The action plan roadmap has been conceived The schematic below showcases how policy, following the ‘Theory of Change’ which governance, financing and procurement stipulates how an intervention can deliver related interventions as a part of the the desired results of a program or policy proposed action plan roadmap can by creating an enabling environment for deliver the outcomes such as increased EV meeting its long-term objectives.15 penetration, shift to sustainable transport modes, higher investment, creation of jobs The scenarios presented below were and reduced adverse impact of transport assessed as a part of this study to sector on environment. The inputs are the estimate the impact of the key action plan direct changes and actions that are executed recommendations: today to deliver the objectives of the overall program or policy. • Business-as-Usual (BAU): This scenario represents a continuation of central and state government policies as on January 2022 without any concerted effort to move the needle towards high EV penetration. It incorporates the impact of declining battery prices and FAME subsidy and State EV policies implemented till January 2022. In this scenario, the business models continue to operate under the constraints elaborated in Chapter 2. • Alternate scenario: This scenario assumes implementation of key action plan recommendations with coordinated approach across policy initiatives at central and state level, institutional re- alignment and unlocking of affordable financing for e-mobility by adopting innovative approach including risk 15  Review of the use of ‘Theory of Change’ in international development, Review report, Isabel Vogel, April 2012 49 Electric Mobility Market Assessment, Business Model and Action Plan in India 1. Electric Mobility Market Overview Figure 1.7: Prioritization of action plan recommendations Source: Steer representation THEORY OF CHANGE <1% 10% 30% Incresed EV sales penetration levels Intermediate Inputs Activities Outputs Outcomes Impact Outcomes Changes in policies Creating right De-risking business Increased private Growth in EV Greater investment and regulations governance models and contact investment, more job penetration; India flows in EVs; to allow for structure, regulatory structures, improved opportunities and moves closer improved urban business models environment and user perception growth of EV to its long-term mobility; reduced providing affordable leading to higher EV technologies and goal of clean and carbon footprint and financing penetration businesses sustainable transport pollution levels. modes Alternate >30% EV sales EV30@30 Policy & Regulatory BAU penetraation in 2W and 3W 52% Prioritisation of action plan 3W Freight 40% Governance & Institutions 71% 3W Fleet 47 million tonnes 55% of carbon 27% savings 4W Fleet Urban Infrastructure 17% 4W Personal 15% 62,300 million 9% litres fuel savings Funding & Financing 2W Fleet 46% 20% 35% 23million jobs Procedural & Procurement 2W Personal 15% created 0% 10% 20% 30% 40% 50% 60% 70% The framework for prioritizing action plan bottlenecks which hinder the existence or recommendations is not unidirectional; scale up of potential business models. it indicates the critical levers required for • Strong governance mechanisms and developing a roadmap where government institutions are a vital block for effective has substantive role to play till a benchmark implementation of such policy or penetration is reached from where market regulatory changes; hence they have forces would be taking over for mass scale to be aligned as soon as the necessary adoption. The recommendations are inter- regulation is implemented by the dependent between different actors in public government agency. and private sectors. The rationale behind • Urban infrastructure in form of availability the suggested prioritization framework is of adequate charging and ancillary presented below: infrastructure is the backbone of EV industry. Once business models are • Policy and regulatory barriers are the first allowed under the national or state EV gateway in the decision tree framework policies, the next focus should be on for selecting prioritized market segments as it focuses on removing critical 50 Electric Mobility Market Assessment, Business Model and Action Plan in India 1. Electric Mobility Market Overview deployment of charging infrastructure Figure 1.8: Impact vs complexity framework of recommendations at strategic locations to increase EV Source: Steer representation penetration across high potential business models. Priority 1 recommentations Priority 2 recommentations High • Existence of different business models is contingent on effective policy implementation and provision of adequate charging infrastructure, however due to high financing costs and Impact lack of availability of credit, the scale and viability of business models is adversely Priority 3 recommentations Priority 4 recommentations impacted. Therefore, after aligning policies and infrastructure, support to EV businesses has to be provided in form of affordable and accessible financing options which is seen as a critical factor for success of any business model. Low High The approach used for identifying and Complexity appraising financial options to unlock flow of affordable financing in the EV ‘Impact’ refers to the benefit the sector is discussed in detail in Chapter-6. recommendation has on the scaling the • Improved procedures and efficient potential business models. ‘Complexity’ procurement processes are important refers to the time, effort, and cost for optimizing business operations. to implement a recommendation. A Therefore, after implementation of combination of complexity and potential above recommendations, procedural impact has been assessed to prioritize the and procurement related action plan action plan recommendations. steps may lead to improved viability and scalability of alternate business models. Deep-dive analysis for each barrier impacting operations and viability of business model was done with stakeholder consultations The multiplier impact in terms of increase across different agents in the EV value chain. in EV penetration may differ across This was further validated with extensive market segments and geographies due policy and regulatory investigation to assess to differences in effectiveness of policy the reason and impact of such barriers. A implementation, governance frameworks, series of consultations were held on the urban infrastructure development and draft action plan recommendations with available funding options. To develop an the state and national government agencies effective roadmap for implementation as well as private sectors players to get of action plan recommendations, a feedback on the applicability, impact, and framework has been developed to prioritize ease of implementation of the proposed recommendations within each category of recommendations. critical ecosystem factors based on their expected impact versus the complexity of implementation. 51 Electric Mobility Market Assessment, Business Model and Action Plan in India 1. Electric Mobility Market Overview The prioritization framework was developed recommends an action plan roadmap for based on the ecosystem factors (policy, increasing adoption of selected business governance, urban infrastructure, financing models. and procurement) described above, impact 4. E-buses provides an overview of of the recommendation in improving adoption of e-buses under the current the perception factor which influences procurement framework. It also provides consumer’s and business choice to adopt alternate business model options and key EVs and the stakeholder feedback in terms action plan recommendations to support of the complexity of implementing the economies of scale in e-bus procurement, recommended measures. operations and financing. 5. Charging infrastructure presents the The key action plan recommendations are the state of charging infrastructure at global essential levers that could help in achieving and national level and the forecasted the EV30@30 target by taking the average EV charging swapping infrastructure penetration levels from 17% in BAU to 35% in requirement to support EV penetration the alternate scenario. Higher EV penetration across different market segments. The would also result in positive socio-economic, action plan recommendations provided and environment impacts in terms of fuel in this chapter are aimed to improve savings, job creation and decarbonisation. The commercial viability and scale up of impacts highlighted in the above schematic charging and swapping business models. are discussed in detail in Chapter 6- Impacts of proposed intervention. 6. Financing solutions focuses on understanding the challenges and barriers to funding and financing in detail Report structure to identify a set of financial options that This report is divided into seven sections: could be deployed by Indian policymakers to unblock the flow of affordable finance 1. Overview provides a brief on India’s into the EV sector and increase EV targets of electric mobility adoption to penetration for the shortlisted business meet its climate change targets and the models beyond baseline/do-minimum approach used in this study for assessing levels. the market potential, identifying potentially 7. Impact of action plan scalable business models and prioritizing recommendations summarizes the action plan recommendations to meet the impact of taking a coordinated approach EV30@30 targets. and highlights the value of implementing 2. Market assessment provides an the combination of recommended introduction to the India’s transport sector measures and effective financing both on and an overview of current state of EV carbon emissions and for job creation in penetration and barriers faced in each of India. the market segments. 3. 2/3W and Cars presents an estimated EV penetration in 2W, 3W and Cars market segments. Within each market segment, it identified potential business models and 52 Electric Mobility Market Assessment, Business Model and Action Plan in India 2. Market Assessment 2. Market Assessment Introduction Energy Outlook 2021 by International Energy Agency, the growth in India’s transport This chapter presents the current status sector is likely to increase the oil demand of India’s transport sector and the relative to almost 8.7 million barrels per day by positioning of EV in the sector. Within the 2040 assuming a balanced assessment electric mobility sub-sector, various market of the current policies and constraints segments have been studied to identify of India’s energy systems.17 According to potential opportunities and barriers in International Energy Agency, the road large scale adoption of EVs. The chapter is sector in India also accounts for over 90% structured as followed: of total carbon emissions by the transport sector.18 There is a strong push towards • India’s transport sector presents a sustainable development with electrification literary introduction to the sector, its of transport and deployment of energy economic drivers and historical growth efficient measures to potentially bring down trajectory. this oil demand to 1 million barrels per day by 2040.19 • Market segments introduces the different potential markets available With economic growth and development, for each vehicle mode. It also presents average level of travel in India has increased an overview of current state of EV to 5,000 kms each year, which is a threefold penetration for each of these market increase compared to 2000. In the last two segments decades, vehicle ownership has increased • Market opportunities and barriers five-fold led by two-wheelers and three- presents an overview of factors wheelers. Growth in freight activity has promoting as well as posing a threat to resulted in quadrupling of truck ownership the development of EV market in India. between 2000 and 2019.20 These factors are categorized among the ecosystem factors regulatory, policy, Witnessing the world’s highest growth rate of governance, urban infrastructure, urbanization, India’s urban population grew financial, and procurement as described by 91 million between 2001 and 2011. As per in Chapter-1. the census 2011, 31% of India’s population resided in cities,21 which is expected to grow to 40% in 2030 and 50% in 2050,22 thus India’s Transport sector creating pressure on the mobility needs of the country—which will result in growing Transport is among the fastest growing vehicle ownership and demand for public sectors in India. Energy demand associated transport. with transport is expected to increase significantly, especially with expansion plans for transport infrastructure in roads, railways, metro, ports and airports. India has the second largest road network globally with about 5.89 million kms16. As per India 17  India Energy Outlook 2021, Special Report, International Energy Agency 18  India 2020, Energy Policy Review, International Energy Agency 19  India Energy Outlook 2021, Special Report, International Energy Agency 16  Basic road statistics in India, Ministry of Road Transport and Highways, 20  India Energy Outlook 2021, Special Report, International Energy Agency 2016-17 21  Provisional population totals, Paper 2, Volume 1, Rural-Urban Distribution, Census of India, 2011 22  Faster adoption of Electric Vehicles in India: Perspective of consumers and industry, The Energy and Resources Institute, 2019 54 Electric Mobility Market Assessment, Business Model and Action Plan in India 2. Market Assessment Indian cities with over 1 million population developed regions such as Europe and the account for 30% of total registered vehicles. US which have an average car ownership With lack of adequate public transport, of 79% and 88%26, average car ownership growing cities experience a high share of per 1000 people is at 35 in cities with over transport demand led by two-wheelers 1 million population. Therefore, the path of (2W) and three-wheelers (3W). Average 2W e-mobility that India takes may not be led by ownership is at 45%-50% of households cars (4W) like in other developed economies. in tier II and tier III cities and close to 30% in tier I cities23. ‘Tier I’ includes cities with Two-wheelers (2W) account for majority of population of 8 million or above; ‘Tier II’ personal vehicle sales in India and three- cities population ranges from 4-8 million; wheelers (3W) act as a key (intermediate) Tier III includes cities with population of public transport mode and are extensively 1-4 million and; ‘Tier IV’ is classified as cities used for last mile freight deliveries. with population between 0.5-1 million24. Successful business models within the Indian Therefore, a significant opportunity exists in e-mobility sector are also likely to be driven terms of electrifying two and three-wheelers by such light vehicle modes. to lower energy demand and reduce carbon emissions. At a global level significant technological advancement is anticipated, with evolving Overall, total vehicle registration has battery chemistry and progressively greater grown from 18 million in FY16 to 21 efficiencies and longer range being achieved million in FY20.25 Vehicle registrations by battery packs. However, these trends witnessed a sharp decline during FY21 to 15 may take time to impact the Indian market million due to COVID 19 impacting global directly as a vast majority of the EVs in India automobile demand. 2W registrations are expected to be light vehicles which are have consistently accounted for 75%-80% powered by the batteries below 10kWh. The of these registrations. Currently a majority additional complexity caused by the ongoing of 2W demand is being met by petrol COVID pandemic and its impact on global variants which are a significant contributor supply chains is causing many industry to greenhouse gas emissions and PM2.5 players to rethink their strategies around particulate matter. Further, the lack of procurement and their sourcing of EV adequate public transport systems in cities battery, vehicle components and supporting has led to high dependence on 2/3W and charging infrastructure. cars. Economic growth coupled with urbanization, rising incomes and aspirations promoting higher vehicle ownership and usage in Indian cities, has paved way for promoting electric mobility market in India. Unlike other 23  Faster adoption of Electric Vehicles in India: Perspective of consumers and 26  https://www.bloomberg.com/news/articles/2015-04-17/a-pew-survey- industry, The Energy and resources Institute, 2019 charts-global-car-motorcycle-and-bike-ownership accessed on 20 August 24  https://www.india-briefing.com/news/india-tier-2-tier-3-cities-right-busi- 2021 ness-15932.html/ accessed on 27 October 2021 25  FADA Releases FY20-21 & April’21 Vehicle Registration Data, Federation of Automobile Dealers Associations, 10 May 2021 55 Electric Mobility Market Assessment, Business Model and Action Plan in India 2. Market Assessment Market segments Current state of electric mobility The success of EV in the overall vehicle mix has been limited except for e-3W, due to higher upfront costs and technology apprehension around batteries and their range. The current level of e-mobility penetration is very low for e-2W, e-4W and e-bus as seen in the table below.27 Table 2.1: EV penetration by market segments as a percentage of total vehicle sales from FY 19-FY 21 Source: SIAM Database, FADA28 Penetration Penetration Penetration Mode FY 19 FY 20 FY2144 % % % FY2129 28    e-2W 126,000 0.9% 152,000 0.9% 149,000 1.3% e-3W 100,000 14.3% 90,000 14.1% 88,000 34% 29    e-4W 3,600 0.11% 3,400 0.12% 5,900 0.2% e-bus 400 0.04% 600 0.08% 1,850 11.7% Note: 3W numbers do not include e-rickshaws. Historical data is available at an aggregated market segment of 2W, 4W and 3W, and is disaggregated for the forecast period; EV Penetration % estimated with total sales reported by FADA Even though the vehicle sales number have being replicated in EVs. It is also the declined for e-2W and e-3W, the penetration segment where several Original Equipment levels have improved due to decrease in the Manufacturers (OEMs) have stepped in overall vehicles sales in FY 21. EV penetration and are currently producing various slow has witnessed significant increase in e-bus (<25km/hr), mid (25-40 km/hr) and high and e-4W categories. The use of light (>40 km/hr) speed variants. This has also vehicles such as two and three-wheelers for led to the upfront price point of an e-2W short distance trips and last mile delivery are being within acceptable range of an ICE 2W leading the EV growth story. These are also which is supporting faster adoption. Policy the vehicle segments which are witnessing initiatives being implemented by central and EVs having an advantage over ICE vehicles state government across India are seen to be in terms of Total Cost of Ownership (TCO) supporting adoption of e-2W across various which combines both upfront and operating states of India. costs. The TCO results for each market segment are discussed in Chapter 3 for 2/3W e-3Ws have seen a steady uptake initially and cars and in Chapter 4 for e-buses. due to the introduction of the slow speed variants, commonly known as e-rickshaws, Two-wheelers in general dominate the in various parts of India. It is estimated that overall vehicle sales and the same trend is there are nearly 2 million such e-rickshaws 27  https://cp.catapult.org.uk/wp-content/uploads/2021/03/210318_1020_CPC_India_Report.pdf 43  FADA Releases FY20-21 & April’21 Vehicle Registration Data, Federation of Automobile Dealers Associations, 10 May 2021 44  https://www.autopunditz.com/post/ev-sales-decline-over-19-percent-in-fy2021-to-2-36-802-units accessed on 1st March 2022 56 Electric Mobility Market Assessment, Business Model and Action Plan in India 2. Market Assessment current plying on Indian roads. This rapid The low levels of EV penetration in cars increase in e-rickshaws is due to low (4W) and bus market is due to the high barriers of entry for both manufacturers upfront prices, relatively low performance and operators, limited regulations around and dependency on the development of their design and operation and lower cost charging infrastructure coupled with limited relative to ICE 3Ws. These are considered number of products. Given these challenges, to be a replacement of the traditional cycle adoption of four wheelers and electric buses rickshaws and serve an important purpose has been low and is expected to grow in within the last mile connectivity by serving tandem with the development of charging short distance trips. ecosystem and more products catering to specific market segments being developed. E-rickshaws are key to urban mobility for last and first mile connectivity and due Market opportunities and to welfare reasons city/state authorities have taken a light touch approach to their barriers regulation as they provide employment to In countries where EV adoption has low skilled groups and can be considered as accelerated, it is reaching a level where it a steppingstone for L5 e-3W30 as the price is comparable to their ICE counterparts in point is lower. The slow speed e-rickshaws are terms of performance, including speed, pick- currently powered by lead acid batteries and up, and range. Additionally, EVs are growing are not compliant to automotive standards to present users benefits in the form of as they are not classified as ‘transport vehicle’ operational cost savings due to better under the Motor Vehicle Rules. Most of them efficiency, lower maintenance requirement, are unregistered making financing at scale and lower energy and emissions. Key drivers challenging, and they are accordingly not influencing transition towards electric covered in this study. Better regulation in mobility include: terms of quality, licensing, battery disposal should be encouraged in case of e-rickshaws • Climate change targets: According as these vehicles form a significant means of to a recent World Air Quality Report urban mobility. by IQAir31, India dominates the PM 2.5 emissions globally and is home to 22 The more traditional mid to high speed 3W, of the top 30 most polluted cities in the categorized as L5 within vehicle specification world. Transportation is a leading source norms, are currently dominated by ICE for all pollutants and PM 2.5 emissions. vehicles driven by CNG and petrol engines. India has committed to reducing its However, this vehicle segment of L5 3W GHG emissions by 33% to 35% percent is seeing rapid uptake of EV with multiple below 2005 levels by 2030. To lower the OEMs launching new products combined contribution of transport sector to overall with policy initiatives taken by central and carbon emissions, the government is state governments supporting this uptake of focusing on including EVs in their policies e-3W. This study focuses on the mid to high- to promote transition to clean mobility.32 speed segment (L5) of e-3W. 30   According to International Centre for Automotive Technology- L5 31  World Air Quality Report, Region and City 2.5 Ranking, 2020, IQAir auto-rickshaw is a motor vehicle with maximum speed exceeding 25 kmph 32  Zero Emission Vehicles (ZEVs): Towards a policy framework, NITI Aayog, and engine capacity exceeding 25 cc if fitted with a thermic engine, or World Energy Council, motor power exceeding 0.25 kW if fitted with electric motor. 57 Electric Mobility Market Assessment, Business Model and Action Plan in India 2. Market Assessment • Fuel costs: India imports 85% of its oil • Growth of e-commerce: Rapid growth in requirement and its cost stood at USD 55 e-commerce businesses has increased billion in FY 2020-21.33 95%34 of transport demand for last mile delivery services. fuel requirement is met by oil imports With COVID-19 pandemic resulting and this ratio is expected to increase in the increase in online shopping in with growth in mobility demand. India urban areas, there is increased demand is also a cost-conscious market, with for affordable last mile connectivity increase in prices of fuel and electric influencing transition to light electric vehicle’s total cost of ownership (TCO) vehicles such as e-2W and e-3W. Shift being competitive or cheaper than to e-delivery fleets is being witnessed ICE counterparts, there is significant by hyperlocal delivery start-ups such as potential for uptake of EVs in India BigBasket, Blinkit, Swiggy and Zomato as especially in light vehicle categories like well as major e-commerce players such as e-2W and e-3W. Amazon and Flipkart. Barriers to uptake The barriers to uptake of EV market segments are identified and mapped for each ecosystem enabling factor. These barriers have been identified based on over 100 stakeholder interviews conducted across the EV supply chain including government institutions, vehicle manufacturers (OEMs), fleet operators, bus concessionaires, charging infrastructure operators, battery manufacturers and financial institutions. The consultations took place in 2020 and early 2021. Some of those barriers have been or are in the process of being addressed for example through adjustments made for the FAME II program. 2/3W and Cars Table 2.2: Challenges faced by private vehicle market segments Ride- Last mile Challenges Personal hailing delivery Regulations in many states under the Motor Vehicle Act categorize 2W as non-transport vehicles which cannot be used for commercial operations such as a taxi, or for rental purposes, or for deliveries (requires yellow registration number plates). Category: Policy and Regulatory Impacted mode: e-2W 33  Roadmap for Ethanol Blending in India 2020-25, Report of the Expert Com- mittee, NITI Aayog, Ministry of Petroleum and Natural Gas, June 2021 34  India Energy Outlook 2021, Special Report, International Energy Agency 58 Electric Mobility Market Assessment, Business Model and Action Plan in India 2. Market Assessment Ride- Last mile Challenges Personal hailing delivery Even though EV policy states no registration fee on these vehicles, new registrations of L5 category e-3W at RTOs is obstructed in multiple states due to bureaucratic hurdles. Owning to pollution from diesel 3Ws in the past, governments in many large metropolitans had imposed restriction on registering new 3Ws. This had not been amended even after introduction of CNG and improvement of emission norms in many cities, leading to very few new 3W registrations35. This is – the primary reason for marginal yearly growth in this vehicle segment. Moreover, to meet the growing urban mobility needs, there has been significant adoption of e-rickshaws in many cities which do not require permits and lack safety regulations. Category: Policy and Regulatory Impacted mode: e-3W Ministry of Road Transport and Highways MoRTH, Government of India has recommended exemption from permit requirements for e-3Ws36 but the measure not yet implemented in many states. Permits for e-3W are currently issued to individual 3W drivers and not to corporate fleet owners. Results in black market for permits, with drivers selling them to fleet owners or other drivers at a – significant premium. In many cities district level RTOs issue route- wise permits which significantly limits the aggregation potential for a fleet operator and slowing the development of a network. Category: Policy and Regulatory Impacted mode: e-3W Selling battery separately from vehicle attracts Goods and Services Tax (GST) of 18% instead of 5% for the fixed battery in the vehicle, leading to inverted tax structure. Given that the life of the vehicle is longer than the battery and its cost comprises about 40% of the total vehicle cost, the higher GST rate on battery is a significant deterrent for end-user who is making a choice between EV and ICE variants. Also, for alternate business models such as battery swapping or battery leasing / subscription models, the higher GST rate on battery coupled with electricity duty results in double taxation and is a significant cost impacting the commercial viability of the business model.37 Category: Policy and Regulatory Impacted mode: e-2W and e-3W 35  https://epca.org.in/EPCA-Reports1999-1917/report-no-95-removal-of-three-wheeler-cap.pdf accessed on January 2021. Validated from stakeholder consultations with 3W OEM for local RTOs at Bhopal, Mumbai and Chennai 36  https://morth.gov.in/sites/default/files/circulars_document/Incentivisation_of_Electric.pdf 37  Accelerate corporate adoption of EVs in India, Policy and regulatory recommendations for Government of India, WBSCD, October 2020 59 Electric Mobility Market Assessment, Business Model and Action Plan in India 2. Market Assessment Ride- Last mile Challenges Personal hailing delivery As per Central Motor Vehicle Rules (CMVR), OEMs with motor ratings below 250W and a speed limit of 25 kmph are liable for homologation cost of INR 500,000 and those above these limits are subject to a licensing cost of INR 5,000,000 Many of these slow speed vehicles are fitted with cheaper imported parts leading to low price point for these vehicles. With such products not being subjected to stringent checks their penetration remains higher than the safer versions recognised under the FAME II policy. According to the research done by WBSCD, about 70-80% of e-2Ws bypass Automotive Research Association of India (ARAI- CMVR) regulations by getting vehicles approved as non-number plate vehicles. Also, indications that many e-2W fleet operators later increase the motor wattage and speed depending on operations (last mile delivery/ ride hailing) posing a serious safety hazard on the driver of these vehicles. Category: Policy and Regulatory Impacted mode: e-2W Residual or secondary market sale of electric scooters is negligible due to lack of understanding of battery technology for e-2Ws. Lack of technical bodies/ agencies estimating battery life and performance is also a key barrier in estimating residual value of e-2Ws.38 Category: Policy and Regulatory Impacted mode: e-2W, e-3W and e-4W High financing costs of e-2Ws between 15%-24% and for e-3W between 24%-30% on reducing balance with significant down- payment requirements. Financial institutions extending loans to this category are mostly NBFCs or Fintech companies such as RevFin, OTO Capital, Zest Money etc. whereas many commercial banks either don’t extend loan facility to EVs or treat them as ‘white goods’ instead of automobile loans leading to a much higher rate of interest. The low residual value expectation due to lack of technological understanding and lower battery life is another key challenge resulting in higher cost of financing this vehicle segment. Category: Financial and funding Impacted mode: e-2W and e-3W 38  Regulatory mechanisms for electric three wheelers, Parul Thakur and Sugandha Pal, TERI, December 2019 60 Electric Mobility Market Assessment, Business Model and Action Plan in India 2. Market Assessment e-buses In case of e-buses, there is a significant near-term. For the intercity bus markets, the gap in TCO between diesel and e-buses lack of public charging infrastructure, range in the majority of intracity operations. concerns (technology) and lack of subsidies Consequently, the pace of electrification of for the private sector market along with the bus fleet in intracity markets in the short to impact of COVID have slowed the uptake. medium term will be largely policy driven. The key barriers in the existing FAME subsidy Unprofitable public bus operations, high provision and execution of GCC contracts for capital costs of e-buses and the additional all market segments - intra-city, inter-city and fiscal constraints on both public and private mofussil – as applicable in 2020 and early operators due to the COVID crisis have 2021, are presented below: slowed down the transition to e-buses in the Table 2.3: Challenges faced by e-bus market segments: Intra-city, inter-city and mofussil Source: Steer Review Challenges Exclusion of private operators from FAME II subsidy: Under the operational guidelines of FAME II subsidy, only public bus operators or STUs are eligible to receive the demand incentives offered. Given the higher upfront cost of buses and associated cost of developing charging infrastructure, TCO parity doesn’t exist for e-buses over shorter distances whereas for longer routes the battery size is large and price of the bus may be much higher than a competing ICE vehicle, therefore private bus operators have not invested in shifting to electric fleet Category: Financial and funding Lack of depot and grid readiness: Under the model concession agreement (MCA) issued by NITI Aayog, the responsibility for making the depot infrastructure ready for installation and use of charging infrastructure lies with the contracting authority. However, during stakeholder consultations it was found that even provision of basic power infrastructure (11kV line) was not done by the authority. In several cases, the tender does not even specify the location of depots, which increases the risk premium perceived for these contracts and results in high GCC bids. Likewise, the lack of charging infrastructure in open access for intercity bus transport limits the uptake. Category: Urban Infrastructure Lack of scale economies: in 2020, three authorities i.e. BEST in Mumbai (300 buses) Janmarg in Ahmedabad (300 buses) and Uttar Pradesh (combined procurement of 600 buses for deployment across 11 cities) constituted about 50% of the total buses sanctioned under the FAME subsidy scheme. The FAME-II scheme is proposed to support only 7,000 buses and, without operating subsidies, these buses are commercially unviable for both intra-and inter-city routes. Therefore, there is limited incentive for OEMs to invest in R&D to improve the bus technology and performance or in capacity development for mass production of these buses, which has resulted in an uncompetitive product priced significantly higher than its ICE counterpart. Category: Urban Infrastructure 61 Electric Mobility Market Assessment, Business Model and Action Plan in India 2. Market Assessment Challenges High cost of capital: In the bundled GCC approach under FAME II, the responsibility of procurement, operation and development of associated charging infrastructure lies with the operators, which results in large upfront capex requirement to be fulfilled by the operator consortium consisting of OEMs as lead partners. Therefore, most of these OEM-operators require large upfront financing as well as working capital loans to finance their e-bus operations. Operational risk coupled with technology risk associated with e-buses results in higher cost of capital when attempting to raise business finance. Category: Financial and funding Uncertainty of payment by government operators: Poor financial health of State bus agencies, coupled with higher costs of operations of e-buses, has contributed to delay/ default of payments to operators. While the terms of payment in the case of service provider default were retained in local tenders, many cities changed the default clauses associated with delay in payments (as well as contract termination clauses) to relax obligations of the authority. The requirement of minimum amount to be maintained in the escrow account under the contract has also been changed by several cities. All these measures have adversely impacted the bankability risk of the project for service providers and their financing entities, deterring some potential bidders from applying. Category: Financial and funding Unbalanced risk sharing in contractual framework: In the GCC regime under FAME II, the risk allocation is skewed heavily towards the operator as all functions such as fleet provision, maintenance, operation and charging infrastructure provision are bundled. The performance and subsidy bank guarantees are additional contractual obligations of the operator. The risk premia to counter the risks of bundled operations based on a new technology, along with unbalanced application of penalties which can be imposed on the operator, result in higher quoted GCC rates Category: Procedural and Procurement Charging infrastructure The type of business model in charging space is determined by its location and the market segment it caters to, the following figure gives an overall understanding of the charging infrastructure market. Figure 2.1: Charging infrastructure market segments • Residential: Assumed to • Captive: Fleet operators of be the primary location of e-2W, e-3W and e-4W charging for personal users • Public: Key enabler for all led by e-2W market segments to grow Personal • Office: Will facilitate Commercial • Battery Swapping: Specific opportunity charging for market segments led by personal users fleet operator of e-3W • Depot charging: Specific for e-bus operations 62 Electric Mobility Market Assessment, Business Model and Action Plan in India 2. Market Assessment The barriers identified in uptake of charging infrastructure market segments are based on stakeholder discussions across the charging infrastructure supply chain Table 2.4: Challenges faced in charging and swapping business models Source: Steer Review Battery Captive Public Challenges Swapping Charging Charging Availability of land at subsidized prices is a key challenge in setting up charging stations. Stations require significant capex/ expense which at the current level of utilization of public and captive charging stations significantly hampers the commercial viability of the business. As per the findings from the pilot done by Ola Electric in Nagpur, land lease rental alone was at INR 23-28 per sq.ft. accounting for about 31% of the opex, which strongly discourages private players to scale up their operations. Category: Policy and Regulatory Selling battery separately from vehicle attracts GST of 18% instead of 5% for the fixed battery in the vehicle. The higher GST rate on battery is a significant cost impacting the commercial viability of the business model.39 Category: Policy and Regulatory Weak regulatory frameworks don’t assign responsibility of recycling or reuse to consumer or OEM. 75% is the value of cells in the battery, of which 40% extraction is possible. After processing, only 10% can be extracted in the form of primary metals-lithium, cobalt, nickel. This process is very time-consuming and expensive. The residual value is typically realized in 3 years and is not an attractive business proposition for any large player. As EVs adoption in India is still at a nascent stage, planning for other alternate stationary use of batteries or safe disposal and recycling plants is necessary so that it doesn’t result in a large environmental cost in the short to medium term. Category: Policy and Regulatory 39  Accelerate corporate adoption of EVs in India, Policy and regulatory recommendations for Government of India, WBSCD, October 2020 63 Electric Mobility Market Assessment, Business Model and Action Plan in India 2. Market Assessment Battery Captive Public Challenges Swapping Charging Charging Subsidized electricity tariff is not made available in certain cases such as for captive charging stations or for setting up stations in parking lots and commercial buildings (such as malls/ office complexes) and for individual battery swapping stations. Also, to avail subsidized electricity tariff the electricity connection and metering needs to be separate from other electricity uses. The Supply Code and Tariff Regulations vary from state to state and implementation costs for setting up connection and metering further increases cost of stabling a charging and swapping station.40 Category: Policy and Regulatory Battery swapping is an attractive proposition for e-3W and e-2W for ride hailing fleet as it significantly reduces downtime of the vehicle. However, the biggest challenge in this model is the variable battery standards used by OEMs in light vehicle categories especially for e-2W. If battery swapping must be accepted at a large-scale, multiple OEMs would need to accept a common set of norms for sizes of battery pack which may limit battery performance in the short-term. Category: Urban Infrastructure For installation of DC chargers to provide opportunity charging, the constraint of availability of high-voltage power across the city is deterrent in setting up fast/ rapid chargers. Category: Governance and Institutions 40  Charging India’s two- and three-wheeler transport, A guide for planning charging infrastructure for two- and three-wheeler fleets in Indian Cities, Shyamasis Das, Chandana Sasidharan, Anirudh Ray, September 2020 64 Electric Mobility Market Assessment, Business Model and Action Plan in India 3. 2/3W and Cars Photo credits: Ather Energy 3. 2/3W and Cars Introduction cars and heavy commercial vehicles in 2021. One of the key determinants of users’ This chapter discusses the market potential preference for an EV over its ICE counterpart in terms of EV sales penetration of 2/3W is the total cost of ownership (TCO) over and car segments in BAU scenario keeping the typical life of a vehicle, which includes in view balanced assessment of current upfront purchase costs, registration costs, policies and constraints in each market operating costs including charging/fueling segment. The major sections of this chapter costs, loan repayment costs and road tax. include the following: These costs exhibit large variations across vehicle and market segments, driven by their • Estimated market penetration in each inherent characteristics: market segment based on TCO and other macro-economic growth factors • Typical operating range e.g. fleet operators have higher daily average trip • Shortlist key business models is based lengths as compared to personal users; on the TCO assessment and projected EV penetration in BAU scenario. These • Geographical area e.g. Nagpur has are further assessed quantitatively on shorter average trip lengths than Pune a financial viability tool to select high and Chennai has much higher per capita potential business model which can lead 2W ownership than Mumbai; and to widespread adoption of EVs across • Counterpart ICE vehicle e.g. 3W market market segments has CNG operated vehicles as an ICE • Action plan recommendations based option. on stakeholder feedback and their likelihood to increase adoption of high From our analysis of TCO, discussed later potential business models in this chapter, TCO for 2W and 3W fleet market segments have already reached TCO parity or have TCO savings when compared Market overview and to their ICE counterparts, making these EV priority segments market segments particularly attractive Current market penetration target markets for transition to EVs. EV sales contributed to about 1.6%41 of total SWOT analysis of key market segments vehicle sales in India in 202142. Given the low and business models current levels of penetration, the 2030 target Business models across the market appears to be ambitious given that India segments were studied in detail based stands at the nascent stage of EV adoption. on secondary research, financial viability A significant proportion of EVs currently are analysis, and feedback from key market e-rickshaws and e-2W, with a majority of players. these powered by lead acid batteries. EV sales have been highest in 2Ws at 149,000 vehicles, equaling approximately 61% of total EV sales in 2021. Market penetration was negligible in 41  EV sales: https://www.autopunditz.com/post/ev-sales-decline-over-19-per- cent-in-fy2021-to-2-36-802-units 42  FADA Releases FY20-21 & April’21 Vehicle Registration Data 66 Electric Mobility Market Assessment, Business Model and Action Plan in India 3. 2/3W and Cars Table 3.1: SWOT analysis of selected business models and potential players Source: Steer Review Potential Market Business players SWOT Analysis Segment model Stakeholder feedback e-2W De-risked lending Strength – Provides more • Revolt for Personal by commercial affordable EV option for individual specialized (Financing) bank or NBFCs/ purchasers by lowering cost of financing arm for Fintech finance for EVs closer to that of e-3W companies ICEs • Zest money Weakness – Large scale market • OTO Capital but potential for EV market (TATA Capital penetration/growth is lower than financier) fleet and cargo sector Opportunity – Stimulate/ accelerate market growth Threat – May encourage purchase of lower specification imported units rather than encourage higher end indigenous production e-2W fleet Aggregator Strength – Good potential • Delivery (Freight) model to provide for market growth in growing • Big Basket services to e-commerce sector e-commerce Weakness – 2W cargo not players for last authorised in all states mile delivery Opportunity – Wider authorisation of e-3W for deliveries Threat – n/a e-2W fleet Derisked lending Strength – Fast growing market • E-bikego (Ride by commercial sector. EV economics more • EESL (fleet hailing) bank or NBFCs/ favorable than personal 2W provider) 43 Fintech market companies Weakness – Limited understanding of technology advantages among owner/drivers working as contractors. Opportunity – Regulation to require use of EVs in this market sector (within defined urban areas) Threat – Lack of charging infrastructure in key locations may constrain potential for growth 43  https://www.bloombergquint.com/business/india-offering-evs-to-taxi-firms-as-government-fleet-swap- drags accessed on 11 November 2020 67 Electric Mobility Market Assessment, Business Model and Action Plan in India 3. 2/3W and Cars Potential Market players Business model SWOT Analysis Segment Stakeholder feedback e-3W fleet Aggregator Strength – Good potential • Clean Motion (Freight) model to provide for market growth in growing • Sheru services to e-commerce sector e-commerce Weakness – Constrained by RCO players for last bureaucracy delaying / increasing mile delivery cost of deployment Opportunity – Favorable TCO relative to ICEs Threat – Battery range/ performance issues limiting application in some businesses e-4W fleet Fleet aggregator Strength – Fast growing market • Meru (Employee model where sector, with some employers • Lithium shuttle operator requiring use of EVs. Economics service) provides more favorable than personal 4W employee market shuttle services Weakness – EVs not economic for to companies all shuttle operations but could against an be improved by widening vehicle operating usage (B2C off-peak) contract defining Opportunity – Charging hubs with revenue per km. potential for high utilization at employment sites/business parks Threat – n/a e-4W fleet Fleet aggregator Strength – Fast growing market • Blu Smart (Asset (Ride model for sector. EV economics more light model) hailing) providing taxi favorable than personal 4W • EESL (fleet services to market provider) 44 consumers Weakness – Limited understanding of technology advantages among owner/drivers working as contractors. Opportunity – Regulation to require use of EVs in this market sector (within defined urban areas) Threat – Lack of charging infrastructure in key locations may constrain potential for growth 44  https://www.bloombergquint.com/business/india-offering-evs-to-taxi-firms-as-government-fleet-swap- drags accessed on 11 November 2020 68 Electric Mobility Market Assessment, Business Model and Action Plan in India 3. 2/3W and Cars TCO analysis Total cost of ownership of a vehicle reflects the sum of all costs involved in the purchase, operation and maintenance of a given vehicle during its lifetime. Since India is known to be a very price sensitive market, the TCO is a key factor influencing consumer choice. TCO has been estimated for different fuel categories in each market segment in major cities of Madhya Pradesh, Maharashtra and Tamil Nadu. The ICE fuel categories considered for comparison are petrol, diesel and CNG vehicles, as applicable in each market segment. The TCO analysis for EVs is performed in real terms for five years starting 2020 and 2025, which allows for the assessment of improvement in battery technology and expectations of lower battery costs going forward, partly offset by gradual reduction in government subsidies on the overall TCO of each market segment category. The components for estimation of TCO are presented in the following figure: Figure 3.1: TCO analysis cost components Operations & Capital Cost Financial Cost* Maintenance Cost • Ex showroom price • Equated Monthly • Fuel Cost • Taxes Installment (EMI) • Maintenance cost • Subsidies/ incentives • Downpayment • Battery replacement *if financed instead of price cost (applicable only for EVs) Key assumptions for undertaking TCO • As per a NITI Aayog’s India Energy analysis are: Storage Mission, an increase in domestic manufacturing and learning curve • TCO of EVs across market segments about battery technology would bring is inclusive of incentives given under down battery price around $100-110 FAME-II. It is considered that government per kWh (INR 7,500-INR 8,250) by 2025 incentives, such as given under FAME-II and to about $70-75 per kWh by 2030 . scheme, would begin to taper by 2025 The decline in battery prices has been with higher penetration across market included in the TCO estimation for the segments. Accordingly, these incentives forecast years. are assumed at 95% and 75% of 2020 • ICE is a mature market, thus its TCO is value in 2025 and 2030 respectively for stable across the years. Any substantial applicable market, on account of which change in TCO of ICE vehicles would be TCO may slightly increase from 2025 to primarily driven by change in fuel prices. 2030. This assumption of subsidies does TCO analysis for selected EV market not extend to 4W personal segment as segments at a city level are presented in the there are no FAME-II incentives offered figure below. The detailed assumptions for today for this segment. TCO estimation is presented in Annexure A 69 Electric Mobility Market Assessment, Business Model and Action Plan in India 3. 2/3W and Cars Table 3.2: TCO in INR per km across market segments (for Mumbai) Source: Steer estimates Market segment ICE (2022) EV (2022) EV (2027) EV (2032) 2W personal 4.64 4.53 4.54 4.74 2W fleet 2.65 1.71 1.59 1.60 4W Personal 25.91 32.99 31.14 30.58 4W Fleet 12.74 14.36 13.49 13.80 3W Fleet 6.07 4.95 4.87 4.65 3W Goods 9.56 7.11 6.76 6.90 An overview of TCO analysis presented • TCO variation between 2022, 2027 and above shows, 2032 is not significant as some impact of reduced battery prices is balanced • Different cities show different TCO in the by assumed reduction in subsidy from same market segment due to variation in the current levels to 95% by 2027 and trip lengths, the city of Mumbai has been subsequently to 75% by 2032. shown as an example. Typically, smaller cities with shorter trip lengths and lesser In case of e-3W passenger fleet segments, distance covered in a day show higher charging and swapping would co-exist in TCO. Therefore, in smaller cities, fleet the short to medium term until their battery market segments having larger number is improved to support their daily distance of trips per day would be the preferred needs on a single charge. Swapping is market segments for adoption and shift primarily a solution for passenger fleets to EVs. to reduce their charging downtime during • TCO of e-2W and e-3W market segments revenue earning hours of the day with have already reached parity or shown a swapping solution. This solution also advantage over their ICE counterparts reduces the upfront capital requirement for due to longer trip lengths; making purchasing an e-3W. However, there is an these market segments more attractive increased cost of swapping the battery due options for transition to EVs. In case of to the cost of multiple batteries per vehicle e-4W, both personal and fleet segments, to be procured by the swapping service ICE vehicles are expected to remain provider. Below table shows a comparison more attractive in terms of life-cycle of per km TCO between fixed and swappable costs compared to the EV segment. This solutions for e-3W passenger fleet in is primarily due to the travel distances selected cities. staying below the TCO breakeven thresholds across personal and fleet segments. 70 Electric Mobility Market Assessment, Business Model and Action Plan in India 3. 2/3W and Cars Table 3.3: City-wise comparison of TCO in INR per km of battery swapping and charging models for e-3W passenger fleet in 2022 Source: Steer estimates City Swapping Charging Mumbai 5.68 4.91 Nagpur 4.64 3.74 Chennai 4.56 3.69 Coimbatore 5.62 4.89 Bhopal 4.73 3.98 Indore 7.33 6.96 The provision of charging stations is growing, however there is an expectation that with larger number of battery players entering the market over time, the share of swapping as a service would grow substantially in the coming decade. These market shares assumed for estimating charging infrastructure demand are presented in the table below: Table 3.4: Year-wise market share of battery swapping and battery charging for e-3W passenger fleet Year Swapping Charging 2022 5% 95% 2027 25% 75% 2032 25% 75% To estimate the potential EV penetration, a bespoke choice model was built to estimate the EV vs ICE share for each individual market segment for selected cities and then scaled up at a national level. The key inputs in the choice model are the estimated TCOs and a perception factor influenced by multiple factors including policies, availability of public charging stations, vehicle choice range, resale value, EV awareness and driving range per charge which capture the overall EV landscape. Based on the market assessment model and TCO analysis, the following table summarizes the projected EV penetration in priority market segments. 71 Electric Mobility Market Assessment, Business Model and Action Plan in India 3. 2/3W and Cars Table 3.5: EV annual sale projection in terms of number of vehicles and as a % of total vehicle sales of 2/3W and cars for India in business-as-usual (BAU) scenario Source: Steer estimates EV EV Market segment FY21 FY25 FY30 share share (FY25) (FY30) 2W personal 1,573,000 3,423,000 8% 15% 149,000 2W Fleet 557,000 1,106,000 12% 20% 4W Personal 140,000 568,000 4% 9% 5,900 4W Fleet 25,000 89,000 8% 17% 3W Fleet 159,000 254,000 46% 55% 88,000 3W Freight 51,000 118,000 33% 40% Total 243,000 2,505,000 5,558,000 12%* 18%* High potential Moderate potential Low potential *Weighted average across market segments. Table 3.6: EV stock numbers and total investment value of e-2W, e-3W and e-4W for India in business-as-usu- al (BAU) scenario Source: Steer estimates Total Investment Value EV Stock Market segment (INR Million) FY25 FY30 FY25 FY30 2W personal 3,549,000 16,616,000 418,000 1,998,000 2W Fleet 1,128,000 5,566,000 84,000 413,000 4W Personal 276,000 2,050,000 345,000 2,824,000 4W Fleet 55,000 346,000 68,000 465,000 3W Fleet 734,000 1,790,000 205,000 506,000 3W Freight 205,000 661,000 77,000 249,000 Total 5,947,000 27,029,000 1,197,000 6,455,000 72 Electric Mobility Market Assessment, Business Model and Action Plan in India 3. 2/3W and Cars Priority markets Examples of the business model: Ola, Lithium and Energy Efficiency Services Ltd. The business model structures evaluated (EESL) are procuring vehicles from OEMs for for financial viability analysis across market their fleet operations. segments are described below: BM2: Third party fleet aggregator BM1: Fleet operator-asset heavy This model is an asset light version of the In this case, the fleet operator is above business model, where the fleet responsible for procurement, operation and operator is separate from fleet provider. maintenance of the fleet throughout the business tenure. The key roles played by • Fleet Provider: This is a third-party other counterparties are outlined below service provider who is providing the vehicles on lease to the fleet operator. • Financing Institution: A commercial The fleet provider is mostly the financing bank extends loan to the fleet operator arm of the OEM (e.g. Mahindra Finance) for procuring vehicles. who provides the vehicles on lease.45 • Manufacturer: An Original Equipment Manufacturer (OEM) is responsible for Examples of the business model: Blu Smart fleet provision and long-term contract has its deployed 100% of its fleet on leasing for fleet maintenance. model. The charging infrastructure is also • Energy provider: The fleet operator deployed by third party providers.46 An chooses between setting up its own international example of taxi provision charging stations or having leasing by third party has been studied in case arrangements with 3rd party service of Shenzhen Pengcheng Electric Taxi Co. providers. presented below. Photo credits: Clean Motion 45  https://www.financialexpress.com/auto/car-news/mahindra-e-verito-and- e2o-to-be-part-of-ubers-fleet-in-two-major-cities/945850/ accessed on 11 November 2020 46  https://www.pluginindia.com/blogs/qna-blu-smart-electric-ride-hailing- 2020-updates accessed on 11 November 2020 58  Analysis of “Shenzhen Model” for New Energy Vehicle Promotion in Public Transportation, Qihang Zhang 2019, IOP Conference Series: Earth and Environmental Science 73 Electric Mobility Market Assessment, Business Model and Action Plan in India 3. 2/3W and Cars Source: https://www.smartcitiesdive.com/news/electric-taxi-fleet-shenzhen-china/545347/ Electric taxi in Shenzhen For provision of electric taxis in the city of Shenzhen, the Shenzhen Bus Group together with BYD Company Limited jointly established Shenzhen Pengcheng Electric Taxi Co. The company purchases the taxis at an instalment payment option with zero down payment. The China Development Bank provides financial support amount to 10 billion yuan for the program. BYD provides 4 years or 100,000 kilometres warranty for electric taxis, power battery pack, motor and drive motor controller which eases the concerns about the service life of electric taxis among the taxi companies and drivers.47The financial support offered by a development bank and technology risk borne by OEM allowed for drivers and smaller taxi operating companies to transition to e-buses. Such an initiative can be deployed in India with a government agency such as EESL acting as a fleet provider of e-3Ws or e-4Ws which are further leased to individual drivers for promoting uptake of EVs accompanied by provision of funding by a development bank. BM3: Driver partners leasing • Fleet operator: The fleet operator the vehicles enters into partnerships with fintech companies or commercial financing This is a variant of the asset light fleet institutions to enable the drivers operator model. In this case, the fleet to access financing for purchasing operator doesn’t own the vehicles but the vehicle. The Equated Monthly facilitates the provision of financing to their Instalments (EMI) of the vehicle are driver partners. The key roles played by deducted by the fleet operator in an other counterparties are outlined below escrow account arrangement before transferring the net earnings to the drivers. 47  Analysis of “Shenzhen Model” for New Energy Vehicle Promotion in Public Transportation, Qihang Zhang 2019, IOP Conference Series: Earth and Environmental Science 74 Electric Mobility Market Assessment, Business Model and Action Plan in India 3. 2/3W and Cars • Financing Institution: This model Assessment of Business Models is more popular with NBFCs and Each business was assessed in terms of fintech companies which have lesser its ability to become commercially viable, requirement of paperwork to avail loans. a prerequisite for scalability. The business- The financing interest rate on these is as-usual financial model solves the revenue typically vehicles higher than commercial yield (revenue per km) required to achieve a interest rate to account for counterparty target investment return (a ‘hurdle rate’). A risk of default. hurdle rate is a commonly used investment concept that represents the minimum rate Examples of the business model: Ola and of return on an investment that is used Uber have widely deployed their fleet on this to determine whether the investment is a model for their ICE vehicles. viable commercial proposition. The following hurdle rates have been assumed based on our stakeholder consultation exercise: – Hurdle rate (IRR) for fleet operator models: 15% – Hurdle rate (IRR) for aggregator models: 10% Table 3.7: Summary of financial viability assessment of business models Opportunity to Policy/ Business Key financial improve Regulatory Risk assessment model results commercial bottlenecks viability e-2W State Motor EV: Revenue per km: • Vehicles owned by Not viable without cargo fleet vehicles INR 12.9 fleet operator regulatory change. operator rules to be Equity IRR: 15% • Reduced financing EV costs lowered, amended Gross margin: 9.5% cost making a more ICE: Revenue per km: • Drivers purchase commercially attractive INR 9 (asset-light); INR vehicles proposition. 13.7 (asset-heavy) e-2W NA Revenue per vehicle • Reduced financing Aggregator has ability aggregator per month: INR 1,811 cost to market attractive Equity IRR: 10% proposition. At scale Gross margin: 67% take-up reduces exposure to individual customer default. e-3W FAME EV: Revenue per km: • Vehicles owned by EV costs lowered, cargo/ to allow INR 16.3 fleet operator making a more freight subsidy to Equity IRR: 15% • Reduced financing commercially attractive, fleet be available Gross margin: 25% cost lower risk proposition. operator to fleet ICE: Revenue per km: operator INR 20.9 75 Electric Mobility Market Assessment, Business Model and Action Plan in India 3. 2/3W and Cars Opportunity to Policy/ Business Key financial improve Regulatory Risk assessment model results commercial bottlenecks viability e-3W FAME to Revenue per vehicle • Reduced financing Aggregator has ability aggregator allow per month: INR 7,405 cost to market attractive subsidy to Equity IRR: 10% proposition. At scale be availed Gross margin:66% take-up reduces by fleet exposure to individual aggregator customer default. e-3W Permit and EV: Revenue per km: • Vehicles owned by Needs change in permit passenger registration INR 16.1 fleet operator polity to implement. fleet to be Equity IRR: 15% • Reduced financing Lower EV costs make operator allowed at Gross margin: 21% cost commercially viable. local city ICE: Revenue per km: RTOs INR 19.7 (asset-heavy); INR 12 (asset-light) e-4W NA EV: Revenue per km: • Drivers purchase Lower EV costs make passenger INR 18 vehicles commercially viable. fleet Equity IRR: 15% • Vehicles provided Ability to improve operator Gross margin: 44% by 3rd party fleet payment security ICE: Revenue per km: provider by deducting driver INR 19.3 • Reduced financing finance payments from cost gross income. e-4W NA Revenue per km: • Vehicles owned by Fleet operators have employee INR 14 fleet operator an advantage of shuttle Equity IRR: 15% • Vehicles provided opportunity charging operator Gross margin: 40% by 3rd party fleet at client locations. provider Commercial model can • Reduced financing be enhanced by serving cost taxi market off-peak. e-4W NA Revenue per vehicle • Reduced financing Low risk extension of passenger per month: INR 22,930 cost established and proven fleet Equity IRR: 10% vehicle financing model operator Gross margin: 83% to EV market. Business models which offer the maximum potential for scalability and relative TCO advantage include fleet-based ride hailing and last mile delivery models in e-2W and e-3W markets. To achieve TCO competitiveness, higher km coverage is required due to significant upfront cost which can be achieved in fleet-based models. 76 Electric Mobility Market Assessment, Business Model and Action Plan in India 3. 2/3W and Cars Figure 3.2: Selected business models • e-2W ride hailing fleet • e-3W ride hailing fleet • e-4W ride hailing fleet • e-2W freight fleet • e-3W freight fleet • e-4W employee shuttle Market barriers and proposed intervention Action plan recommendations An overarching recommendation for effective implementation of the proposed action plan is creation of a nodal agency at central and state level to ensure effective governance, implementation, and monitoring of EV policies and to drive the policies and plans promoting greater adoption of EVs. Since implementation of EV policies requires coordination between multiple public and private stakeholders in the value chain, it is important to create an institutional mechanism to allow them to interact, collaborate and undertake coordinated decision making. At central government level, an empowered committee and cell may be created under a body which can oversee holistic formulation and implementation of EV related policies. The executive committee under this cell may be responsible for overall policy formulation and implementation, developing plans and rules, and monitoring of EV related programs of the government. This committee may have representation of different ministries and departments. The Transport and Climate initiative is one such example where city councils are working with district authorities for coordinated action towards adoption of clean energy. The Transport and Climate Initiative (TCI) Internationally in countries where EV penetration is high like the US, it is seen that coordinated government action for effective policy implementation has been key to wider adoption of clean energy vehicles. The Transport and Climate Initiative (TCI) is one such example where 13 Northeast and Mid-Atlantic states and the District of Columbia are coordinating for developing clean energy economy and reducing carbon emissions.48 TCI is a group of top environment, energy and transportation officials working on targeted reduction of greenhouse gas emissions to prevent climate impacts. They have launched the Northeast Electric Vehicle Network to coordinate state action towards development of regional EV charging network in line with the overall clean energy transition goals.49 48  https://www.transportationandclimate.org/content/about-us accessed on 7th May 2021 49  https://www.transportationandclimate.org/node/30 accessed on 7th May 2021 77 Electric Mobility Market Assessment, Business Model and Action Plan in India 3. 2/3W and Cars FAME policy is being implemented by the Delhi government has initiated setting Department of Heavy Industries (DHI) under up of an EV cell within the Delhi Ministry of Heavy Industries and Public Transport Infrastructure Development Enterprises and a Centre of Excellence Corporation(DTIDC) to accelerate has also been set up at DHI to focus on implementation of the state’s EV policy. DTIDC supporting development in EV and associated is under the administrative control of Ministry manufacturing ecosystem in line with the of Transport, Government of National Capital central government’s National Electric Mobility Territory (NCT) of Delhi to manage all three Mission Plan. Inter-State Bus Terminus (ISBT) in Delhi.50 Post the launch of the new EV policy in 2021, state To function in coordination with the states government of Maharashtra has also started and ensure effective delivery of action plan setting up of EV cells in Mumbai51 and Pune recommendations, it is recommended to set in association with Brihanmumbai Municipal up an EV cell within a leading department, Corporation and Pune Municipal Corporation such as the state’s Transport Department. to fast-track adoption of EV in the cities.52 This cell may be responsible for inter- agency coordination between different state The following figure summarizes the priority government departments such as transport, of implementation for key recommendations urban development, energy, industries as using the approach described in Chapter-1 well as with the empoweredcell set-up under the central government, to deliver EV policy targets in line with national plans. Figure 3.3: Prioritization framework for e-2W, e-3W and e-4W action plan recommendations *Financial solutions to reduce financing cost for EVs has been presented in Chapter 5; Steer representation Categorize 2W as Priority 1 recommentations Priority 2 recommentations 1 High transport vehicles 2 2 Consistent GST 1 6 7 Increase cap on 3W 3 registeration 3 Open permit for e-3W 8 4 up to a cap 4 9 Allow battery swap- 5 5 ping in FAME and Impact state EV policies 6 Reduce financing cost Priority 3 recommentations Priority 4 recommentations 10 Include EV in priority 7 sector lending 11 Allow permits to fleet 8 operators Develop nodal EV cells 9 at national and state levels Create EV fund-fi- 10 nance incentives Additional scrappage Low 11 benefits to purchase Complexity High EVs 50  https://theprint.in/india/delhi-govt-starts-process-to-set-up-dedicated-cell- for-facilitating-adoption-of-e-vehicles/864458/ accessed on 11 March 2022 51  https://auto.hindustantimes.com/auto/electric-vehicles/maharash- tra-govt-launches-mumbai-ev-cell-for-faster-electric-mobility-transi- tion-41645626003023.html accessed on 11 March 2022 52  https://www.financialexpress.com/auto/electric-vehicles/punes-ev-cell- puts-in-place-plan-to-drive-adoption/2382046/ accessed on 11 March 2022 78 Electric Mobility Market Assessment, Business Model and Action Plan in India 3. 2/3W and Cars Detailed action plan recommendations are presented in the annexure-C. Key action plan recommendations required for unlocking high potential business models and creating an enabling environment for mass-uptake of EVs are described below: Table 3.8: Action plan roadmap and barriers addressed for 2/3W and cars Source: Steer recommendations Recommendation Description Barriers addressed National level recommendations Make GST rates Goods and Services Tax (GST) Higher GST rate of 18% applicable consistent across the EV Council to amend the GST Law on selling batteries separately value chain and issue relevant circular/ impacts the commercial viability notification to implement uniform of battery swapping /leasing / Category - Policy and tax rates subscription models. Also, battery Regulatory replacement costs are almost 50% of capex and higher GST on batteries increases TCO of an EV Allow battery swapping / Department of Heavy Industries Benefits offered under FAME subscription in FAME (DHI) to amend FAME II policy subsidy is not offered to vehicles guidelines to allow battery sold without batteries hindering Category - Policy and swapping or subscription business growth of fleet and battery as a Regulatory models by splitting incentives service business models between battery provider and purchaser of EV Incentivizing transition Ministry of Road Transport Residual or secondary market to EVs through scrapping and Highways (MoRTH) may sale of EVs is negligible due to program include additional incentives for lack of understanding on battery purchasing EV in the Scrappage technology Category - Policy and policy Regulatory Reduce financing cost for The Central EV cell to set up a High financing costs (e-2Ws: EV dedicated EV financing vehicle 16%-24% and e-3W :20%-35%) and reduce financing cost by with significant down payment Category - Financial and adopting an innovative approach requirement leads to higher Funding including risk sharing facilities, upfront capex for purchasing an buyback guarantee, help to buy EV approach, interest subvention in collaboration with commercial banks for disbursing subsidized credit to e-3W and e-2W players 79 Electric Mobility Market Assessment, Business Model and Action Plan in India 3. 2/3W and Cars Recommendation Description Barriers addressed National level recommendations Include EV in priority Reserve Bank of India (RBI) to sector lending (PSL) by classify EV sector as a ‘priority banks sector’ and to mandate all scheduled commercial and Category - Policy and cooperative banks to extend a Regulatory specified portion of net bank Category - Financial and credit (total lending) to EV sector. Funding NITI Aayog has suggested design considerations and guidelines for including EVs as a priority sector. It has proposed alternate portfolios of EV segments to be included for PSL53 Recommendation Description Barriers addressed State level recommendations Allow battery swapping Any incentives provided by Benefits offered under State EV / subscription in State EV state EV policies to allow battery policy are not offered to vehicles policy swapping or subscription business sold without batteries hindering models by splitting incentives growth of fleet and battery as a Category - Policy and between battery provider and service business models Regulatory purchaser of EV. Maharashtra and Delhi EV policies allow splitting purchase incentives between vehicle OEM and battery swapping player. Categorize 2Ws as Department of Transport (DoT) As 2Ws are not categorized as transport vehicles in states to recognize 2Ws as transport vehicles, they cannot transport vehicles and amend be used for commercial fleet Category - Policy and Motor Vehicle (MV) Act section 66 operations (ride hailing, rental or Regulatory to grant ‘contract carriage’ permits last mile delivery) to e-2Ws Registration and permits DoT in states to adopt MoRTH In almost all States, there is a cap of e-3Ws at RTO guideline on registering an e-3W on registration and permits issued without permit requirement till a for passenger 3Ws restricting Category - Policy and target proportion of existing on- large scale deployment of these Regulatory road fleet is comprised of EVs vehicles 53  Banking on electric vehicles in India, A Blueprint for inclusion of EVs in priority sector lending guidelines, Report, NITI Aayog, RMI, RMI India, January 2022 80 Electric Mobility Market Assessment, Business Model and Action Plan in India 3. 2/3W and Cars Recommendation Description Barriers addressed State level recommendations ZEV mandate for DoT in states to mandate fleet Non-issuance of permits to large scale fleet conversion to EVs for large scale fleet operators or aggregators operators54 ride hailing operators significantly limits the potential for Department of Industries in states large adoption of fleet businesses Category - Policy and to amend the EV policy to allow Regulatory 3W permits to be granted to both individual drivers and corporate fleet operators/ aggregators Create an ‘EV Fund’ for State Finance Department to allow State’s exchequer is burdened incentives offered under levy of an environment tax on with existing responsibilities EV policy using feebate sale of fuel (diesel or petrol) and/ across sectors, therefore has concept of charging or a congestion fee to be used limited resources for providing polluting vehicles and for providing financial incentives incentives under EV policy. sale of fuel under the EV policy Category - Policy and Regulatory 54  Regulatory pathways for zero-emission vehicle mandates, ICCT, July 2019 81 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses Photo credits: JBM 4. E-buses Introduction of the urban population in India. Bus markets can be classified into three broad This chapter presents a study of the current categories based on the differences in the adoption of e-buses in India, barriers in typical daily utilization, as average annual fleet electrification including the gross-cost utilization per bus strongly influences the contract (GCC) framework currently used for total cost of ownership (TCO). public sector e-bus procurement and options available to overcome these barriers in the • Intracity buses that operate within city form of policy changes, action plans and limits in urban areas business models. The major sections of this • Mofussil buses (an extension of intracity chapter include the following: bus services) that operate services to far- • Market overview and barriers in flung suburbs and neighboring districts each market segment based on route • Intercity buses that operate between characteristics, TCO comparison analysis urban areas for market segments and existing business models Bus services are managed and/or operated • Identification of improvements and by the public or private sector depending options for alternate business models on the history of institutional evolution and based on a targeted review of relevant reforms in each state. State Road Transport international and India experience. Undertakings (STUs) are public transport (These options were assessed undertakings that manage public sector quantitatively on a financial viability tool buses in cities and in some states, inter-city to select high-potential business models transport as well. While some STUs operate which can support economies of scale their buses in-house (MTC Chennai), others in e-bus procurement, operations and outsource their operations to private players financing) (AICTSL Indore). Most STUs in India are • Prioritized action plan supported through public subsidies, with recommendations based on their primary focus being on sustaining stakeholder feedback from various state current operations. As a result, the share of agencies, bus operator associations and buses managed by STUs has been declining OEMs. relative to the total number of registered buses. For example, in Maharashtra’s inter-city market segment, 82% is privately Market overview and operated whereas 18% is public. According priority segments to the registration data for the city of Current market penetration Pune, the number of buses operated by the public operator, Pune Mahanagar Apart from suburban rail (and metro rail Parivahan Mahamandal Limited (PMPML), more recently) in some large metropolitan has decreased over the last five years while cities, buses have traditionally been the the fleet size of private buses has grown at a lifeline of mobility and provided accessibility CAGR of over 20%. to jobs, education, health, shopping and leisure-purpose travel for a large proportion 83 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses The FAME II policy was revised in June 2021 to promote penetration of e-buses by lowering upfront costs. It has been extended till March 2024 and the maximum cap of subsidy has increased to 40% of the cost of the bus. Presently, DHI has sanctioned subsidy for 5,595 e-buses. Of these buses, 5,095 are for intra-city operations, 400 for inter-city operations and 100 for providing last mile connectivity55. About 900 e-buses are operational as of February 2021.56 More recently, under FAME II policy, Energy Efficiency Services Limited (EESL) has been nominated to aggregate demand for e-buses across 9 cities with population over 4 million (Mumbai, Delhi, Bangalore, Hyderabad, Ahmedabad, Chennai, Kolkata, Surat, and Pune) on OPEX basis.57 Convergence Energy Services Limited (CESL) part of EESL, has floated a tender to deploy e-buses under a ‘Grand Challenge’ mode in January 2022. Image Source: https://english.cdn.zeenews.com/sites/default/files/2022/03/07/1020539-1001963-dtc-electric-bus.jpg Procurement of e-buses on ‘Grand Challenge’ Under the ‘Grand Challenge’, STUs/ PT Authorities were requested to subscribe for e-buses with FAME II incentive being offered on OPEX basis. The primary objective of this procurement mode was to homogenize and aggregate demand through standardization resulting in lower upfront costs of the e-bus. 58 EESL through its wholly owned subsidiary-CESL as project manager has launched a tender in January 2022 for procurement of 5,450 single decker and 130 double decker e-buses under ‘Grand Challenge’ mode for Bangalore, Delhi, Hyderabad, Surat and Kolkata. Under the conditions of procurement, the bidder has to manufacture, supply, operate and maintain buses as per the required specifications for a contract period of 12 years after scheduled operation date. Additionally, the bidder would also develop, operate, maintain the depots and be responsible for procurement and installation of charging infrastructure for charging the e-buses. The tender is expected to lower upfront capex costs by standardizing bidding conditions across these five cities.59 55  https://dhi.nic.in/writereaddata/fame/famepressrelease/1-E__didm_WriteReadData_userfiles_Press%20 Release%20for%20Buses.pdf 56  Analysis of registered e-buses from Vahan Dashboard (as on February 2021) by Spoctech Solution 57  The Gazette of India: Extraordinary, Part II Sec 3(ii), Ministry of Heavy and Public Enterprises, Department of Heavy Industry, Notification, New Delhi, 11th June 2021 58  Draft Grand Challenge for E-Bus Deployment Under FAME-II, CESL 59  Request for proposal for selection of bus operator for procurement, operation and maintenance of 5,450 electric buses and 135 double decker electric buses and allied electric and civil infrastructure on 84 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses India’s e-bus market is currently dominated by The TCO was estimated across a ten-year public sector procurement due to availability period, aggregating total expenses per year. of FAME subsidy only under a gross cost The analysis also takes into consideration contract (GCC) model. Buses managed and subsidy provided under FAME II incentives. operated by the private sector, that make The figures below illustrate TCO across the up for more than 80-90% fleet across the bus segments in 2022. They suggest that country, ply as contract carriage, school buses TCO parity in e-buses is achievable in the and employee buses. While this share may near future, leveraging the positive gains vary from state to state, electrification of from economies of scale and technology private sector bus fleet through an enabling development in this sector, with continued investment environment is key to accelerate subsidies. the pace of e-bus adoption in the country and achieve the desired local pollution control It must be noted, from the range of bids targets and national climate goals. received for FAME-II projects, there is a significant variance in the estimation of TCO TCO analysis value. This variance is on account of limited and differing availability of data on capex TCO analysis for buses was carried out prices of e-buses, battery prices, annual comparing diesel and e-buses for the reduction in cost of battery and metrics on following typical air-conditioned (AC) bus battery degradation. For the purposes of operations: the TCO analysis presented above certain assumptions have been taken on these input • 9-metre intracity AC bus values based on conversations with multiple • 12-metre intracity AC bus industry stakeholders and publicly available • 12-metre intercity AC bus sources which have been further detailed in Annexure-A. Gross Cost Contract, Open tender, CESL, dated 20 January 2022 Figure 4.1: TCO Analysis of EV with subsidies (9-m intracity, 12-m intracity and 12-m intercity) and Diesel buses (INR per km) *10-year TCO has been calculated for e-buses; Source: Steer estimates 70 60 50 TCO (INR) per km 40 30 65.1 63.9 62.4 62.4 57.3 60.9 20 56.3 53.4 50.2 10 0 Intracity 9-m Intracity 12-m Intercity 12-m Diesel 2022-32 EV 2022-32 EV 2027-37 85 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses Figure 4.2: TCO Analysis of EV with and without subsidies (9-m intracity, 12-m intracity and 12-m intercity) and Diesel buses in 2022 (INR per km) *10-year TCO has been calculated for e-buses; Source: Steer estimates 80 70 60 TCO (INR) per km 50 40 77.1 71.6 64.4 65.1 63.9 62.4 30 57.3 60.9 56.3 20 10 0 Intracity 9-m Intracity 12-m Intercity 12-m Diesel 2022-32 EV 2022-32 (subsidy) EV 2022-37 (without subsidy) The figure above shows that for traditional operations. The CESL tender for aggregation ICE (diesel) buses vs. e-buses, there is parity in and procurement of e-buses for deploying TCO terms which has achieved with subsidies in metropolitan cities with 4 million plus in case of some market segments such as population is an example of expansion of intracity 12-m due to the rise in ICE fuel prices, e-bus network for public bus operations in high annual distance operated, and current urban environment. battery capacity suited for the average daily distance covered by such buses. Parity of For the intracity employee shuttle market, e-buses with ICE on TCO basis is likely to be which represents a significant and more achieved first on routes with higher kms such importantly a growing share of the total as mofussil (extension of intracity buses to intracity bus market, the typical AC 12-m suburban areas and neighboring districts) and diesel bus costs in the range of INR 3-5 intercity services. million whereas the equivalent e-bus costs range around INR 13-17 million before With further improvements in technology and subsidies. The average use of an intracity battery chemistry this parity between ICE and bus is no more that 200km/day and a e-buses is expected to be achieved for other typical one-way yield is in the range of INR market segments as well in the coming few 20-30 per passenger. Accordingly, private years. TCO parity of e-buses with ICE on TCO operators may start seeing competitive basis is expected to be a key trigger for rapid TCOs for e-buses only once the prices are adoption by public agencies who can avail substantially reduced or adjustments are the subsidies and are able to demonstrate made to yield reflecting better service quality the ability to effectively manage the e-bus or battery size to match the different usage pattern. 86 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses The intercity bus market is dominated by Key barriers to e-bus penetration private operators, e.g. 82% private vs.18% Extensive stakeholder consultations public share in Maharashtra intercity undertaken with OEMs, STUs, private market as this market offers higher yields operators and state transport departments compared to intracity context. Adoption in 2020 and early 2021 underlined a number of e-buses by private operators has been of key barriers to e-bus penetration in the limited due to change in travel behavior and business-as-usual scenario as presented a sharp decline in tourism industry as well below, as also earlier explained in Chapter 1: as commuter movements amid the COVID 19 pandemic in the last two years. However, • High cost of capital for e-bus purchase with sustained high level of ICE fuel prices and potential reduction in e-bus capex • Aftermath of COVID-19, which greatly from improved manufacturing capacities weakened the finances of bus operators and battery technology, private operators • Exclusion of private sector market from are expected to start transitioning towards the FAME II subsidy electrification of their fleet in medium to • For bus service delivery under long term as they witness the TCO savings government agencies or companies: being offered by e-buses in the coming years. – Unbalanced risk-sharing in the exist- ing GCC contractual framework – Lack of scale economies in e-bus pro- curement, maintenance and financing – Mismatch between role and spe- cialization of various stakeholders in e-bus deployment including chal- lenges around operations by an OEM-led consortium and installation of charging infrastructure being the responsibility of the operator – Low creditworthiness of many pub- lic transport authority for operator payments • Lack of readiness of depot, charging and grid infrastructure to support e-bus operations Photo credits: UITP 87 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses Greater penetration is expected when Market assessment results barriers in contractual, tendering and The market assessment model used in commercial aspects of procurement are estimating total market size for e-2W, e-3W addressed, along with a favorable tax, and e-4W was used in estimating the total subsidy and policy regime. The extension of bus market. Thereafter the e-bus penetration FAME II subsidy till FY2024 and the recent of the total market was estimated based on CESL tender which is aggregating e-bus the policy initiatives currently underway that demand across multiple state governments is are focused on intracity public bus context a step in the right direction. Such aggregation followed by market segments which offer initiatives would have a long-term impact favourable cost economics with the right in building capacity of manufacturers to technology mix. Table 4.1 below shows the expand their production line and gain from results of this assessment. economies of scale, resulting in lower upfront cost of e-buses. Table 4.1: e-bus projection in terms of number of vehicles and as a % of total vehicle annual sales for India in business-as-usual (BAU) scenario Source: Secondary research (FY19-21) and Steer estimates(FY25, FY30) Market segment FY1960 FY20 FY21 FY25 FY30 e-bus sales 400 600 1,850 5,600 6,000 EV penetration 1.0% 1.5% 11.7% 13% 22% Table 4.2: EV stock numbers and total investment value of e-buses for India in business-as-usual (BAU) sce- nario from FY23-30 Source: Steer estimates Total In- vestment Market Segment FY23 FY24 FY25 FY30 Value (INR Mn) e-bus stock 11,000 16,000 22,000 52,000 700,000 60  https://jmkresearch.com/electric-vehicles-published-reports/electric-bus- es-india-market-analysis/ accessed on 1st March 2022 88 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses In the last two years, personal travel choice Learnings from previous patterns have shifted preference towards private vehicle use due to COVID 19 and experience as a consequence bus market has suffered Based on a targeted review of the experience significantly both in terms of intracity and of cities, markets and players that provided intercity bus operations suffering significant both relevance and evidence for potential shortfall in passenger revenues. However, success in either similar socioeconomic with high coverage of its vaccination and contexts or having similar implementation opening up of economy, a revival in the bus barriers to India, key lessons from Santiago market is expected in short to medium term. (Chile), Bogota (Colombia), London (UK), Annual bus sales are expected to increase Zenobe (UK) and Proterra (US), Delhi (India) to about 40,000 to 50,000 following revival and Shenzhen (China) are listed below: of bus demand till FY2025, post which it is • Separation of the role of fleet provision expected to taper down to the long-term bus including procurement, availability, sales trend of 30,000 per annum. and maintenance allows potential for aggregation to appropriately distribute Also, the current status of technology and risks and responsibilities. product availability within e-buses limits • Battery swapping has restricted the maximum range on a full charge at application in case of e-buses around 300 km. This is expected to improve with technological advancement of the • E-bus programs should focus on e-bus vehicles. In the last ten years, battery homogenization prices have significantly reduced owing to • Capital-rich and technologically specialized improvements in technology and greater players can aggregate fleet provision to demand. The battery prices are expected address capital cost and financing risks. to decline over time to make e-buses • Long-term maintenance by OEMs is increasingly competitive with equivalent ICE needed to address technology risks and variants. This coupled with the government questions on residual value. boost from subsidies to develop supporting infrastructure- such as charging stations is • Capital cost and battery replacement expected to further improve the e-bus TCO risk can be mitigated by leasing, once in comparison with ICE variants boosting adjustments are made so that it does not uptake in the market. attract higher GST rates. • Capital and operational subsidies should In the BAU scenario, the e-bus penetration continue until commercial viability is is expected to grow from the current level of achieved. 12% to 22% of annual bus sales by FY2030 • Ring-fenced trust funds are needed to driven by policy push to adopt e-buses in improve payment securities. urban intracity transport context and focus on achieving carbon neutrality may also • Apart from the above, direct payments foster e-bus penetration in intercity markets from a creditworthy authority to where technology is favorable to serve the lender subaccounts and state payment selected routes. guarantees also improve bankability. 89 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses Latin American cities show how unbundling Alternate business model and long-term maintenance contracts with OEMs is important in addressing challenges options for e-bus procurement faced by small-time operators related to The existing e-bus procurement regime for technological risks and high capital cost of public transport services in India could be e-bus. On the other hand, London’s e-bus improved through either or both of: experience suggests that e-bus markets once • A Revised GCC model with a targeted set matured may return to bundled models of changes to contractual and tendering when technological readiness has been aspects demonstrated and bankability has been • Alternate business models centered improved through competitive bus prices, around fleet aggregation, supplemented available secondary markets and better PT by unbundled energy provision and authority capabilities. optional leasing options Experience from Latin America is relevant to the Indian context in that it demonstrates how some of the concerns around bankable e-bus procurement and deployment at scale can be addressed. Different models can be considered depending on the level of institutional maturity and market development, such as separation of the role of fleet provider, who will procure and ensure fleet availability, from that of the operator. Being able to procure and aggregate on a large scale provides financial, technological or commercial advantages, and fleet providers may also potentially take responsibility for fleet maintenance as well. These enabling levers can bring step-change improvements in TCO, resulting in improved commercial viability, scalability and bankability. Therefore, apart from suitable contractual relationships, aggregation by suitable financially strong fleet providers can play an important role in acceleration of e-bus adoption and successful deployment. 90 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses Revised GCC model: With improved contractual terms Based on a review of the first phase of FAME II tenders in 2020 and early 2021, several potential improvements were identified in the e-bus procurement under FAME II. Eligibility to FAME II subsidies requires the use of gross-cost contract (GCC) model and an associated model concession agreement (MCA). The review indicated that the tenders of various cities deviated from the model concession agreement on contractual terms including fee revision and provision of depots ready for installation of charging infrastructure. The table below lists the major gaps to be addressed in the existing GCC regime under FAME II along with key proposed modifications, as identified in a parallel study to that presented in this report.61 Improvements made to the GCC model as applied in the early implementation of FAME II could help achieve estimated TCO cost savings of 10-15%.62 Table 4.3: Key proposed recommendations related to contracting and tendering in the existing GCC model Source: Spoctech Solutions and Steer for the World Bank Group Gap Proposed solution in the Revised GCC model Lack of readiness and • Adequate timelines to authority and bidders preparation of the • Authority to prepare feasibility report and detailed project contracting authority report (DPR) • Depots with status of charging infrastructure readiness to be provided in the tender Insufficient bid timelines • Minimum 45 days to be provided as bid notice to allow due diligence by bidders Capital subsidies potentially • Capex subsidy could be changed to hybrid subsidy distorting bus prices Large subsidy bank • The need for the subsidy bank guarantee may be guarantee required from reconsidered or adjusted operators Lack of depot infrastructure • Responsibility for depot infrastructure including civil and readiness trunk infrastructure to lie with authority, or alternatively site availability with permits and suitable power connection to be provided by authority. Eligibility criteria for • OEM not to be mandatorily part of the operator consortium operators not matching specialization Lack of payment security • MCA + additional securities • Financially strong or creditworthy intermediary to act as guarantor 61  Please refer to Spoctech Solutions and Steer’s report on Improving the Bankability of E-bus Procurement in India for greater detail on contractual modifications that we recommend improving the existing GCC model under FAME II 62  These estimates are based on analysis carried out Spoctech Solutions and Steer in a parallel study to this report. 91 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses Gap Proposed solution in the Revised GCC model MCA-recommended fee • Fee revision clauses to be simplified and included as in the revision not followed MCA and reflective of cost evolution. Unbalanced penalties • Capping of penalties related to performance Uncertainties around • Authority to pay tariff at actuals subject to cap on fuel electricity cost payments economy Uncertainties around • Payment for underutilzsed km to be at GCC contracted payment for underutilized rate km Achieving more TCO savings though Similarly, an intracity 9-m e-bus can achieve alternate business models potential savings of INR 20 per km for an annual operating distance of 66,000 km. Apart from a revised GCC model, innovative Amongst other assumptions, this estimate commercial structuring and contractual incorporates facilitation of cheaper financing relationships as applied internationally at 9.5% and availability of OEM discounts could help in achieving step-change for procurement of large numbers of buses improvements. by the aggregator. Fleet aggregator-based alternate business models could therefore In fleet aggregator models, the aggregator further improve the TCO cost savings going undertakes the role of fleet procurement, from the existing GCC model to either a financing and (optionally) maintenance, which private/market player-led aggregation allows the transfer of financial, capital cost (15-20%) or national or state-led (20- and technology risks from the operator to the 25%) aggregation. National or state-led aggregator. Aggregation allows reaching larger aggregation allows for more savings due to scale in terms of number of buses (over 1000 potentially greater volumes of aggregation compared to the traditional 100 to 300 levels). and negotiating power for discounts. Based on a detailed financial assessment, it was found that separating fleet provision from The table below shows the progression of operations using a fleet aggregator model TCO savings for various business models for an intracity 12-m e-bus could potentially (existing and proposed) along with key offer savings of INR 23 per km (compared to enabling levers and the reasons for smaller-scale bundled fleet operations and reduction in TCO costs for 9-m intracity bus procurement) based on an assumption that it operations. covers an annual distance of 70,530 km. 92 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses Table 4.4: High-potential business models along with estimation and reasons for cost savings Source: Steer review Estimated Reasons for TCO cost Business model Key enabling levers TCO cost savings savings (%) GCC FAME II Business-as-usual 0% No change scenario with small scale bundled fleet operations Revised GCC Model Modifications in 10-15% Reduction in risk premia contracting, tendering for payment security and and policy aspects other contractual risks Revised GCC with Beyond the Revised GCC Reduction in technology Unbundled Solution solution, unbundling the and capital cost risk role of fleet provision premia from fleet operations Private/market Financially strong 15-20% Further reduction in player-led OEMs, energy players risk premia for payment aggregator models or financiers who are security; Economies of interested in aggregation scale for procurement, and/or investment, along maintenance and with state payment financing guarantees National or State-led Creditworthy government 20-25% Reduction of technology aggregator model agency with ring- risk; Further improvement fenced funds for fleet in economies of scale procurement aggregating for procurement, at the national, state, maintenance and regional or city level financing It is to be noted that these TCO savings are expected where these business models are dependent on ensuring the implementation of implemented in states and cities with suitable key enabling levers for the alternate business institutional and financial characteristics models in question. The quantitative range supported by key action points listed in the of estimates provided in the table above for following section titled ‘Recommendations TCO reduction is based on financial modelling and Action Plan’. run for several scenarios. Assumptions of 20% discounts for large-scale procurement and Likewise, aggregation for private bus purchase lowered interest rates of 11% (reduced from will enhance parity, as long as charging 12.5%) were taken as inputs for the alternate infrastructure readiness for both depots and business models based on fleet aggregation. en-route is ensured and range anxiety from Please note these TCO savings may only be technological challenges is addressed. 93 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses Companies like Greencell Mobility started examples of e-bus business models such as exploring economies of scale through large battery leasing models which demonstrate scale e-bus purchase, to lower the capex one of more of the following conditions: associated with such option. • Evidence for procurement success Alternate business models: With fleet (irrespective of bus technology) aggregation and unbundled energy • Evidence for e-bus procurement success provision-International experience and/or deployment in international city Alternate models have been developed • Successful and investment-worthy based on review of international best players in the e-bus market space Source: Zenobe energy Zenobe turnkey bus fleet solution Zenobe in the UK provides bespoke technical and financial solutions tailored to needs of customers including leveraging existing grid supply through battery energy storage systems, smart charging infrastructure, guaranteed green energy supply, ‘battery on bus’ financing and battery health management to guarantee performance and protect residual value. Zenobe is currently offering a financial solution to operators where it owns and operates battery storage systems, takes care of batteries on the buses and also manages the depot charging infrastructure. Once the useful life of the battery is over, it uses it for stationary storage.63 63  https://www.sustainable-bus.com/news/interview-steven-meersman-zenobe-energy/ accessed on December 2021 94 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses ENEL-Metbus-BYD partnership in Santiago Energy providers in Santiago have partnered with private bus operators and bus manufacturers to pilot and deploy e-buses. In this partnership ENEL took the role of both energy provider and fleet provider (financier) for this contract. Figure 4.3: E-buses parked in a depot in Santiago (left); E-bus being charged by ENEL energy infrastructure Source: ENEL X After two rounds of pilot e-buses which helped understand changes to capital, operational and maintenance costs for bus operations, Metbus initially introduced 100 e-buses for fleet renewal in place of a closing diesel bus contract of another operator Alsacia. ENEL took the role of both energy provider and fleet provider (financier) for this contract. An after- sales agreement with OEM provided assurance of bus maintenance. Several deployments have followed and as of October 2020, Metbus is running 436 e-buses in Santiago, this not including the hundreds of e-buses that other bus operators currently operate. Therefore, the case of Santiago, in a market-economy with similar emerging-economy challenges, is a clear case for learnings for the Indian context. Figure 4.4: Contractual model in the Metbus-ENEL-BYD partnership for e-bus deployment Source: Steer representation System (State) Concession Fleet payment quote contract Bus Operator Maintenance and availability of the bus Company Financing Energy, fleet and leasing charging infrastructure Energy Company Bus Manufacturer (Investment) Puchase of the fleet 95 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses The schematic above shows the contractual structure between various stakeholders playing a role in e-bus deployment. The table below shows key findings based on a systematic business model decision tree framework explained in Chapter-1. Table 4.5: Findings from Santiago based on our business model analysis framework Source: Steer review Lever Specifics Particulars categories Bankable Payment • Authority directly pays energy provider for leasing contract mechanisms contract from contracted rate with operator terms • Contracts with operators and fleet providers specify that buses will remain in system (with different operators) until debt is paid. This allowed longer debt tenures compared to operation contracts and also resulted in affordable operating cost quotes. Contract • Operator paid both for passengers carried (70%) agreements and km operated (30%) as incentive to improve fare revenue and control fare evasions. Selection • E-bus introduction (100 BYD in 2018) through increase criteria in operational km for Metbus due to operator Alsacia’s closing contract, later followed by a renewal of fleet (183 BYD). Cost and • In initial introduction, the authority covered the CAPEX revenue risks difference between diesel and e-bus, whereas in the fleet renewal, the operator renewed the fleet at their own expense. • In the case of fleet renewal, Metbus estimated OPEX savings of $1,800 per month for a 10-year contract. BYD offered lower bus cost ($300,000) in the bigger fleet contracts compared to in the pilots ($450,000) Infrastructure • Enel X (earlier Chilectra) has been active since 2011 in readiness setting up charging infrastructure in the city and pilot studies Ministry of Energy regulates grid modifications and e-depot compliance • Charging management software avoids peak periods of electricity demand • E-depots considered as industrial connections for tariffs. 96 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses Lever Specifics Particulars categories Unbundling Battery N/A based on Fleet After-sales agreement between Metbus and BYD held •  specialization maintenance OEM responsible for electric maintenance of e-buses, charging process and spare parts Fleet provision • Energy company (Enel/Engie) financed/leased the bus fleet to operator Charging • Enel was involved in the installation, power (CaaS/PPP/ management and providing energy for the charging captive) infrastructure Depot • Energy provider constructs the e-depot. infrastructure Unlocking Creditworthy • Multinational energy providers Enel and Engie provide suitable aggregator fleet and energy delivery. financing options Private equity • Enel provided financing for initial set of 100 e-buses. Later, for the fourth PPP onwards, Enel decided to stick to only energy provision and charging infrastructure Subsidies N/A Soft loans N/A Non-farebox N/A revenue Policy and Fiscal/ • No import duties on e-buses from China through free regulatory Non-fiscal trade agreement support Commercial • Loan rate for TranSantiago was historically 7.8%. Enel lending offered 7.3% for e-bus financial lease contract after policies precedent from Engie. Long-term • Timing of e-bus transition coinciding with close of procurement previous diesel contracts, and negotiation between plan/mandate stakeholders helped. • E-bus introduction supported TranSantiago’s brand transformation and NDC targets. 97 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses Alternate business models: With fleet the core of the framework to be explored aggregation and unbundled energy for suitable cities, the supplementary provision-Application to the Indian business models will have to be worked out context in tandem with suitable primary business models. The business models vary in how Three primary business models were the institutional, market, regulatory and considered, based on separation of the role operational risks are shared. A major of a fleet provider and achievement of fleet trade-off of unbundling is the interface aggregation by the fleet aggregator. The risk occurring across participants in case models varied based on which stakeholder of failure of one aspect. While solutions took the role of a fleet aggregator. This have emerged to address this, institutional allocation of responsibility – especially that capacity and capability need to be mature of a creditworthy fleet aggregator taking enough to handle conflict that may emerge the primary financial risk – is critical to the from such multiparty agreement to consider success of these business models. While effective unbundling. the primary business models will serve as Table 4.6: Proposed roles and responsibilities framework across the alternate business models Source: Steer review and analysis *CaaS = Charging as a Service provider *Real = Real estate player, DFI = development finance institution, PTA = public transport authority, Opr = operator, DISCOM = power distribu- tion companies *Grey cells refer to those that are not mandated under the business model itself. *Players mentioned within braces are optional for that role. Financing Theme Fleet Energy Instruments Grid Business Mainte- Charging Depot Equity Role Operation Provision connec- Leasing Loan model nance infra infra Capital tions Bundled GCC approach GCC Opr. consortium led by OEM Bank Opr. Primary business models – Fleet provision unbundled BM1 State-led fleet PTA/ Opr. OEM State DFI/ State/ aggregation Bank PTA BM2 Market player PTA/ Opr. OEM DFI/ (OEM) (OEM)-led Bank aggregation BM3 Market player PTA/ Opr. OEM Non-OEM DFI/ (Non- (non-OEM)-led Bank OEM) aggregation Secondary business models – Energy and leasing options BM4a CaaS CaaS CaaS/ (CaaS/ (OEM) DFI/ CaaS unbundled as DISCOM Real) Bank a PPP BM4b CaaS CaaS (OEM) DFI/ CaaS Bank BM4c WSA CaaS CaaS WSA (CaaS) DFI/ WSA combined Bank with CaaS BM5 Battery leasing (OEM) (OEM-financier partnership) 98 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses The table above presents roles and To enable formulation of simple contractual responsibilities that various stakeholders agreements where performance risks are may take in various business models for passed to suitable players, it is proposed to fleet, energy and financing aspects of the have back-to-back contracts with only two e-bus deployment ecosystem. During parties involved wherever possible. The table implementation, a combination of primary below presents the key contracts that are and secondary business models, along proposed to be part of the five high-potential with the supporting policy and financing business models, along with the parties framework, are required to cover various involved and their primary responsibilities. roles. In all the options, battery leasing The detailed responsibilities, contractual may be an option if favorable GST rates are structures, institutional arrangements, risk offered through policy changes. and associated mitigation measures are covered in a parallel study titled, ‘Improving bankability of e-bus procurement in India’ by the World Bank Group. Table 4.7: Key contracts and agreements to be part of the five high-potential business models Source: Improving bankability of e-bus procurement in India, Spoctech and Steer Business Contracts/ Parties Primary model agreements involved responsibilities Primary – BM1 State Fleet purchase OEM E-bus supply and State-led agency as and maintenance (Optionally fleet maintenance charging infra) aggregator contract State agency/ Procurement/funding SPV agency Fleet provision State agency/ Fleet provider contract SPV PT authority Hiring agency, Fleet manager Fleet operations PT authority Hiring agency, Fleet contract manager Private Operations operator 99 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses Business Contracts/ Parties Primary model agreements involved responsibilities Primary BM2 OEM as Fleet provision OEM E-bus supply and – Private/ fleet and maintenance market aggregator maintenance (Optionally charging infra) player-led contract State or PT Payment agency Fleet provision authority contract State agency/ Guarantor funds Fleet operations PT authority Hiring agency, Fleet contract manager Private Operations operator BM3 Market Fleet purchase OEM E-bus and charging infra player as and seller fleet maintenance Market Procurement/funding aggregator contract player agency Fleet and Energy Fleet and energy provider energy player provision PT authority Payment agency contract State agency/ Guarantor funds Fleet operations PT authority Hiring agency, Fleet contract manager Private Operations operator Secondary BM4 Energy PT authority Payment agency Charging provision Energy Charging and depot and depot contract player infrastructure provision Real-estate Energy Depot space for development player development contract Construction Depot facilities partner Non-energy revenues BM5 Battery leasing Battery Battery funding, Battery contract lessor Battery performance leasing Fleet Payment per km model operator 100 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses Based on stakeholder consultations, it was help ensure charging infrastructure found that the capital cost of grid upgrades readiness. The CaaS provider or wayside and e-depot construction may be an obstacle amenity manager here takes the capital and for both public sector DISCOMs and PT technological risks of charging infrastructure, authorities that are often cash-strapped and grid upgrades and/or e-depots. The table strained for financial resources. The use of below provides an understanding of the fleet unbundled charging infrastructure bringing business market, routes, charging type and in private sector expertise and investment locations covered by unbundled charging could therefore alleviate this issue and infrastructure models. Table 4.8: Mapping secondary business models with implementation contexts Source: Steer review and analysis Fleet Charging Charging Secondary Routes business type Location business model Intra- Inter- Oppor- En- Private Public Depot OD city city tunity route BM4a BM4b BM4c As an example, the figure below illustrates the State-led fleet aggregator business model in combination with CaaS options for unbundled charging infrastructure. 101 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses Figure 4.5: Business model structure- State agency as fleet aggregator with charging infrastructure unbundled Source: Steer representation State government Approval (budgetary source) Cash Flow Other revenue Optional Cash Flow DHI sources World Bank/ investor Subsidies DFI funding or Approval for green investment aggregation Repayments Fleet aggregator’s OEM as seller or IFC/investor trust battery lessor Committed funding into ring-fenced fund State aggregator Energy provider’s sub-account Fleet purchase and Maintenance maintenance charges charges Multilateral funding or green investment Farebox revenue PT authority Energy minus depot lease charges Non-farebox PT Authority trust CaaS provider revenue Grid services and Depot Fleet operation energy charges Sub-lease charges charges Private Real-estate fleet operator DISCOMs partner Self-operated routes STU operator As explained earlier, the State agency as a fleet aggregator, through favorable funding from a green investor or financing through a multilateral financial institution, procures fleet at an aggregate level from OEMs and ensures availability of e-bus fleet according to agreed schedules to one or more STUs. Apart from procurement and financing, maintenance of fleet may also be aggregated by the fleet aggregator through long-term maintenance contracts with OEMs/suppliers. The STUs may in turn contract the operations of these e-bus fleet through private operators or self-operate. Through a CaaS contract with a specialist player, the STU ensures charging infrastructure readiness in accordance with the charging schedules agreed with the operator. Variants of the CaaS contract adopted may depend on requirements of the STUs, routes undertaken (intracity/intercity), charging type (opportunity/depot) and charging locations (origin-destination or en-route). Likewise, the figure below illustrates a market player-led (OEM-led) fleet aggregator business model in combination with CaaS options for unbundled charging infrastructure. 102 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses Similar to the State-led fleet aggregator model, the OEM-led aggregator model allows a market player to take on financial, technological and market risks associated with e-bus procurement. Technological risks are more appropriately shared in this model compared to the State-led model though aggregation potential may be lower. In the case of intercity routes, the CaaS model may involve wayside amenities that may provide charging as an additional service with the help of contracted CaaS players. Figure 4.6: Business model structure- OEM as fleet aggregator with charging infrastructure unbundled Source: Steer representation State government Approval (budgetary source) Cash Flow Other revenue Optional Cash Flow IFC/investor DHI sources OEM’s sub- account Subsidies Guarantee DFI funding or green Repayments investment State government Fleet aggregator’s IFC/investor as guarantor trust Direct OEM as seller or repayments Energy provider’s battery lessor sub-account Fleet provision and maintenance Multilateral payments funding or green Repayments investment or dividends Repayments PT authority Energy Empanelment minus Self-operated for fleet lease routes provision charges PT Authority trust WSA manager STU operator Self-operated routes Fleet Charging infra purchase and Grid services and operations maintenance payments energy charges Farebox revenue payments Private Charging Non-farebox DISCOM fleet operator infra OEM revenue Grid approval and services 103 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses Technology, charging infrastructure and In order to build trust and incentivize large- subsidies for the private sector market scale adoption of e-buses in this key market, it is essential to take policy actions to aid a Given that buses serve 38% of the annual favorable business case for the private sector passenger km travelled and the private sector market to transition to e-buses through: bus market makes up 90% of the fleet size with potentially higher investment potential, • Creating a favorable and consistent tax the private sector bus market is key to regime for manufacturing, procurement achieving fleet electrification targets aligned and operations of e-buses, through with the climate change goals of cities, states coordination between the DHI and state and the country overall. transport departments to reduce or waive Lowering cost for companies transitioning to taxes from e-buses until a critical volume e-buses is reached. Adoption by private operators has been • Balanced subsidy structures that could limited by the subsidy design, capital cost and be extended to the private sector market technological fit. Although 35% of the FAME II as well to see visible and sustained scheme provides subsidies for e-buses under electrification of bus fleet. Currently, the GCC model, the private sector bus market personal vehicles like cars that are more is excluded from this incentive. The high polluting per vehicle km and have lower capital cost at 30% of the lifecycle TCO also occupancy are eligible for FAME capital frontload financial risks for operators. Last, subsidies. Also, eligibility is limited to the performance of e-bus technology in India for public sector bus market that makes up different applications such as long distances for about 20% of the fleet size. trips, remains in its early days. • Alternative sources of revenue like feebate schemes that can help fund subsidies Based on the experience of UK and for purchase of e-bus and charging Latin American cities in scaling up e-bus infrastructure deployment. deployment, leasing of e-buses and/or battery can help overcome the obstacle of high capital Suitable business models and policy action for purchase in the case of non-adverse tax for charging infrastructure readiness treatment. For example, Chile charges zero Availability of charging infrastructure is critical VAT for e-buses with no import duties, along to support the e-bus market. However, with exemptions in vehicle emission tax. deployment of charging infrastructure suffers However, in India, there is higher (18%) GST from a lack of program approach and vision rate for leasing e-buses compared to purchase for e-bus fleet penetration on specific routes, (5%) making the option unattractive. Overall, along with a need to incentivize specialist lack of subsidies for purchasing e-buses and players with investment potential to enter adverse tax treatment of leasing e-buses has and kickstart the private sector markets. As provided an uneven playing field with the charging infrastructure is seen as a niche private sector e-bus market at disadvantage, market involving technology, grid and power although having the most potential in terms aspects apart from being able to work of attracting investments, access to specialist on a service model like fuelling stations, players and bankability. unbundling facilities through policy mandates is key to reduce range anxiety for fleet players entering the e-bus market. 104 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses The E-mobility Cell or the public transport • E-depots in urban areas: PPP department of each State will need to arrangements can be made between formulate and implement a State-wide private fleet companies and CaaS players program to install depot and en-route for installation and maintenance of charging infrastructure facilities that can grid and charging infrastructure. While be shared between the public and private this may be suitable for large fleet sector markets. Players like OEMs, energy companies, smaller-sized fleet operators providers and utility companies with specialist may be benefitted by shared e-depots capabilities may be invited to invest in and developed for the private market as develop charging stations (en-route) on the STUs will have their own dedicated highways for intercity markets and e-depots e-depots either self-managed or through (origin-destination) for both intracity and a separate PPP arrangement. Real-estate intercity markets. potential of land and building may also be tapped. • En-route charging on highways: In both cases, the CaaS players ensure Government land earmarked for this energy availability and manage charging purpose may also be provided to for the e-buses, while fleet players like charging-as-a-service (CaaS) players at aggregators and operators can focus on subsidized lease rates who can provide commercial and operational aspects of e-bus charging services to fleet operators deployment. Zenobe’s customised market either on a pay-as-you-go model solutions in the UK, and ENEL and other based on pre-booking or subscription energy players providing e-depot services model for members. CaaS players in Bogota (Colombia) are examples from may recover energy charges and fixed previous international experience. However, charges for installation of grid and it needs to be emphasized that a policy- charging infrastructure through per/ based approach to pilot and scale-up such kWh charges to fleet operators. Existing infrastructure in the Indian context is key to informal highway eatery complexes and attract interest and investment from suitable upcoming NHAI wayside amenities show players. good potential as potential sites. Unlocking suitable financing options Along with the necessary support in the form of subsidies, favorable tax treatment and ensuring charging infrastructure readiness, facilitating access to suitable financing options for the private sector market is essential. • Priority sector lending status to players involved in e-bus deployment can help especially smaller to medium-sized fleet operators and CaaS players access financing instruments at financial institutions. Photo credits: UITP 105 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses • Fleet aggregator models for e-bus decision-making flowchart primarily for fleet deployment separate fleet provision (procurement and operations) and energy (purchase and ensuring availability) aspects of the e-bus ecosystem. Institutional from fleet operation and help reduce readiness and financial capacity are requisite cost through achieving economies of for state or city to go forward with decision- scale in procurement, maintenance making on suitable business models. and financing of e-buses. Separate fleet Aggregating potential depends on volumes, provision, which transfers the capital precedents and institutional/financial cost risk of the e-bus to a financially characteristics. Overall, the Revised GCC strong player, appropriately apportions solution could be opted by a variety of technology, financial and market risks states and cities which may or may not between stakeholders. Investment have previous GCC tendering or operating platforms of fleet aggregators could experience. The market player-led aggregator attract investments from green investors business models may be suitable in cases and financial institutions. Leasing where more than 250 e-buses may be options between the fleet aggregator aggregately procured. Potential to aggregate and the OEM could further augment the more than 1000 e-buses across cities and benefits in a favorable GST scenario. routes in the state is suitable for country or state-led aggregation. Recommendations and For fleet operations, e-bus operational action plan capability may be self-assessed either using Each proposed business model requires performance of previously self-operated certain ingredients in the states and cities of routes and markets, or previous successful implementation to see improved bankability, history of e-bus or conventional bus commercial viability and scalability in e-bus operations. Energy provision may be led by procurement and operations. Moreover, charging infrastructure OEMs, energy players each state, city or agency may have its own or private DISCOMs, unbundled as a service/ precedents, aspirations and preferences, PPP and/or bundled with fleet provision. and they may assess suitable business models using the proposed decision-making framework below which presents a stepwise 106 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses Figure 4.7: Proposed framework for decision-making on selection of suitable business models Source: Steer review Self-operated Institutional Financial Aggregating potential • Efficient (cost, readiness capacity for procurement performance, quality of E-bus operational service) bus operations by PT authority capability Improved GCC • JnNURM success • GCC experience • GCC tendering • E-bus awards/ experience for e-buses Privately operated operations • Existing e-bus • Previous successful operations history of e-bus or conventional bus • State’s own share in operations by private revenue operators Private-led • City/STC credit rating • Fewer than aggregation 80% JnNURM DISCOM-led • History of rate contracts sanctioned buses with OEMs • Good operational and deployed • Interest from investors financial performance of • No previous and market players to >250 DISCOMs experience of • State’s share of aggregate paying private volume revenue less than potential operators 40% Unbundled from State-led Energy readiness • No e-bus tenders • Credit rating less have reached aggregation operation than BBB- awarded status • History of State resources • Depot/city-wide scalability for bus procurement of charging infrastructure • State/regional by energy provider aggregation >1000 • PT authorities with volume fleet management Bundled with potential capabilities fleet provision • Energy players interested in invest in fleet procurement to kickstart the market 107 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses Action plan prioritisation framework and the current business model. The action plan recommendations were discussed with In order to develop an action plan for central and state government agencies to e-buses, detailed stakeholder consultations get feedback on the applicability, impact and were undertaken with the OEMs, STUs, private ease of implementation of the proposed operators and transport departments to recommendations. The following figure assess the barriers in scaling up adoption summarises the priority of implementation for of e-buses, to understand stakeholders’ key key recommendations. concerns relating to existing GCC contracts Figure 4.8: Prioritization framework for e-bus action plan recommendations *Financial solutions to reduce financing cost for EVs has been presented in Chapter 5 1 E-Bus pilot operations High Priority 1 recommentations Priority 2 recommentations 4 Seperate funding for in- 7 2 frastructure readiness 3 6 Programme approach 3 for e-bus implementation 2 4 Consistent GST regime Balanced subsidy 1 5 structures 5 Impact Favourable financing 6 ecosystem Priority 3 recommentations Priority 4 recommentations Contractural improve- 8 7 ment to improve bankability 9 10 Capacity building in 8 e-bus operations Contract management 9 and prosurement cell Alternate revenue 10 souces-feebate scheme for e-bus fund Low Complexity High While detailed action plan recommendations are presented in Annexure-C, key action plan recommendations required for unlocking key business models and creating an enabling environment for mass-uptake of e-buses are described below: 108 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses Table 4.9: Action plan roadmap and barrier addressed for e-buses Source: Steer recommendations Recommendation Description Barriers addressed National level recommendations Programme approach • Develop an e-bus program for • Fragmented demand for at state level to the state or city with multi- e-buses from various STUs electrification of bus fleet year framework agreements leads to lack of economies between State and of scale resulting in high Category - Policy and participating PT authorities. capex of e-buses and lack of Regulatory • The program approach commercial viability of e-bus should be adapted to market, business models. institutional, operational and financial characteristics of the cities/ state. • CESL has already initiated this approach under FAME II policy to aggregate demand of e-buses across five cities with over 4 million population. Favorable and • Consistent GST to be applied • Higher GST and other taxes consistent tax regime across the e-bus value chain add to the high capital cost for manufacturing, including manufacturing, of e-buses throughout its procurement and procurement (purchase/ operating life. operations of e-buses leasing) and operations. Category - Policy and Regulatory Balanced subsidy • In GCC procurement model, • Fixed subsidy offered under structures as part of fiscal hybrid subsidy structures to the current GCC procurement measures be followed with operational models leads to price subsidy component linked to distortion in the e-bus market Category - Policy and performance of e-bus during • Not extending capital Regulatory the contract period subsidies to the private Category - Funding & Financing • Subsidies offered under FAME sector excludes major part policy to be extended private of the market with greater sector investment potential. Alternate sources of • Feebate scheme with levy of • STUs and DISCOMs often revenue for e-bus and carbon tax on ICE vehicles to are cash-strapped and lack charging infrastructure fund fleet electrification financial resources to fund deployment • Allow commercial exploitation development of charging of depot land to generate infrastructure Category - Financial and alternate sources of revenue Funding to improve commercial viability of unbundled charging infrastructure models Improve bankability of • Ensure payment security to • Contractual and tendering procurement through fleet operators for minimum issues increase risk premia contractual modifications assured kms via an escrow in bid quotes, leading to account arrangement cancellation or re-tendering Category - Procedural & managed by an independent of bids Procurement intermediary institution 109 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses Recommendation Description Barriers addressed • A step in ensuring payment guarantee has been initiated in CESL tender which includes a payment security mechanism mandating the authority procuring e-buses to either approve the invoice or issue a notice for necessary deductions or adjustments within 30 days from the date of submission, else it would be deemed approved, and operator can approach the Escrow Bank for its clearance.64 State level recommendations Capacity-building for • Capacity-building programe • Many STUs and state STUs, public transport for contracting authorities to departments lack the department, aggregator be mandated before initiation technical and operational agencies and DISCOMs of bid process and release of skills for new technologies like in e-bus operations and tender documents electric buses and charging contract management infrastructure for effective Category - Governance & contract management Institutions Contract Management • A centralized contract • Contractors including and Procurement Cell at management and fleet providers, operators, State and agency level procurement cell along with energy or CaaS providers project management units may perceive higher risk in Category - Governance & for each cluster of e-bus fleet entering into contractual Institutions being procured and operated agreements with agencies Category - Procedural & Procurement at a state or STU level having a history of non- • A project management unit compliance with contract with representatives from terms contractors, PT authorities, State agency (if any), CaaS providers and lessors • Mumbai and Delhi have launched their EV cells recently to accelerate transition and adoption of EVs. 64  Clause 22.2.3 and 22.2.4, Amendment No.3 against tender, ‘‘Request for proposal for selection of bus operator for procurement, operation and maintenance of 5,450 electric buses and 135 double decker electric buses and allied electric and civil infrastructure on Gross Cost Contract’’, Open tender, CESL, dated 2 March 2022 110 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses Recommendation Description Barriers addressed Separate funding and • Power DISCOMs to be • Lack of charging readiness of charging provided with funding infrastructure readiness infrastructure support by respective states increases risk premium governments to deploy added to the bid quotes in Category - Funding & charging infrastructure at e-bus tenders. Financing depots and en-route charging Category - Urban infrastructure points before procurement stage. Enable favorable • Central/state governments to • In the absence of secondary financing ecosystem for introduce scheme to de-risk markets, bankers’ concerns e-buses lending to e-bus sector (public around residual value of and private) until 10% of the e-buses affect bankability Category - Funding & fleet is electric. of e-bus procurement and Financing operations. E-bus pilot operations • DHI to mandate e-bus pilots in • Significantly higher capital for mitigation of addition to feasibility studies cost of e-bus along with lack performance risks, model undertaken before release of of evidence on performance registration and OEM tender reliability contributes to range empanelment • OEM empanelment to concerns for operators on the be based on successful path of fleet electrification. Category - Procedural & Procurement registration of piloted e-bus models • The CESL procurement of aggregated demand allows standardization of e-bus specifications and operational parameters reducing performance risks associated with e-bus operations. Impact of e-bus penetration • Reduction in risk premia in operator bid quotes that aim to counter payment, Implementation of the action plan for technology, capital cost and other risks e-buses can have impacts at multiple levels: – Payment: Direct lender subaccount • TCO parity between e-buses and ICE payments, escrow account mecha- nism and/or ring-fenced trust funds variants – Technology: Mileage assurance and/ • Improved commercial viability, bankability or battery replacement risk on OEM and scalability of e-bus procurement – Capital cost: Financially strong player • Investments in electrification of the as fleet aggregator • State-led aggregator with programe private sector bus market approach to fleet moderation can • Fleet electrification resulting in carbon achieve greater economies of scale in emission savings procurement, maintenance and financing While savings in the Revised GCC solution – Procurement: Discounted bus costs for result from improved contractual terms, large orders additional TCO reduction in the aggregator – Maintenance: Centralized maintenance models result from the following: arrangement for procured fleet – Financing: Cheaper interest rates and guarantees 111 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses The chart below illustrates the improved financials and TCO savings for 9-m intracity e-bus, in moving from the existing GCC model to an improved GCC model, and further to aggregator-based business models with continued FAME subsidies. Figure 4.9: Potential TCO improvement across alternate business models with continued FAME subsidy (INR/km) Source: Steer estimates 80 9m-intracity financials (INR/km) 70 60 50 40 74.5 30 61.1 54.4 50.5 50.0 20 10 13.4 6.7 0 Current Contractual Improved Favourable Market Larger State-led ICE GCC modifications GCC financing player-led scale aggregation benchmark and aggregation and discounts no profits The aggregation initiatives that have begun competition among e-bus OEMs and with the CESL tender would pave the way for gain from economies of scale resulting in improving contracting and procurement of lower upfront costs e-buses under GCC mode. The e-bus market is likely to grow with improvement in TCO by Development of en-route charging adoption of action plan recommendations infrastructure and its availability to private coupled with improvement of ecosystem operators is a pre-requisite for adoption of factors such as: e-buses at a large scale. National Highways Authority of India (NHAI) has a target to • The sustained higher price of fuel is install charging stations at 40km-60km on expected to switch the modal choices in national highways and it is planning to equip favor of public transport about 40,000km with charging stations by • The revival of tourism sector is likely 2023.65 These stations are proposed to be to boost intercity travel demand which developed as a part of wayside amenities, would result in improvement of finances which would further facilitate adoption of of private operators e-buses in the intercity bus market. • Improvement in manufacturing capacities resulting from aggregated public procurement is likely to increase 65  https://theprint.in/india/governance/e-vehicle-charging-stations-every- 40-60-km-40000-km-of-highway-coverage-nhais-2023-target/751104/ accessed on 11 March 2022 112 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses The public policy push creating operators and the policy and action plan manufacturing capacity and improved recommendations discussed earlier. These availability of charging infrastructure adoptions include the impact of TCO led coupled with ease of access towards savings resulting in switching of some of the affordable financing (covered in detail private sector operators aided by conducive in Chapter-6) would influence improve market environment and increased perception of e-buses and result in increased competition in e-bus manufacturing level of penetration under the alternate landscape resulting in lowering of upfront scenario. These sales penetration levels costs and higher reliability of product have been estimated considering a higher available. adoption rate by urban public bus Table 4.10: e-bus projection in terms of number of vehicles and as a % of total vehicle annual sales for India in Alternate scenario Source: Secondary research (FY19-21) and Steer estimates (FY25, FY30) Market segment FY1966 FY20 FY21 FY25 FY30 e-bus sales 400 600 1,850 8,000 14,000 EV penetration 1.0% 1.5% 11.7% 18% 50% Table 4.11: EV stock numbers and total investment value of e-buses for India in the Alternate scenario from FY23-30 Source: SSteer estimates Total In- vestment Market Segment FY23 FY24 FY25 FY30 Value (INR Mn) e-bus stock 15,000 23,000 31,000 98,000 1,303,000 66  https://jmkresearch.com/electric-vehicles-published-reports/electric-bus- es-india-market-analysis/accessed on 1st March 2022 113 Electric Mobility Market Assessment, Business Model and Action Plan in India 4. E-buses Summary to alternative straight purchase and GCC approach. Initial ramp-up and predictable A rapid uptake of e-buses will play a major demand associated with aggregation will role in the decarbonization of transport lower cost, build state and city capacity in India. Achieving rapid TCO parity and and enable the development of market unlocking financing for such uptake player-led aggregator models for private will require efficiency gains in existing sector bus provision. Since the majority of contracting (revised GCC solution with buses are managed and operated by the improved contractual terms and guarantees) private sector, a systematic reduction in and leveraging aggregation based on long- transition cost (through feebate and reduced term programs such as those initiated taxes), development of shared charging with the CESL tender. Aggregation will infrastructure, and access to favorable also require adjusting GST distortions financing will be needed to accelerate the that may limit the competitiveness of transition. associated business models compared Photo credits: JBM 114 Electric Mobility Market Assessment, Business Model and Action Plan in India 5. Charging Infrastructure Photo credits: Ather Energy 5. Charging Infrastructure Introduction in the country. It also summarizes the estimated demand for charging Provision of charging infrastructure is a infrastructure deployment till FY30 pre-requisite for EV adoption. This chapter based on the forecasted penetration introduces the charging infrastructure of EVs across market segments. This ecosystem, starting from the global and section also summarizes the key features national push for its development, along and examples of various charging with current market overview in India. infrastructure business models The demand for charging infrastructure is presented in terms of the preferred • Market barriers and proposed location for charging and associated charger intervention given the limited utilisation requirements. The various charging locations of chargers due to low penetration are residential, office, captive, public levels, the charging business models are and swapping. The supporting charger currently not viable. An assessment of requirements refer to the electric equipment alternate business models and current suitable for installation at various charging bottlenecks influencing their viability locations such as the 15-ampere socket, and scale-up are analysed. Accordingly, Type 2 Alternating Current (AC), Bharat a set of action plan recommendations Direct Current (DC), Combined Charging addressing these bottlenecks are system-2 (CCS) charger. The charging presented. infrastructure requirement of each market segment was estimated at a city level and Market context then scaled up to estimate the national level Global context charging infrastructure demand. The demand for charging network is expected to grow to over 309 million The major sections of this chapter are: chargers at all locations by 2040 under the ‘economic transition scenario’ considered • Market context presents both by Bloomberg. An estimated 270 million global and national state of charging of these would be at home locations. infrastructure with respect to investment Additionally, 24 million would be required requirement, policy support and at public locations, and a further 12 million an overall charging infrastructure at workplaces, while about 4 million would development. be needed for charging buses and trucks. • Charging infrastructure value chain A total investment of USD 589 billion is provides an overview of value chain expected to install chargers at all locations starting from battery energy storage globally. The changing needs of the network system to end-user interacting with will evolve by 2040 and vary in each country charging infrastructure to charge EV. depending upon where they are in their EV It also provides a brief on the charging penetration journey.67 standards relevant to India market context. • Market overview presents the status of charging infrastructure deployment 67  Electric Vehicle Outlook, 2021 Executive Summary, BloombergNEF 116 Electric Mobility Market Assessment, Business Model and Action Plan in India 5. Charging Infrastructure Plans to rollout charging infrastructure have To support the charging requirement of EVs become a priority across markets. Transport nationally, it has invested roughly USD 2.4 Environment, a clean energy transport billion in improving charging infrastructure campaign group, estimates that European till 2020.70 A study by the International Union’s public charging infrastructure Council on Clean Transportation (ICCT) deployment should target 1.3 million public estimates that to support a stock of charge points for 2025 increasing to 3 million 26 million vehicle in the US, public and for 2030, which would require investment workspace charging would need to expand of USD 2.1 billion in 2025.68 China has a to about 2.4 million chargers by 2030 vehicle stock of about 4.92 million new from 216,000 in 2020 which would need energy vehicles by 2020 which includes investment of about USD 28 billion.71 battery electric, plug-in hybrid and fuel cell vehicles.69 Image Source: https://www.ubitricity.com/in-use/ Berlin street EV charging infrastructure They have also installed about 250 charging Berlin-based start-up-Ubitricity has developed points in London. Such an initiative has also physical and digital infrastructure to upgrade been attempted in India by Magenta Power existing streetlights and bollards into who have successfully installed ChargeGrid charging points in collaboration with the local Flare EV charger on street light poles at authorities resulting in an affordable and two locations- HPCL outlet in Bandra Kurla accessible charging network. A billing system Complex in Mumbai and Nitimarg in Delhi. allows users to incorporate the EV charging It has announced plans to set up over 1,000 cost in their electricity bill using mobile such facilities all over India in the following electricity contracts and a smart cable that has year. It is enabled with an automated an integrated electricity meter. payment gateway through the ChargeGrid app.72 68  Recharge EU: How many charge points will Europe and its Member States 70  https://www.businesswire.com/news/home/20210524005446/en/14- need in the 2020s, Transport and Environment, January 2020. https:// Billion-Electric-Vehicle-Charging-Infrastructure-Market---Global-Outlook- www.transportenvironment.org/discover/recharge-eu-how-many-charge- and-Forecast-2021-2026-Revenue-is-Expected-to-Grow-at-a-CAGR-of- points-will-eu-countries-need-2030/ Over-30---ResearchAndMarkets.com accessed on 20th August 2021 69  Driving a green future, A retrospective review of China’s electric vehicle 71  https://theicct.org/publications/charging-up-america-jul2021 accessed on development and outlook for the future, Lingzhi Jin, Hui He, Hongyang Cui, 20th August 2021 Nic Lutsey, Chuqi Wu, Yidan Chu, International Council on Clean Transpor- 72  ttps://www.kfw.de/stories/economy/mobility/ubitricity-mobile-electricity/ tation, Jin Zhu, Ying Xiong, Xi Liu, China EV100, January 2021 accessed on 20th November 2021 117 Electric Mobility Market Assessment, Business Model and Action Plan in India 5. Charging Infrastructure National context The forecasted EV penetration results estimated under BAU scenario would need Government of India has published a policy adequate deployment of chargers at all document, ‘Transformative Mobility for All’ locations-residential, office, public and in 2017 which is spread over three phases- I: captive facilities for fleet operations. Based 2017-19; II: 2020-23 and III: 2024-32. The first on an assumption of 5 charging points per phase was focused on short-term actions to location, about 240,000 public charging build political and market confidence, followed stations are required to be set up by 2030 by developing regulatory incentives and (detailed estimates are presented in the policy measures in phase II and deployment subsequent section). of large-scale charging network while scaling up domestic manufacturing in phase III.73 Availability of accessible and affordable Charging infrastructure charging infrastructure is a pre-requisite for value chain mass adoption of EVs. Charging infrastructure needs to be at the core of the future planning While at present there are no universally for transition to electric mobility. accepted standards or global benchmarks for the extent to which EV charging In India, Department of Heavy Industries (DHI) infrastructure is required, it is widely has sanctioned 2,636 new charging stations considered that EV market growth will only to be set-up across 62 cities and 24 states and be delivered in conjunction with a clear and Union Territories in January 2020. Additionally, visible EV charging infrastructure growth Ministry of Heavy Industries and Public plan. While the numbers of charging points Enterprises has sanctioned 2,877 EV chargers implemented is important, the psychological on highways and expressways in October impact of seeing EV infrastructure 2020. Ministry of Power has also announced installation in an area also has a strong setting up of EV chargers across 69,000 petrol influence on users making the decision to stations in India. transition from ICE to an EV. India has about 1,640 operational public Charging infrastructure is the backbone charging chargers as of January 2022, with of any electric mobility implementation. the highest proportion concentrated in major A Battery Electric Vehicle (BEV) is driven cities such as Bengaluru, Delhi and Mumbai.74 by an electric motor supplied with energy During the transition phase towards EVs, entirely from on-board batteries. Provision there would be low utilization of chargers of an adequate, affordable, accessible and due to lower penetration of EVs, owing to reliable charging network is considered a which the business models for public charging pre-requisite for the mass adoption of EVs. stations are financially unviable; this restricts Therefore, the provision of robust charging flow of private capital investment in the sector infrastructure solutions is key to promote and may need initial funding and financial awareness and confidence in vehicle range support from central and state governments. among prospective EV customers.75 73  Electric Vehicle charging infrastructure and impacts on distribution 75  Emerging best practices for electric vehicle charging infrastructure, ICCT, network, Greening the Grid (GTG)-Renewable Integration and Sustainable 2017 Energy (RISE) Initiative, A partnership between USAID and Ministry of Power, GOI, June 2020 74  https://www.bloombergquint.com/business/india-ramps-up-charging-in- frastructure-to-spur-adoption-of-evs accessed on 10 March 2022 118 Electric Mobility Market Assessment, Business Model and Action Plan in India 5. Charging Infrastructure Figure 5.1: EV value chain Charging standards Source: Steer representation At present, there is significant variation in the type of charging standards and sockets Leverage existing grid which are being used to charge EVs. A supply through battery lack of common charging standards adds energy storage system complexity and cost in establishing a charging infrastructure model that is in harmony with Charging infrastructure itself rather than in conflict. India has yet to Smart charging strategy fully standardize its requirements for public to minimise cost of power and private charging infrastructure and (public/ home/ swapping) numerous charging connector standards have Embed green / been deployed. renewable energy supply The advantages of standardizing on-charging connectors are: • Reduction in complexity for OEMs EV battery ecosystem serving the market: Complexity comprising of mining & in manufacturing costs money and refining, cell technologies and cell/ battery complexity reduction saves money, both manufacturing in manufacturing and component supply. • Users’ ability to use any charging OEMs of different modes (2W, 3W, 4W, LCV, buses) station: User experience and trust in and market segments transition to EV would be eased. Capital expenditure reduction, public charging locations would only need to cater Customer or fleet for a single DC standard rather than operator- moving goods and people the potential four in play in the Indian market, ensuring greater utilization of the available electric charger. The EV ecosystem is evolving and consists of many interconnected actors and business In terms of standards in the Indian context, models. The supply side stakeholders for there are currently only two Bharat Series charging infrastructure include OEMs of – BAC001 and BDC001 developed by Electric Vehicle Supply Equipment (EVSE), Electrotechnical Department (ETD). ETD battery manufacturers, charging network under Bureau of Indian Standards (BIS) has providers and utility companies. The also constituted a committee- ETD-51 for deployment of charging infrastructure developing standards beyond the present requires coordination among multiple Bharat series. Others are connector protocols stakeholders. or charger types recognised by the public charging infrastructure guidelines issued by the Ministry of Power (MoP) in January 2022. The following table briefly describes the current charging approaches being adopted by India. 119 Electric Mobility Market Assessment, Business Model and Action Plan in India 5. Charging Infrastructure Table 5.1: Approaches for EV charging stations in India Source: Charging standards for electrical vehicles (EV)- revised guidelines and standards, Ministry of Power, January 14, 2022; Steer representation Type of Charger Charging power Output Voltage Vehicle charger connector (Kilowatt) (Volts) type Fast Combined min 50 kW 200-750 or 4W Charging System higher (CCS) 1 and 2 CHArge de Move min 50 kW 200-500 or 4W (CHAdeMO) higher Type 2 AC Charger Min 22 kW 340-480 4W, 3W, 2W Slow/ Type 2 AC Charger76 7.2-11 kW 150-340 4W, 3W, 2W Moderate Bharat DC-001 10/ 15 kW 48/ 72 4W, 3W, 2W (10KW) 4W (15 KW) Bharat AC-001 3 connecting 230 4W, 3W, 2W guns of 3.3 kW Battery swapping Battery swapping is mostly applicable where the swapping station. The battery swapping the battery is small and easily accessible stations have charging facilities located at and can be separated from the EV, such as the site itself with either stacks of chargers in the case of 2W and 3W. In many of these or individual battery chargers. Taiwan-based emerging models the battery is not owned Gogoro has been successful in creating a by the EV vehicle owner/operator, but by network of swappable batteries for its two the energy operator who owns, charges and wheelers which is accessible 24x7 with an leases the battery to the vehicle operator. open AI powered and cloud connected Once consumed, the discharged battery can platform. be swapped for the recharged one at 76  https://www.exicom-ps.com/Charging-intro.html?id=divTab508 accessed on 12 November 2020 120 Electric Mobility Market Assessment, Business Model and Action Plan in India 5. Charging Infrastructure Image Source: https://www.gogoro.com/gogoro-network/ Swap and go: Gogoro’s swapping solution Taiwan based Gogoro is an electric scooter company which has been a market leader in the country. It has built an accessible and intelligent energy platform and distribution network of exchangeable smart batteries. Gogoro’s network is the largest battery swapping network with over 2,000 swapping stations globally77. The company has also entered in a joint venture with Hero Motorcorp Ltd. for bringing the battery swapping solutions for the Hero’s EV models in India which would be initially rolled out in Delhi and Bangalore.78 In terms of considering charging versus swapping infrastructure, discussions held with various stakeholders highlighted the relevance of the battery swapping options to be particularly relevant for e-3W and e-2W passenger fleet market segments. This is driven by the need to reduce upfront capex and down time during operating hours, thereby increasing the earning potential. For the other vehicle market segments, particularly e-4W and e-buses the OEMs preference is not to separate batteries from the vehicle. Further for e-3W and e-2W freight markets, the range of the existing e-vehicles for the purposes of daily use in terms of kms and the time available to carry out top-up charging during the operating period make charging as the preferred solution over battery swapping. In all market segment, technological and policy changes may rapidly shift balance across options. The swapping policy announced in the 2022 Government of India budget is expected to enhance the competitiveness of battery swapping by creating a level playing field across technologies. 77  https://www.gogoro.com/news/gogoro-network-battery-swapping-can-help-transform-cities/?utm_ source=google&utm_medium=cpc&utm_campaign=bb_battery_swap accessed on 20 October 2021 78  https://www.bloomberg.com/news/articles/2021-09-16/battery-swapping-startup-gogoro-to-go-public- in-spac-merger accessed on 20 October 2021 121 Electric Mobility Market Assessment, Business Model and Action Plan in India 5. Charging Infrastructure Current market overview Market segment charging options Overview Each market segment presents a different set of characteristics of charging and This section provides the current state downtime requirements for EV usage. While of charging infrastructure deployment; and the charging standards differ as does the EV maps the charging infrastructure requirement battery size and type, each market segment for each market segment. This understanding utilizes different charging options depending is incorporated into the market assessment upon: whereby, charging infrastructure requirement is estimated under BAU scenario. • Requirement and downtime: EV users want to optimize vehicle charging The market assessment results show the downtime for the minimum time and cost. national estimate for number of charging For example, operators of commercial points required by each vehicle type, and EV (e.g. 2W/ 3W) fleets want to maximize the type of charger by each location. This on-road time by minimizing charging indicates the need of charging infrastructure downtime. As the batteries of these development for both business models- vehicles are often easy to remove from battery swapping and charging stations the EV, this mode appears well suited (captive and public). to battery swapping business models. Current charging infrastructure However, the need and extent of the deployment adoption of battery swapping would also depend upon technology, standards and There are numerous initiatives being taken range improvements of the underlying by both public and private players in batteries. These options may not be deployment of charging infrastructure across suitable for 4W and buses where there the country. The recent announcement by may be need for faster plug-in charging the Department of Heavy Industries (DHI) to options and where the size, weight and deploy nearly 2,700 charging stations across vehicle package of the battery make this 62 cities under public procurement model more challenging. is expected to provide a fillip to the pace of public charging network expansion. • Availability of charging facilities: The charging facilities used for the different The public charging stations sanctioned by modes will depend on their use-cases. DHI are expected to have 5-6 charging points For example, vehicles purchased for comprising of 2-3 slow chargers (AC001 and personal use like e-4W would be charged Bharat DC001) and 1-2 moderate chargers at residential and office locations, while (Type2 AC) and a selected few fast charger EV fleets can use charging infrastructure (CCS2). Our assessment of private deployment at commercial or public charging stations suggests that most of the charging points for faster battery swapping and/or have Type2 AC chargers being deployed while provide plug-in charging, as applicable. the slow chargers constitute a relatively small Combinations are likely to emerge. For proportion. The fast chargers are only being example, Ola, the 4W fleet operator has deployed by the private sector at very few set up fast charging stations in Nagpur selected locations at this point, focusing on along with slow charging points at driver- major urban centers like Delhi, Mumbai and partners’ residences.79 Chennai. 79  Ola Mobility Institute 122 Electric Mobility Market Assessment, Business Model and Action Plan in India 5. Charging Infrastructure Photo credits: Statiq – For intracity bus services, it is assessed The table below provides a summary that average route length is less than the overview of EV charging infrastructure by range of e-buses and therefore, suitable market segment-wide battery attributes and charging options may involve charging charging requirements. the buses at depots post completion of trip(s) or overnight, whereas an en- route or intermediate charging station is required between origin and destination modes for an intercity trip given the longer route length. 123 Electric Mobility Market Assessment, Business Model and Action Plan in India 5. Charging Infrastructure Table 5.2: EV charging attributes market segment-wide *2W fleet includes passenger and freight; Source: Stakeholder inputs, Steer representation Attributes/ 3W- Market 2W- 3W- 4W 4W- Bus 2W-Fleet Passen- Segment Personal Freight Personal Fleet ger Fleet Typical battery 1.5-2 1.5-2 5-7 5-7 5-22 15-22 145-350 size (kWh) Charging time (hours) AC-001 3-4 3-4 4-5 4-5 11-12 11-12 Type 2 AC 8-10 8-10 charger Bharat DC 001 0.5 0.5 2 2 (GB/T) CCS/CHAdeMO 0.5 0.5 4-5 (DC) 50kW Charging facilities Residential Office Public charging includes captive charging station Battery swapping Depot charging 124 Electric Mobility Market Assessment, Business Model and Action Plan in India 5. Charging Infrastructure The total investment requirement includes the following costs related to installation of chargers Table 5.4: Installation costs (As a proportion of charger costs) Source: Stakeholder inputs, Steer representation; Table 5.3: Cost of different charger types above installation costs are not added for 15 Ampere Source: Stakeholder inputs, Steer representation chargers Cost (INR per Installation Cost as a Charger type charger) costs proportion of 15 Amp 2,000 charger cost AC001 3,500 Type2AC AC 001 Bharat Type2AC- 7kW 40,000 DC001, CCS2 Bharat DC 001- 10kW 200,000 Civil work 5.0% 10% CCS2- 25 kW 700,000 Installation and 3.0% 15% Commissioning Software cost 2.0% 5% Market assessment results Using the outputs of the market assessment exercise for each market segments, a charging infrastructure model has been developed to estimate the number of charging points required by each vehicle type, and the type of charger by each location nationally. Figure 5.2: National charging infrastructure forecast by charger type and location- 2/3W and cars (business- as-usual scenario) *E-bus penetration in India is largely policy driven and would lead to charger installation primarily at depots as a part of procurement process, therefore estimation of e-bus chargers is not included in the forecasts; Source: Steer estimates 15 Amp AC001 Type2AC CCS2 Bharat DC001 16000 Number of Charging Points (Thousands) 14000 12000 10000 8000 6000 4000 2000 0 2025 2030 2025 2030 2025 2030 2025 2030 2025 2030 Residential Office Captive Public Battery Swapping 125 Electric Mobility Market Assessment, Business Model and Action Plan in India 5. Charging Infrastructure Table 5.5: 2030 charging infrastructure forecast- Business-as-usual scenario (in thousand charger points) Source: Steer estimates Type of Total Resi- Cap- Battery Total Charger Office Public Investment dential tive Swapping Chargers required (INR Mn) 15 Amp 11,360 50 150 11,560 23,000 AC001 1,820 30 370 220 830 3,270 13,000 Type2AC 720 20 30 20 790 41,000 Bharat DC 4 1 90 96 25,000 001 CCS2 2 2 2,000 Total 13,900 100 554 244 920 15,718 104,000 As seen in countries with high EV penetration sockets and/or AC001 chargers where e-2W such as US and China, the residential EV and e-4W users can easily access them at charging demand in India contributes the their preferred parking locations requiring maximum proportion, at about 90% of a total investment of about INR 67 billion by forecasted charging points to be installed in FY 2030. With most significant increases in order to support EV penetration under BAU the numbers of users looking to charge their scenario. This is driven by the 2W vehicle e-2W and e-4W using these slow chargers at population, which would be primarily charged their residential locations, a clear mandate at home. Majority charging requirements from the city/state authorities to enable new at residential locations are expected to be and existing residential locations to be EV met from large number of 15 Amp industrial ready (through retrofitting) will become a key enabler. Guidance on Accelerating the Construction of Electric Vehicle Charging Infrastruc- ture- China The State Council of China had issued a guidance for construction of EV charging infrastructure which plans for all new residential construction to be equipped with EV charging facilities, all large public buildings to have 10% reserved parking space for EV charging and development of one public charging station for every 2,000 EVs. It also promotes public-private partnership for installation of chargers in commercial places such as malls, grocery stores, major parking facilities. To support this development, National Development and Reform Commission has published a notice setting out standards and procedures for installation of residential chargers. City of Shenzhen offers purchasers of EVs, subsidies up to RMB 20,000 (*USD 3,092) for vehicle insurance and installation of charging equipment.80 In April 2020, Chinese government decided to invest USD 381 million in EV charging to enable the State Grid company to build about 78,000 charging stations over the year.81 80  Electric Vehicle Charging in China and the United States, Anders Hove and David Sandalow, February 2019, Centre of Global Energy Policy 81 How EV Charging Can Clean Up China’s Electricity Grid,” Barbara Finamore and Hyoung Mi Kim, NRDC, 2020 126 Electric Mobility Market Assessment, Business Model and Action Plan in India 5. Charging Infrastructure Under the forecasts outlined above, the vehicles only. CCS is the most widely provision of public charging is a critical supported charging standard in Europe. enabler for the EV market growth to The locations of the charging stations are continue unabated to gain user confidence sourced by the Ionity team and focused for adoption of EVs. Based on user in high traffic locations and where speed preferences, some studies have claimed of charging is key to the users’ needs and that the classic ‘chicken and egg’ problem therefore drives higher utilization. The between charging and EV adoption can network is open for use to any vehicle be resolved by deploying public charging that can charge using the CCS standard. first as it is an essential consideration for The consortium also offers preferential purchase of an EV.82 To facilitate EVs adopted membership tariffs available to those under BAU scenario, about INR 4 billion you drive the consortiums vehicle investment would be required in setting up product and other selected partners. public charging stations. Battery swapping Relevance in India: Several OEMs like would become a key facilitator for e-2W and Ather and Okinawa have started e-3W fleet models and would require setting working on providing a network of up a dense network of swapping stations. charging locations for their customers. Captive charging locations would contribute For instance, Ather Grid installed in mainly for meeting charging needs of fleet cities like Bengaluru and Chennai allow businesses across e-2W, e-3W and e-4W fast charging for its models, however vehicles. other scooters manufactured by other large e-2W OEMs are still using AC Priority markets charging for their models. Therefore, they are currently all working to serve Qualitative analysis of a range of potential their own customer base and not business models for providing charging adding to a public provision of charging infrastructure was undertaken, building infrastructure. Currently this cost of upon the stakeholder feedback and providing public charging infrastructure secondary analysis of charging infrastructure is being seen as a market enabling market. initiative and is treated as a cost of doing business by most OEMs. As the market Below are some international useful sizes increase and larger adoption across examples of charging infrastructure business large urban centers is experienced, it models prevalent globally, with their is likely that some OEMs would come relevance for India. together to offer joint solutions which could be provided by the equivalents of • BOO Example – IONITY83 network IONITY in India. A key enabler for such owned and operated in Europe by five business models would be some level vehicle manufacturers (VW, Ford, BMW, of standardization of the battery and Daimler and Hyundai). The creation and charging across multiple OEMs. This is funding for the network was provided starting to happen in the e-4W market by a consortium of OEMs to support however there is not much progress in and create a network of High-Powered the e-2W and e-3W markets in this area. Charging network for CCS capable 82 Electric Vehicle Charging in China and the United States, Anders Hove and David Sandalow, February 2019, Center of Global Energy Policy 83 https://ionity.eu/en/design-and-tech.html 127 Electric Mobility Market Assessment, Business Model and Action Plan in India 5. Charging Infrastructure • Infrastructure as a Service (IaaS) – • Infrastructure as a Service (IaaS) Liberty Charge.84 A new and emerging - FEV.85 Defined by the company FEV business model in the UK, Liberty as an IAAS model it addresses the Charge is a joint venture between Liberty fluctuating demand in charging and Global and Zouk Capital (a sustainable the need to provide grid reinforcement infrastructure fund manager) and and transformer stations when the leverages the network assets and build business case is still challenging. The capabilities of Virgin Media (a Liberty FEV developed prototype has confirmed Global subsidiary). The intent of model is proof of concept with the energy that investment is split above and below supplier Uniper producing a mobile fast the ground. Liberty Charge provides the charging station, that contains a mobile base power and communications that battery storage solution, that can be enables charging point operators or local replaced once the batteries run out (a authorities to set up areas where access form of battery swapping). Uniper has to off street locations is prohibitive. The an intent to install more than 1300 units charging station operator connects via a across Germany over the next 4 years. plug and play system to the power and Relevance in India: Sun Mobility is connectivity on annual IaaS fee basis partnering with Kinetic Green and reducing the upfront infrastructure cost Piaggio in setting up stationary battery for CPOs. swapping stations. They are closest to Relevance in India: The initial steps in taking up this business model as the creation of capabilities needed for such market evolves and the need for mobile a model to exist in India are being taken charging stations arises. by involving public sector undertakings like NTPC or REIL in delivering the public In India, four key business models are charging network investments being led prevalent in space of charging and swapping by DHI. As these organizations gain the infrastructure space which are presented in technical expertise to deal with below the table below: the ground and grid connectivity aspects of delivering charging infrastructure facilities, they could evolve over time to let the installation, operations and maintenance of the above ground infrastructure being led by specialists charging infrastructure operators. DISCOMs are not considered as the active participants in this sector due to their wider financial conditions and the focus on managing their existing business better. 84  https://libertycharge.com/infrastructure-as-a-service/ 85  https://www.fev.com/en/coming-up/press/press-releases/news-article/ article/fev-develops-mobile-power-bank-for-electric-vehicles.html 128 Electric Mobility Market Assessment, Business Model and Action Plan in India 5. Charging Infrastructure Table 5.6: Business model for charging and swapping infrastructure Source: Steer representation Captive Charging Station Public Charging Station • Fleet operator setting up captive stations • Commercial EV charging station providing for own fleet charging on pay per use basis on public • Third-party private operator providing locations charging services to fleet operators • Key driver of viability: Utilization of • Key driver of viability: Utilization of chargers chargers • Extended/potential uses: Provision of • Extended/potential uses: Tie-ups with amenities to improve viability other fleet operators and offering services • Fiscal support required: Capital subsidy to general public for chargers, subsidized land electricity • Fiscal support required: Subsidized land tariff and electricity tariff • Example: EESL, NTPC, REIL • Example: Luthium, OLA electric, e-BikeGo Battery Swapping Stations E bus-depot charging • Third-party private operator providing • Third-Party charging-as-a-service provider swapping services to fleet operators installing and maintaining charging infrastructure • Key driver of viability: Utilization of batteries • CaaS subscription models and wayside amenity+services for intercity bus market • Extended/potential uses: Tie-ups with many fleet operators • Key driver of viability: Commercial use of land/building and packaging with other • Fiscal support required: Subsidy on services like wayside amenities battery sold seperately, reduced GST rate on batteries and battery as a service • Extended/potential uses: Availability for model use by private fleets during off-peak (day) for buses • Example: Sun Mobility, VoltUp, Lithion Power • Fiscal support required: Concessional land • Example: Zenobe, NHforEV, NHAI WSA Residential charging would be primarily used for e-2W charging but will be essential for early adoption of 4Ws as well. Public charging and battery swapping are key enablers to bring confidence in users to adopt EVs. Captive charging would be primarily used in fleet businesses across private vehicle market segments for 2W, 3W and 4Ws. Unbundling charging infrastructure as service for e-buses brings efficiency and will enable viability for fleet operator. 129 Electric Mobility Market Assessment, Business Model and Action Plan in India 5. Charging Infrastructure Market barriers and public fast charging facility allaying concerns over range. Action plan steps have been proposed intervention recommended to improve deployment Key action plan recommendations of charging and swapping infrastructure All business models and market segments for all market segments. Detailed action of charging and swapping infrastructure plan recommendations for charging and such as residential, office, captive, public swapping infrastructure are presented in and swapping stations would play a key annexure C role in mass uptake of electric vehicles. For the general public, the priority is to unlock As discussed in Chapter-1, the action plan charging at locations where people naturally recommendations presented in the figure park already for large number of hours. This below were prioritized based on feedback should be supplemented by a network of received from implementing agencies at national and state level Figure 5.3: Prioritized action plan recommendations for charging infrastructure Source: Steer representation Government land pool- Priority 1 recommentations Priority 2 recommentations 1 ing for public charging High station 1 4 Seperate meters for EV 2 charging 5 EV policy to include all 3 technologies 2 6 Uniform EV tariff for all 4 charging use cases Depot charging infra- 3 5 structrue accessible to Impact all operators Priority 3 recommentations Priority 4 recommentations Amend development 6 control regulations for office/home charging 7 Allow demand aggre- 7 gation for accessing renewable energy Low Complexity High Key recommendations for mass deployment of charging and swapping solutions are presented in the table below: 130 Electric Mobility Market Assessment, Business Model and Action Plan in India 5. Charging Infrastructure Table 5.7: Action plan roadmap and barrier addressed for charging and swapping infrastructure Source: Steer representation Recommendation Description Barriers addressed Applicable to all charging business models Provide land at Allow land at concessional rate or Decrease in capex or opex (rent concessional prices in provide capex subsidy in form of or lease cost) requirement leading cities for setting up public land provision for setting up public to improvement in commercial charging infrastructure charging stations by state and city viability of a charging station authorities Category - Policy and Regulatory Category - Governance and Institutions EV policy to provide EV policy to provide level playing Reduction in upfront capex of level playing field to all field to all charging technologies. setting up a charging or swapping charging technologies Therefore, FAME or state EV station policies to extend capital subsidy Category - Policy and to any public charge point Regulatory operator or battery swapping Category - Governance player under the condition on and Institutions providing open or shared access to other users Amend development Majority of charging needs would Overcome negative perception control regulations to be met at residential and office towards an EV due to range enable residential and locations; therefore, State Urban concerns of a user by improving office charging Development Department and accessibility to charging solutions local municipalities to adopt the Category - Policy and amendments in Development Regulatory Control Regulations issued by Category - Urban Ministry of Housing and Urban Infrastructure Affairs (MoHUA) for installing charging infrastructure in building premises and core urban areas.86 Consistent tariffs for EV Consistent tariffs for EV charging Lack of consistent tariffs across charging across public, across public, private, captive different locations impacts private, captive and and battery swapping facilities in commercial viability and scale up battery swapping facilities each city. The Ministry of Power potential of fleet and charging in each city to consider including in the station business models recently introduced “Electricity Category - Policy and (Rights of Consumers) Rules, Regulatory 2020” the consumer’s “right” to have a “choice” to get EV metered connection for charging 86  Amendments in Model Building Bye-Laws (MBBL-2016) for Electric Vehicle Charging infrastructure 131 Electric Mobility Market Assessment, Business Model and Action Plan in India 5. Charging Infrastructure Recommendation Description Barriers addressed Applicable to captive charging models supporting fleet operations DISCOMs to facilitate State Power Distribution Availability of subsidized tariff separate meters at EV Companies (DISCOMS) to make published by State Energy charging locations necessary provisions such as Regulatory Commissions is not facilitate separate meter or sub- available across different charging Category - Policy and meter to allow charging operators and swapping locations Regulatory to avail EV charging tariff Category - Urban Infrastructure Remove the minimum State Electricity Regulatory As EV penetration is low in threshold requirement on Commission (SERC) to remove the the current market scenario, contract demand for EV minimum threshold requirement charging station operators cannot charging on contract demand for EV maintain the minimum 1 power charging and allow access to MW, restricting use of renewable Category - Policy and renewable energy on charging energy resources on charging Regulatory stations such as solar-rooftop stations Category - Urban panels and demand aggregation Infrastructure among multiple charging operators Provision of charging State governments to liaise with e-bus TCO in comparison to ICE infrastructure/depots NHAI to add e-bus charging variants is better on intercity opened to public and points on the passenger wayside routes due to operational private operators plying amenities along national highways savings realized over longer intercity route which could be accessed by both distances, however the absence public and private bus operators. of opportunity or depot charging Category - Policy and State level plans to be developed locations along the route limit the Regulatory for ebus charging. adoption of EVs in this market Category - Urban segment Infrastructure 132 Electric Mobility Market Assessment, Business Model and Action Plan in India 6. Financing Solutions 6. Financing Solutions Introduction Funding and Financing One of the key objectives of the study barriers to assess current EV market conditions As is typical with an emerging technology, and outline a viable market roadmap for the current market for EV financing is still in increasing uptake of EVs in India. Chapters its infancy and is characterised by various 2 and 3 of this report have summarised the funding and financing barriers across the various market segments and shortlisted electric vehicle market. These barriers business models with the highest potential must be overcome to allow much needed for scalability. In the earlier chapters, investment to flow into the sector which, in specific action plan recommendations turn, can increase the supply of affordable have been provided which may result in financing to business and individual the first acceleration required to achieve borrowers. 30% EV market share in the priority market segments. The funding and financing barriers identified in the figure below are not entirely unique This chapter focuses on understanding to EV financing and can be seen in the the challenges and barriers to funding conventional ICE vehicle financing market and financing in detail to identify a set of in India. However, EVs add an extra layer financial options that could be deployed by of complexity in terms of credit risk and Indian policymakers to unblock the flow of this is resulting in potentially tighter credit affordable finance into the EV sector and conditions faced by EV borrowers in terms increase EV penetration for the shortlisted of interest costs and loan-to-value (LTV) business models beyond baseline/do- requirements. minimum levels. These investment options if implemented will act as a second accelerator contributing to the 30X growth to be achieved in shorter time span. The major sections of the chapter are as follows: • Funding and financing barriers – these are the challenges faced by the selected business models in accessing affordable funding and financing. • Identification of financial options – a range of financial options have been identified that could help reduce some of the funding and financing barriers. • Appraisal of financial options - Each of the financial options are appraised to establish their relative impact on penetration and which options should be prioritized by government. 134 Electric Mobility Market Assessment, Business Model and Action Plan in India 6. Financing Solutions Figure 6.1: Funding and financing barriers Source: Steer representation Funding and Impact: High cost Financing & limited access constraints to finance Business/ Supply side High interest counterparty Asset risk constraints rates risk Tight gearing Liquidity Utilisation risk Asset life risk restrictions (low challenges loan to value) Fragmentation Operations and High upfront Limited supply and underwriting maintenance costs of finance costs Shallow Counterparty Inadequate Short debt secondary risks policy signals tenors market Credit Risk Credit risk is particularly the case with requirements and a low base of mechanical the interdependency with public charging capacity and expertise to provide effective infrastructure which, if underprovided lifecycle/after-sale maintenance. This means for, can undermine the operations of high lenders have to carefully consider any utilization business models where EVs have additional operations and maintenance a TCO advantage (e.g. fleet businesses). As costs and what impact this may have on the such, lenders have to carefully appraise borrower’s ability to meet their debt service whether the charging interface is effectively obligations. But perhaps more importantly, it managed before making firm commitments, can also create uncertainty around residual otherwise it may present a business risk that value and asset life which in any vehicle is challenging to manage and could increase financing is often the key element of lender credit risk. security. This is exacerbated by an immature and shallow second-hand market for EVs Additionally, the asset life of what is a nascent meaning lenders cannot rely on the market technology is still to be fully discovered and valuations such as those available in the large understood by financiers, with unknowns in second-hand market for ICE vehicles. terms of battery life, uncertain maintenance 135 Electric Mobility Market Assessment, Business Model and Action Plan in India 6. Financing Solutions The relatively higher upfront purchase costs Identification of Financial of EVs also present potential challenges to financiers. All other things being equal, Options higher purchase prices result in larger loan Overview sizes for borrowers. This can be a particular If unaddressed, these funding and financing challenge in the light vehicle segments barriers (and the impact they have in (e-2W/e-3W) where the TCO advantage tightening credit conditions for EV financing) of EVs is higher but the creditworthiness will have a detrimental impact on delivering of potential borrowers is often low and India’s target EV penetration rates. In counterparty risk is higher. As a result, order to drive increased penetration, there borrowers may not be able to access the needs to be at least parity in the cost and higher capital required and/or be able to availability of financing between EVs and ICE afford the commensurate increase in vehicle vehicles. deposit and interest rate that is likely to be associated with a larger loan amount. A laissez-faire approach of allowing the market to gradually adjust to the new This situation also presents a challenge for technology and the associated financial financiers in terms of the additional liquidity risks will result in an extended period of required to meet the higher financing adjustment that is unlikely to support the requirement. Much lending in the vehicle step-change in penetration required by finance sector is undertaken through government targets. Policymakers in many thinly capitalized Non-Banking Financial countries are faced with this same reality Companies (NBFCs) who are already facing and are having to formulate a catalytic policy liquidity challenges due to non-performing response to overcome these barriers and loans and high underwriting costs. This stimulate market growth. Policymakers can can result in challenges in NBFCs accessing adopt a range of financial solutions to support affordable wholesale funding. lenders to better understand and effectively manage EV financing risk. For this purpose, Although, existing policy and regulatory a range of these potential financial solutions incentives have helped spur activity in have been identified in this report to work in the sector, as of early 2021, these are not the Indian context to unlock the EV financing enough to create enough momentum market, particularly for those business models towards a mass EV shift. Further signs of with the highest potential to increase EV policy commitment and incentives are penetration. needed to transition to EVs which would also boost financiers’ confidence in the sector Emerging trends in EV financing without which the targeted number of EVs NBFCs, private and public banks, OEM led on road may not be possible. captive vehicle financers are key players in the automobile financing. Recently fintech companies have been a niche market segment in digital lending.87 FinTech companies offer commercial lending through technology and digital platforms and are emerging as significant players in EV financing ecosystem, 87  Mobilizing Finance for EVs in India, A Toolkit of solutions to mitigate risks and address market barriers, NITI Aayog and Rocky Mountain Institute, January 2021 136 Electric Mobility Market Assessment, Business Model and Action Plan in India 6. Financing Solutions through tie-ups with OEMs, insurance being offered in the FinTech space would providers, battery manufacturers to create also act as a key catalyst in boosting EV an instalment cum subscription model to adoption. make it easier for consumers to buy EVs.88 Identified Options FinTech options are increasingly becoming The financial solutions proposed can be relevant in EV space as a lot of EVs especially classified into three groups of potential e-2Ws are also being purchased in smaller towns with limited availability of credit from financial options: traditional banks. It is also not feasible for NBFCs to be present at most of these places • Direct government funding: These due to high operational costs, whereas options involve a direct intervention by fintech companies offer consumer an option government in the form of direct subsidy to avail credit via a smartphone which can to EV markets. get processed in a short span of time with • Debt mobilization: These options limited need of documentation verification involve leveraging the government’s and past credit history. They are using data balance sheet to provide indirect funding driven tools like machine learning algorithms support aimed at unblocking the flow and non-traditional data like psychometrics, of debt into the EV sector by providing SMS and biometrics for underwriting these a backstop to lenders on key risks, loans.89 therefore improving access to affordable finance. Many FinTech companies are using • Equity/debt investment: These are innovative methods for collections including options where new, high-quality capital tie-ups with payment banks which allow the is deployed directly into the EV value customer to deposit cash at any authorised chain to provide the investment required payment point. To secure vehicles which to spur development and further are being financed by these platforms, uptake but without any recourse to the some fintech companies are embedding IoT government balance sheet. Here the role devices in the vehicles such that in case of of DFIs (such as International Finance theft they can limit vehicle range through Corporation) is crucial. geo-fencing and immobilising the vehicles. FinTech’s enable smaller, higher frequency The various financial options assessed in the and more diversified transactions.90 study are summarized in the table below. All Innovative financing solutions such as of the options have the objective of reducing subscription based financing plans, offering risk to lenders and in turn reducing the bundled services including insurance, service interest rate costs faced by borrowers. and maintenance, upgrade options etc., 88 https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/ how-fintech-can-provide-innovative-financing-solutions-to-indias-ev-sec- tor/articleshow/78200187.cms accessed on 15 January 2022 89 https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/ how-fintech-can-provide-innovative-financing-solutions-to-indias-ev-sec- tor/articleshow/78200187.cms?utm_source=contentofinterest&utm_medi- um=text&utm_campaign=cppst accessed on 15 January 2022 90 https://www.hitachi.com/rev/archive/2017/r2017_01/102/index.html accessed on 15 January 2022 137 Electric Mobility Market Assessment, Business Model and Action Plan in India 6. Financing Solutions Table 6.1: Financial options to address funding and financing barriers Source: Steer representation Barriers Option Group Option Description addressed Vehicle discount Government subsidy to OEMs to High upfront scheme offer a discounted sale price costs Direct Interest rate Government subsidy to allow lenders High upfront government subsidy to offer a lower interest rate costs, liquidity funding challenges User discounts Rebate scheme for transport Utilization risk, operators per journey/delivery Inadequate undertaken by EV policy signals Wholesale First-loss facility to partially absorb Liquidity market first loss losses at the wholesale funding level from NBFC defaults on EV loans. Facility covers a specified amount of loss; thereafter wholesale lender covers losses First loss First-loss facility that partially absorbs challenges guarantee lenders losses in the event of default by a borrower. Facility covers a specified amount of loss; thereafter Debt lender covers losses mobilization Second-loss A second-loss facility provides a fixed Asset life guarantee proportion of losses in the event of risk, Shallow default by a borrower. Lender covers secondary remaining proportion of loss market Public charging Government tenders a charging Asset life PPP station or a bundle of charging risk, Shallow stations to be built, financed and secondary operated by private sector supported market, High by government funding support (e.g. upfront costs availability payments) Direct lending/ DFIs enter the value chain deploying investment both debt and equity products to different companies, particularly start-ups so that innovation is catalyzed Equity/debt investment New financing A new NBFC / SPV to be created with vehicle (NBFC) the sole mandate of providing debt financing for electric vehicles or an existing NBFC would be re-capitalized to provide dedicated and lower-cost EV finance for borrowers 138 Electric Mobility Market Assessment, Business Model and Action Plan in India 6. Financing Solutions An example of first loss facility is presented in the box below: Source: https://www.nama-facility.org/projects/kenya-small-vehicles-e-mobility/ NAMA facility -Kenya NAMA facility is a multi-donor initiative In Kenya, 72% of population is residing in between German Federal Ministry for the rural areas and has low vehicle ownership Environment, Nature Conservation and rate of about 28 vehicles per 1000 persons. Nuclear Safety (BMU), UK’s Department for The rapid motorization of the economy Business, Energy and Industrial Strategy presents an opportunity for acceleration (BEIS), Danish Ministry of Climate, Energy of e-2W and e-3W uptake which would also and Utilities (KEFM), Danish Ministry result in reducing potential emissions from of Foreign Affairs (MFA) and European the transport sector. Commission that offers technical and Limited financing is available in electric financial assistance to developing and mobility sector in the country and therefore emerging economies in tackling climate two initiatives have been implemented change. The KfW Development Bank and under the NAMA facility: Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH are – Second loss partial credit guarantee commissioned to implement the Facility.91 scheme of EUR 3.5 million has been launched especially for commercial fleets – First loss credit guarantee scheme of EUR 5.5 million to unlock private sector debt financing for absorbing losses up to the first 10%.92 91 NAMA Facility-2nd Interim Evaluation and Learning, Final Report, February 92 https://www.nama-facility.org/projects/kenya-small-vehicles-e-mobility/ 2021 accessed on 20th January 2022 139 Electric Mobility Market Assessment, Business Model and Action Plan in India 6. Financing Solutions The same options are shown graphically at reducing cost to the end user. The debt in the figure below. This shows how the mobilization options see the government different options have a different risk and private sector, specifically lenders, allocation between government and the sharing in key risks whilst the private equity/ private sector. The direct government debt investment options involve corporates funding options have high government taking the bulk of risk with minimal support exposure and low private sector risk with but still benefit in terms of the availability of the intervention predominately targeted new high-quality capital. Figure 6.2: Mapping of Financial Options Source: Steer representation High Primary beneficiaries: End users Primary beneficiaries: Lenders Primary beneficiaries: Corporates Direct debt/ New equity Private sector Risk/Reward financing vehicle Second (NBFC) loss First loss guarantee Wholesale guarantee market User first loss discount Interest rate subsidy Vehicle Discount Scheme Low High Direct government Debt mobilization Private Low funding equity/debt investment Government Risk/Reward Appraisal of Financial Options Introduction Government funding available to the EV identified financial options to establish sector is of course finite and policymakers which of the options provides the best value are unlikely to pursue all of the financial for money for government. The sections options outlined in the section above. below present the approach adopted in Instead, government would need to prioritize the appraisal exercise and the subsequent its intervention in the sector. The study has results and recommendations. therefore appraised each of the 140 Electric Mobility Market Assessment, Business Model and Action Plan in India 6. Financing Solutions Appraisal methodology Using the same analytical framework, the impact of deploying government funding Each of the options outlined in the to support the development of charging previous section is appraised by assessing infrastructure has been considered given its its budgetary efficiency (i.e. how many criticality in driving increased penetration additional EVs will be sold per quantum and customer perception of EVs. As such, the of government funding invested in each impact of INR 11,250m ($150m) investment option). To calculate budgetary efficiency in charging stations is calculated in terms of for 2/3W and cars, it is assumed that the its impact on private vehicle EV penetration government would provide INR 33,750 93 and in turn the budgetary efficiency of such ($450m)94 of funding in support of each an investment vis-à-vis the financial options. option to be spread equally across each Appraisal of investment options in charging of the e-2W, e-3W and e-4W markets (i.e. station have considered if those could be INR 11,250m ($150m) funding for each viable on a standalone basis or whether market). For each option, the choice models government funding would be required. developed earlier in the study were used to It also identified models that reduce the calculate the increase in EV penetration in recourse to government funding. the target cities, estimating how a reduction in the interest rate offered to borrowers The detailed approach to the appraisal of the under each option would in turn reduce TCO financial options is contained in Annexure D. and help to improve the wider perception of EV ownership. Each option can then Option appraisal results be compared consistently and relatively 2/3 W and cars in terms of its budgetary efficiency – i.e. how many additional EVs would be sold As shown in the figure below, for electric per million dollar of INR 33,750m ($450m) 2W, 3W and cars, the options that provide government funding invested. the greatest level of budgetary efficiency are those that mobilize the debt markets by A similar exercise was also carried for the deploying de-risking instruments, whether e-bus market. Here the appraisal exercise at the wholesale market level (i.e., a first assessed the extent to which each option loss facility made available to those banks could help in bridging existing TCO gap 11% funding NBFC vehicle lenders) or in the between conventional ICE buses and e-buses underwriting of individual transactions and in turn assessed the total aggregate (the first loss and second-loss guarantee cost savings achievable across the market options). through the introduction of each of the financial options. 93 Assumed exchange rate of INR 75/USD 94 For reference, FAME II provides a total outlay of US$1.4 billion. 141 Electric Mobility Market Assessment, Business Model and Action Plan in India 6. Financing Solutions Figure 6.3: Appraising the impact of the financial options – e-2W/e-3W/e-4W by FY2030 Source: Steer estimates 7.64 18000 8 Budgetary Efficiency (increase in EV sales per $1m of government funding between 2022 6.84 7 6.25 6.40 6.63 16000 Total Electric Vehicle Sales in 2030 6.00 5.67 5.71 5.56 14000 6 (Millions of Vehicles) 12000 5 and 2030) 10000 4 8000 3 6000 2 4000 1 2000 0 0 Baseline New User Interest Vehicle Direct Second First Wholesale Financing Discount rate Discount lending/ loss loss market vehicle subsidy investment guarantee guarantee first loss E2W E3W E4W Total  Budgetary Efficiency Under these debt mobilization options, a amortization of loans is relatively a small large number of vehicles can benefit from amount (e.g. loss given default for a INR the option because only the expected loss 75,000 ($1,000) e-2W vehicle is estimated from each vehicle is being funded, whereas to be just INR 2700 ($36) if default occurred under the options that involve direct 2.5 years into a loan tenor and assuming a government funding (i.e. subsidy), often a recovery value of 40% - a loss to lenders of significant proportion of a vehicle’s cost is about 3.5% of a vehicle). being funded or financed. In other words, debt mobilization options provide a greater Even with a lower funding cost per vehicle, leveraging effect and are therefore more the impact of these options in terms of the efficient. reduction in risk to lenders is significant as it reduces credit risk in several downside To illustrate this point, for a vehicle discount scenarios which in turn has the potential (which in effect is a direct government to reduce interest rates to borrowers and subsidy) to be effective it is assumed that consequently increase penetration. As at least a 15% discount on the vehicle shown in the figure above, these options are price would be needed. Based on a $1,000 increasing EV sales significantly against the e-2W vehicle, this will require government baseline (i.e. no intervention option) and are funding of INR 11,250 ($150) for each the most efficient with each INR 75m ($1m) vehicle covered by the option. By contrast, of government funding invested generating the options orientated towards debt between 12,000 and 17,000 additional mobilization cover only lender losses in the vehicle sales over the period 2022 and 2030. event of default which after adjusting for the In particular, the appraisal exercise shows recovery (salvage) value of the vehicle and that the most efficient option is a first loss 142 Electric Mobility Market Assessment, Business Model and Action Plan in India 6. Financing Solutions facility at the wholesale funding level where of equity investment could be significant, banks are provided first-loss coverage including being able to fund market entry and on the default of NBFCs active in the EV R&D activities. This does not have the same financing market. leveraging effect in terms of penetration as the debt mobilization options but can Such an approach could be structured in a be crucial in stimulating participation from variety of ways but in all of its potential forms, companies focused on the e-mobility sector its higher impact is attributable to the strong and in providing a demonstration effect for credit substitution effect created by reducing domestic lenders and investors. the default risk on NBFCs (which can often be sub investment grade rated). The underlying E-Buses funding costs of NBFCs often account for a The same financing options have been significant proportion of the total interest appraised for the e-bus market. The appraisal cost borne by borrowers so any change in the exercise for e-buses used a different NBFC’s funding cost can have a large impact methodology which assessed the extent to on the final interest offered to borrowers. which each option could help in bridging the In comparison the first loss and second loss existing TCO gap between conventional ICE options provided to underwriting banks will buses and e-buses and in turn assessed the only reduce credit risk margins, which are a total aggregate cost savings achievable across smaller proportion of the total interest cost the market as a result of the introduction of faced by borrowers. each of the financial options. In the case of e-buses, the appraisal exercise, unlike that for NITI Aayog and the World Bank are exploring 2/3W and cars, does not attempt to estimate the development of a first loss risk sharing what impact an improvement in TCO will facility for banks and NBFCs with a national have on e-bus sales given that the logit choice bank as its program manager. The instrument models did not incorporate buses and that would act as a hedging mechanism for an elasticity effect in the sector is much more financial institutions in event of delays or challenging to calculate given that owners defaults on EV loans. It is expected to mobilize during initial phases are often large entities up to $1.5 billion by bringing down EV (e.g., government) rather than individuals. financing costs. The risk cover would provide greater confidence in lending and improve This total cost saving calculation used for penetration in priority market segments.95 the appraisal was based on the number of vehicles covered by INR 11,250m ($150m) Although less efficient in terms of investment by government in each option penetration, increased direct lending and and a set of operating assumptions (e.g. investment from international third-party daily running distance, number of annual financiers (such as DFIs) could also have a operating days etc) to establish a total significant impact, especially if deployed ownership cost saving of the option over a alongside a debt mobilization approach. Each 10 year assumed asset life for an e-bus – see individual investment will not have a systemic Figure A2 in Annex D for an overview of the impact but the value to each individual firm calculation methodology. 95 Banking on Electric Vehicles in India, A Blueprint for inclusion of EVs in Pri- ority Sector Lending Guidelines, January 2022, NITI Aayog, RMI, RMI India 143 Electric Mobility Market Assessment, Business Model and Action Plan in India 6. Financing Solutions As with 2/3W and 4W, the options which The figure below provides an overview of mobilize debt by providing de-risking (i.e., first the appraisal results and shows the level loss and second loss facilities) have the largest of e-bus TCO savings per $m (INR 75m) impact on reducing total aggregate costs in of government funding compared to the the sector because they not only significantly baseline (i.e., no-intervention). This shows reduce financing costs (and therefore TCO) how efficiently each option can deliver but also can cover a large number of vehicles a reduction in the cost of owning and because only the potential losses are covered operating e-buses over an assumed 10-year on the loans which means the funding asset life. It also shows how TCO per km requirement per vehicle is lower than the (INR) for e-buses changes with each option options that directly subsidize the bus market. and the extent it closes the gap with the TCO of e-bus ownership. As can be seen A first-loss facility at the wholesale funding the wholesale market option if it was also level is estimated to be the most efficient in made available to buses would have the achieving ownership cost savings of e-buses. dual benefit of equalizing TCO cost with ICE However, the sector will also benefit from buses but also because of its leveraging lower-cost direct lending and investment effect can cover more vehicles and hence from international third parties (including is also the most efficient option. It shows DFIs) who can potentially provide lower-cost that loss guarantee mechanisms have the financing as well as co-benefits such as setting largest impacts on aggregated TCO savings a demonstration effect for domestic lenders with a ratio of 4 to 6.6 times the level of to enter the financing market for buses. government support owed to the leverage they provide. On a direct TCO basis per bus impacted, direct lending or investment performs well, albeit on fewer units. Figure 6.4: Appraising the impact of the financial options – -e-buses Source: Steer estimates 600 64 ($m) government funding (INR m) E-Bus TCO savings per INR 75m 500 62.4 62 61.3 59.7 60 INR per KM TCO 400 58.2 58.2 58 300 57.0 56.4 56 56.0 200 54.7 54 100 52 0 50 Baseline New User Interest Vehicle Direct Second First Wholesale Financing Discount rate Discount lending/ loss loss market vehicle subsidy investment guarantee guarantee first loss E-bus TCO savings per INR 75m ($m) government funding EV TCO ICE TCO 144 Electric Mobility Market Assessment, Business Model and Action Plan in India 6. Financing Solutions Charging Infrastructure 33,000 additional vehicle sales per INR 75m ($1m) invested. This shows that investment Using the same analytical framework, in charging infrastructure is also extremely the impact of deploying government funding important in driving increased EV sales and to support the development of charging is also an efficient use of finite government infrastructure has been assessed given its resources and compares well in terms criticality in driving increased penetration of budgetary efficiency with the financial and customer perception of EVs. options presented above. Appraisal of different financial options However, with current EV market shows that if the government invests INR penetration levels, utilization is expected 11,250m ($150m) into a public charging to remain low during the initial years. This scheme, the TCO benefits would drive a makes charging infrastructure investment significant increase in electric 2/3W and unviable for the private participants on cars sales when assessed through the study a standalone basis. Therefore, public logit choice model with nearly 2 million agencies would need to step-in to provide additional vehicles expected to be sold as the necessary funding support to promote a result of the investment. This translates setting up of the charging stations and to to a budgetary efficiency estimation of provide affordable prices in-line with home 29,000 additional vehicles per INR 75m charging. ($1m) invested. Adding battery swapping facilities at a charging station would add The table below summarizes the impact of further penetration with an estimated some of the different business models for charging stations. Table 6.2: Appraisal of investment options: Station viability (recommended options) Source: Steer representation Public Public Charging Public Public Charging Scheme (40% Charging Charging Options Scheme Electricity Scheme Scheme (with Battery Discount & 75% (PPP) (Municipal) Swapping) Capex Subsidy) INR 11,250m INR 11,250m INR 11,250m INR 11,250m Facility Size ($150m) ($150m) ($150m) ($150m) Increase in EV sales 5.5 Mn 5.5 Mn 6.3 Mn 4.2Mn (2022-2030) Increase in EV sales per INR 75m ($1m) 29,003 29,003 33,055 22,818 of government funding (2022-2030) 145 Electric Mobility Market Assessment, Business Model and Action Plan in India 6. Financing Solutions Summary There are several barriers to increasing the important and also an efficient deployment flow of affordable finance to the EV sector. of government funding to support the Overcoming these barriers will be crucial in sector. Given that government funding is reducing the overall cost of ownership of EVs likely to continue to be required to support versus ICE vehicles and in turn increase sale the roll out of charging infrastructure, this penetration. Policymakers will likely need to places an extra emphasis on the need to intervene to stimulate the financing market by support the financing market efficiently providing funding and/or de-risking support through debt mobilization mechanisms so that the viability of investment in the sector such as the one proposed for the wholesale is improved. This will provide the incentive for funding market so that support to both the financiers to participate and enter into in the financing market and the emerging charging EV finance market whilst it is still in its infancy market can be maintained. and will also have the co-benefit of reducing cost of ownership and increasing penetration. Once more financiers have entered the market, sector risks will become better understood and managed which should remove the need for any long-term funding support. The analysis in this report showed that the most optimal option for supporting the EV financing market was through mobilizing the debt markets, preferably at the wholesale funding level where underwriting NBFCs could benefit from accessing lower funding costs through a first loss facility operating at the wholesale level (to the benefit of participating state banks). The underlying funding costs of NBFCs constitute a large proportion of the interest cost faced by borrowers and so if this can be reduced, the impact on cost of ownership and subsequently penetration is significant whilst such a facility can cover a large number of potential borrowers because only loss coverage needs to be funded rather than large direct subsidies. While the financial options presented will drive increased EV penetration across vehicle types, it is important to note that investment in charging infrastructure is also vitally 146 Electric Mobility Market Assessment, Business Model and Action Plan in India 7. Impact of Action Plan Recommendations Photo credits: Ather Energy 7. Impact of Action Plan Recommendations Introduction • Impacts of proposed action plan and financing interventions across This chapter provides a snapshot of impacts various aspects of EV market and the of implementing recommended action economy under both- BAU and Alternate plan steps with financing solutions on EV scenario. These are impacts on TCO, penetration and TCO improvement. The EV penetration, charging infrastructure wholesale market first loss facility is found requirement, decarbonization, fuel to have the maximum impact on reducing savings and job creation. financing costs (explained in detail in chapter-6) as it reduces lenders/NBFC’s funding costs which is often the biggest Need to transition component of the interest rate faced by the towards EVs end borrower. Further, the socio-economic and environment impacts of higher EV India has set-up an ambitious target of penetration under alternate scenario are achieving 30% EV sales penetration in assessed to understand the long-term all vehicles by 2030, with higher targets implications of suggested changes. This pursued across specific market segment analysis does not include estimation of by NITI Aayog. Over the last decade, there any possible trade-offs from transition to have been efforts by the Government of electric mobility on job losses in ICE market, India to implement favorable policies such sales reduction in counterpart ICE vehicles as Faster Adoption and Manufacturing of and impact on energy sector from decrease Electric (FAME) subsidy and implementation in fuel demand. Only direct jobs in fleet of Production Linked Incentive (PCI) for and charging businesses are estimated National Programme on Advanced Cell (ACC) in this report. Other jobs created from Battery Storage (NPACC), national mission on EV penetration such as in manufacturing Transformative Mobility and Battery Storage businesses of batteries, powertrain and along with complementary state EV polices chargers, and in other related service to promote clean and sustainable mobility sectors such as telematics, data analytics, initiatives. battery recycling and disposal, are outside the purview of the current study. Overall, The need for transitioning to EVs can be the economic value addition from transition understood from the following factors: to EVs would be positive in form of diversification of income earning sources • Climate change targets: India has across the value chain. committed to cutting its GHG emissions to 33% - 35% below 2005 levels by This chapter is structured as follows: 2030.96 Meeting this target would require identifying clear pathways to • Need to transition towards EVs: a decarbonize high GHG emitting sectors recap/ summary of all the key aspects such as energy and transport. that have made EV market development • Impact of pollution levels: India is crucial and critical to economic growth home to 6 out of 10 of the most polluted cities in the world. WHO estimates 4.2 million lives are lost due to air pollution 96 https://www.carbonbrief.org/the-carbon-brief-profile-india accessed on 20 September 2021 148 Electric Mobility Market Assessment, Business Model and Action Plan in India 7. Impact of Action Plan Recommendations globally.97 In India, the transport sector Impacts of proposed contributes to about 13% of total CO2 emissions (IEA 2021), of which land action plan and financing transport sector accounts for 87% of the interventions emissions.98 This section presents a summary of • Urbanization: India is growing at a impacts from adoption of EVs under two rapid pace in terms of Gross Domestic scenarios explained in Chapter-1: BAU with Product and population, which will continuation of existing EV policies and an lead to higher demand for mobility led alternate scenario with implementation of key by industrial and service sectors. This action plan recommendations and coordinate would have a far-reaching impact on efforts from centre and states to move greenhouse gas emissions (GHG), energy towards higher EV penetration. demand, infrastructure planning and development. The impact of high penetration of EVs may • Energy security: Transport is an energy meet other challenges related to creating a intensive sector and according to robust supply chain for manufacturing EVs estimates by TERI (2018), it accounts for and batteries. Currently, India has limited 24% of national energy consumption manufacturing capabilities especially related out of which 98.5% is met by petroleum to cell and cell component manufacturing. A products. India’s transport sector clear long-term roadmap developed by the accounts for 3% of the total diesel Government with strict enforcement would consumption in the world.99 Energy help Indian OEMs to develop a transition a demand associated transport is set share of their automotive and component to grow with the rapidly urbanizing manufacturing towards EVs. The supply population. India’s crude oil import in FY chain related issues and risks are outside the 20 was about USD 101 billion (Bn).100 purview of the current study and have been discussed in detail in the study titled ‘Electric mobility in India, Accelerating Implementation’ This report estimates the impact of published by the World Bank Group in April transition to EVs in the form of reductions 2021.101 in the oil imports bill, decreases in GHG emissions and associated treatment cost Impact on TCO for each market savings, market size of electric vehicle segment market and jobs created. Based on the action plan recommendations and availability of affordable finance by implementing the wholesale market first loss solution, impact of change in TCO for each market segment was analyzed at a city level. The table below showcases the impact for the city of Mumbai as an example. 97 https://www.weforum.org/agenda/2020/03/6-of-the-world-s-10-most-pol- 101 Electric mobility in India, Accelerating Implementation, the World Bank luted-cities-are-in-india/ accessed on 20 September 2021 Group, ESMAP, April 2021 98 Comparison of Decarbonisation Strategies for India’s Land Transport Sector, An Inter Model Assessment, NITI Aayog, USAID, SHAKTI Sustainable Energy Foundation, 2019 99 All India Study on Sectoral Demand of Diesel & Petrol. New Delhi: Petro- leum Planning and Analysis Cell, Nielsen (2013) 100 https://www.ppac.gov.in/content/212_1_ImportExport.aspx accessed on 20 September 2021 149 Electric Mobility Market Assessment, Business Model and Action Plan in India 7. Impact of Action Plan Recommendations Table 7.1: Impact of policy changes on TCO (INR/km)-Mumbai Source: Steer estimates Market TCO under Business-as-Usual TCO under Alternate scenario segment scenario ICE EV EV EV ICE EV EV EV (2022) (2022) (2027) (2032) (2022) (2022) (2027) (2032) e-2W Personal 4.64 4.53 4.31 4.45 4.64 4.53 4.54 4.74 e-2W Fleet 2.65 1.71 1.55 1.54 2.65 1.71 1.59 1.60 e-4W Personal 25.91 32.99 30.08 29.17 25.91 32.99 31.14 30.58 e-4W Fleet 12.74 14.36 12.95 13.08 12.74 14.36 13.49 13.80 e-3W Fleet 6.07 4.95 4.72 4.45 6.07 4.95 4.87 4.65 e-3W Goods 9.56 7.11 6.53 6.60 9.56 7.11 6.76 6.90 Adopting the recommended action plan and financing solutions results in EV TCO improving against ICE equivalents across all the vehicle categories in the proportions presented in the table below: Table 7.2: Improvement in TCO in alternate scenarios vs BAU scena: Mumbai Source: Steer estimates Market segment EV (2027) EV (2032) e-2W Personal 5% 6% e-2W Fleet 3% 4% e-3W Fleet 3% 5% e-3W Cargo 4% 5% e-4W Personal 3% 4% e-4W Fleet 3% 4% Implementation of action plan showcase the impact of implementing action recommendations improves EV TCO by plan recommendations on TCO savings. about 7%-15% by 2032 when compared Furthermore, state-level TCO savings are to the TCO values in BAU scenario across aggregated based on the state’s contribution market segments in all selected states. to total vehicle ownership at a national level. Improved TCO competitiveness against TCO savings are highest in case of personal ICE variants is considered while estimating e-2W due to high levels of penetration of the the impact on EV penetration. The above vehicle category followed by e-4W personal unit TCO reductions calculated for each and e-3W fleet (except in case of MP). city are aggregated at a state-level to Annual TCO savings are aggregated to show 150 Electric Mobility Market Assessment, Business Model and Action Plan in India 7. Impact of Action Plan Recommendations the resultant cumulative savings over the INR 202 billion by FY2030 at a national level. years from implementation of action plan The results are presented in the table below: recommendations and financing solutions. This results in a cumulative saving of about Table 7.3: Cumulative TCO savings (in INR million) (Difference in alternate and BAU scenario) Note: Above TCO savings estimation doesn’t include e-buses. Source: Steer estimates FY23 FY24 FY25 FY30 Maharashtra 500 1,600 3,200 29,500 Madhya Pradesh 100 300 600 5,200 Tamil Nadu 300 1,000 2,000 16,800 India 4,000 12,000 24,000 201,500 Impact on EV penetration of high potential market segments across 2W, 3W and fleets resulting improvement of As seen in chapter 2, under the BAU scenario perception factor towards electric vehicles. of 5.5 million annual EV sales in 2030 falls This results in increasing the annual sales of short of the 30% targeted penetration EVs to about 12 million, resulting in achieving by 2030. The alternate scenario includes above 50% penetration in 3W segments and adoption of the action plan recommendations about 40% in 2Ws. EV penetration in 4W following a coordinated approach across market segment increases to 27% and the policy initiatives at central and state level, annual e-4W sales increase from 0.6 million in institutional re-alignment and unlocking of BAU to 1.04 million in the alternate scenario: affordable financing to facilitate adoption Table 7.4: EV annual sale projection in terms of number of vehicles and as a % of total vehicle sales of 2/3W and cars for India in the Alternate scenario *Weighted average across market segments, Source: Steer estimates Market EV share EV share FY25 FY30 Segment (FY25) (FY30) 2W personal 4,193,000 7,818,000 22% 35% 2W Fleet 2,087,000 2,552,000 43% 46% 4W Personal 199,000 899,000 5% 15% 4W Fleet 37,000 148,000 12% 27% 3W Fleet 206,000 325,000 60% 71% 3W Freight 66,000 151,000 43% 52% Total 6,788,000 11,893,000 29% 37% High penetration Medium penetration Low penetration 151 Electric Mobility Market Assessment, Business Model and Action Plan in India 7. Impact of Action Plan Recommendations Table 7.5: EV stock numbers and total investment value of e-2W, e-3W and e-4W for India in business-as-usu- al (BAU) scenario Source: Steer estimates Market Total Investment Value EV Stock Segment (INR Million) EV share EV share FY25 FY30 (FY25) (FY30) 2W personal 7,941,000 39,781,000 935,000 4,686,000 2W Fleet 3,738,000 15,568,000 277,000 1,156,000 4W Personal 389,000 3,484,000 486,000 4,351,000 4W Fleet 80,000 597,000 100,000 745,000 3W Fleet 896,000 2,282,000 250,000 637,000 3W Freight 264,000 850,000 99,000 320,000 Total 13,308,000 62,562,000 2,147,000 11,895,000 The comparison in national sales penetration for different vehicles under the alternate scenario is presented in the figure below: Figure 7.1: EV sales penetration- BAU vs Alternate scenario in FY2030 Source: Steer estimates EV30@30 Alternate BAU 3W Freight 52% 40% 71% 3W Fleet 55% 27% 4W Fleet 17% 15% 4W Personal 9% 2W Fleet 46% 20% 2W Personal 35% 15% 0% 10% 20% 30% 40% 50% 60% 70% 80% 152 Electric Mobility Market Assessment, Business Model and Action Plan in India 7. Impact of Action Plan Recommendations Alternate scenario presents an opportunity to achieve the target set-out in Clean Energy Ministerial by India to achieve 30% penetration across vehicle segments102 for 2Ws and 3Ws, which comprise 78% of total annual vehicle registrations in the year FY2021.103 Maximum impact of increase in penetration is seen on e-3W and e-2W feet businesses which also have the maximum potential for scale-up in the alternate scenario if an enabling environment is provided at a state or city level with affordable financing, favorable policies and removal of regulatory barriers with respect to registration and permits. The annual investment in EVs for the period FY 2022 to FY 2030 under the two scenarios is presented in the table below: Figure 7.2: Annual Investment in EVs by FY 2030- BAU vs Alternate scenario 104 Source: Steer estimates Total investment-BAU Total investment-Alternate Investment value-Annual sales (in INR billion) 3,000 2,755 2,500 2,000 1,500 1,000 1,508 500 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 The annual investment value of EV sales in e-2W, e-3W, e-4W and e-buses in BAU is estimat- ed at INR 1,500 billion, which can potentially increase to INR 2,700 billion in FY 2030 under alternate scenario with implementation of action plan recommendations and provision of affordable financing with the wholesale market first loss solution. 102 https://www.cleanenergyministerial.org/campaign-clean-energy-ministerial/ev3030-campaign accessed on 20 September 2021 103 Monthly Vehicle Registration Data for FY 20-21, Federation of Automobile Dealers Associations (FADA), May 2021 104 Market size is only calculated for first time purchase of EVs with fixed batteries. It is calculated as the product of the price an EV and annual number of units sold. We use market prices for the EVs of 2Ws, 3Ws, 4Ws and buses as of FY 2021. The models assumed for EVs also remain the same till 2030; e-2W: 3.3KW for personal use and 1.25 KW for fleet use; e-3W: fixed battery of 7.4KW, e-4W: 21.5 KW and e-bus (9m): 162KW and e-bus (12m): 320 KW. 153 Electric Mobility Market Assessment, Business Model and Action Plan in India 7. Impact of Action Plan Recommendations Impact on charging infrastructure requirement Implementation of proposed action plan recommendations across 2/3W and 4W and charging infrastructure market segments would promote higher uptake of EVs, which would increase the requirement for deploying charging and swapping infrastructure across different market segments. Below graph presents the forecasts of need for charging infrastructure deployment under alternate scenario with higher EV adoption. Figure 7.3: National charging infrastructure forecast by charger type and location (Alternate scenario) *E-bus penetration in India is largely policy driven and would lead to charger installation primarily at depots as a part of procurement process, therefore estimation of e-bus chargers is not included in the forecasts; Source: Steer estimates 15 Amp AC001 Type2AC CCS2 Bharat DC001 35000 30000 Number of Charging Points 25000 (Thousands) 20000 15000 10000 5000 0 2025 2030 2025 2030 2025 2030 2025 2030 2025 2030 Residential Office Captive Public Battery Swapping Table 7.6: Charging infrastructure forecast for 2030- Alternate scenario (in thousand charger points) Source: Steer estimates Type of Total Resi- Cap- Battery Total Charger Office Public Investment dential tive Swapping Chargers required (INR Mn) 15 Amp 27,100 120 420 - - 27,640 55,000 AC001 3,960 80 620 440 1,940 7,040 27,000 Type2AC 1,220 30 40 40 - 1,330 69,000 Bharat DC 8 2 220 230 59,000 001 CCS2 4 - 4 4,000 Total 32,280 230 1,088 486 2,160 36,244 214,000 154 Electric Mobility Market Assessment, Business Model and Action Plan in India 7. Impact of Action Plan Recommendations The total charger point requirement Assumptions for estimation of decarbonization increases from 15 to 35 million by 2030 impact from business as usual to alternate scenario To assess the impact of action plan under which higher vehicle penetration may recommendations, additional CO2 be realised from implementation of action emissions reduction from higher sales and plan recommendations and availability of penetration of EVs (alternate scenario) were affordable financing with the wholesale evaluated using the following per km CO2 market first loss solution. Unlike global assumptions. Other pollution emissions such statistics presented in Chapter 6, which focus as particulate matter (PM2.5), nitrogen oxide on charging for cars, the majority of those (NOx), sulphur dioxide (SO2) and carbon in India will be low-cost chargers for 2- and monoxide (CO) are not estimated as a part of 3-wheelers. The total investment required in decarbonization impact. charging infrastructure at the business-as- usual case is estimated to be about INR 100 Table 7.7: Emission norms of different vehicle billion, increasing to INR 210 billion under categories106 alternate scenario by the year 2030.105 Source: Appraisal guidelines for Metro rail projects proposals, Ministry of Housing & Urban Affairs, Gov- Impact on decarbonisation (well to ernment of India, September 2017 wheel)+(tank-to-wheel ) Emission norms Vehicle type E-mobility plays a critical role in India’s (kgCO2/km) 4W (Petrol) 0.14 energy and transport transition. While 2W (Petrol) 0.03 EVs are clean vehicles with zero tailpipe emissions, electricity powering them may 3W (Diesel) 0.08 be generated from a polluting energy Bus (Diesel) 0.79 source such as coal or gas power plants. Accordingly, reductions in emissions is best Additionally, the emission factor of electric- estimated by considering the well-to-wheel ity generation has been assumed to reduce emissions. Considering ongoing plans to from the base level of 0.925 kgCO2/kWh in green the power grid, announced at COP 26 2018107 to 0.610 kgCO2/kWh by 2030.108 The in Glasgow, EVs would still lead to significant year-on-year reduction in carbon emission carbon savings as compared to conventional due to improvement in efficiency of power ICE vehicles. The decarbonization impact plants have been assumed as follows: presented in this section is based on a well-to-wheel framework which compares the carbon contribution of ICE and battery operated EVs including the entire lifecycle of energy flow from generation of energy to the total kms driven by the vehicle (well-to- wheel). 105 1 USD is assumed to be INR 75 106 https://mohua.gov.in/upload/uploadfiles/files/Appraisal%20Guide- lines%20for%20Metro%20Rail.pdf 107 CDM - CO2 Baseline Database - Central Electricity Authority (cea.nic.in) 108 Understanding the emissions impacts of large-scale vehicle electrification in India, Arijit Sen, Josh Miller, Anup Bandivadekar, Mukesh Sharma,1 Pavan Kumar Nagar,1 Dhirendra Singh,2 and Jennifer Callahan, April 2021 155 Electric Mobility Market Assessment, Business Model and Action Plan in India 7. Impact of Action Plan Recommendations Table 7.8: GHG emission standards for electricity generation (kgCO2/kWh) Source: Understanding the emissions impacts of large-scale vehicle electrification in India, Arijit Sen, Josh Miller, Anup Bandivadekar, Mukesh Sharma,1 Pavan Kumar Nagar,1 Dhirendra Singh,2 and Jennifer Callahan, April 2021 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 GHG emission 0.826 0.795 0.765 0.737 0.71 0.683 0.658 0.634 0.610 factor Treatment cost of INR 500 per tonne has The well-to-wheel annual carbon savings been assumed for estimating the treatment have been estimated to 16 million tonnes in cost savings from reduced carbon emissions FY 30 which includes the carbon contribution across vehicle segments. The following of ICE and battery operated EVs including section summaries the impact of action the entire lifecycle of energy flow from plan recommendations on additional CO2 generation of energy to the total kms driven emissions reduction from higher sales and by the vehicle. penetration of EVs (alternate scenario). 56 million tonnes of cumulative carbon To benchmark Steer estimates with savings estimated from transition to EVs comparable studies from other institutes, from FY 22 to 30 the annual tank-to-wheel carbon savings have also been estimated and presented in the table below. Table 7.9: Benchmarking Steer estimates of decarbonization (tank-to-wheel ) under alternate scenario with other studies for FY 2030 Source: Change in CO2 emissions-New Policy scenario(2030); CSTEP, CEEW, IRADe, PNNL, and TERI (2019). Comparison of Decarbonisation Strategies for India’s Land Transport Sector: An Inter Model Assessment. New Delhi : TERI; *Steer estimates compared to average emissions across the alternate sources Carbon savings Steer CSTEP PNNL CEEW IRADe TERI Reference emissions 2030 566* 630 376 378 833 615 (million tonnes) • e-2W: 38% • e-2W: 30% Electrification of • e-4W:17% • e-4W: 3% Transport fleet (sales • e-3W: 65% • e-3W: 50% penetration) by 2030 • e-bus: 50% • e-bus: 10% Reduction from electrification of transport 6% 2.5% 26% 1.2% 6.6% 8.1% (%) Carbon savings from electrification (million 32 16 98 5 55 50 tonnes) 156 Electric Mobility Market Assessment, Business Model and Action Plan in India 7. Impact of Action Plan Recommendations The Steer estimate implies that electrification benefits from EV adoption. EV uptake of the sector can result in 6% reduction combined with other decarbonization tank-to-wheel carbon emissions from the strategies such as modal shift from private sector which are estimated at an average of to public or shared transport modes, travel 566 million tonnes by 2030 across various demand management strategies would have a agencies- Center for Study of Science, more significant impact in reducing emissions Technology and Policy (CSTEP), Pacific from the transport sector.109 Northwest National Laboratory (PNNL), Council on Energy, Environment and Water The impact of decarbonization is directly (CEEW), Integrated Research and Action for linked to vehicle ownership and growth trends Development (IRADe) and The Energy and in each State and at national level. If action Resources Institute (TERI). Other studies plan recommendations are implemented with have produced estimates which indicate a the financing solution of a wholesale market wide range of potential savings, with varying first loss facility, it would lead to a cumulative contributions from different factors such as well-to-wheel carbon savings of 56 million mode shift and use of alternative fuels. The tonnes across FY2022-30, saving a treatment Steer estimate appears on the conservative cost of INR 28 billion. side as it only seeks to estimate direct Figure 7.4: Cumulative carbon savings at national level from increased EV penetration under BAU and alternate scenario across FY2022-30 (Well to Wheel) Source: Steer representation 48.3 50.0 Cumulative carbon (in million tonnes) savings from EVs 40.0 30.0 20.0 7.3 5.0 0.9 10.0 2025 2030 Alternate-e-2W, e-3W and Alternate-e-buses e-4W 109 Comparison of Decarbonization Strategies for India’s Land Transport Sector: An Intermodal Assessment NITI Aayog, USAID, Shakti Foundation, 2019 157 Electric Mobility Market Assessment, Business Model and Action Plan in India 7. Impact of Action Plan Recommendations Impact on fuel savings Oil imports constitute about a third of India’s total imports in value terms110. A national level study by M/S Nielsen for Petroleum Planning and Analysis Cell (PPAC), estimates that 70% of diesel and 99.6% of petrol is consumed by transport sector. In case of 2/3 W and cars, for petrol highest consumption is in 2W accounting for about 61% followed by cars at 34%. Diesel has highest consumption of about 28% by cars, utility vehicles and 3Ws. Buses consume about 10% of total diesel consumption111. Fuel savings across modes are considered to result from adoption of action plan recommendations and affordable financing option (wholesale market first loss facility) in the alternate scenario. Figure 7.5: Cumulative savings on fuel (in million litres) and associated import bill (INR Bn) across FY2022-30: Alternate scenario Value of fuel savings (import bill) calculated assuming a price of INR 95/litre for diesel and INR 105/litre for petrol; Source: Steer estimates Alternate-e-bus Alternate-e-2W, e-3W and e-4W INR 700 Bn FY30 INR 5,000 Bn INR 100 Bn FY25 INR 600 Bn 10,000 20,000 30,000 40,000 50,000 60,000 Cumulative Fuel sacings (in million litres) The higher adoption of EVs in the alternate scenario would translate into about 59 billion litres of cumulative fuel saving resulting in about INR 5,700 billion savings in the fuel costs cutting down about 56 million tonnes of carbon during FY22 to FY 30. Fuel savings primarily result from transition to e-2W, e-3W and e-4W. Highest savings results from transition of petrol based 2W which contributes to about 50% of total fuel savings followed by diesel based three wheelers contributing about 30%. EV penetration in e-4W and e-bus segments each result in about 10% of total fuel savings. 110 Indian Petroleum and Natural Gas Statistics 2018-19, Ministry of Petroleum and Natural Gas. 111 https://pib.gov.in/newsite/printrelease.aspx?relid=102799 accessed on 20 September 2021 158 Electric Mobility Market Assessment, Business Model and Action Plan in India 7. Impact of Action Plan Recommendations Impact on job creation With promotion of fleet-based businesses in EV market segments, there would be incremental job creation at a national level. Assuming one driver per commercial vehicle and one operator for a charging station operating 5 charging points at office, public or captive locations, there is a potential to generate 20 million jobs in fleet businesses across modes (2/3W and cars and buses) and about 900,000 jobs in charging and swapping businesses by FY 2030. Figure 7.6: Job creation with EV penetration under BAU vs Alternate scenario Source: Steer estimates 2W Fleet 3W Fleet and Freight 4W Fleet Bus Charging stations 25,000 20,150 Jobs created (in thousands) 20,000 15,000 8,738 10,000 5,114 5,000 2,131 BAU 2025 Alternate 2025 BAU 2030 Alternate 2030 159 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES Photo credits: UITP   ANNEXURES A. Approach for market and TCO assessment Overall approach A top-down approach has been applied to project EV market size for each mode and market segment (categorized by personal, fleet (shared) and freight/goods). The market assessment involves four essential steps: Figure A.1: Market assessment approach overview Mode-wise vehicle Calculating Model EV ownership EV build forecast forecast penetration (Total) The first step is to build a multi-dimensional EV forecast model for the eight principal vehicle categories: • Two-wheelers (2W): – goods vehicle/ cargo fleet • Four-wheelers (4W): – personal – fleet – personal • Three-wheelers (3W): – passenger fleet • Buses: – passenger fleet – intercity – intracity 161 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES The forecasting model was built for each population in the area of influence and of of the cities shortlisted in three states: economic activity as represented by city/ Maharashtra (Mumbai, Pune, Nagpur, Thane, district GDP. Vehicle growth cannot continue Nasik), Madhya Pradesh (Bhopal, Gwalior, indefinitely, and a saturation level of Indore, Jabalpur) and Tamil Nadu (Chennai, ownership is defined. The main inputs used Salem, Madurai, Coimbatore, Tirunelveli). are: E-bus forecast was also done for the state of Kerala (Kochi, Trivandrum, Kozhikode). The • Population growth; model uses FY20 as a base year and includes • City level per capita economic growth; and yearly forecast up to FY40. • Initial and saturation level for each mode for ownership. The primary socioeconomic drivers considered in the model are Gross State The model formulation to predict vehicle Domestic Product (GSDP), per capita income ownership was: levels, and population. Additionally, current level of ownership for each vehicle category was also taken as a baseline input for the dependent variable. Overall vehicle ownership growth was Where: forecasted using econometric analysis with macro-economic and demographic – VO = Estimated vehicle ownership indicators such as income growth, (vehicles/inhabitant); population, and level of motorization (initial – Sw = Saturation Level (as per vehicle ownership trends). assumptions); – Growth driver = Per capita (GSDP/ The overall vehicle forecast projections were Population) in case of 2-wheelers and further split into ICE and EV vehicle types. 4-wheelers, population in case of 3 The EV penetration has been calculated wheeler passenger auto and 4 wheeler based on a logit model for which TCO is passenger fleet/ taxi and GSDP for 3 the key input. The methodology for each of wheeler cargo fleet; these steps is described in greater detail in – Pop = Population (million inhabitants); and the following sections. – a= intercept; b=slope Vehicle ownership forecast The parameters of the model, intercept Steer has developed a bespoke approach to and slope were derived using historical forecast vehicle ownership for each city. ownership and growth driver data for the It links the growth in vehicle ownership period FY16 to FY20. The current market size (rate per 1,000 people) to the growth in (FY20) and estimated growth trend of each market segment over the last 3 to 5 years (subject to the availability of data112) were established. 112 Note: In certain cities, especially in Madhya Pradesh, the latest vehicle registration data available is for FY18. We have requested the respective state departments to supply the missing data but for the purposes of this exercise, the FY20 number has been estimated assuming a continuation of past trends. 162 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES Table A.1: Model assumptions *The average saturation level assumed for 2-wheelers is 500, however this number varies for the cities that already have a relatively higher existing ownership level.; Source: Steer secondary research and analysis Saturation level, per 1,000 Mode Growth driver population (baseline assumption) Per capita 2-wheelers 500* (GSDP/population) 3-wheelers passenger auto Population 100 3-wheelers goods auto GSDP 100 Per capita 4-wheelers personal 250 (GSDP/population) 4-wheelers taxi / shared Population 100 This model correlates the vehicle ownership For the 2-wheelers market, an additional with GDP per capita (GDP per capita for factor affecting vehicle ownership is increase city, to reflect higher prosperity in urban in personal wealth and upward mobility of the areas), assuming that vehicle ownership growing middle class, which leads to a modal grows according to an inverse log function, shift from 2W to cars over time. The model asymptotic to an estimated “saturation” also takes into consideration this linkage level per 1,000 population. The saturation between 2-wheelers and 4-wheelers—the level has been benchmarked against the higher the level car ownership, the lower is international standards and considers the the saturation level for 2-wheelers. Therefore, specific conditions of each city as well. the model estimates future 2W ownership To reflect the local context the baseline level as a function of base saturation level saturation level has been modified depending (500) minus the car ownership level. upon the current ownership levels in the city (substantially higher in some cases than The theoretical background behind this others), and availability of alternate modes formula is the assumption that everyone of travel such as suburban rail, metro and who has bought a car is no longer a primary well-developed public transport which could potential customer for two-wheelers. suppress the level. The saturation level (600- 650) for Chennai, Coimbatore, Nagpur, Bhopal Using the approach defined above, the mode- and Indore are assumed higher to reflect the wise vehicle ownership has been estimated relatively higher ownership levels in these for each selected city. The vehicle ownership cities. The saturation levels have been further numbers are then used to arrive at total compared to average levels observed in major vehicle population in each city. The year-on- cities of other developing countries, such as year difference in the vehicle population is Taiwan (650), Indonesia (550) and Malaysia assumed to be the vehicle sales/registration. (400)113. 113 ttps://www.jstage.jst.go.jp/article/easts/9/0/9_0_541/_pdf/-char/en 163 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES Total vehicle population = Vehicle of EVs vs. ICE vehicles in current year and in ownership per 1,000 * Total population forecast years of 2025 and 2030. TCO analysis (e-2W, e-3W and e-4W) Registeration new vehicles = Vehicle Total cost of ownership of a vehicle reflects population (t)- Vehicle population (t-1) the sum of all costs involved in the purchase, EV penetration operation and maintenance of a given vehicle The output from the vehicle ownership during its lifetime. As India is known to be a model, i.e. the number of new vehicles very price sensitive market, the TCO is a key registered/sold was then split between factor influencing consumer choice. ICEs and EVs. To calculate the expected TCO for different fuel categories has been EV penetration in forecast years, a fitted estimated for each of the market segment in logit function was used to estimate market major cities of Madhya Pradesh, Maharashtra penetration rate at city level. This assessment and Tamil Nadu. The ICE fuel categories is different for each mode and market considered for comparison are petrol, segment and is performed for each city diesel and CNG vehicles, as applicable in individually. The key input considered for each market segment. The TCO analysis is calculating the expected EV penetration is performed for five years starting 2020, 2025 the total cost of ownership (TCO) of a vehicle and 2030, which allows for the improvement supplemented by a perception factor. in battery technology and expectations of lower battery costs going forward, partly The perception factor is used widely for offset by reduction in government subsidies. vehicle adoption studies to model individual Central and state government policies choice probability to choose between included in the TCO analysis are the releases exclusive alternatives that maximize his/her available in public domain till January 2022. utility. The study makes significant attempt The following cost categories are considered to include the objective factors into the for TCO analysis: assessment of the factors that influence Figure A.2: TCO analysis cost components consumer choice towards EV. Source: Steer analysis Perceptions of EV is driven by multiple Capital Cost factors, including availability of public • Ex showroom price charging stations, availability of choices • Taxes among different vehicle models, resale • Incentives potential/value, EV awareness, driving range per charge, etc. These are likely Financial Cost to change over time and therefore with implementation of favorable policy and • EMI regulatory measures, this factor has • Downpayment been improved to showcase increasing confidence in adoption of EVs in the Operations & Maintenance Cost alternate scenario. • Fuel Cost The TCO output with market environment and • Maintenance cost user perception factors to feed into a logit • Battery replacement cost (applicable only for EVs) choice model allows us to estimate the share 164 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES Key assumptions for calculation of TCO TCO may slightly increase from 2027 to include the following: 2032. This assumption of subsidies does not extend to 4W personal segment as • The TCO of EVs across market there are no FAME-II incentives offered segments is inclusive of incentives today for this segment. given under FAME-II as of January • ICE is a mature market, thus its TCO is 2022. It is considered that government stable across the years. Any substantial incentives, such as given under FAME- change in TCO of ICE vehicles would be II scheme, would begin to taper by primarily driven by change in fuel prices. 2027. Accordingly, these incentives are assumed at 95% and 75% of 2022 Other cost related assumptions are value in 2027 and 2032 respectively for presented in the table below: applicable market, on account of which Table A.2: Summary of key cost assumptions for TCO analysis Source: Steer Analysis Cost component Assumption Some of the cost assumptions for each market segment has been benchmarked to existing vehicles in the market: • 4W vehicle: e-Verito, Tata Tigor Ex-showroom price and • 2W personal: Okkinawa iPraise battery related costs • 2W fleet: Hero Photon LP • 3W passenger fleet: Mahindra Treo SFT • 3W cargo fleet: Mahindra Treo Zor • 3W passenger fleet (swapping): Piaggio ACE Vehicle holding period 5 years for each market segment Road Taxes As per State legislation Higher interest rate applicable for EVs as per the market Financing cost conditions and stakeholder feedback (presented below) Financing tenure 36 months for each market segment Tariff rates for the year 2022 are taken as per state Tariff rate regulations, while for 2027 and 2032 tariff rate is assumed across cities is using as a fixed tariff rate of INR 5 per kWh The fuel cost of ICE vehicles, such as that of petrol, diesel, CNG, and LPG/autogas is taken at its one-year average price Fuel cost for ICE vehicles for the month of January 2022 prevailing in the selected cities, sourced from publicly available data. 165 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES The following table presents the financing cost assumed for TCO analysis: The average trip length (ATL) of market segments in each city is sourced from Table A.3: Financing cost assumption Source: Steer Analysis 2W 3W 4W EV 18.0% 24.0% 15.0% Petrol 15.0% 24.0% 12.0% Diesel 24.0% 12.0% CNG 24.0% 12.0% comprehensive mobility plan (where available) or peer cities. ATL of selected cities is summarized below: Table A.4: Average Trip Length of Selected Cities (in km) Note: Based on similar per capital income, ATL in Pune assumed equivalent to Nagpur; ATL in Thane, and Navi Mumbai assumed equivalent to Mumbai; ATL in Madurai assumed equivalent to Salem; ATL in Gwalior equivalent to Bhopal. 3W Passenger City 2W 4W Bus Fleet Mumbai 6.5 4.3 12.0 8.5 Nagpur 8.6 5.8 10.8 13.1 Nashik 5.0 4.4 5.7 6.0 Chennai 10.0 6.4 10.5 12.9 Salem 6.8 4.7 6.6 7.2 Coimbatore 7.3 4.7 9.6 10.3 Bhopal 5.8 6.1 6.0 - Indore 5.4 3.3 5.4 15.0 Jabalpur 5.3 4.8 8.3 8.2 166 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES Battery prices Battery prices constitute about one-third of the total purchase price of EVs currently. Globally, the price of batteries has fallen substantially over the last decade and, with continued innovation in battery technology and increased production scale, the declining price trend is expected to continue. A study by NITI Aayog and Rocky Mountain Institute (RMI) predict that prices could fall to an average $109 per kWh by 2025 and $73/kWh by 2030, from about $180 per kWh today, based on a 19 percent learning rate for current EV battery technology.114 If recent ambitions to reduce greenhouse gas are realized, with a growing focus on a shift to an all-electric system, prices may fall even faster than current projections. Figure A.3: Global battery price; India battery prices for 2W and 4W market segments ($ per kWh) Source: Bloomberg NEF, CRISIL Research, SIAM, NITI Aayog. Global India-4W India-2W 1200 1000 800 $/kWh 600 400 230 190 200 90 75 0 2009 2010 2013 2015 2017 2018 2020 2025 2030 Accordingly, and assuming a constant exchange rate of INR 75/USD, the following battery price has been applied in the calculations for TCO: Table A.5: Battery price assumption for the years 2022, 2027 and 2030 (in INR per kWh) Source: NITI Aayog and RMI115 Market Segment(s) 2022 2027 2030 2W 12,000 8,000 7,000 3W 12,000 8,000 8,000 4W, Bus 11,000 7,000 6,000 114 India’s Energy Storage Mission: A Make in India opportunity for globally competitive battery manufacturing, NITI Aayog and RMI, 2017 115 India’s Energy Storage Mission: A Make in India opportunity for globally competitive battery manufacturing, NITI Aayog and RMI, 2017 167 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES Since potential economies of scale are more limited in the 2W segment, the battery price of 2W considered to be higher than other modes—in 2030 it is assumed to be 20% higher. TCO: Scenario Analysis The above TCO is the base case, from which base case EV penetration at India level is estimated. On top of this base case, another alternate scenario was analyzed, to assess the impact of adoption of the action plan recommendations on TCO and level of EV penetration. This scenario impacts the perception factor associated with EVs in the logit function and lead to changes in the level of EV penetration. Table A.6: Key action plan recommendations impacting EV market demand Source: Steer Analysis Particulars Enabling Factors • Amend state level Motor Vehicle Act to classify e-2Ws as transport vehicles and allow them to be registered as e-2W commercial vehicles • DoT to mandate targets for inclusion of EVs in commercial fleets • Adopt open-permit system to register e-3Ws • Allow permits to be issued to both individual drivers and fleet operator/ aggregators e-3W • EV policy to include framework for fast-track approvals of e-3Ws at RTOs • Increase the total permissible number of permits for e-3W in the State • EV policy to allow demand incentives to be availed by fleet Fleet operators operators/ aggregators • EV policy to include scrappage incentive for replacing old ICE / EV vehicle with EV Residual scrappage value • Allow scrappage incentive to be availed by fleet operators • Mandate advance recycling fee to be paid equally by the OEM/ dealer and buyer at the time of an EV sale • Offer interest subvention (500 basis points discount on Financing cost of EV financing cost) benefits to e-2W and e-3W operators and individual buyers • Aggregate funds for incentives offered under EV policy using EV Fund feebate concept of charging polluting vehicles and sale of fuel 168 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES TCO analysis (e-bus) It must be noted, from the range of bids TCO analysis for buses is carried out received for FAME-II projects, that there is a comparing diesel and e-buses for the significant variance in the estimation of TCO following typical air conditioned (AC) bus value. This variance is on account of limited operations: and differing availability of data on capex prices of e-buses, battery prices, annual • 9-meter intracity AC bus (9-m intracity) reduction in cost of battery and metrics on • 12-meter intracity AC bus (12-m intracity) battery degradation. For the purposes of • 12-meter intercity AC bus (12-m intercity) the TCO analysis presented above certain assumptions have been taken on these input values based on conversations with multiple The TCO is estimated for 10 years starting industry stakeholders and publicly available 2022 and 2027 by aggregating total expenses sources. In particular: per year. The TCO takes into consideration a loan tenure of 7 years, along with a battery • For 2022 TCO, EV buses prices are replacement between 6th and 7th year of taken as per DHI’s estimates; intracity operation, by assuming the replacement at a diesel buses price assumed to be based reduced battery price. Additionally, the bus on mid-market bus segment, collated is expected to undergo annual maintenance, during stakeholder feedback; price of estimated as a per kilometer value. electric intercity 12-m bus from BYD . Correspondingly, for 2027 TCO, EV bus It is understood that both the battery prices are a cumulative of a 30% vehicle and overall vehicle platform will undergo and 40% battery price reduction. technological advancement, along with economies of scale in production and • For 2022 and 2027 TCO, battery size is thereby reducing prices. Accordingly, the taken as per DHI’ estimates; subsidy is battery price is expected to reduce through assumed as per FAME-II incentives (as of the years, along with a certain reduction January 2022) and daily vehicle running as in vehicle platform. However, with the per FAME-II tenders (as of October 2020). technological advancement of the electric • Diesel fuel cost is based on one-month vehicle, the reduction in vehicle price is average price in Mumbai (publicly expected to be relatively lower than the sourced116) battery price reduction. The cumulation of • It is assumed that 90% of the bus price is the two is considered to determine the ex- financed through debt of 7 years showroom vehicle price in 2027. The analysis also takes into consideration subsidy • Staff cost includes the cost of drivers, provided under FAME-II incentives (as garage staff, other staff and overheads offered till January 2022). Since the subsidy • The TCO presented above is a summation applicable is in line with vehicle battery of all expenses assumed constant capacity, subsidy is reduced at the same rate (without inflation) over 10 years divided by as that of battery price reduction in 2027, to kilometres travelled. compute the 2027 TCO. Accordingly, the key assumptions to our TCO analysis in given in the following table: 116 https://www.mypetrolprice.com/3/1/Mumbai-Diesel-Price-Chart 169 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES Table A.7: Key assumptions for TCO Analysis of buses Source: Steer Analysis Parameter Intracity Intercity 9-m 12-m 12-m EV Diesel EV Diesel EV Diesel Bus price inclusive 2020: 123 2020: 175 2020: 280 of battery 30 45 80 2025: 84 2025: 118 2025: 191 (INR lakhs) Battery size (kWh) 162 320 324 2022: 11,000 2022: 11,000 2022: 11,000 Battery price 2027: 7,000 2027: 7,000 2027: 7,000 (INR/kWh) 2030: 6,000 2030: 6,000 2030: 6,000 Subsidy 2020: 32 2020: 64 2020: 65 (INR lakhs) 2025: 19 2025: 38 2025: 39 Daily vehicle 194 194 207 207 300 300 running (km/day) Fuel cost (EV- INR per kwH Diesel- 300 76.9 8 76.9 8 76.9 INR per litre) Mileage (EV: km/kWh; 4 1 4 1 4 Diesel: km/L) Staff cost (INR per 18 18 17 17 9 9 km) Maintenance cost 9 7 9 10 9 10 (INR per km) Financing cost (%) 13% 11% 13% 11% 13% 11% p.a. Useful value at the end of 10 0% 0% 0% 0% 0% 0% years 170 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES B. Comparison of India’s EV policy with international examples The table below showcases comparison of FAME II with international examples: Table B.1: Comparison of India’s FAME policy with international examples Source: Steer Analysis Country Fiscal incentives Non-fiscal incentives India FAME II117: All vehicles (including PHEV MORTH • and Strong Hybrid) except Buses; uniform demand incentive of INR 10,000 per kWh • For buses, demand incentive of INR 20,000 per kWh is offered Charging infrastructure • Establish public charging infrastructure with involvement of government agencies, industries and public sector enterprises • For charging e-buses: each buyer would be provided with one slow charger per e-bus and a fast charger for every 10 e-buses as per the guidelines issued by Ministry of Power118 • FAME II revised119: Partial modification to Scheme document issued on 8th March 2019 with the following changes – Aggregation to bring cost of e-3W at par with ICE counterparts. EESL to aggregate demand for 3 lakh e-3Ws – Aggregate demand for e-buses across 4 of million plus cities- (Mumbai, Delhi, Bangalore, Hyder- abad, Ahmedabad, Chennai, Kolk- ata, Surat, and Pune). EESL would aggregate demand in these 9 cities for remaining e-buses under OPEX model – For e-2W demand incentive in- creased to INR 15,000 per kWh with a cap of 40% of total vehicle cost 117 The Gazette of India: Extraordinary, Part II Sec 3(ii), Ministry of Heavy and Public Enterprises, Department of Heavy Industry, Notification, New Delhi, 8th March 2019 118 Charging infrastructure for electric vehicles- Guidelines and standards dated 14 December 2018; Recently updated to Charging infrastructure for electric vehicles- the revised consolidated guidelines and standards dated 14 January 2022; Ministry of Power 119 The Gazette of India: Extraordinary, Part II Sec 3(ii), Ministry of Heavy and Public Enterprises, Department of Heavy Industry, Notification, New Delhi, 11th June 2021 171 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES Country Fiscal incentives Non-fiscal incentives Canada • Point of sale incentives of $2,000 to • Parking fee discount is $5,000 for purchase or leasing options implemented but with a on EVs cap of maximum of 50% • Ontario: Scrappage incentive program of full price offering $1,000 on purchase of used fully • Access to bus lanes electric or plug-in hybrid electric car Charging infrastructure120 • For EV fast chargers from output of 50kW and above-50% of project costs up to $50,000 per charger • For fast chargers between 20KW to 49KW- 50% of project costs up to $15,000 • For level 2 chargers (3.2 kW to 19.2 kW); 50% of project costs up to $5,000 per connector Norway • Exemption from paying VAT including • Free access to toll roads 121122 leased vehicles for BEVs • Exemption from registration tax • Free parking in municipal • Reduced annual motor vehicle tax lots • Free charging in public charging stations • Access to bus lanes • Funding charging stations • For new buildings a minimum amount of 6% is allocated for electric cars Germany • BEVs are exempted from ownership tax • BEVs are exempt from for 10 years emission inspection • Lower financing cost at 1% • Preferential or free parking, access to high- occupancy vehicle (HOV) lanes, • and access to restricted traffic zones 120 Electric Vehicle and Alternative Fuel Infrastructure Deployment Initiative- https://www.nrcan.gc.ca/ energy-efficiency/transportation-alternative-fuels/electric-and-alternative-fuel-infrastructure/electric- vehicle-alternative-fuels-infrastructure-deployment-initiative/18352  121 Comparison of leading electric vehicle policy and deployment in Europe; Uwe Tietge, Peter Mock, Nic Lutsey, Alex Campestrini, White Paper; ICCT, GIZ and Federal Ministry of Environment, Nature Conversation, Building and Nuclear Safety, May 2016 122 https://www.eafo.eu/countries/norway/1747/incentives#:~:text=Norway%20%2D%20Other%20 Financial%20Benefits,clean%20vehicles%20on%20the%20roads. Accessed on 20 January 2022 172 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES Country Fiscal incentives Non-fiscal incentives United • Grant for electric car at £1,500 with • Free and discounted Kingdom upper price limit on eligible car models at parking in many towns £32,000 and cities • Grant on large and small vans at £5,000 • Exemption from London’s and £2,500 respectively123 congestion charge • Write down of 100% of purchase price of EVs against corporate tax liability • BEVs costing less than £40,000 are exempted from Vehicle Excise Duty Charging infrastructure124 • EV charger grants under Electric Vehicle Homecharge Scheme to receive a grant of 75% on total purchase and installation costs • EV charger grant for workplaces that covers 75% of total purchase and installation costs capped at maximum of £350 for each socket • On-Street Residential Charge point Scheme (ORCS) to install on-street charging points to be provided to local authorities. One time grant to part- fund (75%) the capital costs relating to the procurement and installation of on-street electric vehicle charge point infrastructure in residential areas 123 https://www.theguardian.com/environment/2021/dec/15/uk-cuts-grants-for-electric-vehicles-for- second-time-in-a-year#:~:text=The%20grant%20available%20for%20electric,from%20%C2%A350%2C00 0%20in%20March. Accessed on 20 January 2022 124 https://blog.wallbox.com/ev-and-ev-charging-incentives-in-the-uk-a-complete-guide/ accessed on 20 January 2022  173 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES C. Details of Action Plan Recommendations Action plan recommendations- e-2/3 W and Cars The action plan recommendations for e-2W, e-3W and cars have been detailed in the table below. Several of the states, including Maharashtra, which was closely associated with the formulation of this report, have started to embed such recommendations in their EV policies. Table C.1: Action Plan recommendations and steps for e-2W,e-3W and e-4W market segments Source: Steer representation S.No. Recommendations Action plan steps 1. Make GST rates consistent across • NITI Aayog to propose amendment of the the EV value chain GST bill to ensure uniform and consistent Category: Policy/ Regulatory tax rates 0%-5% across the EV value chain including sale of battery separately, Business Model Impacted battery swapping/ subscription model e-2W fleet- ride hailing and last • GST on chargers is at 5% and GST mile delivery, e-rickshaw and e-3Ws for charging and battery swapping (passenger and cargo) services is at 18%, reformed GST bill to have consistent tax rates for effective provision of charging services. 2. Allow battery swapping / • NITI Aayog to recommend revision of subscription in FAME and State EV operational guidelines under FAME policy subsidy to allow purchase incentives Category: Policy/ Regulatory to be distributed between energy operators and purchaser of EV including Business Model Impacted aggregators and fleet operators for e-2W and e-3W ride hailing fleet, swappable batteries. battery swapping service provider, • Bureau of Indian Standards (BIS) to battery subscription service providers define standards for connectors of battery to ensure wider penetration of Best practice: Delhi EV policy allows swapping/ subscription models sale of vehicle without battery and • DHI to amend FAME II policy guidelines distributes the purchase incentive to allow purchase incentives to be split between the vehicle owner and between energy operator and purchaser energy operator. It is paid only once during the purchase of battery and • DHI to amend FAME II policy to offer not for subsequent replacement. higher proportionate purchase incentives Energy operators must register to e-3Ws (L5 category) in comparison separately with the Transport to e-rickshaws based to their cost department. All energy operators differential have to sign lease agreement with the • DoT to amend the EV policy to allow the purchaser for deposit charged for the vehicles to be sold without batteries battery. and issue the requisite guidelines for registration of energy operators to avail the purchase incentive for batteries 174 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES S.No. Recommendations Action plan steps 3. Categorize 2Ws as transport vehicles • Department of Transport (DoT) in Category: Policy/ Regulatory respective states to amend MV Act section 66 to grant ‘contract carriage’ Business Model Impacted permits to commercial e-2Ws e-2W fleet- ride hailing and last mile • DoT to allow permits to be issued to delivery app-based aggregators mandating conditions ensuring road safety such Best practice: MV (Amendment) bill speed conditions, provision of first-aid passed by Lok Sabha in 2018 allows box, GPS device fitted in the vehicle states to issue taxi permits to all kinds of etc.126 vehicles including two-wheelers.125 • DoT to mandate a requirement for In 2019, app-based mobility providers e-2W fleet operators within cities to have been included under ambit of MV have at least 20% of vehicles owned Act Rajasthan, Mizoram, UP, Haryana, - or under contract (driver owned) - West Bengal, Chandigarh (UT) and to be EVs and then increase target Goa have permitted 2Ws as contract by 20% per annum (prior year + carriages. replacements) 4. Registration and permits of e-3Ws at • Increase cap on registration of L5 three- RTO wheelers complying with emission Category: Policy/ Regulatory norms to promote growth of the overall vehicle category and restrict growth of Business Model Impacted e-rickshaws e-3W fleet- ride hailing • DoTs to adopt MoRTH guideline on registering an e-3W without Best practice: Delhi has adopted permit requirement and ensure its an open permit system to approved implementation across RTOs in cities e-autos (L5 category) subject to the cap till a target proportion (say at 20% not on number of Auto Rickshaw Permits exceeding the overall registration cap) (‘e-auto Permits’) fixed by the Supreme of existing on-road fleet is comprised Court. These include all passenger 3Ws of EVs. This target can be increased as approved under FAME and additionally part of EV implementation plan adopted may allow vehicles to use swappable by the state including replacement of Advanced battery. existing ICE fleet with EVs. • Department of Transport or Industries (as applicable in the states) to amend the EV policy to allow permits to be granted to both individual drivers and corporate fleet operators/ aggregators. 125 Accelerating corporate adoption of EVs in India, Policy and regulatory recommendations for the Government of India, WBCSD, October 2020 126 Contract carriage permit 175 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES S.No. Recommendations Action plan steps 5. Incentivizing transition to EVs through • MoRTH to include two and three- scrapping program wheelers in the scrappage policy. Category: Policy and Regulatory • MoRTH to include additional incentives for purchase of EV against Business Model Impacted certificate of vehicle scrapping e-2W fleet- personal, ride hailing and (proposed at 5% for buying new last mile delivery e-rickshaw and e-3Ws vehicles). 128 (passenger and cargo) e-4Ws Best practice: China introduced a national program for promoting voluntary scrapping by users. This involved scrapping all ‘yellow-label’ vehicles (Euro 0, I and II standards) which are operational since 2005 by 2015. They offered subsidizes based on the condition that the new vehicles purchased from the subsidizes to be at least China IV emission standard compliant.127 6. Regulate OEM registration and safety • The Central Motor Vehicles Rules checks of vehicle to bring in two wheelers and three Category: Policy/ Regulatory wheelers including e-rickshaws under its purview and enforce compliance of Business Model Impacted ICAT standards for approval of the 2W e-2W fleet- ride hailing and last mile and e-rickshaw models delivery, e-rickshaws fleets • DoT in respective states to ensure adoption and compliance of safety Best practice: In Delhi, a clearance norms and standards by amending certificate is required to be obtained State MV rules by the Transport Department which can only be procured if the e-rickshaw models are in-line with the models cleared by International Center for Automotive Technology (ICAT)129 127 Survey of Best Practices in Reducing Emissions Through Vehicle Replacement Programs, Francisco Posada, David Vance Wagner, Gaurav Bansal, And Rocio Fernandez, ICCT, CCAC, March 2015 128 Motor Vehicles (Registration and Functions of Vehicle Scrapping Facility) Rules, 2021, MoRTH 129 Analyzing the role of government regulations & intervention in e-rickshaw industry of Delhi, Volume 2, Issue 12, December 2016, International Journal of Management and Applied Science, ISSN: 2394-7926 176 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES S.No. Recommendations Action plan steps 7. ZEV mandate for large scale fleet • Department of Transport to mandate operators130 fleet conversion to EVs for all large Category: Policy and Regulatory ride hailing fleet operators (minimum fleet size of 1000 vehicles) by setting Business Model Impacted specific conversion targets aiming at e-2W, e-3W and e-4W fleet- ride hailing 100% conversion in the next 10 years. operators Best practice: London has set emission norms for all private hire vehicle licenses issued in the state and this includes standards for phased transitioning to ZEVs 8. Additional purchase incentives for • Nodal agency for EV policy to include promoting e-4W additional purchase incentives for Category: e-4Ws up to a target number. It may Policy/ Regulatory be compensated from increase in fees on ICE vehicles. Business Model Impacted • Allow such purchase incentives to be e-4W (personal, employee shuttle and accessed by both fleet operators and ride hailing) individual buyers. Best practice: Delhi EV policy offers an additional purchase incentive of INR 10,000 per kWh of battery capacity up to INR 150,000 to registered owners of first 1,000 e-4Ws. 130 Regulatory pathways for zero-emission vehicle mandates, ICCT, July 2019 177 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES S.No. Recommendations Action plan steps 9. Create an ‘EV Fund’ to aggregate funds • State Finance Department to allow for incentives offered under EV policy levy an environment tax on sale using feebate concept of charging of fuel (diesel or petrol) and/ or polluting vehicles and sale of fuel a congestion fee to be used for Category: providing financial incentives under Policy and Regulatory the EV policy Financial and Funding • Earmark a proportion of EV fund for improving footprint of public charging Business Model Impacted infrastructure and providing demand e-2W, e-3W and e-4W fleet- ride hailing incentives to alternate charging operators models. Best practice: Delhi has levied a 25paise cess on sale of per litre of diesel which accrues to Air Ambient Fund and 50% of that amount is transferred to state EV fund. 10. Reduce financing cost for EV • EV cell/ Nodal agency to foster Category: Financial and Funding adoption of innovative approach including risk sharing facilities, Business Model Impacted buyback guarantee, help to buy e-2W fleet- ride hailing and last mile approach, interest subvention in delivery e-3Ws fleet (passenger and collaboration with commercial banks cargo) for disbursing lower cost credit to e-3W and e-2W players. Best practice: The WBG helped in • National bank to establish first-loss addressing barriers to GRPV (Grid risk sharing program to unlock access Connected Rooftop PV) by making long- to commercial financing for e-2W and term concessional finance available for e-3W. deployment of GRPV including capacity • States to fund the additional cost of building support to regulators, DISCOMS offering interest subvention scheme and other state agencies. from the ‘EV fund’ set-up in the state. Delhi EV policy has given a 5% interest • WBG to partner with large scale subvention on loans for EVs if availed commercial banks or NBFCs to from Delhi Finance Corp. open concessional financing line to promote fleet aggregators to adopt EVs. • IFC to co-invest debt/ equity into the EV financing vehicles • IFC to invest to assist in increasing private investment in the sector via debt and equity financing to fleet and manufacturing businesses which would help in crowding in investments 178 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES S.No. Recommendation Action plan steps 11. Include EV in priority sector lending by • RBI to classify EV sector as a ‘priority banks sector’ Category: • Under the PSI guidelines, RBI to Policy and Regulatory mandate all scheduled commercial Financial and Funding and cooperative banks to extend a specified portion of net bank credit Business Model Impacted (total lending) to EV sector e-2W fleet- ride hailing and last mile • NITI Aayog has suggested design delivery e-3Ws fleet (passenger and considerations and guidelines for cargo), e-4W (employee shuttle and ride including EVs as a priority sector. It hailing), e-bus (market led models, GCC) has proposed alternate portfolios of EV segments to be included for PSL.131 Key action plan recommendations – e-buses The action plan recommendations for e-buses have been detailed in the table below. Several of the states, including Maharashtra, Tamil Nadu and Kerala, which have been closely associated with the formulation of this report, have started to embed such recommendations in their e-bus policy or fleet modernization programs. Table C.2: Action plan recommendations and steps for e-buses Source: Steer representation S.No. Recommendations Action plan steps 1. Program approach at state level to • STUs through a Public Transport Cell electrification of bus fleet to provide demand estimates for Category: Policy and Regulatory fleet requirements and preference of business model to be adopted, to Business Model Impacted state PT or transport department. State-led fleet aggregator model. • The PT or transport department to Market player-led aggregator model aggregate the demand at state level to achieve economies of scale for Best practice: CESL has already initiated procurement, operations and/or this approach under FAME II policy to financing. Department to mandate aggregate demand of e-buses across five uniform scrappage policy for ICE cities with over 4 million population. buses based on age and km operated required, with additional incentives for timely scrappage. • Either a state agency or a private/ market player to act as the aggregator depending on state or city’s institutional and financial characteristics, and volume potential for aggregation. 131 Banking on electric vehicles in India, A Blueprint for inclusion of EVs in priority sector lending guidelines, Report, NITI Aayog, RMI, RMI India, January 2022 179 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES S.No. Recommendations Action plan steps 2. Favorable and consistent tax regime • DHI and state transport departments for manufacturing, procurement and to liaise with the GST Council to waive operations of e-buses or reduce to at-par GST rates for entire Category: Policy and Regulatory e-bus value chain. • Central and state governments to Business Model Impacted grant 100% exemptions to all e-buses All models with leasing-based from taxes like road tax, passenger tax, procurement permits, Motor Vehicle tax and vehicle registration fees until 10% of the bus Best practice: Latin American countries fleet is electric. like Colombia and Chile, with inspirational evidence of e-bus penetration in bus fleets, had low or waived import duties and taxes on e-buses. 3. Balanced subsidy structures as part of • DHI, in consultation with state fiscal measures transport/PT departments, to modify Category: subsidy scheme under FAME to a Policy and Regulatory hybrid structure where capex part Financial and Funding is retained to be 2/3rd of existing FAME II subsidy while the remaining Business Model Impacted 1/3rd along with state/STU subsidy is All business models related to fleet disbursed over 2-3 years as operational procurement subsidies potentially linked to operational performance Best practice: Chinese cities like • DHI, in consultation with state Shenzhen that have electrified their entire transport/PT departments, to modify fleet of more than 16,000 buses have MCA and RfP under FAME GCC to utilized capital and minimum-km-based consider fixed subsidy amount operational subsidies irrespective of bidder’s quote. 4. Alternate sources of revenue for • Feebate scheme with levy of carbon e-bus and charging infrastructure tax on ICE vehicles based on emission deployment levels and/or fuel economy can be Category: passed by the State government to Policy and Regulatory e-buses and e-2W, e-3W and e-4W in Financial and Funding form of fiscal incentives. • State Industries Department to Business Model Impacted manage a Credit Guarantee Fund Trust All business models for Green Transport through a SIDBI- equivalent institution that can provide Best practice: affordable financing for e-buses. • Scottish BSOG ‘LVC’ initiatives • Commercial exploitation of depot • Government of India has proposed a land either as charging infrastructure voluntary Vehicle Scrappage Policy in PPP or other models can help accrue its current Union Budget 2021-22. additional revenue for the STUs. 180 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES S.No. Recommendations Action plan steps 5. Capacity-building for STUs, public • The state transport/PT department to transport department, aggregator organize capacity-building programs agencies and DISCOMs in e-bus for various stakeholders like STUs, operations and contract management identified state-level aggregator Category: Governance & Institutions agencies and DISCOMs. • The state transport/PT department Business Model Impacted to mandate completion of All models with leasing-based training sessions before tender procurement documentation and release. • The state transport/PT department and PT authorities to consider partnerships with multilateral development banks like World Bank for technical assistance on capacity- building • The Ministry of Skill Development and Entrepreneurship (MSDE) to mandate courses related to EV skills/ maintenance in ITIs and Polytechnics to create skilled human resources. The Department of Higher Education to introduce courses related to EV skilling in concerned states. 6. Contract Management and • State transport or PT department to Procurement Cell at State and agency set up a project management unit level for e-bus services with representatives from contractors, Category: PT authorities, state agency (if any), Governance & Institutions CaaS providers, energy providers Procedural & Procurement and lessors. Unit will monitor the following: Business Model Impacted – Performance of subsidy dis- Revised GCC model. bursed against policy objectives State-led fleet aggregator model. – Project operations Market player-led aggregator model – Dispute resolution mechanisms • During the contract period, these Best Practice project management units to report Mumbai and Delhi have launched their to the Contract Management and EV cells recently to accelerate transition Procurement Cell at the state level on and adoption of EVs. contract management parameters 181 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES S.No. Recommendations Action plan steps 7. Separate funding and readiness of • State or PT department to mandate charging infrastructure e-depot preparedness for state Category: guarantees on contracts which Funding & Financing includes en-route charging facilities Urban infrastructure for inter-city route tenders. • State or PT department to provide Business Model Impacted financial / VGF support to DISCOMs All business models where charging for developing ancillary infrastructure. infrastructure is unbundled • Where charging infrastructure is unbundled with fleet, the PT authority Best practice: In Santiago (Chile), could bring in a charging as a service energy players like ENEL and Engie have (CaaS) player to provide end-to- partnered with operators and OEMs end energy solutions i.e. liaise with to pilot and scale up e-bus penetration DISCOMs, upgrade grid connectivity, in the operators’ fleet mix. This not procure installation and maintenance only ensures energy provision for of charging infrastructure, and ensure the e-buses but also establishes the energy availability according to energy business for e-buses on a firmer charging schedule for operators footing. • Where charging infrastructure is bundled with fleet, the operator will be responsible for installation and maintenance of charging infrastructure. • State to set up Dedicated Charging Infrastructure Fund (earmarked share from state’s EV Fund) at state level for establishment of charging infrastructure including at depots. 182 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES S.No. Recommendations Action plan steps 8. Enable favourable financing • Central government to confer priority ecosystem for e-buses lending sector status for lending Category: Funding & Financing towards components of the e-bus manufacturing, procurement and Business Model Impacted operations ecosystem including All business models charging infrastructure. • Central/state governments to introduce scheme to de-risk lending to e-bus sector (public and private) until 10% of the fleet is electric. 9. Improve bankability of procurement • DHI to consult with relevant through contractual modifications stakeholders and adopt contractual Category: modifications including on payment Procedural & Procurement security mechanisms, minimum assured km, substitution agreements, Business Model Impacted operator consortium composition. Revised GCC model This role is now undertaken by CESL as part of the revision to the FAME II Best practice: In Bogota, trust funds scheme in June 2021. help TransMilenio in providing ring- • State transport department or PT fenced payments to contractors – fleet department to enter into support providers, operators, fare collection agreements to ensure ring-fencing agencies, etc. – from farebox revenue of farebox revenue and budgetary and budgetary support support. • State government to provide substitution agreements or payment guarantee, optionally using financing support from multilateral development banks like World Bank. 183 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES S.No. Recommendations Action plan steps 10. E-bus pilot operations for mitigation of • State transport/PT department in performance risks, model registration consultation with public/private and OEM empanelment operators to evaluate routes based Category: on Total Cost of Ownership (TCO). Procedural & Procurement States to allocate most profitable routes like airport shuttles, mofussil Business Model Impacted routes and inter-city routes with one- All models related to operations way distance up to 200 km for e-bus procurement operations. • State/PT departments to mandate Best practice: Santiago’s success story e-pilots in addition to feasibility in large-scale introduction of e-buses studies before release of tenders. IFC in fleet were based on partnerships can support pilots that have a line between energy player (fleet provider), of sight to larger investments using OEM and private operator. Several its early-stage project development rounds of pilots featured in this product (upstream) deployment. 184 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES Key action plan recommendations- Charging and swapping infrastructure Table C.3: Action Plan recommendations and steps for charging and swapping infrastructure Source: Steer representation S.No. Recommendations Action plan steps Common recommendations for all business models 1. Provide land at concessional prices in • Allow land at concessional rate or cities for setting up public charging provide capex subsidy in form of infrastructure land provision for setting up public Category: charging stations Policy and Regulatory • Allow charging infrastructure Governance and Institutions developer to use a percentage of allotted land to open public amenities Best practice: Bangalore Electricity to improve viability of charging Supply Company (BESCOM) has set- business up 80 EV charging stations with 126 • State Transport Department to chargers in Bengaluru. The charging provide VGF either in form of capital stations are in government office or in form of land lease rentals premises such as Bruhat Bengaluru (capped to a maximum value) Mahanagar Palike, Bangalore for short term until a benchmark Development Authority, Traffic Transit footprint of public chargers is Management Centres and RTO. This was available in a city funded by the Transport Department of the state132 • City municipalities to allow public charging operations on government designated land parcels • The exact location details of the station to be shared by the procuring agency in tender details • Urban Development and Transport Departments in state to regularize street parking and include setting up of charging stations as part of parking policy • Smart City mission in state to include plan for deployment of minimum 10% of the available parking spots for setting up of charging infrastructure and including norms of residential charging as prescribed by MoHUA in its residential projects • Municipalities to give fast track clearance on land for setting up charging and swapping stations 132 https://www.thehindu.com/news/cities/bangalore/bescom-sets-up-80-electric-vehicle-charging-stations /article30743515.ece accessed on 26 May 2021 185 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES S.No. Recommendations Action plan steps 2. EV policy to provide level playing field • Public charging point operator to all charging technologies and battery swapping player to be Category: given capital subsidy for purchasing Policy and Regulatory chargers under FAME subsidy Governance and Institutions conditional to the charging/ swapping station to be open to shared access Best practice: Delhi government has until a target minimal coverage is provided a grant of 100% for purchase achieved. of charging equipment up to INR • States and municipal corporations 6,000 per charging point for the first to provide subsidy for setting up 30,000 charging points. Additionally, charging infrastructure to residents for public charging stations, it would and captive charging providers open provide capital subsidy for cost of to shared access to other users until a charger installation to selected Energy target minimal coverage is achieved. Operators. 3. Amend development control • 75% of charging needs would be met regulations to enable residential and at residential and office locations, office charging therefore it is important to ensure Category: implementation and monitoring Policy and Regulatory of building by-laws mandating Urban Infrastructure installation of charging points • MoHUA guidelines with respect Best practice: Delhi government has to amendments in Development directed all buildings such as malls, Control Regulations to be adopted offices, hospitals, hotels etc to install and implemented by state’s Urban charging infrastructure Development Department and local municipalities. BSES has rolled out Digi-Seva Kendra • Department of Industries to amend for offering quick, convenient and free EV policy to include incentives on single window clearance services to setting up chargers at home and consumers for getting an electricity office locations. connection. Such centres may also extend services to charging service • State Urban Development and Town providers.133 Planning Department to define the type and configuration to chargers to be installed in buildings as per recommendations by Ministry of Power134 • EV cell in states to provide single- window clearance facility for setting- up new private charging stations. 133 BSES Consumer Information Bookletㅋ 134 Charging infrastructure for Electric Vehicles-Guidelines and standards, Ministry of Power, December 2018 186 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES S.No. Recommendations Action plan steps 4. Second life of batteries • Ministry of Environment, Forest and Category: Climate Change has published rules Policy and Regulatory called ‘Battery Waste Management Governance and Institutions Rules. 2020’ for end-of-life disposal, re-use and recycling standards Best practice: Government of UP to • Under these rules, OEMs and dealers provide 50% capital subsidy per annum must be registered under Central for 5 years to large, anchor EV Battery Pollution Control Board and would Units and service units in form of be responsible to send collected loan taken for procuring equipment/ batteries to recycling units. State machinery for battery recycling subject Pollution Control boards to ensure to maximum ceiling of INR 10 million adherence and implementation of per annum these rules by all registered OEMs and dealers.135 • State EV policies to provide incentives for setting up battery recycling plants including capex subsidy, concessional land, GST reimbursement etc. to incentivize setting up these businesses. 5. Conduct siting study to identify • Cities to undertake charging strategic locations for public infrastructure siting analysis to charging infrastructure identify the source of power and map Category: it with the mobility needs of the city Governance and Institutions to identify the strategic locations for Urban Infrastructure setting charging infrastructure • State Urban Development Best practice: The British Columbia Department to adopt the guidance Toolkit provides knowledge-based from Handbook of Electric approach and methodology to plan Vehicle Charging Infrastructure Electric Vehicle Charging Infrastructure Implementation issued by NITI Aayog sponsored by BC Hydro and British and Ministry of Power137 for selection Columbia Ministry of of charging locations for deployment Energy, Mines and Natural Gas136 of public charging stations. • State’s Urban Development and Transport department to jointly commission a charging infrastructure siting study for each city including forecast of expected growth of EVs 135 https://mercomindia.com/india-blueprint-battery-waste-management/ accessed on 27 May 2021 136 https://d2rfd3nxvhnf29.cloudfront.net/legacy/uploadedfiles/playbook-assets/electric-vehicle-charging/ public-fleet-electrification-final.pdf 137 Handbook of Electric Vehicle Charging Infrastructure Implementation, Version-1, NITI Aayog, Ministry of Power, Department of Science & Technology, WRI, August 2021 187 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES S.No. Recommendations Action plan steps Recommendations for fleet operators 6. Consistent tariffs for EV charging • The Ministry of Power to consider across public, private, captive and including in the recently introduced battery swapping facilities in each city “Electricity (Rights of Consumers) Category: Policy and Regulatory Rules, 2020” the consumer’s “right” to have a “choice” to get EV metered Best practice: Tariff concessions under connection for charging DERC Tariff Schedule for 2019-20 shall • DoT to amend the EV policy to include be extended to all private charging uniform tariffs across EV charging point operators that are BEVC-AC001 players compliant and are connected to the • State Electricity Regulatory Central Management System (CMS) of Commission to introduce a separate the relevant DISCOM138 tariff category for EV charging and follow the guidelines on tariff setting issued by the Ministry of Power in June 2020 • The EV special tariff to be allowed to any exclusive EV metered connection irrespective of the charging technology (plug-in, battery swapping, wireless, etc.) and the type of charging facility (private, captive, semi-public or public) provided the charging points are properly hardwired to avoid any misuse of the electricity connection for any non-EV purpose • State Energy Regulatory Commissions (SERC) to publish Time-of-Day tariffs to allow captive and personal users to charge their vehicles in off-peak hours and realize savings on electricity costs 138 Delhi Electric Vehicles Policy, 2020 188 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES S.No. Recommendation Action plan steps 7. DISCOMs to facilitate separate meters • State DISCOMS to make necessary at EV charging locations provisions such as facilitating Category: separate meter or sub-meter to Policy and Regulatory allow charging operators to avail EV Urban Infrastructure charging tariff • State DISCOMS to ensure provision Best practice: Delhi Electricity of power infrastructure at charging Regulatory Commission has notified a locations policy wherein commercial buildings • Power DISCOMS in each city to such as hotels and malls providing EV adopt MoHUA guidelines on allowing charging facilities can install a sub- enhanced power load to residential meter and EV tariff rate would be and commercial units by upgrading applied based on the units consumed.139 its distribution infrastructure with a long-term vision of 30 years. Results from siting analysis to be shared with DISCOMs to plan grid upgradations140 8. Provision of charging infrastructure/ • State governments/ PT cell to liaise depots opened to public and private with NHAI to add e-bus charging operators plying intercity route points in the passenger wayside Category: amenities that are being developed Policy and Regulatory on highways in the country Urban Infrastructure • PT cell managing the depot charging infrastructure on intercity routes/ highways to provide real-time information on availability of chargers and allow access to private e-bus operators • State level program to rollout network of charging facilities developed by private sector players providing Charging as a Service to support intercity movement (for buses and 4 wheelers) 139 https://www.businesstoday.in/sectors/auto/gahlot-appeals-to-malls-hotels-market-complexes-to- install-ev-charging-points/story/433232.html accessed on 27 May 2021 140 Amendments in Model Building Byelaws for Electric Vehicle Charging Infrastructure, MBBL 2016, Town and Country Planning Organization, MoHUA, February 2019 189 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES D. Appraisal Methodology for The quantitative impact of each option is estimated as the change in EV penetration proposed investment options that would result from the reduction in TCO Overview and/or improvement in perception of users This activity analyzes a range of investment from reduction of financing costs and/or ease options to assess their impact on EV of access to finance. This penetration factor is penetration and TCO savings. Each of the then used to calculate the increase in number investment options identified would all of electric vehicles per million dollar invested. undoubtedly have a significant impact on EV penetration and because most of the options The qualitative impact of investment options are not mutually exclusive, it is likely that, if all has been analyzed against a set of broader of these options were deployed together, the qualitative criteria. impact would be transformative. However, the reality is that the resources available from It is important to note that this analysis is only government are finite and some degree of indicative in nature and a feasibility level of prioritization would be required. study and market sounding would be required to form a more definitive view of the impact Each investment option is appraised and challenges of implementing any of these quantitatively and qualitatively. They are options. analyzed based on a common facility size of USD 150 Million for e-2W/e-3W/ e-4W and e-bus individually to ensure comparability of options across board. Figure D.1: Appraisal approach for investment options Source: Steer Analysis Electric Vehicles Impacted* Increase in EV 50% TCO (average penetration Quantitative for fleet) per $ million Analysis invested Perception Investment Core Appraisal Option Score Criteria Ease of (out of 100) mobilisation Cost Recovery 50% Red Amber Qualitative Green (RAG) Analysis Government Analysis exposure Delivery costs & Execution risk 190 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES One of the appraisal criteria is a quantitative analysis, built on TCO and perception factor. This page elaborates on its implementation. Figure D.2: Logical Calculation Flow (Vehicle Discount Scheme as an example) Source: Steer Analysis 15% Capex Discount Investment Perception X per Vehicle Factor % Sticker Price / Improved X Perception Vehicles Factor Facility Size Impacted / X Vehicles Sold in FY20 Market Coverage Improved EV Penetration Financial Model X Revised TCO — Increased EVs Baseline TCO — TCO Savings Baseline EV Penetration Cost Saving from options (e.g. 15% Capex Discount) Legends Estimated quantification Estimated investment Static Inputs into the Calculations in the model of the venefits from per vehicle. This calulations. These to arrive at the increase investment option. This parameter is used to parameters will not in electric vehicles with is used as an input to calculate the vehicles change from investment interventions the financial model to which can be covered by option to investment calculate the improved the facilities option TCO X Estimated % of TCOs Model Output Calculations used in the to be considered as an model improvement in the perception factor 191 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES Quantitative Criteria: E 2W / E 3W / E Cars dollars invested”. EV penetration is calculated on the basis A score is then awarded according to the of the market assessment model created savings in e-buses per million dollars invested for estimating the unconstrained demand. [TCO saving per e-bus x no. of buses impacted Based on the improvements in the total by scheme x total distance covered by vehicle cost of ownership for electric vehicles (by over lifetime / Facility size (USD 150 Million)] reducing cost of the vehicles or the financing The business model which is widely accepted costs, based on the investment option) is the public transport model where the and the improvement in public perception buses are run on state identified routes and towards the electric vehicles (considered as a the demand risks are borne by the public proportion of the TCO based on assumptions authority. Given the nature of the business, noted on the quantitative approach page), perception factors cannot be considered. the model calculated an expected growth in Users are deemed to opt for the available EV penetration by 2030 over and above the service and, for modelling purpose, would baseline growth. be indifferent in their choice as long as the ticket prices are not increased significantly Quantitative Criteria: E-Bus by the government. To analyze investment options proposed for e-bus, the TCO analysis developed in Quantitative Criteria : Charging Station Module 1 of the study has been used to To implement charging stations, each estimate the extent to which the option will bridge the delta in TCO from the baseline ICE investment option has been analyzed both cost levels. qualitatively and quantitatively from the perspective of increasing EV penetration This is quantified as “USD Savings per Million improving financial viability for the charging dollar” which is the gap covered by the station operators. investment option between the baseline TCO for an e-bus and the revised TCO for The appraisal methodology for analyzing the impacted vehicles under the investment EV penetration reviews the impact for e-2W option / e-3W and e-4W using the methodology noted in the section above for e-2W / e-3W The benefits from the investment option are and e-4W. No impacts are assumed for used to estimate the improvement in e-bus e-buses as they are assumed to be charged TCO from its e-bus baseline TCO to cover the in their respective depots. gap between ICE and EV costs To analyze the viability of operating a Difference of this baseline TCO & revised charging station for private participants, an TCO under the investment option are then expected return of 10% is assumed on the multiplied with the total kilometers travelled investment. by the bus over its lifetime (1.02 Million Kms) to quantify the difference over the life of The options are run by keeping the expected vehicle. It is then multiplied with the number returns constant and reducing the price of vehicles impacted with the investment to be charged per unit of electricity to option to quantify “USD Savings per million maintain viability. The aim of this is to reach 192 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES a price comparable with the cost of a typical Appraisal Approach Examples residential charging This page illustrates the application of the The EV penetration analysis assumes that appraisal approach & methodology to arrive the electricity cost will remain at par with at the final penetration results using two of their current costs and will not vary with the the proposed investment options implementation strategy of the charging station. Thus, provision of a subsidy or a price / interest rate cut will not impact the EV penetration. These options will just improve the viability of the charging stations at a lower price per unit of electricity Qualitative Analysis For each of the proposed options, qualitative appraisal has been undertaken where each investment option has been scored on a Red-Amber-Green (RAG) basis against a set of following four criteria. • Mobilization: How to minimize government funding to maximize and mobilize private finance (i.e. efficiency of the option) • Cost recovery: Whether investment can be recovered so that the capital can be recycled (i.e. effectiveness of the option) • Government exposure: The liabilities incurred by the government (i.e. fiscal impact of the option) • Delivery costs & execution risk: The ease with which the option can be introduced (i.e. the deliverability of the option) Each option is scored against each of these criteria. If the option scores red against a criteria, it receives 0 points; amber 5 points and green; 10 points. 193 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES Table D.1: Key assumptions for TCO Analysis of buses Source: Steer Analysis Scoring Methodology Red Amber Green Criteria Description (0 Points) (5 Points) (10 Points) Extent to which option mobilizes Directly leverages Does not directly private capital and private capital No government Mobilization mobilize private reduces the via guarantee or support required capital funding requirement government support of government Extent to which option can be Investment capital Investment capital investment returns Cost withdrawn and costs can be recycled and unlikely to be possible but high Recovery recovered when existed at profit (if recyclable risk/reward market maturity is successful) achieved Extent to which option exposes Direct and contingent Contingent liabilities No government Government government balance liabilities with central with government (e.g. recourse (“off- exposure sheet to both direct government (“on- sovereign guarantee) balance sheet”) and contingent blance sheet”) liabilities Existing counterparts Delivery costs Extent to which Standard Option involves but interacting with & option imposes underwriting creation of new innovative funding execution transaction/set-up process with existing entities/counterparts and financing risk costs borrowers mechanism The applications and thus the implications of each investment option for the stakeholder can be understood as a graphical depiction. In the example shown here, first loss facility takes the first hit in case of a default thereby making the lenders risk free until a certain level of recovery rate. The lenders will feel much more secured and hence lower the rates. Table D.2: Wholesale Market De-risking instrument Source: Steer analysis Market Offering Lender is assured a cover up to 20% of outstanding loan balance E 2W: $150 Mn / E 3W: $150 Mn / e-4W: $150 Mn Facility Size USD 450 Mn in Total Facility Size / Investment per vehicle, investment per vehicle equals lower of 20% Vehicles Impacted of the outstanding loan balance and loss given default (outstanding loan balance 7.6 Million less salvage value which is 40% of the sticker price) Market % Vehicles Impacted / Total vehicles sold in FY 20 pan India Impacted Un-adjusted TCO Credit margins become 1.2% & bank rating improve by 1 basis point (B-) making Improvement interest rate come down by 8%. Adjusted TCO Market % Impacted x Un-adjusted TCO Improvement Improvement Goes through in the calculations 194 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES Perception Factor 75% of the TCO improvement is assumed to be applicable on the perception improvement Overall ∆EV Based on the Adjusted TCO & Perception Factor calculations Penetration 7.6% 18,600 EVs per Based on the Overall penetration & Facility size USD Million Invested in the investment option Table D.3: Second Loss Facility Source: Steer analysis Market Offering Lender is assured 20% cover up to 20% of outstanding loan amount E 2W: $150 Mn / E 3W: $150 Mn / e-4W: $150 Mn Facility Size USD 450 Mn in Total Facility Size / Investment per vehicle, investment per vehicle equals 20% of the Vehicles Impacted lower of 20% of the outstanding loan balance and loss given default (outstanding 6.6 Million loan balance less salvage value which is 40% of the sticker price) Market % Vehicles Impacted / Total vehicles sold in FY 20 pan India Impacted Un-adjusted TCO The credit margins will become 4.90% making complete interest rate come down Improvement by 1.3%. Market % Impacted x Un-adjusted TCO Improvement Adjusted TCO goes through in the calculations Improvement Perception Factor 65% of the TCO improvement is assumed to be applicable on the improvement perception Overall ∆EV Based on the Adjusted TCO & Perception Factor calculations Penetration 3.7% 9,600 EVs per USD Based on the Overall penetration & Facility size Million Invested in the investment option 195 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES Figure D.3: Appraisal approach & methodology to arrive at the final results for e-bus using “Wholesale market de-risking instrument” as an example Source: Steer Analysis Based on the contin- gent risk borne by the facility Wholesale market Investment per Bus Facility Size USD 150 derisking instrument USD 3,929 Mn Financing costs will be reduced X with this investment option on ac- count of improving bank ratings & reducing bank and credit margins Total Buses Baseline Revised TCO of impacted with TCO of E-Bus INR E-Bus INR 55.96/ investment option 62.37/km Savings of USD km 38,000 24 Mn per USD / million invested in the option TCO Savings INR 6.4/ km Total Savings from Daily Vehicle the investment Running 300 X Option kms/day USD 3.6 Bn Vehicle Total Distance Holding Period X travelled 1.02 Mn kms 10 years No. of running days in a yr. 340 days/yr. Legends Input to the Model Investment Option Calculations Model Output 196 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES Table D.4: Investment Option Assumptions - First Loss Facility Illustrtaion Source: Steer representation Investment Benefit to Percaption per Vehicle Vehicle Factor % Vehicle 15% of the sticker price 15% lower capex is input 50% of TCO savings Discount considered as the capex in the financial model to considered as perception Scheme discount calculate TCO factor improvements The difference in 10% lower capex is input 15% of TCO savings OEM manufacturing costs of in the financial model to considered as perception Expansion ICE & EV considered as calculate TCO factor improvements investment per vehicle difference in in terest 5% lower financing cost 50% of TCO savings Interest Rate expenses under base case is input in the financial considered as perception Subsidey & with 5% lower interest model to calculate TCO factor improvements rate considered Min. of 20% Loan outstanding at 2.5 yrs. 5% lower financing cost 75% of TCO savings Buyback & outstanding loan less is input in the financial considered as perception Guarantees salvage calue (40%) is model to calculate TCO factor improvements considered Dedicated EV 80% of sticker price 6.64% lower financing cost 15% of TCO savings Financing (Loan) is considered as is input in the financial considered as perception Vehicle investment per vehicle model to calculate TCO factor improvements Charging capacity of Public new station is adjusted infra capex and opex is 85% of TCO savings charging with charging speed & removed in the financial considered as perception scheme (PPP) charge/vehicle to calculate model to calculate TCO factor improvements vehicles 20% of min. of 20% loan outstanding at 2.5 yrs. 1.3% lower financing cost 65% of TCO savings Second Loss & outstanding loan less is input in the financial considered as perception guarantees salvage value (40%) is model to calculate TCO factor improvements considered The % savings on the 3.2% lower financing cost 65% of TCO savings User TCO from the investment is input in the financial considered as perception discounts option is used as a proxy model to calculate TCO factor improvements to calculate the investment Wholesale Min. of 20% Loan outstanding at 2.5 yrs. 8% lower financing cost 75% of TCO savings market & outstanding loan less is input in the financial considered as perception derisking salvage calue (40%) is model to calculate TCO factor improvements instrument considered The difference in Direct 7.6% lower financing cost 30% of TCO savings manufacturing costs of Lending/ is input in the financial considered as perception ICE & EV considered as Investment model to calculate TCO factor improvements investment per vehicle 197 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES The applications and thus the implications of each investment option for the stakeholder can be understood as a graphical depiction. In the example shown here, second loss facility provides a cushion in case of a default thereby making lenders bear lower risks. The lenders will feel much more secured and hence lower the rates. Lender needs to bear default losses post the recovery value falling beyond a Figure D.4: Lender Loss Profile As the Recovery Value Decreases (First Loss Facility) Source: Steer representation Lender Loss First Loss Facility Recovery Value Vehicle Loan Loan Profile (Default @2.5 years) 200 400 600 800 1,000 1,200 1,400 40% 39% 38% 37% 36% 35% 34% 33% 32% 31% 30% 29% 28% 27% 26% 25% Recovery Value % 24% 23% 22% 21% 20% 19% 18% 17% 16% 15% 14% 13% 12% 11% 10% 9% 8% 7% 6% 5% 198 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES Benchmark lender loss profile without any facilities (Lender losses from inception) Figure D.5: Lender Loss Profile As the Recovery Value Decreases (No Facility) Source: Steer representation Lender Loss Recovery Value Vehicle Loan Loan Profile (Default @2.5 years) 200 400 600 800 1,000 1,200 1,400 40% 39% 38% 37% 36% 35% 34% 33% 32% 31% 30% 29% 28% 27% 26% 25% Recovery Value % 24% 23% 22% 21% 20% 19% 18% 17% 16% 15% 14% 13% 12% 11% 10% 9% 8% 7% 6% 5% 199 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES threshold Second level Loss . Illustration The applications and thus the implications of each investment option for the stakeholder can be understood as a graphical depiction. In the example shown here, second loss facility provides a cushion in case of a default therby making lenders bear lower risks. Figure D.6: Lender Loss Profile As the Salvage Value Decreases (Second Loss Facility) Lenders get a buffer to the quantum of the default losses Source: Steer representation Lender Loss Second Loss Facility Recovery Value Vehicle Loan Loan Profile (Default @2.5 years) 200 400 600 800 1,000 1,200 1,400 40% 39% 38% 37% 36% 35% 34% 33% 32% 31% 30% 29% 28% 27% 26% 25% Recovery Value % 24% 23% 22% 21% 20% 19% 18% 17% 16% 15% 14% 13% 12% 11% 10% 9% 8% 7% 6% 5% 200 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES Benchmark lender loss profile without any facilities (Lender losses from inception) Figure D.7: Lender Loss Profile As the Salvage Value Decreases (No Facility) Source: Steer representation Lender Loss Recovery Value Vehicle Loan Loan Profile (Default @2.5 years) 200 400 600 800 1,000 1,200 1,400 40% 39% 38% 37% 36% 35% 34% 33% 32% 31% 30% 29% 28% 27% 26% 25% Recovery Value % 24% 23% 22% 21% 20% 19% 18% 17% 16% 15% 14% 13% 12% 11% 10% 9% 8% 7% 6% 5% 201 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES E. Approach for Stakeholder consultation Stakeholder engagement was both central and key to deliver outputs under the project. The list of stakeholders consulted during the assignment included government agencies at central, state and city level as well as market players covering the entire EV value chain from OEMs to charging point operators and battery manufacturers for each vehicle category from the supply side and fleet operators and 3PL players from the demand side. Figure E.1: List of stakeholders consulted during the project Source: Steer representation Vehicle OEMs Charging Infrastructure (Market) • Ather Energy • Siemens • Zypp • Exicom • Okkinawa • Panasonic • ReVolt • NTPC • Okaya • Altigreen • EESL • Mahindra Electric • TATA Motors • Clean Motion Fleet Operators/Aggregators • TATA Motors Financing Institutions Government Agencies Commercial Bank Central Ministries • IDBI • NITI Aayog NBFC • Ministry of Heavy • Mannapuram Vehicles & Public Enterprises Fintech • OTO capital • Ministry of Road Transport & Highways • Revfin • Ministry of Housing & • Zest Finance Urban Affairs • Three-Wheel United • Shell foundation 202 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES Steer team organized one-on-one consultations with market players on demand and supply side to understand key policy, regulatory, legal, procedural, procurement and funding related barriers to adoption of EVs. These consultations were also central to understand the modalities and conditions for success of high potential business models. The key assumptions for analyzing the financial feasibility of selected business models were also vetted through relevant stakeholders during one-on-one consultations. The action plan roadmap was developed based on the identified issues inhibiting uptake of EVs and solutions required for allowing the business models to be taken up at a large scale. A series of consultations were held on the draft action plan recommendations with the State and National government agencies to get feedback on the applicability, impact, and ease of implementation of the proposed recommendations. Ground level experience and network of our on-board industry advisors (Anil Arora-Clean Motion, Tarun Mehta-Ather Energy and Sivam Sebastian-CharIn) was also instrumental in developing implementable action plan recommendations. The following table provides a list of stakeholders consulted for feedback on the action plan recommendations: Table E.1: List of consultations held on action plan recommendations Source: Steer representation Company/ S.No. Name Designation Date Department National Consultations* Adviser Infrastructure Sudhendu 1. Connectivity and electric NITI Aayog 23 June 2021 Jyoti Sinha mobility National Mission on Principal Consultant & 2. Anil Srivastava Transformative Mobility and 15 December 2020 Mission Director Battery, NITI Aayog State Consultations Transport and Home Ashish Kumar 3. Principal Secretary Department, Government of 29 January 2021 Singh Maharashtra Ex-Additional Satish Transport Department, 8th and 25th 4. Commissioner of Sahasrabudhe Government of Maharashtra February 2021 Transport Pooja Finance Department and State 5. Special Secretary 17 March 2021 Kulkarni Government of Tamil Nadu 6. Raj Cherubal CEO Chennai Smart City 8 March 2021 7. K. Nandagopal Chief Engineer TANGEDCO 16 March 2021 203 Electric Mobility Market Assessment, Business Model and Action Plan in India   ANNEXURES Company/ S.No. Name Designation Date Department Financial Institutions 8. Rev Fin Founder and CEO Rev Fin 16 December 2020 9. Zest Money Ex. Senior Manager ZEST Money 16 February 2021 Sr. Vice President and 10. Dhiraj Agarwal Mannapuram Finance Limited 17 December 2020 CEO TW an EV Businesses 11. Aparna Mangla India Regional Manager Shell Foundation 22 December 2020 OEMs 12. Anil Arora CEO Clean Motion 9 February 2021 Vijay 13. DGM Sales and Marketing Olectra 16 March 2021 Medikonda Charging Infrastructure 14. Sivam Sebasan Managing Director CharIN 17 March 2021 Business Development 15. Akshay Ahuja EXICOM 5 January 2021 Manager Fleet Operators Prasanna Chairman and Managing Prasanna Purple Mobility 16. 15 March 2021 Patwardhan Director Solutions Ltd. *2 national consultations were held during the project which were organized by the World Bank group virtual- ly. The participating organizations included NITI Aayog, DHI, MoRTH, MoHUA, selected states and Cities, DHI, World Bank, IFC, ESMAP and MOLO representatives 204 Electric Mobility Market Assessment, Business Model and Action Plan in India Pantone 115 Pantone 289 CMYK 2 4 100 0 CMYK 93 39 0 73 RGB 255 229 0 RGB 0 35 69 Pantone 656 Process Cyan Pantone 433 CMYK 1 0 0 9 CMYK 100 0 0 0 CMYK 82 65 65 79 RGB 235 241 241 RGB 0 173 228 RGB 2 23 25