Procurement At Scale Helped Bring Down Prices By 22% For 3 Wheelers

With its focus on delivering clean, affordable, and reliable energy, Convergence Energy Services Limited (CESL) is playing a key role in creating an enabling ecosystem for transitioning to renewable, energy efficient solutions, specially, electric mobility. CESL, a subsidiary of state-owned Energy Efficiency Services Limited (EESL), works under the Ministry of Power, Government of India.

Saur Energy spoke to Polash Das, Head e- Mobility at CESL on a wide-ranging topics from CESL’s role in enabling the EV ecosystem, to expected growth trajectory the sector will adopt over the next decade. Das has been active in the Power Sector for over 12 years and a frequent contributor to India’s Energy efficient programs. His experience includes implementation of the country’s largest energy efficient appliance distribution program in Gujarat. Mr. Das’s is responsible for deployment of electric vehicles of all segments including Two-wheeler, Three-Wheeler, Electric Buses on a large scale, pan-India. 

Q.1 The transportation sector in India continues to use 96% of fuel which is non-renewable. How do you see the transition to an energy efficient economy happening?

As a part of the National Programme of Ministry of Power to deploy electric vehicles, we track the electric vehicle market both globally, as well as in India. In India, we have observed there are a few issues associated with the electric vehicle market, which are holding it back from mass deployment. High price, charging infrastructure, and easy financing options are few concerns attached with this technology. Having said that, we must also be mindful of the fact that we are competing with ICE-vehicle technology which is a century old. Things are picking up as people are becoming more conscious about clean options, and they understand that climate change is for real. We have set out huge targets and this requires a large-scale deployment of electric vehicles on the roads. So, for that, policies and guideline are being developed in such a way that the market does exceedingly well going forward.

Taking Covid as the benchmark, so post covid, OEMs have been flooded with orders, and they are struggling to keep up with the demand. They have witnessed a month-on-month rise ranging from 180 -300% of sales size. Given the size of the sales, the traction has been getting better. Policies by both Centre and States have allocated huge targets. There are about 14 states that have their own EV policy and have clearly defined goals for the next five years.

One also has to keep in mind that we are dealing with various segments of vehicles, ranging from two wheelers, private four wheelers, three-wheeler, buses, trucks etc. All these segments will carve out their own path of growth. Targets have been defined in such a way in the policies, that by 2030 we expect 30 % sales coming from electric vehicles.

Q.2  What are the various initiatives being taken by State governments for creating an enabling ecosystem for the growth of electric mobility? 

All States have their own mandate, in terms of generating demand, deploying the vehicles, and even taking a call on how many electric vehicles they would like to have on the road in the next five years. CESL is in touch with all State government departments who are designing these policies. We are helping States in framing the policy and at the implementation stage. We are giving them consultancy, giving them insights about realistic target setting.

Q.3 Since you have a major role to play when it comes to drafting policies and guidelines, what is your overall approach for meeting the market expectations?

We have a holistic approach to the entire ecosystem. We are not only focused on the electric four-wheel segment, but there are also various aspects under electric that we take care of – like financing, pricing, certifications, last mile connectivity, commercial vehicles etc. There are issues in public charging stations, standards, safety, certification; so, we are playing a major role in touch basing all these aspects in the EV ecosystem.

In the large-scale procurement of vehicles, we are not only looking at four wheelers but other categories. Recently, we have concluded the procurement process involving one lakh three-wheeler autos, and surprisingly we were able to bring the cost down by 22% as compared to the retail cost. Through this procurement an electric three-wheeler auto is cheaper than an equivalent CNG auto.

Secondly, what is also being done is that we are installing public charging stations on a massive scale, and government is also supporting our efforts by providing capital subsidies. We are currently the largest fleet operators of electric four wheelers, with about our 1600 vehicles in use by various government departments. Very soon, we would also be aggregating the demand for electric buses for over nine cities- Delhi, Kolkata, Chennai, Mumbai, Pune, Bangalore, Hyderabad, Ahmedabad, and Surat. This will be the biggest bus deployment that will happen over the next few months. Apart from helping state to develop EV State policy, we are also defining tariff for electric vehicle charging, testing, and even certifying these vehicles. So lot of efforts are going into developing an enabling ecosystem for EV.

Q.4 What about the incentives from the Central Government? 

Under the FAME 2 we have been procuring centrally. Every State has different requirements. While they are coming up with their own tenders, deployment wasn’t happening as it was expected. So, Central Government took charge, and started gathering demand, and procurement is being done primarily with the idea of bringing down the costs. With this, requirements have been standardised and contracts more streamlined, overall impacting the cost of running the electric buses.

Q.5 Do you think we will be able to make it to a 30% market share of EVs by 2030? How easy or difficult would it be?  

It won’t be an easy task to meet the expectations of reaching 30% market share. As we are dealing with a well-established technology of ICE vehicles. While there are many benefits attached with driving an electric vehicle, lack of awareness, lack of infrastructure, higher cost, have to be mitigated before we see large scale rollout. Government is infusing a lot of money through different programmes, like FAME, or the performance linked incentives (PLI), and other favourable policies. Around 55 thousand crores will be spent for making this technology popular over the next few years. Conscious efforts are being put in to provide the required push, but obviously this will take a lot of time. At least, a decade or so to have sales of exceed the equivalent IC vehicles.

Q.6 What are the plans on creating mass awareness about the value in going electric?

Every State EV policy has a component for creating awareness, to let consumer know about the benefits attached with using an EV, information on subsidies available among other things. Central government too is running a massive awareness campaign, ‘Go Electric’, in association with CESL and Bureau of Energy Efficiency (BEE). Further to provide more access to knowledge on EVs, NITI Aayog too has a portal called eAmrit where all info about EV policies, benefits extended, business cases, guidelines etc, all such information is available.

Through these campaigns, we are trying remove misconceptions, as we try and help people see value in buying and EV. It will be a time-consuming process, and the fact that unless people start using it, they may not be able to make out the difference, makes it a little more complicated. High diesel and petrol prices too are pushing consumers to explore EVs.

Q.7 Which segments are doing better?

As per our estimates total EV share currently would be close to eight to ten per cent. But, Two-wheeler is picking up in a fast way, because of issue of charging is also not there, multiple options are available charging at home, anywhere u want, swappable batteries etc. The two-wheeler market is about 3-4 lakh sales per month, so its estimated market share has gone up close to seven per cent, overall month-on-month, a sizeable jump.

Different segments will have different offtake. So, three wheelers are also showing good traction. We witnessed 170%-180% month-on-month growth of sales through all our OEMs. So, clearly EV share in overall market of three-wheeler segment has increased considerably, with total share of EVs electric three-wheeler at 40, 000 monthly sales. In four wheelers, despite limited options, there has been traction. Especially, a brand called Tata Nexon has seen tremendous growth.

Q.8 How are you tackling plenty of issues arising from lack of a solid charging infrastructure are creating?

We have been a part of the consultation group; Power Ministry had set up for defining guidelines for public transport charging stations. We have a vertical within CESL focussed completely on meeting the requirements under public charging. So, we are constantly evaluating the needs of the market therein, by deploying more and more public chargers for electric vehicles. We are also adding electric two and three wheelers existing charging network. Out of the sanctioned allocation from the government, we are holding close to 40% of the charger stations which will be rolled out in the next 12 months.

As of now, we are the largest charge point operators in the country, with presence in 46 cities with four-wheeler captive as well as public chargers put together. Numbers are running in 1000s, and utilisation too, of these chargers is going up day by day. In metro cities like Delhi and Mumbai, cab drivers come in and charge through our charging stations in large numbers. Since we are a government company the per unit charging cost is also the lowest found anywhere in the country.  We are consciously trying to put more and more charging stations in the vicinity.

Q.9 What is the progress on phased manufacturing programme focused on boosting value addition and capacity building?

The incentives that Government has extended in EV are primarily through the FAME subsidy, which is an outlay of 10,000 crore to be given out over the next two years as it started three years back. Under the PLI scheme 27,000 crore is being allocated for manufacturing of EV – two, three, four wheelers, all combined. Another 18,000 crore outlay is for performance based advance battery chemistry. All put together more than 50,000 crore has been put for next five years for developing an enabling environment for EV ecosystem. These look at the demand side through FAME, and production and supply side through the PLI. Further, the Go Electric campaign is taking care of awareness generation, capacity building, and also collaborations with educational institution, organising workshops.

Besides this, we are also focussed on developing skill development initiatives. We have collaborated with Andhra Pradesh, for developing a mechanic network, as we expect 1000s of EV being rolled out. Local service stations form an important component of the EV ecosystem. Local service centers are being equipped with knowledge of working on EVs. Existing services centers are also being converted into OEM certified service centres for EVs. Also, driver training programmes for people who need lessons in driving EV is also being provided.

Q.10 Finally, what are the broad trends you see will shape the market?

So, as I said, different segments will have a certain growth trajectory. So as a broad trend, we think OEMS will be coming up with vehicles offering better experience, also efforts will be put in bringing major financial institutions to finance buying of an EV. More and more charging stations will be critical for the overall market.