Decoding EV adoption: Early-stage startups on subsidies, range anxiety, charging infra, funding

An increasing number of Indians are now switching to electric vehicles (EVs), with more than a million EVs already sold in India this year. One of the biggest drivers of this change in India is early-stage startups that are innovating to bring down the barriers to EV adoption.

In a panel discussion on ‘Watt next: Startups creating the future of mobility’ at YourStory’s flagship startup-tech summit, TechSparks 2023, three main hindrances to EV adoption emerged—high cost, unavailability of charging infrastructure, and range anxiety.

Akshay Shekhar, Co-founder and CEO of Kazam, said the focus should be two-pronged—ramp up public charging infrastructure and tap into the potential of captive charging infrastructure, i.e., infrastructure for the internal use of a company’s EV fleet.

“But what has actually happened is it’s a chicken and egg story. So, the vehicles are caught up on the ground, but infrastructure on charging has slowed down. It's now charging infrastructure that needs to catch up,” he said.

Anxiety among consumers that their vehicles will run out of charge before reaching their destination is another deterrent to mass EV adoption. While some of the range anxiety can be addressed with better public infrastructure, charging an EV can take time. This is where hybrid vehicles come into the picture with startups like Green Tiger Mobility, which retrofits existing two-wheeler vehicles with an EV kit, enabling a hybrid future.

“We all want that one day when I want to travel to Mysuru or Coimbatore or Puducherry, my vehicle should run. So, essentially, everybody is scared of that one day in a month that they want to travel. And no matter what range you give in battery, that fear will not go away,” noted Ashish Dokania, Founder and CEO of Green Tiger Mobility.

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While there’s a lot of talk about innovation in battery science when it comes to making EVs affordable, optimising charging infrastructure demand is often ignored. Kazam works on the problem with its IoT-based smart charging solutions that optimises EV charging network and reduce the input cost for charging with its software stack.

“Instead of getting your commercial meters or even RF meters at Rs 7-8, you could even reduce it further to Rs 3 as an input cost. And that will reduce significantly the cost of ownership of, you know, driving electric vehicle today,” Shekhar explained.

Such solutions are being adopted by IT companies or third-party logistics, which are seeing an improvement in the total cost of ownership with EVs as their capex reduces as opposed to fuelling vehicles on a day-to-day basis.

“It also paves the way or rather gives the confidence to the end consumer like us, when we see a Swiggy delivery boy on an electric vehicle who is doing his job very comfortably on a daily basis, probably I can also switch to an EV,” noted Raghav Rohila, Co-founder and CPO of ElectricPe—an aggregator of charging infrastructure.

In June this year, the central government reduced FAME subsidies on electric two-wheelers (e2Ws) from 40% of a vehicle’s value to 15% and capped the subsidy to Rs 10,000 per kWh. This resulted in a 56% fall in the sale of e2Ws during the month compared to May.

Dokania also noted that while government subsidies help, there’s a larger market of unregistered e2Ws and e3Ws that has bloomed overcoming all these challenges.

“The challenge is that the OEM players are not able to adapt themselves to the changing policies of the government. So, once you are consistent and just focus on implementation—with subsidy or without subsidy, doesn't matter,” he argued.

“I believe in the next FAME subsidy, it would be really great if the focus or a significant portion is also towards the supply side, which is the charging infrastructure because that's where a lot of goodness is still remaining,” Rohila added.

Meanwhile, private capital is steadily flowing into India’s EV ecosystem, with startups bagging deals worth $1.2 billion between January-August 2023, according to Tracxn. However, because the sector is capex-intensive, many hardware companies are even unable to raise funds in the early stages.

“We haven't seen a large kind of hardware startups getting the VC funding. Hardware startups, as Akshay rightly stated, is largely in between angels and private equity—the mid arena, the whole array, is completely missing. And if India has to be a manufacturing hub, as it is poised by various regulators, ministries, and that's large ambition in various forum, then we need to have someone to plug that gap,” Dokania noted.

The EV industry is a sunrise sector with an immense potential for job creation. Whether it’s the manpower required for managing public charging infrastructure or software development, EV companies are hiring.

“From a company's point of view, I think while the techies more or less remain the same, the kind of problems are quite new-age to understand a consumer from a different kind of fear and anxiety that they go through, while let's say charging their electric vehicle, and therefore what kind of experience we want to build as a company altogether entails a different kind of mindset,” Rohila noted.