Creating a Robust Electric Mobility Ecosystem in India: 6 Takeaways from Connect Karo 2019

A newly electrified government fleet in the city of Ranchi in Bihar, India. Photo by Priyanka Sulkhlan/WRI India

At Connect Karo 2019, WRI India’s seventh annual conference on sustainable urban development in India, experts across sectors agreed on one big thing: the future of mobility is electric.

This marks a rapid evolution of opinion since last year’s Connect Karo, when participants called electric vehicles (EVs) a risky proposition and questioned their relevance. At this year’s convening, kicked off by Vice President of India Venkaiah Naidu, the overwhelming consensus was that swift adoption of EVs will put Indian cities and businesses at significant environmental and economic advantage, possibly saving the country as much as $60 billion by 2030.

Forum participants pointed to policies that have been designed by the government to grow the EV market, including a subsidy program and guidelines for charging infrastructure. The discussion then focused on how India can build on these efforts to rapidly deploy electric mobility on a large scale.

While it is early to draw conclusions on which EV technologies or policies work best, it is a worthwhile exercise to track the key questions that face the private and public players. The discussions at Connect Karo brought out six key takeaways for India’s policymakers and EV stakeholders:

1. Understand the Country’s Unique Mobility Patterns

Indian cities are some of the densest urban agglomerations in the world. On average, nearly 40% of the trips are less than 5 kilometers. With such short trips on an average, EVs don’t need to have large batteries, which are expensive and carry surplus weight that reduces vehicle efficiency and increases the operational costs for drivers. Instead, with smaller batteries and shorter trips, public and private actors could focus on creating a dense network of charging and swapping stations, building a reliable EV ecosystem. A bottom-up understanding of mobility patterns can help in choosing vehicle and battery technologies that meet people’s needs on the ground in a resource-efficient manner with the same or better convenience offered by conventional vehicles.

2. Establish New Finance Models

High capital costs of vehicle and charging infrastructure have contributed to slow uptake of electric vehicles in India. And with few EVs and infrastructure in place, the country lacks performance benchmarks to help investors understand the risks and opportunities from use cases and hedge against potential failures of new technology – if a vehicle’s battery doesn’t deliver its promised mileage, for example, or if the life cycle of an electric bus ends sooner than anticipated. In addition, advancements in technologies, like for batteries, could render existing assets less valuable compared to new ones, putting long-term investments at risk. Limiting these financial risks will take a joint effort by both the public and private finance sectors to create new models of financing EVs, including models that diversify the ownership of vehicle batteries such as through battery leasing, which separates the battery and vehicle costs. Other options include increasing loan tenure and reducing interest rates for EVs, as one public bank in India recently did.

3. Treat Used Batteries as Valuable Assets

There are two reasons why stakeholders in India should pay special attention to batteries. For one, batteries retired from EVs can be used as stationery storage devices to store renewable energy, such as solar. Renewables currently account for roughly 34% of India’s energy mix. Creating easy and affordable ways to use batteries in their secondary life could help grow the share of renewables by increasing storage capacity and mitigating the intermittent nature of some renewables. Another important role of retired batteries is as a source for mining raw materials for locally manufacturing new batteries for EVs. India doesn’t have the lithium and cobalt reserves to make lithium ion batteries. Battery recycling is one possibility that could create an additional stream of raw materials to create new batteries locally aside from international procurement. While concern about domestic supply of raw materials is understandable, it shouldn’t be treated as a roadblock to EVs. Instead, new solutions should be derived rapidly.

4. Balance Subsidies with Consumer Incentives

Subsidies, whether for consumers or industry, can help meet an initial share of electrification targets. India needs to strike a balance between subsidies and consumer incentives that puts EV users at an advantage. These could include both fiscal and non-fiscal strategies that incentivize use of EVs, such as exemptions from road and registration taxes, accessible battery charging networks, designated EV parking spots, priority lanes for electric vehicles, and low-emission zones, which EVs can access more easily than internal combustion engine vehicles. Countries like China that are leading in vehicle electrification have shown that using such incentives, together with other industry mandates to produce zero-emission vehicles and ambitious fuel economy standards, makes drivers of conventional vehicles feel more confident about transitioning to electric and helps create a competitive consumer market.

5. Learn from Vehicle Owners and Drivers

Handing someone an electric vehicle and a key isn’t enough. When buying conventional vehicles, drivers have a well-established network of expertise to help them manage their vehicles, from refueling to repairing. But purchasing an electric vehicle doesn’t yet come with this benefit. Bridging this gap will require infrastructure, but more importantly it will require manufacturers to gain a greater understanding of the spatial constraints and dominant behaviors of customers to design a supportive ecosystem. For example, they could identify the best spots for installing charging equipment in customers’ homes and set customers up with a digital app to locate charging points in the city as part of their vehicle purchase, as one EV start-up is doing. While these strategies will differ depending on the vehicle, understanding the main elements of consumer behaviors will contribute to making a seamless passage from conventional to electric vehicles.

6. Use Existing Infrastructure Judiciously

The advent of electric mobility requires new infrastructure. But the financial burden of the EV transition will be much lighter if existing vehicle infrastructure is adapted to support EVs instead of scrapped altogether. Existing fuel stations in prominent locations might be set up as charging points and battery swapping centers. This will reduce the expense of acquiring land in dense portions of cities, which is a significant challenge, as a pilot project in Nagpur recently found. Another option might be to convert conventional vehicles into electric, a possibility currently being explored with electric three-wheelers by a government-affiliated research body. When new infrastructure does need to be put in place for EVs, focusing on shared systems could help bring down costs. For instance, electric bus and taxi fleets could share their charging and swapping stations for a fee with EVs that share similar charging requirements for faster returns on their capital expenditure.

As a rapidly urbanizing India strives for more sustainable growth, electric mobility is a promising path. Connecting stakeholders with a diverse set of ideas, like we strive for with Connect Karo every year, is a critical step. Now, it’s time to use these ideas to take meaningful action.

Neha Yadav is a Research Consultant focusing on Electric Mobility at WRI India.