Startups eye EV play, invest in charging solutions

With the unprecedented growth in the number of battery-run vehicles, the fledgling EV infrastructure sector, which was non-existent until a few years ago, is attracting investments not just from top-rung companies and PSUs but also from cash-strapped startups. At least 15 EV startups, with varying technologies and business models, are working on charging solutions for EV segments. There are currently 2 million electric vehicles on the road.

As per a study by TechSci Research, India will require around 63,000 charging stations and cumulative investments of Rs 26,900 crore to set up charging stations over the next five years and cater to the growing demand for power for EVs.

There are currently 8,735 operational electric vehicle charging stations in the country (as per the Bureau of Energy Efficiency) and the central government aims to install around 46,500 public charging stations for electric vehicles in nine major cities by the end of 2030.

It may be recalled that the central government has allocated Rs 1,300 crore to the FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) scheme with the aim of ramping up the EV charging network. Further, the government has proactively amended guidelines for development of the country’s charging infrastructure.

Startups jump on the bandwagon

Within the EV charging space, there are three key business models that have been adopted by various charging solution providers, which are both established and emerging players. While companies  such as Tata Power, Jio-BP, Bolt, Ather, Charge+Zone, Chargeup, Statiq, etc., operate as charging station providers, Okaya, ABB, Delta, Amara Raja, Ather, Exicom and others serve as charging equipment providers. Furthermore, companies such as ElectricPe, TelioEV, Numocity and EVCFinder are charging software management firms.

Among charging station providers, several new-age startups have gone for the “energy-as-a-service” model, wherein they create a charging network on the lines of petrol pumps and offer charging solutions to the electric vehicle drivers or owners.

For instance, BluSmart, which has invested Rs 85 crore to set up 4,300 EV Chargers (fast and slow) across 25  hubs, is planning to spend another Rs. 800 crore  to establish 43,000 chargers across 250 hubs over the next four years. The Gurgaon-based startup  clarified  that the entire amount will be spent by its EV charging subsidiary BluSmart Charge.

“While we have no immediate plans to hive this business off into a separate unit, we will continue to make investments in order to build the supporting ecosystem for EVs. In the coming years, our charging superhubs will be open for non-captive usage, Anmol Singh Jaggi, Founder BluSmart Mobility told Moneycontrol in an exclusive interaction.

Another company, Gurgaon-based Statiq, which provides EV charging stations, has installed 7,000 chargers and has an outlay of Rs 100 crore to set up 30,000 units in the next couple of years. The company has so far raised a total funding of $27.5 million over 2 rounds.

Charge+Zone, a fully integrated IOT-driven, unmanned and app driven EV-charging company, has built 1,600+ charging stations across 400 locations. Having already raised $54 million through debt and equity from Blue Orchard and other family offices, it is now looking to raise$125 million to set up 5,000 high-speed charging stations over the next three to five years.

"The way to make money is pretty simple — electricity, for example, is available at Rs 8 or Rs 9 from the grid. And then you sell it at Rs 15 or Rs 18 or Rs 20 per unit to the end customer. So, the arbitrage is the gross margin. And depending upon the utilisation, you are then profitable,” said Kartikey Hariyani — Founder of Charge Zone.

Likewise, Exponent Energy, a start-up focused on developing fast-charging technology for EVs, is looking at deploying 700 charging stations in the top five cities across 700+ locations in the next 12 months. The Bengaluru-based startup has raised $18 million (Rs 144 crore) till date in its series A and pre-series A rounds. The funds will be utilised to scale up the e-pump network to 100 location points in each city Exponent expands into, starting with Bengaluru and eventually making its way to New Delhi and other Indian cities.

Business outlook 

According to an independent study by CEEW Centre for Energy Finance (CEEW-CEF), the EV market in India will be a $206 billion opportunity by 2030 if India maintains steady progress to meet its ambitious 2030 target. This would require a cumulative investment of over $180 billion in vehicle production and charging infrastructure. Within the charging infrastructure domain, the industry will see cumulative investments of $ 2.9 billion until 2030 for a total of 2.9 million public chargers; 71% of these can be expected to be slow chargers, as per the same study.

As per an ICRA report prepared last year, India is likely to see around 48,000 additional electric vehicle chargers at an investment of around Rs 14,000 crore over the next 3-4 years amid expectations of healthy EV penetration across the country. Approximately, 3000 crore has been spent to set up 9,000 chargers so far, as per ICRA.

Challenges persist

Despite multiple industry stakeholders beefing up EV infrastructure to support battery run vehicles, industry observers reckon that there are some burning issues that continue to plague them. For instance, fluctuating electric supply, the high cost of charging equipment, regulations on setting up charging stations in residential areas, and the lack of standardisation of chargers are some of the challenges that have to be overcome, as per KPMG.

As per the ICRA report, the EV charging infrastructure business is capital intensive and the initial upfront cost, excluding land, is approximately Rs 29 lakh without subsidy. It also claims that the operating costs are over Rs 10 lakh per year, thereby making asset utilisation critical.

“In future, charging infrastructure will face more difficulty when EV adoption is more than 50% (of the total vehicles sold) as India needs to work on smart grid infrastructure development parallelly with EV development. Otherwise, it will hinder growth in future, said Rohan Rao, Partner, Automotive and Lead Electric Mobility, KPMG in India.

On similar lines, Soumen Mandal, Senior Research Analyst, IoT, Automotive & Devices Ecosystem, claims that the economic viability of charging infrastructure will also be another challenge.

“With increased EV adoption, utilisation is expected to improve. Additionally, low/ no rental land acquisitions and unmanned setups (as seen in developed nations) can result in lower OpEx, which would lead to a faster break-even and better economic viability,” said Mandal.