Before we begin to discuss the challenges, let us introduce ourselves to the various stakeholders in this ecosystem

EV Value Chain stakeholders

1. Cell Manufacturer
   • Production of cells from raw materials & other inputs (labour, technology)
2. Battery Assembler
   • Assembly of cells into integrated battery packs with BMS
3. OEM
   • Assembly & manufacture entire vehicles including HW & SW components
4. Dealer
   • Carry out sales of vehicles to buyers
5. Charging Point operator
   • Usually individual stakeholders like station owner, kirana stores, etc
6. Charging Network Operator
   • CPO aggregators & managers
7. Financier
   • Financing for the end customer
8. Vehicle owner
   • Final buyer - individual owner, fleet operator, logistics company, etc.

Challenges - circa 2022

Now let us take a look at the challenges we faced circa 2022. We will then discuss how far we have come from the scenario then to present day (2025)

Lack of good vehicles available

• Given the software aspect coupled with India specific problems, a lot of R&D is required to build a good vehicle suited for the country
• Cost of an EV is much higher compared to ICE offerings
• Customers were also just getting familiar with EVs & most buyers were still first adopters
• As volumes were low not many models were available
• Most major OEMs did not offer EV powertrain models, or just 1 EV model across its entire range in India
• Due to lack of choice, many customers shied away

Lack of component manufacturers

• Most components (outside of battery pack) have a dependency on China. This makes it harder for OEMs to claim available subsidy.
• As domestic demand was low, local production didn't have the necessary volumes & access to advanced technologies

Lack of Charging Infrastructure

• Range Anxiety - more of a fear of not finding chargers vs running out of charge >>Lower sales >>Less attractive for Infrastructure
• Bulk of India's charging is setup as slow charging
• Currently, most charging is happening at homes or offices using private chargers
• Mom & Pop CPOs are emerging, but they lack very large aggregator platform for demand generation
• Some use cases are being solved with swapping, mostly1 in 2W & 3W segment
• FAME II has reinitiated focus on fast charging Infra

Lack of Financial Options

• Not enough vehicles sold to create data on secondary market for underwriters to understand & quantify risk
• Earlier experience with EVs propagated a feeling that EVs had poor longevity, which made underwriting unattractive and non viable for financial institutions
• Major financial institutions are yet to offer attractive finance plans
• A bulk of the financing is done by NBFCs and other smaller finance players

Lack of Recycling Ecosystem

• Insufficient collection infrastructure, linked to ‘extraction’ centers can hinder the effective collection and recycling of used batteries.
• The existence of several types of Li-ion batteries, each with its own distinct design, makes it difficult to establish recycling centers that could cope with the full range of Li-ion batteries.
• Li-ion batteries intended for EVs are typically quite large, with increasingly voluminous battery packs, making disassembly more complex and potentially riskier.
• Except for cobalt and nickel, most of the other constituent materials are more costly to salvage than simply to mine directly.
• Supply of lithium-ion batteries from mobiles and laptops is not enough to setup a large recycling facility.
• Accurate identification and sorting of various battery chemistries and types can be challenging, requiring advanced technologies and expertise.
• EVs have been in the market for the last 4-6 yrs only, most of the batteries have not yet reached their recycling stage yet.

Current Scenario

Let us take a look at the current scenario (2025)

Vehicles available

• With rising consumer interest, more models are being launched across the categories & companies
• Today one has multiple choices at each category & price point
• EVs are are also nearing cost parity with ICE when compared to 2022
• More Indian startups and companies are carrying out R&D & development of new EVs
• Legacy multinational OEMs are also investing in local R&D

Component manufacturers

• Most components are now locally manufactured
• We have moved from simple pack manufacturing to R&D & manufacturing of sophisticated battery packs & BMS systems locally
• Save for a few categories like motors, controllers & mass manufactures BMS systems, we have overcome our dependence on foreign imports and hence sped up the supply chain logistics and cost economics

Charging Infrastructure

• Increasing market penetration of EVs has also led to the development of better Charging Infra
• Power utilities are now offering dedicated EV charging meters for residential consumers with attractive charging rates and unlimited
• OEMs, power utilities and new startups are consolidating and tying up to offer larger networks of chargers though no one charging aggregator or charging station company offers a truly pan-India network even today

Energy Consumption in India

• Current : 1282 TWh
• Total Money Spent : $102 Bn

Energy to be consumed for EV charging

• 2023 - 2961 GWh
• 2030 - 53.3 TWh

EV Charging Cost

• 2023 - $235 Mn
• 2030 - $6.2 Bn

Financial Options

• IDFC First now offers interests as low as 5.99% on the purchase of Ather scooters
• With higher quality of vehicles and better components, underwriting of the vehicle is easier
• Availability of on-ground operating data (powered by data connectivity and higher penetration) allows more accurate underwriting.
• Rise of large banks such as HDFC, ICICI, Kotak already offer competitive interest rates
• Access to financing is largely solved and we see a uptick is EV purchase with this as an anchor

Recycling Ecosystem

• We now have more companies in this space with a few having started production facilities for the same
• They have built partnerships with OEMs to recycle and supply them with Raw materials
• There is still a lot of potential for growth as most 1st generation vehicles' batteries are yet to reach end-of-life

Charging

Types of Chargers

Need for Capacity Augmentation

• Space -Most vehicles park on roads >> friction to install a charging point
• Charging points require a significant amount of land area >> mixed usage of land >> repurposing of existing parking land is required
• Regulation - Unbundling of power distribution is yet to happen
• The electricity distribution system in India is not ideal to support a fast adoption of EVs
• Capacity -in densely populated cities, with moderate adoption of EVs in 5 years, there will be a 20% increased load on the distribution network and it can go back up to 50%
• Utility processes are not agile enough >> Ability to serve on-demand capacity for fast charging points (sat 25kW x 10,000 points) does not exist

Emerging trends

McKinsey's Report on state of EV market in 2030

Click on the link or Scan QR Code to read the McKinsey report

https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/the-future-of-mobility-in-indias-passenger-vehicle-market