Around 75% EV charging stations to be in public; rest will be at homes: Fortum India MD

Around 75% EV charging stations to be in public; rest will be at homes: Fortum India MD

Finnish state-owned firm Fortum, one of the early movers in the EV charging infrastructure space, believes the key will be how quickly public charging infrastructure scales up in the country

Over the next decade, the Indian automobile industry will see its biggest disruption ever with the electrification of transport. There has been much debate and flip flops on the timeline and extent of it but what is certain is everything hinges on availability or lack of charging infrastructure in the country. No surprise then that a number of companies are foraying into this area. One of the early movers in this space, Finnish state-owned firm Fortum believes the key will be how quickly public charging infrastructure scales up in the country. Its managing director Sanjay Aggarwal talks to Sumant Banerji of Business Today on the challenges and way forward for electric vehicles in India.

BT: How big a disruption is electrification for the automobile industry in India?

SA: No major cutting edge technology has come into ICE engine in the last 100 years. Take the case of the telecom industry. Europe moved in a very structured manner between fixed-line, pager and cellphones. In India, pagers lasted for only about 6 months. Hybrid technology in automobiles today is much like pager in telecom in the late 90s. Everybody thinks that customer would not be able to adjust himself, so we would do it in phases. That is how hybrids came about. But just like customers jumped over to mobile phones without even going into pagers, I think we will also move over to electric cars bypassing hybrids... (but) whenever there is a disruption there will always be some confusion.

BT: There is an overwhelming sense there will be a lot of pain due to this change.

SA: It is very difficult to visualise when this kind of disruption happens and definitely there is a lot of chaos. Everybody feels very secure with status quo. But some technologies would die down. It always requires a tipping point. In Europe, the tipping point was when the cheat software scandal (dieselgate) happened. Even in India, four years back everybody was moving from petrol to diesel. Now the conclusion is that we will not make diesel at all (Maruti).

BT: Is there a confusion on which route to the goal should India approach? Is there an 'one size fits all' approach when it comes to fossil fuel and electric or even the kind of charging that is required?

SA: The key thing here is that EV infrastructure across the world is considered a service. Different car manufacturers have different standards. In our case, you could have one point on ChADeMO, one on CCS and one on type 2. I don't get bothered by it. Whenever disruptions have come in, the existing business models have completely changed and incumbents are the ones that get hit royally. Existing companies would always resist this change because they have no legacy in EVs. The Tesla example in the US shows us that perfectly. Finally the consumer will decide.

BT: EVs are believed to be cost effective but there are issues with range anxiety and the high upfront cost for every vehicle.

SA: As of today, purely on operational cost, EVs are far cheaper to run. There will always be an initial issue of range anxiety. That and the upfront cost aspect needs to be settled. When the disruption comes it will come in a rush. We have not reached the inflection point but it will come. If the existing players are not ready by then, new players will come in. Already so many (start-ups) have ventured into the market.

BT: The disruption goes beyond the automobile industry. What will happen to the oil industry for example, which is largely dependent on transport as their consumer?

SA: Every oil company in the world right now is concerned as nobody has any clue how the demand situation will look like between 2025 and 2030. Clearly, there is a lot of uncertainty. Oil consumption generally always grows and this is the first time in centuries that there is a possibility of a serious dent on fundamental demand for oil in the world.

BT: Some EVs like Reva (now e2O) and eVerito have been in India for sometime, but they have not done well. Is that a worry?

SA: We are convinced that EVs would come in and in huge numbers. Probably that is still 3-4 years away. People will keep making comments about range anxiety, high cost and lack of infrastructure. Every carmaker also takes an elevated view that this is not right for the consumers but the consumer knows very well what he wants. We would keep putting our charging infrastructure. In the coming years the whole concept of a utility company will change. We would either have charging infrastructure or it could be that somebody only picks up the cloud services from us to just manage the charging stations.

BT: What are your specific plans on setting up charging network? How many stations would you set up in the near future and how much are you investing in this?

SA: All charging stations set up by us are owned and managed by us. We have taken the decision that we will jump in now and tune ourselves based on the market whether we have to accelerate or not. There are so many dynamics - how does the battery operate in summer and humid conditions. We did a pilot for battery rickshaws in Noida and realised that it is clearly workable and now we need to scale it up. At the end of the day technology is geography agnostic. When it comes it comes. You cannot fight it or stop it. We will plan the network in a manner that it will have a combination of all types of chargers. In Hyderabad, for example, we started in July 2018. Zoomcar had just started their subscription model then. They had 20 cars and wanted to add another 15. They had their own slow charging. Now Hyderabad has around 200 electric cars and we have about 40 chargers. Around 60 per cent of them are being used reasonably quite well - 4-5 cars every day come there. It takes about 1.5 hours to charge completely. With the Hyundai Kona and MG eZs (December) getting launched, we will set up 1 or 2 chargers in the city and then we will see what is the demand like. If it is good, then we will scale it up as we realise that demand is coming. Instead of putting all the money at one time, we will go step by step.

BT: Is batttery swapping also a viable alternative and will you participate in it?

SA: Battery swapping will only work in auto rickshaws and two wheeler fleet. We have taken a conscious decision to stay away from that.

BT: Even after 20 years we have long queus in CNG stations in Delhi. It takes even longer to charge a car. Will that be a problem that will keep customers away from EVs?

SA: Technology will take care of that and it is evolving at a very rapid pace. When we started in Norway, we had 50kW chargers that could charge the batteries in half an hour. Now, we are at a point when we can charge them in 7 minutes with a supercharger. It gives you 125-150 kilometer range. Entire Europe the big four of the automotive companies have formed a group and are setting up 350kW chargers to bring the charging speeds to less than 5 minutes. But then the battery has to be capable to take that charge. Hyundai has launched Ioniq which is capable of taking that much of voltage. Tesla, BMW iPace and BMWs can also take it. We are also catering to it at a global level.

BT: Is this business of charging cars viable?

SA: Yes it is. Maybe in a couple of years you may not make money because you do not have the volume, but in this business the upside is very lucrative. We have taken a conscious decision that smart unmanned chargers are the future. There is no need to have a person there. Business is profitable and it will get even more so as the scale increases. In a year or two, we will reach break-even. Depending on the number of vehicles. If there are not that many vehicles, why set up that many chargers. Which is why we say initially there will be some challenges in profitability because the number of vehicles will be less and the need would be to spread the network to create visibility but once the scale comes in, it will become much easier. That consumers will prefer an electric vehicle is a no-brainer. The operating cost is just Rs 2 per kilometer against Rs 6-7 per kilometer on petrol. It is very attractive.

BT: What mix of charging would India need? Many people say the primary charging for a vehicle will be at home.

SA: Government data says average per capita space available in India is 100 sq feet. One car requires at least that much. Even in a city like Mumbai or Delhi, 70 per cent of the cars are parked on the roads with no fixed slots. In Defence Colony even Audi and Mercedes Benz are parked on the road. So in India we will have 70-75 per cent public charging and the rest will be home charging. In public charging I am not ruling out AC as well as DC charging. In a shopping mall, for example, where you are going to spend 2-3 hours, we wont set up a fast charger. There we will set up a 22kW or a 7kW charger which is also more cost-effective. Ratio should be 2:1 - slow and fast.

BT: Is the cost of charging equipment coming down commensurate with the decline in cost of an electric car?

SA: Cost of charging equipment is also going down, but not at the same rate as batteries. We still believe in the next 4-5 year due to increased scale of production it will go down by 50 per cent.

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