India's Electric Vehicle Dream: Range Anxiety and Infrastructure Woes

India's Electric Vehicle Dream: Range Anxiety and Infrastructure WoesIn December 2021, Carmelita Fernandes, a resident of Pune, India, excitedly traded in her petrol car for an electric Tata Nexon. She believed the five-star safety-rated car would bring a new driving experience and make waves in the Indian market

India's Electric Vehicle Dream: Range Anxiety and Infrastructure Woes

In December 2021, Carmelita Fernandes, a resident of Pune, India, excitedly traded in her petrol car for an electric Tata Nexon. She believed the five-star safety-rated car would bring a new driving experience and make waves in the Indian market. However, two years later, Fernandes regrets her decision: "I wouldn't buy an electric car again."

Fernandes' regret stems from her range anxiety with the electric car. Within the first five months of ownership, she encountered battery issues. On a 180km journey from Pune to Mumbai, her battery ran out halfway. The electric SUV, priced at INR 14 lakhs (about $17,000), drained its battery far faster than expected. "It was supposed to have easily covered 40km on 40% charge, but it barely managed 5km," Fernandes says. "If I can't even drive from Mumbai to Pune, which is a four-five hour drive, without stopping, it's practically unusable anywhere else, forget about a 600km trip like Mumbai to Goa."

Fernandes' experience is not unique. Analysts point to "range anxiety" as one of the main obstacles hindering consumers from switching from petrol cars to electric vehicles in India. Despite India's ambitious target of 30% electric cars among newly registered passenger vehicles by 2030, data from consulting firm Bain & Company shows that only about 2.5% of the 4.2 million passenger vehicles sold in India last year were electric.

Indias electric vehicle market is lacking a mature charging infrastructure. Businesses want to see more vehicles on the road before making further investments in infrastructure. And potential EV buyers want to see more charging stations before they switch, explains Brajesh Chhibber, a partner at McKinsey India. "Its a chicken-and-egg problem," he says.

As of August 2023, Tata Motors commands 72% of the Indian EV market share, followed by MG Motor with 10.8%. Brands like Mahindra & Mahindra, Citroen, BYD, Hyundai, and Kia account for the remaining market share, according to Canalys.

The Infrastructure Bottleneck

Industry experts state that India needs to substantially ramp up its charging infrastructure to achieve its 2030 electric vehicle penetration goals. India currently boasts the second largest road network in the world, after the US, spanning 6.3 million km. However, as of February this year, the country has only about 12,100 public EV charging stations, a far cry from the 1.32 million required by 2030.

Mihir Sampat, a partner at Bain & Company in Mumbai, points out that charging station companies remain cautious about scaling up infrastructure, fearing that it might remain underutilized. "The economics of running a charging station depends heavily on utilization rates," he explains. "Ideally, a station needs to have a utilization rate of at least 15% to 20%, which can only be achieved in areas with a high density of electric vehicles." According to a Bain report released in December last year, in India, each commercial charging station serves about 200 EVs, compared to 20 in the US and fewer than 10 in China.

Fernandes recounts that she must pre-book her charging session at the Harapur toll plaza well in advance every time she travels from Mumbai to Pune, or she'll be unable to charge on time. "The waiting time can sometimes be over two hours," she says. "Ironically, I end up burning more battery searching for charging stations, exacerbating the battery drain."

McKinsey's Chhibber adds that while the Indian government has made progress in increasing the number of charging stations on highways, infrastructure near shopping malls and office buildings needs further improvement.

Other Hurdles

Limited charging infrastructure isn't the only challenge facing electric vehicles. High prices and restricted model options are major deterrents for consumers. Maruti Suzuki, India's largest automaker, plans to release its first EV model next year. Tata Motors currently offers only five electric car models, while MG Motor has only two on the Indian market.

Consumers are still waiting on the sidelines, waiting for more new products and a wider selection of models to come out, says Chhibber. Sampat, from Bain & Company, adds: "The Indian automotive market is price-sensitive, and businesses need to develop low-cost EVs that are competitive with petrol cars." He also points out that a reduction in battery costs will be key to bringing down EV prices.

For instance, the most popular petrol SUV, the Tata Punch, has a starting price of INR 612,900 (about $7,500), while the electric version starts at INR 11 lakhs (about $13,500).

In conclusion, despite the Indian government's ambitious goals, electric vehicles face various challenges in India. Inadequate charging infrastructure, range anxiety, high prices, and limited model choices are major obstacles hindering consumer adoption. To achieve widespread EV adoption, the Indian government needs to take more proactive measures to address these issues and truly propel the rapid growth of the EV sector.