In the previous article in the series, we discussed how battery and charging technology is evolving and increasing adoption of electric vehicles (EV) worldwide. However, there are other issues that remain to be addressed and the cost of an EV comes first to mind.
The cost of an EV remains significantly higher than a conventional car. Not only is the purchase cost higher, a large portion of that cost is sunk into the rechargeable batteries that power an EV. While recent developments in battery technology provide greater range and better charging cycles, EV batteries will eventually need to be replaced. With nearly 40% of the life-cycle ownership cost of a 4-wheeled EV (70% for 2-wheeled EV) being just the cost of the battery required to run the EV, the price for battery replacement is a significant impediment for mass adoption. Thus the value of battery replacement for an EV will far outweigh the costs involved in operating a conventional vehicle across similar life-cycles. Currently, with the higher cost factors at play, EVs need to be driven for nearly 100-150 km each day to offset the higher associated costs. This is significantly higher than the distance covered by most household private vehicles in India.
For this reason, EVs are perfectly positioned to power commercial fleets - urban transport busses and cabs – that cover larger distances on a daily basis. To a large extent operators of commercial vehicles are seeing the value already. It is likely that your next Uber cab in New Delhi is an EV. Major e-commerce companies have begun to invest in delivery fleets that are largely constituted of EVs. This is a trend that policy makers can encash on. Large scale adoption for commercial fleets will help bring a critical mass of EVs on the roads faster, bringing down costs of EVs and batteries overall, changing public perception towards the technology, and incentivising expenditure toward charging infrastructure. So governments can incentivise adoption of EVs for commercial fleets. They can even mandate a gradual and time-bound adoption of EVs for commercial fleets. However, incentives will be necessary to lessen the blow (of high capex) on commercial operators. Incentives can be both monetary and non-monetary. Waiver of taxes and toll-fees; and access to bus lane during rush hour traffic are examples of incentives offered in other countries.
The challenge to prepare for is that large EV fleets operated by public transport operators will create pressure on the existing/ planned EV charging facilities. This is an issue that is being debated globally. Should the responsibility of setting up and maintaining charging stations be borne by the government or private parties?
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