Charging electric two-wheelers: A cost or a chance to catalyze the market?
Just a couple of months ago, I wrote about how central and state government incentives in India are bringing many electric two-wheeler models into similar ex-showroom price brackets as top-selling gasoline models. It’s welcome news because lower upfront prices mean lower monthly payments for those who borrow, and in a mass market segment like two-wheelers in India, sale price will continue to play a key role in influencing purchase decisions.
But consumers also understand that after upfront costs, fuel costs have the most important impact on the total ownership cost of a two-wheeler. As gasoline prices have been steadily increasing and with more than 99% of the two-wheeler market running on gasoline, people are certainly feeling the pinch. Today gasoline retails near INR 100/l, about 25% higher than just 2 years ago. In this context, the case for electric two-wheelers in India almost couldn’t look better, and many consumers are more curious than ever about electric.
Even better? The range available should more than suffice. Several short-range electric two-wheeler models are offering 75 km to 100 km of real world-range in city driving conditions. Mid-range models with real-world range closer to 150 km are in the pipeline and could occupy a significant share of the market going forward, as well. This would meet the daily travel needs of many two-wheeler consumers in the personal use segment through home charging alone.
Still, charging vehicles at home will require some level of behavior change on the part of consumers. More importantly, home charging and public charging are likely both going to be needed, and supporting their development is an opportunity to use policy to help grow the electric two-wheeler market.
Let’s take public charging first. The degree of reliance on public charging might be greater in the initial years of the market as more parking spaces and newer home constructions become EV-ready. How would using public charging impact ownership costs? From our earlier work, we know that electric models have a lower total cost of ownership (TCO) than gasoline models at current gasoline prices and with home charging. Since the cost of public charging can be high, sometimes twice as high as residential electricity tariffs, I build here on our cost parity model to examine what happens to TCO parity under different charging scenarios. I assumed the average residential electricity tariff to be INR 7/kWh and the average public charging tariff to be INR 14/kWh. Further, I looked at the impact on TCO parity at two baseline prices for gasoline—average prices in 2021 and in 2019—and included a 5% annual escalation in both electricity and gasoline costs.
The figure below illustrates when a 150 km real-world range motorcycle can be expected to reach 10-year TCO cost parity with gasoline motorcycles, the top without incentives and the bottom with incentives. The incentives scenario includes the revised FAME-II upfront subsidy and the preferential Goods and Services Tax (GST) benefit for the electric model.
As you can see, at current gasoline prices, cost parity is achieved by 2022 with 100% home charging and by 2023 with 100% public charging in a no-incentives scenario. However, with gasoline prices closer to where they were 2 years ago, cost parity is pushed back to 2023 with 100% home charging and to 2025 with 100% public charging in the same no-incentive scenario. From this we see that at lower gasoline prices, greater reliance on public charging will have a more pronounced impact on delaying TCO parity for electric two-wheelers.
However, with purchase incentives in place, TCO parity is already achieved even if consumers meet all their charging needs through public charging. Incentives also absorb any potential lost benefits if gasoline prices slide back to 2019 levels. Therefore, the current upfront purchase incentives are playing an enabling role in alleviating any charging cost related anxiety that consumers might have. That’s especially useful in the early phases of the market when the infrastructure for home charging is less mature.
Of course, the savings on energy costs through home charging in comparison to public charging are going to be higher and enabling policy frameworks can also play a big role in making home (and workplace) charging accessible for consumers. Doing so will lower the burden on public infrastructure spending and on public land, and vehicles are going to be parked within private premises for long durations, anyway.
To charge from home, consumers will need 5A/15A sockets in their parking spaces that are connected to their electricity meters. This is technically feasible and often means relatively low cost for the consumer. For example, Ather Energy charges a standard fee of INR 1,800, which includes the cost of cables, conduits, and labor, to install its Ather Dot charger in parking spaces located less than 5 m away from the meter. If parking spots are further away from the meter, costs could be higher, especially if any civil or floor work is required. Also, in some cases, meter rooms and parking could be on different levels and that could pose an issue. Several two-wheeler manufacturers have sought to address these issues by providing detachable battery packs that can be removed and charged inside homes, offices, and shops. For longer range (thus heavier) batteries, though, this could be somewhat cumbersome.
Even if there is technical feasibility, some consumers are facing resistance from housing societies due to the perception shifts involved in home charging, especially on matters such as running cables through common areas and the like. It’s also possible that some two-wheeler consumers might not have access to parking at all and would rely on street-side parking.
There are several opportunities to improve access to home charging. For one, many states have yet to amend their building bylaws in line with the guidance under the National Model Building Byelaws, which ask for 20% parking capacity to be EV-ready with appropriate additional load connections in newly constructed buildings. For existing construction, Delhi is perhaps the only state in India where private charging points are facilitated through a single-window facility. With one phone call, consumers can secure a charging equipment provider to come and install a charger with a 100% subsidy toward equipment costs up to INR 6,000. Any additional installation costs incurred can be paid by the consumer through monthly electricity bills. Maharashtra’s latest EV policy also encourages urban local bodies to provide property tax rebates for the installation of private charging points, and property tax exemptions in the range of 2% to 5% have been indicated from 2025. The move has been welcomed by builders as an encouraging incentive for housing societies to enable EV charging.
As central and state government subsidies have gone a long way in addressing upfront cost barriers for potential electric two-wheeler buyers, the focus can now shift to charging. Consumer surveys indicate that after upfront cost parity, access to private charging is a key enabler for electric model uptake. With electric models occupying a less than 1% share of the Indian two-wheeler market today, this is now a ripe policy agenda for state and local governments.