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Case Understanding

BCS Solution Summary

Solution

Americans purchased almost 18,000 plug-in electric vehicles (PEVs) in 2011, a strong first year for these transformative vehicles. Recently, private industry and government have invested valuable resources in developing, promoting, and deploying PEVs. These vehicles offer an uncommon opportunity to address energy security, air quality, climate change, and economic growth. However, market growth is uncertain due to policy, economic, and technical challenges, and other advanced vehicle technology may prove more popular with consumers over time. There are steps that can be taken now, however, to meet some of these challenges and ease adoption of PEVs nationwide. In An Action Plan to Integrate Plug-in Electric Vehicles with the U.S. Electrical Grid, the PEV Dialogue Group lays out some of these critical steps needed to enable a robust national PEV market.

With PEVs’ important opportunities and challenges in mind, the Center for Climate and Energy Solutions (C2ES) convened the PEV Dialogue Group—a unique, diverse set of stakeholders composed of leaders from the public and private sectors along with non-governmental organizations. The Group developed an Action Plan to fill gaps in the existing work on PEVs using a consensus process that aimed to optimize public and private investments and avoided favoring certain PEV technology.

The Group began by identifying key challenges and objectives that existing PEV efforts have not addressed adequately, such as integrating PEVs with the electrical grid. The Group did not focus on reducing vehicle upfront cost directly, since federal and state tax credits are already in place. The Group then held a series of face-to-face meetings to hash out the details of the Action Plan over the course of one year. The plan represents a unique and valuable contribution to the national conversation on PEVs by identifying practical steps that policymakers, regulators, local and state officials, private market participants, and others should consider as PEVs become more broadly available in the coming years.The Group believes PEVs could be an important part of the vehicle market in the United States and worldwide if they are given a fair chance to compete with conventional vehicles. The Group identified a series of market-based actions for all stakeholders that foster innovation, minimize public cost, educate consumers, and maintain electrical grid reliability.

The plan recommends specific actions in four categories summarized below:

1. Create a Consistent Regulatory Framework Nationwide: Regulations by state public utility commissions that are compatible across the country can help foster innovation and increase the PEV value proposition while also maintaining the reliability of the electrical grid.
2. Optimize Public and Private Investments in Charging Infrastructure:  There are opportunities to accelerate private investment, encouraging innovative business models while also acknowledging that PEVs warrant some public investment in charging infrastructure.
3. Facilitate PEV Rollout: Connecting stakeholders to provide a satisfactory PEV and electric vehicle supply equipment (EVSE) purchase and home EVSE installation is a necessary step to seal the deal once a consumer commits to purchasing a PEV.
4. Educate Consumers: Explaining the PEV value proposition and bridging the consumer information gap about PEV technology can be accomplished through a combination of cutting-edge online resources and traditional touch-and-feel experiences.

The Action Plan represents Phase I of a larger initiative to pave the way for PEV adoption nationwide by helping level the playing field. Phase II aims to work with stakeholders “on the ground” to go about implementing the Action Plan with leaders across the country.

The table below provides an overview of the Action Plan, which is fleshed out in great detail in the body of the report. Next to each action component are a number of individual actions or the principles for the individual actions. Many activities for these actions can occur concurrently. Businesses, electric utilities, government, and non-governmental organizations (NGOs) will all play a role in each action component.

Create a Consistent Regulatory Framework Nationwide

• Residential & Commercial EVSE Installation: Stakeholders should jointly create a competitive and innovative market for residential and commercial PEV charging services. Decisions by Public Utility Commissions (PUCs), local government, and PEV service providers regarding household EVSE installation should streamline the installation process. Regulations should reflect the local characteristics of markets, potential PEV users, PEV service providers, and electric utilities.
• Residential & Commercial Electricity Rate Structure: Stakeholders should work together to determine electricity rate structures that maintain the reliability of the electrical grid and reward households for charging PEVs at off-peak hours. Rate structures should offer households choices, including options that better reflect the cost of electricity generation.
• Transportation Infrastructure Finance: Stakeholders should work together to determine how PEV owners can pay their fair share of transportation infrastructure maintenance. Permanent or temporary methods should be implemented in a way that does not affect PEV market growth before PEVs have a noticeable impact on tax revenue for a state.
• Vehicle Charging Standards: Voluntary standards bodies should work together, with the assistance of stakeholders, to develop vehicle charging standards and best practices related to the vehicle charging connector, PEV interconnection and communication with the electrical grid, and EVSE installation.
• Protecting Consumer Privacy: Stakeholders should ensure that individual identity is impossible to glean from data collected from EVSE and vehicles released to NGOs, government, and other researchers while also maintaining the usefulness of these data for researchers.

Optimize Public and Private Investments in Charging Infrastructure

• Assess PEV Feasibility: Stakeholders should cooperatively develop a method to assess the suitability of deploying PEVs in a geographic area and share this information with area governments.
• Estimate Charging Equipment and Infrastructure Needs: Stakeholders should collaborate to estimate charging equipment and infrastructure needs in a geographic area based on the expected PEVs in an area, travel patterns, and area geography.
• Estimate the Extent of Public Investment in EVSE: Stakeholders should work together to estimate the amount of public investment in an area that is appropriate to overcome existing market deficiencies.

Facilitate PEV Rollout

• Expedite EVSE Home Installation: Stakeholders should design an expedited EVSE home installation process. A locality can speed up permitting and inspection processes to reduce overall installation time. Localities can also promote training, best practices as identified by early-action cities, and guidelines for electrical contractors. PUCs and electric utilities should provide assistance when creating this process to ensure regulatory compliance. Steps should also be taken to encourage utility notification about EVSE installation.
• Remove Market Barriers for EVSE Service Providers: Stakeholders should cooperatively remove local and state market barriers for PEV service providers. Legal and regulatory hurdles that prevent a PEV service provider from competing in an area could exist. PEV service providers should identify local and state barriers that prevent them from introducing their product in a market. They should work together with automakers, PUCs, and local and state government to clear those barriers and facilitate new market introduction. Local and state government should encourage the training of inspectors and electrical contractors on all aspects of EVSE installation. Face-to-face meetings between PEV service provider representatives and government officials can begin this process.

Educate Consumers

• Create Tools to Help Consumers Understand PEV Value Proposition: The value proposition PEVs provide includes tangible operational cost savings such as lower fuel and maintenance costs throughout the vehicle’s lifetime. In the short term, however, consumers may find non-financial benefits more valuable, like the driving experience or the statement driving a PEV conveys. Since consumers attain most of their information about vehicles online, stakeholders should cooperate on unbiased web tools that accurately communicate the PEV value proposition.
• Close the PEV Technology Information Gap: The focus of an effort to close the technology information gap should be to increase PEV publicity, develop web tools on PEV technology, and improve stakeholder outreach. Stakeholders should develop engaging and sophisticated web tools to educate consumers about the difference between PEVs, other alternative vehicles, and conventional vehicles. While consumers obtain most of their information about vehicles online, there is no replacing test drives and other valuable hands-on experiences.

Consumers will ultimately decide whether PEVs will succeed or not in the vehicle marketplace. The inaugural year indicates there is strong consumer interest, but the number of early adopters and the ability of PEVs to reach the mainstream consumer are still uncertain. The benefits PEVs provide warrant action by relevant stakeholders to level the playing field in order to provide a fair chance for these vehicles to compete with conventional vehicles. Implementing the steps laid out in the PEV Dialogue Group’s Action Plan will enable a more viable transition to a nationwide PEV market.

Any individual/entity setting up a PCS will need to have the following minimum infrastructure as described in the notification:

Each charging station is required to have a minimum of three fast chargers: a CCS, a CHAdeMo and a Type-2 AC. While the former two will be required to operate on 50kW/ 200-1000V, the Type-2 would be 22kW/ 380-480V. Additionally, the charging station will also have two slow charge points - a Bharat DC-001 (15 kW/ 72-200V) and a Bharat AC-001 (10 kW/ 230V).

​A typical 50 kWh DCFC costs over Rs 1.5 million. Since present models of EVs sold in India cannot be charged above 1C rate and batteries are 11kWh to 25kWh capacity, investment in DCFC of over 25 kWh would yield unappealing returns, unless manufacturers roll out electric cars with batteries capable of fast charging with DC output in the range of 400-500V or higher. This will eventually increase the capacity utilization at PCS and enhance revenues for charging infrastructure providers, making investment in a public charging station an attractive option.

Charging Standards Application:
The IS:17017-1 published by BIS in August 2018 recommends both CCS-2 and CHAdeMO. In 2017, a committee constituted by Department of Heavy Industries (DHI) issued Bharat charger specifications for AC and DC chargers: Bharat EV Charger AC001 & DC001. These are slow chargers with DC output below 120 Volts. BIS has agreed to retain these standards which are supporting the EVs presently operating in India. These are expected to wither away as new EVs are rolled out with batteries capable of fast charging with DC output in the range of 400-500V or higher.

​All standards will co-exist in India: CCS-2, CHAdeMO and the Bharat chargers. Tesla cars, according to recent reports will use CCS standard when launched in India.

The status can be summarized as:

• Two wheelers come with small size batteries which in many cases can be pulled out and taken to homes/offices/shops and charged from normal wall sockets; or can be connected to any PCS.
• Three wheelers are ideal candidates for battery swapping. In this scenario, batteries may be charged in a large industrial scale facility and charged batteries are trucked to points of 3-wheeler concentration where a 3-wheeler driver can swap the used battery with a fully charged one. Alternatively, technology proprietors may install swap stations at a PCS. 3-wheelers could also be charged at any PCS.
• Buses with battery sizes >100kWh would be sold with proprietary charging standards recommended by the battery manufacturer. These batteries will cost several million rupees and it is not advisable to charge from any PCS. Bus operators will install the charging devices supplied (or recommended) by the bus manufacturer at bus depots and bus depots as required.
• Present models of electric cars come with various sizes of batteries - 11kWh (Mahindra e20) to 40kWh (Nissan Leaf) to >90kWh (Tesla Model S). These EVs require DCFCs for fast charging. The whole issue of inter-operability of EVSE for different EV models is essentially limited to cars.

​In India so far only Mahindra Electric and Tata Motors have launched electric cars. The present batteries in these cars are not suitable for charging above 1C rate. The off take of electric cars may be slow as individual buyers might watch the space and move with caution as in other geographies. The initial push for electric cars is expected from taxi fleet operators, Government departments, public sector undertakings and large corporates.

Couple of Mahindra e2o Plus electric cars charging at Mumbai DC fast charger - DC-001

Cost Estimates for a Typical Public Charging Station (PCS):
The Capex and Opex of a PCS comprising of minimum infrastructure required as per the GoI notification are estimated below:

*The cost of swap station is considered to be borne by the swap station technology proprietor. PCS provides space for a swap station in return of margin on sale of electricity.
**Land lease rental is assumed to be low as per Delhi EV policy guidelines on providing land at bare minimum lease rentals to charging infrastructure providers.

Revenue Projections from a Typical Public Charging Station (PCS)
Revenue projection from the PCS business is calculated in the next table based on the following assumptions:

1. 20 hours of charging operations for 30 days/month
2. Capacity Utilization Factor (CUF) of PCS setup considered at 15% for Year-1, 25% for Year-2, 40% for Year-3, 65% for Year-4 and 85% for Year-5 (optimistic scenario)
3. Electricity tariff to the DISCOM is considered as pass through to consumer
4. A margin of Rs 2.5 on electricity tariff is considered in Scenario-A
5. A margin of Rs 3 in first & second year, Rs 2.5 in third & fourth year and Rs 2 from fifth year on wards is considered in Scenario-B
6. EVSE Management Software fee considered @10% of net margin on electricity tariff

As may be observed from Table 1 and 2, for an initial investment of Rs 2.95 million to setup a PCS, the net cumulative return in 5 years is Rs 1.77 million under Scenario-A and Rs 1.53 million under Scenario-B. In both the cases there is little or no incentive for third parties to setup and operate PCS. Levying a margin more than 3 rupees will make the EV tariff at par with commercial electricity tariff.
In the present scenario, PCS business is not viable for individuals/entities to invest.

​The government may fail to encourage third parties to set up public charging stations to accelerate electric mobility adoption. However, in case of Delhi, as per Delhi Electric Vehicle Policy, GNCTD will provide a capital subsidy covering cost of chargers and installation expenses. Considering the cost estimates in Table-1, if 100% cost of chargers is subsidized, the IRR on setting up a public charging station in Delhi makes it an attractive investment choice.

Table 3 - NPV & IRR of non subsidized PCS vs 100% charger cost subsidized:

Since business volumes in the initial years will be very low, attracting private investments for PCS network creation can prove to be a challenge in the country; unless capex cost is partly or fully subsidized.
​Also, it will be difficult to build EV charging network in India as a standalone business. Innovative business models to incentivize the public charging infrastructure (PCI) providers and government will be required.

Financial target, Product Mix & Expansion Plan for Next 5 Years

Hybrid and plug-in electric vehicles can help improve fuel economy, lower fuel costs, and reduce emissions.

1. Energy Security- EVs commonly utilize less fuel than comparable ordinary vehicles, since they utilize electric-drive advances to support vehicle effectiveness through regenerative slowing down—recovering energy in any case lost during slowing down. They alluded to as battery electric vehicles, are both fit for being controlled exclusively by power, which is created in the United States from gaseous petrol, coal, thermal power, wind energy, hydropower, and sun based energy.
2. Costs -  EVs typically achieve better fuel economy and have lower fuel costs than similar conventional vehicles. EVs can reduce fuel costs dramatically because of the high efficiency of electric-drive components. Because PHEVs and EVs rely in whole or part on electric power, their fuel economy is measured differently than that of conventional vehicles. Miles per gallon of gasoline equivalent (MPGe) and kilowatt-hours (kWh) per 100 miles are common metrics. Depending on how they are driven, today's light-duty EVs (or PHEVs in electric mode) can exceed 130 MPGe and can drive 100 miles consuming only 25–40 kWh.
3. Infra Availability - EVs have the benefit of flexible charging. Since the electric grid is in close proximity to most locations where people park, they can charge overnight at a residence, as well as at a multi-unit dwelling, workplace, or public charging station when available. They also have added flexibility because they can also refuel with gasoline or diesel (or possibly other fuels in the future) when necessary.
4. Emission – They have significant emissions benefits over conventional vehicles. EV emissions benefits vary by vehicle model and type of hybrid power system. EVs produce zero tailpipe emissions, or produce no tailpipe emissions when in all-electric mode.
5. Batteries - The advanced batteries in plug-in electric vehicles are designed for extended life but will wear out eventually. Several manufacturers of plug-in vehicles are offering 8-year/100,000-mile battery warranties.

COVID-19 has presented India with an unprecedented economic, humanitarian, and healthcare challenge. The lockdown measures have contained the spread of the Covid yet claimed a tremendous financial cost, with business analysts currently foreseeing that the nation's GDP will recoil between 1.5 percent and 5 percent during the 2021 monetary year.

On the business side, India’s automotive and mobility sectors are among the hardest hit. Following the example found in nations where COVID-19 spread prior, lockdown measures and different limitations have restricted travel and left numerous shoppers incapable or reluctant to buy vehicles. Adding to the pain, the coronavirus took hold just as automotive OEMs and mobility players were attempting to recover from a precipitous drop in annual sales in 2019.

When looking beyond the immediate challenges, however, the picture is not as bleak. Over the long term, as COVID-19 is controlled and India enters the next normal, we expect that automotive and mobility players will return to their former strength. Although many challenges lie ahead, the coronavirus could accelerate some beneficial trends. For instance, electrification will increase in select segments, such as two-wheel (2W) and three-wheel (3W) vehicles, and shared mobility could also increase because of the growth of various use cases, such as last-mile delivery, ride hailing, and rentals. As they prepare for the future, a solid understanding of the changed landscape can help OEMs and other stakeholders update their strategies for the Indian market.

Other developments that could help the small format e-mobility market include the following:

• Incentives from India’s central and state governments to encourage EVs: The Faster Adoption and Manufacturing of Hybrid and EV (FAME) program will provide consumers and domestic companies with various incentives. For instance, in phase two of FAME, the government announced an outlay of $1.4 billion through 2022.
• Lower battery pack prices: According to McKinsey’s battery cost model, the price of a battery pack in India could fall to $110 to $120 by 2030, making EVs much more affordable. A combination of scale, technology, and market maturity will drive this decline.
• Increased consumer readiness: Across use cases, more shoppers should choose EVs over ICE vehicles. As per McKinsey's 2019 Autonomous, Connectivity, Electrification, and Smart portability (ACES) study, one significant barrier is the apparent security of EVs. This was the top worry after TCO and the accessibility of charging framework. As more EVs hit the road, and as purchasers become more acquainted with them, their solace level might increment.

Open-architecture platforms that are both modular and scalable will allow OEMs to offer differentiated products at competitive prices for B2B and retail while enabling significant capital-expenditure synergies. While the platforms’ open architecture will make them suitable for many different vehicles, OEMs can still offer customized features for small-format EVs by building in-house capabilities in various areas, such as battery-management systems and power-train integration

 Our 5-year plan will be to:

• Creating disruptive front-end sales channels
• Developing innovative business models
• Reimagining the partnership landscape

Charging facilities

In a bid to help ramp up the charging infrastructure in the country and to help ease customers’ range anxiety, we will try to equip ourselves with a 50kW DC fast charger. Our customers will be able to avail complementary charging also. An app will also be provided.

Waiting period

Talking about the waiting period for the cars, Dhillon said, “We already have a certain number of cars brought into the country. So they will be available immediately if a customer wants to buy. But if somebody wants to configure the cars, it takes about four to six months depending upon what kind of configuration and some integration because of the semiconductors.”

Source: McKinsey

The vision

We’ll aim to attain 50,000 production capacity in the next one year. We’ll also set up experience centres, partner with dealerships, make the scooters available online (Amazon & Flipkart) with college students and IT sector office goers as its target audience.

Our 2-wheeler will be followed by the launch of a low-scale scooter model for tier 2 and 3 cities with a less elaborate list of features. We can also explore the idea of introducing a mid-range electric bike and plans to indulge in long-range electric car sales eventually.

We’ve a very realistic vision of vehicle electrification and low-cost but low-speed rebadged Chinese electric scooters, instead of benefitting EV adoption, are in fact harming consumer perspective towards electric scooters as being low on quality and convenience. We feel simple Energy products will be a marriage between a good price and features.

Conclusion

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