The Business Times' Column | Eyeing opportunities in the EV race? Look at charging infrastructure

This column was first published on The Business Times.

Access the print version here.

Over the past two years, total electric vehicle (EV) sales in India have surged almost four times, increasing from 400,000 units in 2021 to 1.5 million units in 2023. The rapid growth – tracking momentum in South-east Asia – is driven by a combination of government incentives, changing consumer preferences and a clear shift towards sustainable mobility.

The region is particularly attractive for investors eyeing opportunities in the global transition to electric mobility. In India, for instance, two-wheelers and three-wheelers dominate the market – but larger vehicle segments such as buses and cars are now beginning to gain traction.

While EV manufacturers have pumped in and themselves attracted significant investment, there is growing recognition of the need to develop supporting infrastructure – particularly in charging networks. As the market expands, the focus is shifting towards building up the ecosystem that can support and accelerate EV adoption.

This evolving landscape presents unique investment opportunities across the value chain, with charging infrastructure emerging as a critical area for growth and development.

What is fuelling the charge towards EV adoption?

Momentum is largely coming out of government initiatives aimed at achieving ambitious net-zero emission targets.

In India, programme such as Fame II (Faster Adoption and Manufacturing of Electric and Hybrid Vehicles in India) offer subsidies of up to 30 per cent for two-wheelers and three-wheelers. The Indian government’s goal of achieving “EV30@2030” aims for 80 per cent of two-wheelers and three-wheelers, 30 per cent of private cars, and 40 per cent of buses to be electric by 2030.

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

To support this ambitious target, the government has allocated 100 billion crore rupees (approximately S$1.5 billion) for the Fame II scheme.

Similar trends are emerging across South-east Asia, with countries setting ambitious goals for EV adoption. Singapore is leading the charge, with the highest EV adoption rate in the region.

In 2022, EVs accounted for 11.8 per cent of all vehicles sold in Singapore. This figure is projected to reach 45 per cent by 2030.

By 2040, the Republic is expected to have the largest share of passenger EVs in South-east Asia, with EVs constituting 83 per cent of its passenger vehicle fleet.

Thailand targets having 1.2 million EVs on the road by 2036, and is implementing tax incentives and subsidies for both manufacturers and consumers to encourage adoption.

Meanwhile, Indonesia – the region’s largest automotive market – aims for 20 per cent of all vehicles produced to be electric by 2025, backed by a US$15 billion investment plan to develop its EV ecosystem.

As the EV market evolves, a diverse range of players is emerging across the value chain in India and South-east Asia. For example, from 2016 to 2023, the Indian EV sector attracted approximately US$2.6 billion in venture capital funding, with the majority directed towards original equipment manufacturers.

Established companies TVS, Hero and Bajaj – alongside new entrants such as Ola and Ather – are rapidly scaling their operations. The recent initial public offering (IPO) of Ola Electric underscores the potential within the EV ecosystem.

In South-east Asia, the investment landscape is equally promising. Vietnam’s VinFast has attracted global attention with its ambitious EV plans, while Indonesia has secured commitments from global players Hyundai, LG and CATL for investments totalling more than US$9 billion in its EV and battery production ecosystem.

Thailand is also emerging as a global hub for EV production, with Chinese EV manufacturers BYD and Great Wall Motor establishing facilities there as traditional Japanese internal combustion engine (ICE) carmakers scale back their operations in the country.

Why charging infrastructure is key

Research from the World Bank indicates that investing in charging infrastructure is four to seven times more effective in promoting EV adoption than providing purchase subsidies. China and Norway exemplify this trend, demonstrating high adoption rates supported by extensive charging networks. The International Energy Agency has also identified the availability of charging infrastructure as one of the top three factors influencing EV adoption, alongside vehicle cost and range.

In India, the current ratio of EVs to public chargers stands at 135:1, in stark contrast with the global average of 5-20:1 in mature markets.

The disparity highlights a significant gap in charging infrastructure that must be addressed to alleviate range anxiety among potential EV users.

As at 2023, India had approximately 11,000 public charging stations – which is insufficient given the rapid increase in EV sales.

South-east Asian countries face similar challenges. For instance, Thailand had only 2,000 public charging stations as at 2022, despite ambitious EV adoption targets. The Asian Development Bank estimates that Asean countries will need to invest US$14 billion in charging infrastructure by 2030 to support projected EV growth.

Governments across the region are recognising these challenges, and are implementing various incentives to stimulate the development of public charging infrastructure.

For example, India’s Fame II scheme allocates 10 per cent of its budget specifically to charging infrastructure development. Other incentives include reduced tax rates, capital subsidies and supportive regulatory frameworks.

Leading manufacturers are responding to the growing demand for charging infrastructure by committing substantial investments to establish networks. In India, TVS, Ather and Hero Group have pledged more than US$500 million towards this cause. Major delivery fleets are also transitioning to EVs, with companies such as Flipkart and Zomato aiming for 100 per cent electric operations by 2030.

Charging infrastructure investments can generate revenue through various models, including per-kWh charging fees, subscription services and ancillary services such as grid balancing. Opportunities also exist for strategic partnerships with real estate developers, parking lot operators and retail chains to expand charging networks cost-effectively.

A key debate revolves around the question of which solution will dominate in the future: charging or battery swapping technologies.

While battery swapping gained early traction among fleet operators due to the need for quick vehicle turnaround times, the introduction of fast charging options is reshaping the landscape. Both models are likely to coexist to cater to different market needs, though fast charging is expected to become more prevalent.

The need for comprehensive charging solutions is evident, and companies are stepping up to fill this gap. Full-stack charging platforms, which integrate hardware and software to manage the entire EV charging ecosystem, are essential for supporting the growing EV market.

Companies such as Kazam are developing these platforms – offering real-time management, user-friendly booking and customisable tariffs.

While lack of charging infrastructure slows EV adoption, it is part of a broader ecosystem of challenges. A significant hurdle, particularly for four-wheelers, is the higher upfront cost compared to ICE vehicles. This is exacerbated by less substantial subsidies for four-wheelers than for two- and three-wheelers.

Despite potential lower total cost of ownership over time, the initial price disparity deters many consumers. Other challenges include consumer perceptions about EV performance and range, and inconsistent policy implementation across regions.

Addressing these interconnected issues – from infrastructure and cost to consumer education and policy – is crucial for aligning reality with ambitious government and industry goals. Only by tackling this complex ecosystem can the EV market achieve the widespread adoption envisioned in current projections.

The investment potential within the EV charging infrastructure sector in India and South-east Asia is substantial, with forecasts indicating that global investments in EV infrastructure could exceed US$57 billion by 2028. As consumer demand for EVs continues to rise, the need for reliable and accessible charging solutions will become increasingly critical.

With supportive government policies and evolving consumer preferences, the landscape for EV charging infrastructure is poised for remarkable growth.

Himanshu Jain is Director, Investments at Vertex Ventures Southeast Asia and India

We recently invested in Kazam, an e-mobility startup that offers device-agnostic solutions to EV charging and battery swapping operators, vehicle OEMs, fleet operators, and electricity grid companies. You can read Himanshu's blog on why we invested in Kazam here.

We publish monthly on The Business Times Due Diligence column and we invite you to read our previous articles here.

Edited by Rahul Thayyalamkandy, Director, Vertex Ventures Southeast Asia & India.

For the latest news on Vertex Ventures SE Asia and India and our portfolio companies, follow us on Linkedin or subscribe to our monthly newsletter.