A recent report by Avendus Capital on “India EV Landscape|Charging up the EV ecosystem” analyses the economics of a typical public charging station for electric vehicles (EVs) in India. It suggests that a full-fledged charging station meeting the Ministry of Power‘s requirements would require an investment of at least INR 6 million. The projected project internal rate of return (IRR) is 20% or higher over a 10-year period, with equity IRR potentially exceeding 25%.
Expenses of a public EV charging station
The assumed configuration for the charging station includes two Type 2 AC chargers with a power output of 3.4 kW each, three Bharat DC001 chargers with a power output of 15 kW each, and two 100 kW chargers. In addition to charger investments, a significant portion of the total investment is allocated to obtaining electricity connections, setting up electric infrastructure, and civil works, which can account for up to 50% of the charging station’s cost. The analysis expects low overall utilization of public chargers in the base case, as more than 90% of EV charging typically occurs at home.
Image source: Avendus
Revenue opportunities for a public charging station
Operators have opportunities to generate additional revenue through advertising and promoting nearby businesses, in addition to energy sales. The cost structure of an EV charging station includes electricity, maintenance, manpower, land lease, software, and marketing expenses. Initially, fixed costs such as land lease, manpower, and maintenance dominate, but as charger utilization increases, electricity expenses become the largest cost component.
The analysis provides cash flow projections and IRRs based on three scenarios (Base, Upside, and Downside) that consider variations in charger utilization, electricity tariffs, pricing strategies, and operational costs. These IRRs are subject to market dynamics and operational factors. This analysis suggests that investing in a public charging station can yield attractive returns, but the actual profitability will depend on various factors.
Scale of EV charging infrastructure
The Indian market presents a significant opportunity for the expansion of public EV charging infrastructure. Currently, there are approximately 11,000 public EV chargers in India, with 6,800 being slow chargers and the rest being fast chargers. However, it is projected that by 2030, India will require at least 1.3 million public EV chargers to support the growing number of EVs on the road.
Out of the required chargers, around 85% will be Level 2 chargers (AC slow chargers), while the remaining will be fast chargers primarily installed in dedicated charging stations in captive and public spaces. Additionally, there will be a demand for over 13 million Level 1 chargers (pod-type chargers) to facilitate home charging for more than 60 million electric two-wheelers and three-wheelers by 2030. These Level 1 chargers will be sold along with the vehicles by OEMs at the time of purchase.
Image source: Avendus
The adoption of EVs, particularly in the two-wheeler and three-wheeler segments, has been growing rapidly in FY 2023. However, to achieve a similar level of adoption across other vehicle categories, the development of public charging infrastructure needs to expand rapidly. This is crucial for addressing customer concerns related to range anxiety and ensuring the widespread adoption of EVs.
EV charging unit economics model by Avendus
The EV charging unit economics model assumes the following capital expenditure (capex) investments for various charger types:
The total capex investment, considering charger investments and additional components, amounts to INR 60,30,000. The model provides a cost breakdown for various charger types and additional capex components required for setting up an EV charging station.
The pricing assumptions for electricity charges per kilowatt-hour (kWh) for different charger types over a 10-year period are as follows:
The EV charging unit economics model considers three scenarios: base case, upside case, and downside case, for the utilization of different charger types over a 10-year period.
A few more assumptions are important for analyzing the financial feasibility and profitability of the EV charging station project.
Image source: Avendus
The analysis highlights the potential for favourable returns and the need for rapid development in public charging infrastructure to support the adoption of electric vehicles in India. Avendus adds a disclaimer that it is crucial to consider market variations and constantly monitor and adjust the business strategy to ensure the economic viability of the charging station project.
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