When Carmelita Fernandes switched from a regular car to an electric Tata Nexon in December 2021, she was excited about the shift to a cleaner, more advanced vehicle. India’s EV market was booming, and Tata’s electric SUV had garnered significant attention as a top-rated car. However, just over two years later, her enthusiasm has turned to regret.

Fernandes, who lives in Pune, recounts a difficult journey in which the battery of her new EV died halfway on a trip from Pune to Mumbai, leaving her stranded. “I’ll never ever buy an electric vehicle again,” she lamented, pointing to frequent issues with battery depletion, especially on long journeys. Her story highlights a broader issue plaguing the electric vehicle (EV) industry in India: the lack of sufficient charging infrastructure.

This raises an important question that could shape the future of India’s EV industry—what should come first, electric vehicles or charging stations? The answer to this question has broad implications for the future of India’s EV market and the nation’s ambitious goal of having 30% of all newly registered private cars be electric by 2030.

A Chicken-or-Egg Problem: EVs or Charging Stations?

India’s EV market is at a crossroads. The country has the potential to become a global leader in EV adoption, but a significant obstacle remains: range anxiety. This is the fear that an EV will run out of battery before reaching a charging station. Fernandes’ experiences are a prime example of this issue. “If I can’t drive for four to five hours from Mumbai to Pune, I don’t think I can use the EV anywhere,” she said, highlighting how limited infrastructure makes even short intercity trips a challenge.

The core of the problem is what Brajesh Chhibber, a partner at McKinsey India, describes as a “chicken-or-egg” dilemma: “Charging infrastructure in India’s electric vehicle market is still not fully developed, but companies want more vehicles on the road before they invest more. On the other hand, potential electric vehicle buyers first want more chargers on the road.”

This creates a standstill in the market. Manufacturers and charging station providers hesitate to invest in infrastructure, fearing underutilization. Meanwhile, consumers are reluctant to purchase EVs without assurances of a robust and reliable charging network.

India’s Charging Infrastructure: Lagging Behind Demand

India’s road network is the second-largest in the world, spanning over 6.3 million kilometers. However, the country’s charging infrastructure is far from ready to support a mass transition to electric vehicles. As of February 2023, India had around 12,100 public EV chargers, significantly below the 1.32 million chargers needed to meet the 2030 target.

Mihir Sampat, a partner at Bain & Company in Mumbai, explains the challenge from the perspective of charging station operators. “The economics of running a charging point station are fundamentally driven by how much your chargers are utilized. You ideally want chargers to be utilized at least 15-20% of the time. And for that, chargers need to be in an area with a dense EV population.”

In India, there are roughly 200 EVs for every commercial charging point, compared to around 20 in the United States and less than 10 in China. This wide disparity is a major deterrent to new investments in charging infrastructure. For charging providers, the risk of building stations that go underutilized is too high, especially when the majority of the Indian population has yet to adopt EVs.

Range Anxiety and the Struggle for Reliable Charging

Fernandes’ story underscores the frustration many Indian EV owners feel. She recounts stopping at the Khalapur Toll Plaza on the Mumbai-Pune Expressway to charge her EV, only to face long waits or unavailable chargers. “It would sometimes ask me to wait for more than two hours to charge my car,” she explained. “I end up using more power and wasting my battery by looking for a charger.”

This issue is not unique to long-distance travel. Even in urban areas, EV drivers struggle with limited charging options at places like shopping malls and office buildings. The Indian government has made strides in adding chargers along highways, but for EVs to become a viable option, a comprehensive urban charging network is essential.

McKinsey’s Chhibber emphasizes that the focus needs to shift to ensuring charging availability in daily-use areas. “Infrastructure for intercity usage near shopping malls and office buildings needs to be ramped up too.”

High Costs and Limited Choices: Additional Hurdles for EV Adoption

Charging infrastructure isn’t the only challenge the EV industry in India faces. High costs and limited model variety are two other significant barriers preventing the mass adoption of electric cars. While Tata Motors dominates the market with a 72% share, followed by MG Motors with 10.8%, the overall number of available EV models remains low.

For example, Maruti Suzuki, India’s largest carmaker, is only expected to release its first EV model next year. In contrast, Tata currently offers just five EV models, and MG Motors offers only two. This lack of variety has led many consumers to delay their switch to EVs.

“Customers are pushing back on making the switch to EVs and are waiting for new products and a wider portfolio to come,” Chhibber notes.

Moreover, EVs in India remain more expensive than their internal combustion engine (ICE) counterparts. A Tata Punch, one of the company’s most popular ICE models, starts at 612,900 Indian rupees ($7,300), while the electric version starts at 1.1 million Indian rupees ($13,100). This price gap remains a deterrent, particularly in a price-sensitive market like India.

Sampat from Bain & Company points out that for EVs to become more affordable, the cost of batteries—one of the most expensive components—must come down. Only then will companies be able to produce EVs at prices comparable to ICE vehicles.

Implications for the Wider EV Industry

The question of whether electric vehicles or charging stations should come first has broad implications for India’s EV industry. For the country to meet its goal of 30% EV adoption by 2030, significant investments in charging infrastructure are essential. However, without a critical mass of EVs on the road, these investments may not pay off in the short term.

For manufacturers and charging providers, this creates a conundrum. Building infrastructure before consumer demand reaches critical levels could lead to financial losses, while waiting too long risks missing out on a rapidly growing market. The solution may lie in a balanced approach, with government support playing a key role in incentivizing both EV purchases and infrastructure development.

India’s EV journey is still in its early stages, and while challenges remain, the potential for growth is enormous. However, for the industry to thrive, key issues—such as the chicken-or-egg dilemma of EVs vs. charging stations—must be addressed to unlock the full potential of electric mobility in the world’s most populous nation.

(Adapted from CNBC.com)

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