Global EV sales have seen a significant uptick in the past few years largely driven by markets in China, the US and Europe and also by some smaller markets in other countries like India.
One of the major bottlenecks in the adoption of EVs has been the availability of charging infrastructure. According to a 2022 survey by EY across 18 countries on issues inhibiting the purchase of an EV, 4 of the top 5 issues were related to charging infrastructure. This highlights its importance in accelerating wide scale EV adoption. This is especially true in the 4W and heavier vehicle segments, which are highly dependent on public charging infrastructure. It is often associated with range anxiety among EV users, which can be addressed with the deployment of fast charging infrastructure, a more practical solution over larger battery packs with high upfront costs.
Issues inhibiting the purchase of an EV:
Global charging infrastructure ecosystem
Investments in charging infrastructure have accelerated globally, as key stakeholders are gradually realizing its significance. Cumulative investments in global EV charging space (for 4Ws) have gone up from USD 30 billion in 2021 to USD 64 billion in 2022 and it is expected to reach USD 350 billion by 2030, out of which 60-70% of the investment would be for public fast chargers and the balance would be used for slow and home chargers.
China has been a clear leader in EV charging infrastructure deployment, as is the case with EV sales. By the end of 2022, China had ~1.8 million charging points out of ~2.7 million units globally. Europe had 0.5 million charging points, while USA had 0.1 million. It is estimated that there will be a need for ~13 million public EV charging points by 2030.
Global deal landscape
The charging infrastructure space has also seen strong deal activity globally, with both financial and strategic investors backing early-stage platforms to deploy large networks. These players have been able to attract healthy valuations and ticket sizes despite being at an early stage and small scale. In the last 3 years, there have been 65, USD 50 million+ deals, amounting to a total of USD ~12 billion at a median valuation of USD 305 million. Some of the marquee deals include Blackrock’s investment in Ionity (USD 800 million), Sdiptech’s acquisition of Rolec Services (USD 1.3 billion) and Vision Ridge Partners’ investment in Terawatt (USD 1 billion). There were also a few SPAC listings in 2021-22, which includes ChargePoint, EVGo, Volta Charging, Wallbox, Ads-tec, CTEK.
India’s market potential and opportunity
India’s EV charging infrastructure market is at an inflection point, having ~11,000 public EV charging points, with 40+ charge point operators (CPOs) operating in the space. But this is still much lower than what is ideally required to address the range anxiety among customers. It is estimated that 1.3 million charging points would be needed by 2030 in India, which presents a USD 10 billion+ CPO market opportunity in India.
The space has seen interest from various stakeholders in the ecosystem including the government (for achieving EV adoption targets), EV OEMs (addressing range anxiety for customers), energy companies (leveraging existing fuelling network) and pure play EV charging companies. Various business models have emerged within which these players operate, including charging hardware R&D and manufacturing, CPOs, aggregators, and integrated players. Each model has its own set of risks associated with it such as charging hardware getting commoditized and CPOs witnessing under-utilization. The players offering integrated solutions have the most de-risked model and are best positioned to derive maximum business value in the long term by leveraging capabilities across the value chain.
Key players operating in India include Tata Power, Charge Zone, Jio BP, Statiq, GoEgo Network, EVRE, Electriva, Volttic. Among these players, Tata Power, Jio BP and Charge Zone operate on a pure play CPO model, while Statiq, EVRE and GoEgo also have in-house hardware designing/manufacturing capabilities. A few companies are taking new innovative approaches to disrupt the charging space and provide fast charging solutions. Exponent has commercialized a one-of-its-kind 15 min full charge solution without having any impact on battery life. All these players have announced aggressive targets for the deployment of charging infrastructure in the next 3-5 years, which needs support from the whole EV ecosystem.
(Disclaimer: Koushik Bhattacharya, Managing Director & Head, Industrials, Avendus Capital. Views are personal)
