Expect subsidies for commercial EVs in FAME-II scheme: Deloitte

Subsidies for EVs and their charging infrastructure are expected in the FAME II (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) scheme, said Subhranshu Patnaik, Partner, Deloitte Touche Tohmatsu India.

The consultancy firm on Thursday released a report on various business models that can be adopted to plug the gaps in the EV ecosystem.

Priority segment

Patnaik told BusinessLine that the commercial segment for EVs needs to be prioritised ahead of others. “As far as private ownership is concerned, it is going to take time to change consumer behaviour,” he said, adding that the higher cost of purchase is a deterrent.

“What we hear is there is a definite amount of subsidy for EVs, primarily commercial EVs — buses and three-wheelers and also likely for aggregators. That will be a big leap forward,” he said. “What we also hear is there is subsidy for charging infrastructure.”

However, Patnaik also pointed out that charging infrastructure by itself is a segment that does not make money, even globally. “Because of the cost of installation itself, it doesn’t break even on its own. If we add land costs and electric infrastructure, it isn’t feasible,” he said. “Ways to make it feasible are in the policy and regulations domain.”

5 business models

Deloitte’s report suggests five different business models for setting up charging stations. These are: Urban local bodies operating them; a public-private partnership; electric utilities and power generators managing them; public transport companies or aggregators facilitating them, and vehicle or equipment manufacturers setting up their own stations.

With cab aggregators looking to add electric vehicles to their fleet, Patnaik also expected clear pronouncements on subsidy allocation and charging infrastructure.

With regard to the battery swapping model for EVs, Patnaik said that it makes a lot of sense theoretically, but interoperability is a challenge.

“The batteries are not all standardised. It is easier for lead-acid batteries (used mostly in three-wheelers), but for lithium it is a challenge,” he said. He, however, also observed that with the battery-swapping model, the grid is not loaded at once and the battery banks can actually support the grid.

Power consumption

With regard to vehicle electrification resulting in heightened consumption of electricity, Patnaik said that if 100 per cent of the vehicles in “all 100 cities” were to be EVs, it would result in less than a 5 per cent uptick in energy consumption.

“The existing grid is large enough to absorb the energy requirement,” he said. However, he said that it is a demand-timing problem as a large number of EVs may charge at the same time.

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