Rise Of An EV Wave: Emergence Of New Value Pools As Commercial Fleet Operators Put EV In The Fast La
In 2020, Flipkart pledged to have 100 percent electric vehicles (EVs) in its fleet by 2030. Uber plans to add 3000 EVs to its fleet by the end of 2021, while last-mile delivery fleets like Zomato, Swiggy, Grofers, and BigBasket are ahead of the game in adopting EVs, and plan to increase their EV fleet size further. Driving this transformation are a host of trends working in tandem: better technology, the lower total cost of ownership (TCO), and improved charging network density, prodded forward by government incentives. There are four kinds of commercial fleet operators adopting EVs in India – corporate taxis, bike-taxis, first-/last-mile connectivity, and urban freight. With the rapid pace at which commercial fleet operators are embracing electric vehicles, a range of new opportunities is emerging in the EV ecosystem.
To make EVs more affordable, the government has allowed the sale of EVs without a pre-fitted battery. This has opened up the opportunity for innovative and customer-friendly business models of battery-as-a-service (BaaS) including battery-leasing and battery swapping technology. Battery swapping model, in particular, emerges as a tremendous opportunity owing to commercial fleet operations. Other than the operational benefits of lesser refuelling time, an assessment by the Council on Energy, Environment and Water (CEEW) finds that the economics of battery swapping operations for commercial fleet operations requiring electric two-wheelers and three-wheelers are more favourable than point charging. While the upfront investment is capital-intensive, such a model’s operational costs are comparatively lower due to lesser land requirement. Thus, on a levelised cost of energy-basis, the cost of electricity charged to the consumer per unit of electricity sold is significantly lower. This results in substantial savings on fuel expenses to the consumer as well as a significantly lower TCO (INR/km). As commercial fleets undergo rapid electrification, battery-as-a-service is an area that holds great promise for start-ups and existing energy operators to tap into.
Interestingly, battery swapping services can offer a variety of benefits to the utilities and power sector. Batteries can act as reservoirs of storage during low energy demand and sell power back to the grid during peak demand periods. The data on charging patterns of commercial fleet operators allows the battery swap operators to plan the charging of batteries and capitalise on low electricity prices. The service can also lessen maximum loads on the grid and help avoid the curtailment of renewable energy as it soaks up the energy during excess production. This configuration is a variation of much talked about vehicle-to-grid (V2G) services wherein the batteries providing the ancillary services to the grid are inside the vehicle.
Repurposing batteries for a second-life
After a typical EV battery is removed, around 70 per cent of the power capacity is retained, which could be repurposed for tasks such as power backup, renewable-energy storage and grid stabilisation. After these second-life actions, the final stage is recycling, wherein high-value metals such as lithium, cobalt, graphite, nickel, and manganese are extracted. Given the heavy usage of commercial EV fleets, the rate at which batteries degrade is higher. So the number of batteries replaced and recycled is higher. The rate at which commercial EV fleets are undergoing electrification, there is an enormous opportunity for new players to enter the battery value chain.
In addition to the two new value pools above, there is immense market potential for existing service providers – EV charging operators, vehicle manufacturers for purpose-built EVs, telematics and IOT service providers. It is evident that with the rise of EVs in the commercial fleet operations, the opportunity for the start-ups and existing players in the EV ecosystem abound. Tapping into these new opportunities and building an ecosystem will be key to accelerated transition of EVs in India.
By Harsimran Kaur – A Research Analyst at the Council on Energy, Environment and Water, an independent not-for-profit policy research institution.