Hello there!

Hope 2024 has gotten off to a good start for you. It certainly seems to have for the Indian EV ecosystem from a fund-raising perspective, if you go by the recent flurry of deals announced in this space. 

This month, we turn our focus to key developments in the Global Battery market in 2023, as summarized in the Volta Foundation’s newly launched Annual Battery Report, an excellent overview of the latest battery research, policy and business landscape. This is the first of a two-part series based on this report, and we look forward to hearing your views and suggestions on which of these topics we could further deep dive into?

Batteries – the Key to the Energy Transition?

Ostara’s Sep 2023 newsletter highlighted the crucial role of batteries in the energy transition. Here is a quick recap:

Record Investments: In 2023, Global renewable energy investments surged to $1.77 trillion, a 17% increase from the previous year.

Historical Evolution: Battery technology has evolved over two centuries, from Volta's cell to modern lithium-ion batteries, becoming indispensable for the energy transition.

Lithium-ion Dominance: The global lithium-ion battery market is projected to grow from $56.8 billion in 2023 to $187.1 billion in 2032, at a CAGR of 14.2%.

Addressing Intermittency: Batteries, especially lithium-ion, help mitigate renewable energy intermittency, enhancing grid stability and reducing reliance on continuous base-load power sources.

The Wired Network: Navigating the Battery Value Chain

The global battery value chain refers to the interconnected network of processes, technologies, and industries involved in the production, distribution, and use of batteries worldwide. Batteries lead to significant economic potential across industries like the transport and the power sector.

The above components of the battery value chain can be categorized into upstream, midstream and downstream. Industry restructuring is blurring traditional sector boundaries, impacting market dynamics and competitive strategies. Robust growth is projected across all industry segments by 2030, as depicted below:

Charged Up: Funding Sparks in the Battery Market

In 2023, public battery companies faced trading downturns due to macroeconomic factors and higher interest rates impacting hard tech firms, resulting in adverse effects on companies in each category:

Incumbent Battery Firms: Incumbents like LG Energy Solution experienced lower-than-expected demand from traditional EV manufacturers.

Lithium Companies: Companies like Albemarle witnessed a significant drop in lithium carbonate equivalent (LCE) spot prices.

Battery Startups: Companies like Freyr encountered challenges related to high capital expenditures.

EV Startups: Rivian faced lower-than-forecasted demand and extended timelines to scale their operations.

EV Charging Companies: Companies like EVgo struggled with low utilization rates, unexpected maintenance issues, and subpar user experiences.

Despite these challenges, the battery sector saw major funding developments, albeit against a difficult equity funding backdrop:

Public sector offerings by battery startups

Notable M&A transactions in the Global Battery Market

Private Investment into batteries:

While global climate tech venture funding dropped 40% in the first half of 2023, the year also marked the announcement of various private credit funds that are expected to cater to the Capex requirements of the industry. Here are the some of the key deals in private equity and credit funding in 2023:

There are estimated to be $121B of private climate assets under management and the investors can be categorized thus:

Early-stage VC like Earthshot Ventures, Anzu Partners, and Prelude Ventures

Corporate VC like bp ventures, Shell Ventures, and TDK Ventures

Late-stage VC / Growth equity like Breakthrough Energy, and Decarbonization Partners

Private equity like Ara Partners, Apollo Clean Energy Transition, and Cleanhill Partners

Infrastructure Funds like KKR, Zouk, and Vision Ridge Partners

Sovereign Wealth Fund / Pension Funds like CPP investments, Kuwait Investment Authority, and GIC

Powering Progress: The Declining Cost of Battery Cells

Follow Ostara Advisors to stay updated with the latest trends related to Electric Vehicles, Innovation and Sustainability from India and around the globe.

2023 was a transformative year for the Indian EV industry. Electric two-wheelers and three-wheelers, which form ~95% of total EV sales in India currently, grew rapidly even as regulatory changes brought greater compliance with battery safety standards. VC & PE funding in the Indian EV ecosystem grew by ~12% or so, even amidst the severe funding winter. It is truly remarkable that India EV funding grew from a mere 6% of total VC funding in India in 2022 to 22% in 2023! 

It is a matter of pride and joy for us at Ostara Advisors to have a ring-side view to and play a role in this growth since our inception as India’s first EV & Climate-tech investment bank in 2015. We started structuring M&A and fund-raising deals in this space at a time when the Indian EV industry was practically non-existent, with very few players at scale. With every year of growth, our mission to catalyse planet-friendly businesses grows stronger.

In this edition, we highlight the key trends in EV sales and EV funding in India for the year gone by, as well as highlight key M&A deals in this space.

First a quick update on Global EV funding…

The global electric vehicle (EV) sector witnessed a remarkable surge in investments, surpassing the previous year's record, to reach US$28 billion in 430 rounds, setting a new all-time high in the EV industry. This marked a substantial 58% YoY increase over US$18 billion raised in 600 funding rounds globally in 2022.  USA, China, France, South Korea and India together contributed to over 87% of this funding, leading the much-needed EV revolution. (Source: Tracxn)

EV sales trends in India in 2023

What’s remarkable is that EV two-wheeler (e2W) sales quickly brushed off the impact of a sudden 30% reduction in Demand Subsidy for this segment by the Indian government in June 2023, and bounced back within 2 months, to reach average monthly sales of 70,000+ units for the full year, which was 38% higher than the 2022 monthly average. 

Here are the other notable India EV sales trends for 2023:

1. By far, the fastest growing EV segment was Electric 3W L5, which more than doubled to ~74,000 units in 2023 from 33,000 units in 2022. These are purpose-built for last-mile and mid-mile cargo and passenger transport, are capable of 500kg+ payloads and retail for US$ 5500-6200.

2. Electric cars and Four-wheelers were the second-fastest growing segment with 71% YoY sales growth in 2023

3. Electric 3W L3 vehicles or E-rickshaws, as they are popularly known, were the third-fastest growing segment with 55% YoY sales growth in 2023. These are low-speed EVs serving the last mile commute segment, with top speeds of upto 25 km/hour and selling for an average of US$1500

4. Electric Buses are catching up too with annual sales of 2600+ units in 2023.

Sources: News articles, Tracxn, others

While 2022's Top 5 E2W OEMs by units sold included Ola, Okinawa, Hero Electric, Ampere and Ather Energy, 2023 sales toppers were Ola, TVS Motor, Ather Energy, Bajaj and Ampere, suggesting a re-calibration of the industry on the back of revised regulations and subsidies as well as a stronger entry by incumbents.

Key Fund-raising Trends in the Indian EV ecosystem in 2023

As per our estimates, the total funding raised by the Indian EV ecosystem in 2023 was in the region of US$ 1.8 billion, which was ~12.5% higher than the previous year. These numbers include deals announced and/or funded during 2023, and include debt financing as well as future funding commitments in certain cases.

1. While EV OEMs continued to dominate the fund-raises, their share in the total fell to 55% in 2023 from ~75% in the previous year. A total of US$1bn was raised by EV 2W, 3W and 4W OEMs this year, with EV two-wheeler OEMs getting the lion’s share of the funding.

2. Significant increases in funding were seen in Battery Swapping, EV Fleets and Mobility Services, driven by fast adoption of EVs in Corporate, Ride-hailing and Logistics fleets. This is, by far, the defining trend of 2023, as Commercial Vehicle consumers in both B2B and B2C categories started to adopt EVs for their businesses.

3. The fastest electrifying segment in 2023 was the Cargo Three-wheeler segment, which is expected to reach ~25% EV penetration by March/April 2024.

Key M&A Deals in 2023 in the Indian EV Ecosystem

December 2023: Livguard, an Energy Storage and Solutions company under the SAR Group, has announced a strategic acquisition of Emuron Technologies, a battery swapping and battery intelligence solutions provider for electric two- and three-wheelers.  

October 2023: Sajjan Jindal-promoted JSW Group signed a Memorandum of Understanding to buy ~38% stake in MG Motor India, a wholly-owned subsidiary of the Shanghai-based SAIC Motor. This marks the US$23 billion Group’s entry into the EV market. As of Jan 23, 2024, this deal received Competition Commission of India (CCI) approval.

August 2023: Gulf Oil Lubricants India Limited (GOLIL), a Hinduja Group Company, announced the acquisition of a controlling stake in Tirex Transmission Pvt Limited for ~ $13m subject to the completion of definitive agreements and the satisfaction of predetermined closing conditions. 

July 2023: TI Clean Mobility Pvt Ltd (TICMPL), a subsidiary of Murugappa Group’s engineering firm Tube Investments of India Ltd, takes a majority stake in Auto parts firm Jayem Automotives Pvt Ltd. This subsidiary will manufacture and sell electric small commercial vehicles (eSCVs) with  TICMPL and the Jayem promoter holding 80% and 20% respectively.

May 2023: Siemens’ acquired the EV division of Mass-Techs Controls Private Ltd., which is engaged in design, engineering and manufacturing of a wide range of AC chargers, and 30 to 300kW capacity DC chargers for various end applications for EVs, for approximately $4.75m.

April 2023: German Electric Scooter Brand, Kumpan, was acquired By Indian Firm Lohia Auto. Kumpan’s parent company E-bility was forced to file for bankruptcy on February 10, 2023 and consequently, the Brand was taken over by Lohia for an undisclosed amount. As per reports, Lohia has already begun restructuring the brand.

Follow Ostara Advisors to stay updated with the latest trends related to Electric Vehicles, Innovation and Sustainability from India and around the globe.

Later this month, at COP 28 in Dubai, delegates from nearly every country on Earth will gather to negotiate global goals for tackling climate change, present their individual countries’ plans for contributing to those goals, and report on their progress. There can be no better time to shine the spotlight on one of the most controversial yet crucial technologies to mitigate climate change, Carbon Capture.

We also take this opportunity to wish an Electrifying Diwali to all those celebrating!

Now, let’s dive right in!

The urgency to address climate change, underscored by the Intergovernmental Panel on Climate Change (IPCC), emphasizes the need not only to reduce emissions but also to actively deploy technologies capable of removing carbon from the atmosphere. In this context, Carbon Capture, Utilization, and Storage (CCUS) becomes a crucial technology in our collective pursuit of limiting global temperature increases to 1.5°C (2.7°F), as outlined in the Paris Agreement.

Source: International Energy Agency  

Industries and Countries with Significant CO2 Emissions

Methods of Carbon Capture

Carbon capture technology has been deployed at several industrial projects since the 1970s but its application to power generation is relatively recent.

For industrial processes and electricity generation, current systems must be redesigned to capture and concentrate carbon dioxide, usually using one of these methods:

• Pre-Combustion Carbon Capture: Gasifies fuel to produce a mixture of CO and H2, then separates the CO2 using a physical solvent. This method can be used with integrated gasification combined cycle (IGCC) power plants.

• Post-Combustion Carbon Capture: Post-combustion capture uses chemical solvents to separate CO2 from the flue gas from fossil fuel combustion. This method will likely be used to retrofit existing power plants for carbon capture.

• Oxyfuel Carbon Capture: Oxyfuel capture requires fossil fuel combustion in pure oxygen which facilitates capture.

Source: C2ES, netl, Fossil Transition  

CO2 Utilization Pathways

CO2 utilization technologies have the potential to play a significant role in reducing greenhouse gas emissions. These technologies can convert CO2 into a variety of useful products, such as fuels, chemicals, and building materials.

CO2 Chemicals: Utilizing CO2 to produce chemicals could remove 0.3 to 0.6 gigatonnes of CO2 per year from the atmosphere in 2050. This process could even be profitable, with costs ranging from -$80 to $300 per tonne of CO2.

CO2 Fuels: Combining CO2 with hydrogen to produce fuels could address a huge market, but the costs are currently high. CO2 fuels could utilize 1 to 4.2 gigatonnes of CO2 per year in 2050, but costs could be up to $670 per tonne of CO2.

Microalgae: Microalgae can be used to fix CO2 and produce fuels and chemicals. This technology is still in the early stages of development, but it has the potential to utilize 0.2 to 0.9 gigatonnes of CO2 per year in 2050.

Concrete Building Materials: CO2 can be used to cure cement and manufacture aggregates. This technology could store a significant amount of CO2 for the long term and displace emissions-intensive conventional cement. CO2 concrete could utilize and store 0.1 to 1.4 gigatonnes of CO2 in 2050, with costs ranging from -$30 to $70 per tonne of CO2.

CO2-Enhanced Oil Recovery (EOR): Injecting CO2 into oil wells can increase the production of oil. If done correctly, this process can store more CO2 than is produced on consumption of the final oil product. CO2 EOR could utilize and store 0.1 to 1.8 gigatonnes of CO2 per year in 2050, at costs that are between -$60 and -$40 per tonne of CO2.

Bioenergy with Carbon Capture and Storage (BECCS): BECCS involves growing trees to capture CO2, producing electricity through bioenergy, and sequestering the resulting emissions. This technology could utilize and store 0.5 to 5 gigatonnes of CO2 per year in 2050.

Enhanced Weathering: Crushing rocks such as basalt and spreading them on land can accelerate the formation of carbonate from atmospheric CO2. This technology is still in the very early stages of development, but it has the potential to store a significant amount of CO2 in the long term.

Forestry: Timber from new and existing forests can be used to store CO2 in buildings and displace cement use. Forestry could utilize up to 1.5 gigatonnes of CO2 in 2050, at costs of between -$40 and $10 per tonne of CO2.

Soil Carbon Sequestration: Land management techniques for soil carbon sequestration can store CO2 in the soil and enhance agricultural yields. Soil carbon sequestration could utilize 0.9 to 1.9 gigatonnes of CO2 per year in 2050.

Biochar: Biochar is produced by burning plant material at high temperatures under low oxygen levels. Biochar application to agricultural soils can increase crop yields and store CO2 in the soil. Biochar could utilize 0.2 to 1 gigatonnes of CO2 per year in 2050.

Source: Energy Post EU 

Tracking of Carbon emissions

All ten CO2 utilization pathways offer economic motivation, together with some degree of climate mitigation potential. CO2 utilization can help in two main ways: the removal and long-term storage of atmospheric CO2; and the reduction of CO2 emissions to the atmosphere. Potentially, using CO2 to make valuable products might also offset some of the costs of climate change mitigation.

Global carbon dioxide (CO2) emissions from energy combustion and industrial processes grew 0.9% or 321 Mt in 2022 to a new all-time high of 36.8 Gt.

Source: IEA Report 2022, Energy Post EU 

Where is CCS being used already?

According to the Global CCS Institute’s 2022 report, there were 194 large-scale CCS facilities globally in 2022, compared to 51 in 2019. 

The CO2 capture capacity of all CCS facilities under development grew to 244 million tonnes per annum in 2022, an impressive increase of 44% over the year.

Source: National Grid  

How India is looking at Carbon Capture? 

At COP26, India announced its ambition to become a net-zero emitter by 2070—an important milestone in the fight against climate change. Despite low per-capita emissions (1.8 tons CO2), India is the third-largest emitter globally, emitting a net 2.9 gigatons of carbon dioxide equivalent (GtCO2e) every year as of 2019. The bulk of these emissions (about 70%) are driven by six sectors: power, steel, automotive, aviation, cement, and agriculture. 

The Indian government is taking a leading role in the development and deployment of carbon capture, utilization, and storage (CCUS) technologies, which are essential for achieving global decarbonization goals. The government is establishing two National Centres of Excellence in Carbon Capture and Utilisation, participating in the Mission Innovation Challenge on CCUS, collaborating with the Department of Biotechnology on CO2 storage research, and joining forces with 11 other countries to accelerate CCUS innovation and deployment.

Source: Mckinsey, Sunday Guardian. 

Pros and cons of CCUS

Carbon capture, utilization, and storage (CCUS) is a promising approach to reducing greenhouse gas emissions by capturing, re-using, and storing carbon dioxide from industrial processes and power plants.

CCUS offers adaptability, allowing retrofits to existing power and industrial plants, ensuring their continued operation. This technology proves particularly effective in hard-to-abate sectors, including significant industries like cement, steel, and chemicals. Furthermore, CCUS emerges as a critical enabler for the least-cost low-carbon hydrogen production, supporting broader decarbonization efforts across industries, trucks, ships, and various energy systems. 

It offers economic, social, and environmental benefits like job creation and reduced air pollution. 

However, challenges include high costs, energy-intensive processes, and environmental risks. While policymakers and industry leaders continue to explore the potential of CCS, it is important to consider these pros and cons and weigh the benefits against the costs. Ultimately, the success of CCS will depend not only on its technical feasibility but also on its economic viability and social acceptance.

Source: Verde Blog, Treehugger  

Do write to us with topics in Climate-tech, Mobility, and New Energy that you’d like us to cover in future editions.

Hello Reader,

As the Sustainability wave sweeps the globe, it's heartening to see the automotive industry taking a strong approach in this direction. This approach to production can redefine the way vehicles are designed, manufactured, used, and disposed of, by prioritizing the principles of Reduce, Reuse, Recycle, and Regenerate. By adopting circular economy principles, the automotive industry can reduce waste, conserve resources, and mitigate its environmental impact. 

What is Circularity in the Automotive Industry?

Did you know that Circular economy approaches can help the automotive industry reduce the lifecycle carbon emissions per passenger km by up to 75% by 2030? 

The term “circular economy” was first coined by Pierce and Turner in 1989 and refers to an alternative to the linear economy. It focuses on maintaining material value and eliminating waste, using the 3R principle: reduce, reuse, and recycle. This method minimizes resource usage, maximizing the reuse of old products. The circular economy is also known as a closed system of production, as it circulates used products as a basic resource. This sustainable approach to production is a healthier approach to the environment.

Source: Kenniskaarten, Impacx, Contec.

So what is a “Circular Car” and what are the key elements of this approach?

A circular car maximizes value to society, the environment, and the economy, and it efficiently utilizes resources and public goods. Accenture and WEF in their 2021 Report recommend 4 approaches to achieving Circular Economy in the automotive industry. 

Source: Accenture - World Economic Forum Report 2021

The degree of circularity should be measured in terms of outcomes including lifecycle Co2 emissions or non-circular resource consumption per unit of passenger km.

Key Methods to implement these 4 approaches

• Remanufacturing is a significant aspect of the circular economy, with benefits such as the conservation of natural resources, reduced waste, a smaller carbon footprint, and lower costs. Automotive components are commonly remanufactured by companies like ZF, Robert Bosch, Carwood, IM Group, and Valeo, as well as automakers like Renault. The Refectory in Europe is Europe's first circular economy factory focused on mobility, built around four pillars: Retrofit (vehicle life extension), Re-energy (green energy management), Re-cycle (resource management optimization), and Re-start (accessible innovation).

• Recycling is another important aspect of the circular economy, with recycling plastic, steel, aluminum, and tires offering environmental benefits. Closed-loop recycling is a major trend that reduces natural resource usage, pollution, and landfill burden used by Nissan Rogue. Automakers like General Motors, Honda, Nissan, Ford, Volkswagen, and Chrysler are involved in plastics recycling, with Honda making mud guards and splash guards from recycled scrap bumpers. Steel is almost 100% recyclable, and most car bodies contain approximately 25% recycled steel. Companies like Wastefront, Bridgestone, and Michelin are showcasing innovative approaches to tire recycling.

• Product life extension, where vehicle parts are proactively serviced before they develop any faults, thereby extending their useful life. The automotive industry is focusing on increasing the useful life of products, including tire and battery life extension, servicing electronic components, and deploying predictive maintenance systems. Retreading tires can extend a tire's life by at least 200%, saving fleets $3 billion annually in tire-related costs. Predictive maintenance systems (PMS) are being used to detect component faults before they occur and predict repair needs. Continental Tyres India launched the Conti Bharosa warranty program in July 2021, offering a 5-year warranty on truck and bus tires. Electronic components are being serviced instead of discarded, reducing electronic waste in landfills. Companies like ReJoule provide rapid diagnostic testing for EV batteries entering second-life applications. 

• Sustainable material use, where innovative, eco-friendly materials such as bio-plastics are incorporated into new cars. This includes alternatives like recycled polyester microfiber, vegan leather from grape skins and seeds, compressed wood composites, and natural fibers like Amplitex. The development of organized scrapyard markets, repurposing EOL batteries for second-life applications, and investments in eco-friendly sustainable materials are necessary, especially in India.

  Source: Suppliers Partnership, Mobility Outlook.

How can Technology solve for Circularity in the Automotive Industry?

Predictive Maintenance: Cloud-connected data infrastructure allows for monitoring vehicle performance and customer behavior by enabling the "Software-defined vehicle" (SDV) concept. This data, combined with machine learning and advanced analytics, can help keep vehicles and components in use longer, reduce emissions, and minimize waste at the end of a product's life cycle. 

Battery & Vehicle Re-use & Recycling: Automated dismantling systems are used to efficiently disassemble end-of-life vehicles and recover valuable components and materials for reuse. As Battery Recycling and Second-Life Applications become more common, technology can enable Residual Value assessment of EV batteries for stationary energy storage, providing a second life and maximizing resource utilization.

Shared Mobility and Mobility-as-a-Service (MaaS): Shared mobility services offered by car-sharing platforms enable fleet optimization and help reduce the number of vehicles on the road, leading to more efficient use of resources.

End-of-Life Vehicle Management Systems: Technologies that facilitate the tracking and managing of vehicles at the end of their life cycle, ensuring proper disposal and recycling.

Source: Forbes, Wipro.

Recent Global Developments in this space

• November 2022: Renault has announced plans to split its business into five units, aiming to achieve closed-loop circularity across the vehicle life cycle. The last unit, "The Future is NEUTRAL," aims to become carbon-negative in automotive production by 2030. 

• October 2022: Stellantis plans to launch a circular economy business unit to become carbon neutral by 2038, generating €2bn in revenue.

• March 2021: Ford has set an interim target of using 20% recycled and renewable plastics in new vehicle designs by 2025. The current directive requires a minimum of 85% reuse and recycling and 95% reuse and recoverability for light vehicles. 

• General Motors has stated that it will use 100% renewable energy for vehicles manufactured in the US and reduce factory greenhouse gas emissions by 31%, even as a raft of automakers, including Honda, Nissan, Toyota, and Volvo, are working to achieve carbon neutrality by 2031-2050.

• Japan and South Korea have had similar vehicle recycling laws for more than 15 years now. Meanwhile, India also launched a similar framework for scrapping end-of-life vehicles (ELVs) in August 2021. In the US, there is no federal law for ELVs, but several state governments have legislation and requirements for vehicle recycling.

Sources: Wiley, Economist Intelligence EIU.

Ostara Updates!

We are thrilled that our in-house insights for fund-raising in the Indian EV ecosystem for the period Jan - Aug 2023 were recently published in the Economic Times. Click here to read the article.

Our Founder, Vasudha Madhavan, appeared on the Energizing India Podcast, India’s only eMobility-focused podcast, for a record third time! In this engaging conversation, she shared her insights on Finding Investors for EV startups through the funding winter and other remarkable trends in the Indian EV ecosystem. Click here to listen to the podcast.

Do write to us with topics in Climate-tech, Mobility, and New Energy that you’d like us to cover in future editions.

Global investments in Energy Transition technologies reached a record high of $1.3 trillion in 2022, a 19% increase from 2021, according to the  International Renewable Energy Agency (IRENA) with major investments into solar and wind technologies.

In the first six months of 2023, new investments in Renewable Energy which is a sub-set of the Energy Transition, reached $358 billion, a 22% increase compared to the start of last year and an all-time high for any six months.

At the heart of these transformative shifts lies the battery - an unassuming yet indispensable component that is reshaping industries, powering our lives, and enabling a sustainable future. In this exploration of batteries' central role in the global energy transition, we will delve into the technologies driving change, the emerging trends shaping the landscape, and the profound implications for our planet's future.

We also have a bonus section this month in which we review the Fundraising activity in the Indian EV landscape in the first eight months of 2023 and share some interesting insights.

Sources: Bloomberg NEF, Mercom 

Invention of the Rechargeable Battery

Battery technology has evolved significantly over the past 200 years, with remarkable advancements in rechargeable batteries for digital devices, electric vehicles, and consumer electronics. The journey began with Luigi Galvani's "frog leg experiment" in 1780, which led to the invention of the "galvanic cell" in 1800 by Alessandro Volta.

The first rechargeable battery based on Lead Acid was introduced in the 19th century, with Wilhelm Josef Sinsteden and Gaston Planté contributing to the development of the lead-acid accumulator. Alkaline Batteries emerged in 1899 with the invention by Waldemar Jungner of the nickel-cadmium (NiCd) battery that used nickel as the positive electrode (cathode) and cadmium as the negative (anode). High material costs compared to lead limited its use.

The Nickel-Metal Hydride (NiMH) Battery, introduced in the late 1980s, eliminated toxic metals like cadmium and offered higher capacity, longer lifespan, and improved power and durability. Lithium-ion (Li-ion) batteries, first commercialized by Sony in 1991, have doubled energy potential and gained widespread adoption in laptops, cell phones, and vehicles. Today, they power a wide range of electronic products and are being researched to make them safer, more powerful, and longer-lasting, with potential applications in electric mobility and other fields.

Source: Lion Smart, The Battery University

At 40.77% of Global Battery Market revenues in 2022, Li-ion is the battery of choice for portable devices and the electric powertrain. 

Lithium-Ion Battery Market to reach $189.4 bn globally by 2032 at 15.2% CAGR from $46.2 bn in 2022.

The EV industry is expected to drive the dominance of lithium-ion battery solutions in the coming years. In 2022, automotive lithium-ion battery demand surged by 65% to 550 GWh, from about 330 GWh in 2021, largely due to an increase in electric passenger car sales globally.

Sources: Global EV Outlook 2023, Allied Market Research, Grand View Research 

Batteries and the Energy Transition

Renewable energy, while environmentally friendly, has faced challenges with intermittency, a problem that hinders its ability to provide a constant energy supply. This issue is linked to the concept of "base-load" energy, which refers to a power source's ability to provide a minimum, uninterrupted amount of energy to a grid. Lithium batteries have played a crucial role in addressing intermittency through energy storage and reducing dependence on continuous base-load power from a single source.

Source: World Bank, Know How

Types of Energy Storage System (ESS)

Mechanical storage systems (MSSs) store energy by utilizing kinetic or gravitational forces, with the Flywheel Energy Storage System being a popular choice due to its high efficiency and power density. These systems can be combined in hybrid setups for EV energy storage. 

Electrochemical devices can store and convert energy in various forms. Electrochemical electrical storage is based on systems with either high energy density (batteries) or power density (electrochemical capacitors). They store and release electrical energy through chemical reactions with various metals (lithium, iron, lead, etc.)

Electrical storage systems store energy in electric or magnetic fields, with ultracapacitors being widely used for quick power bursts during sudden acceleration. 

Chemical conversion systems, like fuel cells, convert chemical energy into electrical energy without mechanical motion, offering high efficiency, extended operational lifespan, and noise-free operation. Fuel cells are available in various types based on the ion carrier and fuel used.

Sources: MDPI, Research Gate, Special thanks to Murari Ramkumar, Co-Founder and CEO of Vimano Inc.

India’s Energy Storage Market

The share of renewable energy will increase from 9.2% in 2019 to 32% in 2030 in India. This will require the installed capacity of renewable energy to be scaled up from 82.5 GW in 2019 to 455 GW in 2030. The government has set a target of having 500 GW of installed renewable energy by 2030.

India's Battery Energy Storage System (BESS) market is estimated to be at $3.10 billion by the end of 2023 and is projected to reach $5.27 billion in the next five years, registering a CAGR of over 11.20% during the forecast period.

Source: TOI, CSE India, Mordor Intelligence 

Ostara Review: Fund-raising in the Indian EV Ecosystem (Jan - Aug 2023)

A total of $1161m in investments (incl. debt and equity) were announced in the Indian EV ecosystem during Jan-Aug 2023. Of these, EV OEMs have the highest share with 38.6%, followed by Battery Swapping and Mobility Services with 21.5% and 14.2% each respectively.

The most interesting trend is the relatively more even distribution of sub-sectors that received funding as compared to the previous year. The share of OEMs in the fund-raises announced went down from 75-80% in previous years to ~39% in the first 8 months of 2023, while the share of Battery Swapping, Charging, EV Fleets, etc. has increased. 

OEMs that announced funding in the first 8 months of the year included Murugappa Group’s TI Clean Mobility, Mahindra & Mahindra, Ola Electric, Ather Energy, Simple Energy, River, and Kabira Mobility, among others.

The EV OEMs segment saw the highest number of deals (9 deals) totaling ~$448m followed by EV Components(8 deals) totaling ~$80m and Mobility Services (7 deals) totaling ~$165m.

Disclaimer: The information contained herein is a part of Ostara’s proprietary research, based on publicly available sources. These are the deals announced from Jan-Aug 2023 and include debt financing as well as future funding commitments in certain cases. 

Do write to us with topics in Climate-tech, Mobility, and New Energy that you’d like us to cover in future editions.

We are at the cusp of an exciting era of electrification in the #motorcycle segment that presents breakout investment opportunities in the Indian market. At Ostara Advisors, we have been excited about this space for a while and see some interesting players emerging in this segment. This month, we take a look at the trends in the Indian Motorcycle industry, from an electrification perspective.

Sizing up the Indian 2W Market:

The Indian 2W market comprises motorcycles, scooters, and mopeds, with motorcycles accounting for ~65% of the 2W market. The Indian 2W market was valued at $16B in 2022 and is projected to reach $26.64B by 2028, growing at a CAGR of 9.88% over this period.

Source: TechSci Research

Two-wheeler Categories

E-Scooters vs E-Motorcycles: A Quick Explainer

Source: EV News

FAME II Eligibility:

Currently, India’s FAME II Scheme allows for a demand incentive of 15% of the ex-factory vehicle price or Rs 10,000 per kWh of battery pack, whichever is lower. For electric two-wheelers, a maximum ex-factory price cap of Rs. 150K is prescribed to avail of the subsidy. This means that an electric motorcycle designed for performance and range will be outside the subsidy net and a subsidy-agnostic business model can be built in this space.

What makes Electric Motorcycles so special?

While ICE motorcycles are increasingly getting more advanced in terms of performance, at given price points and specs, EV powertrains offer a whole range of opportunities to make the machine significantly more advanced in terms of connectivity and software-defined architecture. 

Superior Technology:

• Instant Torque: EMs provide instant and consistent torque, whereas ICEMs need to rev up to reach peak torque, leading to a different riding experience.

• Thermal Management: EMs may have advanced thermal management systems to maintain optimal operating temperatures for the battery and motor, enhancing performance and longevity.

E-Motorcycles (EMs) are Software-defined vehicles:

• Motor Control: EMs require sophisticated motor controllers to regulate the power delivery to the electric motor. Software controls the torque, throttle response, and energy recuperation.

• Battery Management: EMs feature advanced Battery Management Systems (BMS) to monitor and balance the cells in the battery pack. The BMS is critical in determining the performance and safety of the vehicle and is one of the toughest aspects to engineer.

• Connectivity: EMs often have integrated connectivity features to provide real-time data on battery status, range, and performance. Some models allow over-the-air software updates.

Edge Computing:

• Motor Control: EMs may employ real-time edge computing for instant adjustments to motor output based on rider input and road conditions, enhancing performance and safety. EMs utilise Torque and RPM sensors to measure motor RPM and torque output. This data is crucial for optimising power delivery and efficiency.

• Predictive Maintenance: Edge computing can enable predictive maintenance, analysing sensor data to identify potential issues before they become critical. Some EMs offer cloud-connected features for remote diagnostics, firmware updates, and even rider-specific settings.

Ride-by-Wire Technology

• Electric Throttle: EMs can use ride-by-wire technology to control the throttle electronically, allowing for precise power delivery based on rider input.

• Regenerative Braking: Ride-by-wire technology can be employed to adjust regenerative braking levels, optimising energy recapture in which it converts kinetic energy back into electrical energy, increasing overall efficiency and range.

Low Maintenance

Electric scooters and motorcycles need very little maintenance. With only a battery, a motor, and a controller to keep you moving, electric motorcycles are a breeze to maintain compared to a conventional motorcycle, what with all the lubricating and adjusting and tuning that needs to be done. You basically just worry about consumables: brake pads, tires, a brake fluid flush. Electric scooters and motorcycles equipped with regenerative braking typically have longer brake pad life because a significant portion of braking duty can be performed with the electric motor instead of the mechanical friction brakes.

Low Operating Cost

At between one and two cents per mile (depending on electric rates), electric machines enjoy an enormous fuel cost advantage. Three months and 2,800 km (1,700 mi) of commuting on an electric motorcycle cost less than $30 for electricity; on a BMW ICE bike a single trip of 650 km (400 mi) cost nearly the same.

Recent Partnerships in the Indian Motorcycle segment 

Accelerating growth in the premium 2W segment has seen Indian 2W majors partner with global players. Recent developments in the Motorcycle segment are summarised below. These partnerships are expected to tap into the growing demand for premium motorcycles in India and challenge Royal Enfield’s dominance in this segment.

1. TVS Motor Company and Ultraviolette Automotive : TVS Motors, one of the largest motorcycle brands in India, has invested in Indian electric motorcycle  startup Ultraviolette Automotive.  

2. Hero MotoCorp and Ather Energy : Hero MotoCorp, the world's largest manufacturer of motorcycles and scooters, has been a significant investor in Indian EV Scooter startup, Ather Energy,. Hero MotoCorp is working towards building the entire EV ecosystem through investments and partnerships with external partners.

3. Royal Enfield's Electric Division: Royal Enfield is working on  two electric motorcycle platforms: one in-house and one in collaboration with Spanish startup Stark Motorcycle. The final product is expected to be ready for market launch by 2024. The new electric Royal Enfields will be built at the company's Chennai plant and move to a new plant in Cheyyar by 2025, stated the Company.

4. Matter and Airtel for Aera electric motorcycles: Indian EV startup, Matter Motor Works and Bharti Airtel have partnered to deploy Airtel's IoT solutions in Matter Aera electric motorcycles. Airtel will enable automotive grade E-Sims on 60,000 bikes, providing a connected experience on Airtel's pan-India network. 

5. Hero MotoCorp and Zero alliance : Zero Motorcycles is partnering with Hero Motocorp to enter India, aiming to establish itself in the Indian market. Hero has made a $60 million equity investment in Zero and plans to launch and manufacture Zero's two-wheeler portfolio in India. The partnership combines Zero's expertise in power trains and electric motorcycles with Hero's manufacturing and marketing capabilities.

6. Bharat forge investment in Tork: Bharat Forge invested up to Rs 30 Crores in an EV startup with Tork Motorcycles, a renowned Indian e-bike manufacturer with expertise in 2 wheeler powertrains since 2009. Tork's in-house team will provide Bharat Forge with access to personal e-mobility technologies.

ICE Motorcycles are set to see some new launches as well:

Bajaj Motors and Triumph motorcycles: Bajaj Auto officially handles distribution in India for Triumph Motorcycles Ltd. By 2025, it intends to open Triumph dealerships with the Triumph emblem in more than 120 cities.

Harley Davidson and Hero MotoCorp : Harley-Davidson is partnering with Hero MotoCorp to offer locally-produced premium bikes in India. The deal aims to develop and sell a range of premium motorcycles, starting with the X440, under the Harley-Davidson brand in India, with Hero MotoCorp responsible for service and parts requirements.

Top electric motorcycles/Scooters brands in India

Source: Bike Dekho 

Deals and developments

1. August 2023: Ola Electric’s 4 new concepts unveiled:Launch by end-2024

2. July 2023: TVS Motor collaborates with the Indian Army for an All-Women Motorcycle Rally to honor Kargil Vijay Diwas.

3. July 2023: Three major motorcycle manufacturers are preparing to compete against Royal Enfield: Hero-Harley, Bajaj-Triumph, and Honda

Do write in to us with topics in Climate-tech, Mobility, and New Energy that you’d like us to cover in future editions.

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Imagine hopping on a bus that doesn't rumble with a noisy engine, doesn't emit clouds of exhaust, and doesn't rely on fossil fuels. Instead, it glides through the streets silently, powered by clean and sustainable electricity. Yes, we're diving headfirst into the remarkable realm of electric buses – the next big revolution in urban transportation!

Electric buses have become more than just a novelty in recent years – they have become a necessity. As we face the challenges of climate change and air pollution, it is crucial to reimagine our transportation systems and prioritize sustainable alternatives.

Why Electrify City Buses?

• As the upfront cost of an EV is more than an ICE vehicle, fleet operators with regular and high utilization stand to benefit from lower operating & maintenance costs resulting from economies of scale. City buses, with fixed routes that cover large areas, eminently fit the bill.

• Buses ply in urban environments where noise and air pollution are major issues. Electric buses solve for both as they generate much less noise and have zero tailpipe emissions.

• India, in comparison to nations like Brazil, Mexico, and China, requires 300,000 new buses to accommodate its quickly expanding population. This offers a chance to switch from diesel-powered buses to cleaner electric vehicles.

Source: WRI Report on Electric Buses

Only 4,909 of the 12,15,397 total buses in India are electric buses, making about 0.4% of the total.

The two most common bus lengths in India are the 9 m (Midi) bus and the 12 m (Standard) bus. Due to their lower CAPEX costs and narrower streets in cities, 9m buses were favored by most cities.

Source: Vahan Sewa, UNESCAP  

Anatomy of an Electric Bus

Source: Research gate 

Battery 

• The battery in the eBus may be placed either on the floorboard or on the roof of the chassis 

• Lithium-ion batteries are crucial for electric vehicles, with energy consumption primarily influenced by vehicle weight. In the e-bus segment, competition for the highest energy density is fierce.

• Should have high energy density (to provide a long driving range) & high power density (to increase the acceleration)

• Currently, lithium iron phosphate (LFP), lithium titanium oxide (LTO) and lithium nickel manganese cobalt oxide (NMC) dominate the Electric bus batteries 

Comparison of a 12-metre e-bus range after 10 years of use, when NMC or LTO batteries are installed. (2021 research)

Clearly from the above, NMC wins the race as it offers both high energy density and ability to fast charge, making it suitable for both opportunity and depot charging (see below). 

LTO offers high charging power but low energy density, and is only suitable for opportunity charging. LFP is more feasible in slow-charging situations.

Source: BMZ Poland  

Charging Methods for Electric Buses in India

Depot Charging is typically slow-charging done overnight when the buses are not plying and does not require additional charging infrastructure en-route. 

Opportunity Charging involves fast-charging during short stops en-route and enables smaller battery packs in buses, but requires conveniently located charging stations.

• Plug-in charging is the primary method for charging e-buses globally, with AC or DC outputs. 

• Pantograph charging uses an automated system for DC charging at high power levels. The e-bus must be designed with specific battery chemistries for high resilience. 

Other charging techniques, such as wireless and battery swapping, have been applied, but their adoption remains pilot-level and empirical research on trade-offs is not encouraging. 

Source: WRI India

What are the economics (TCO) of an electric bus in India

• The focus on electrification of the public transport bus fleets is essential for future-proofing long-term capital investment decisions. 

• However, for a typical daily utilization of 200km, electric buses currently have a higher TCO per km than diesel (low-cost models) and CNG-fueled buses. 

• The TCO per km for electric buses is INR 60.47, as compared to INR 69.28 for high-end diesel buses and INR 44.30 for low-cost diesel buses. 

• For electrified public transport fleets to be economically competitive for transit agencies, electric buses need higher utilization or financial incentives to lower capital costs.

  

Source: WRI India

Key Electric Bus OEMs in India

Source: Vehicle info (Feb 23)

Deals & Developments in the eBus space

• July 2023: JBM Auto and its subsidiaries have won orders for approximately 5,000 electric buses for supplying to various STUs & leading corporates

• July 2023: Later this year, the first test runs of Hydrogen Powered buses  will likely be under way in Delhi followed by other States. The buses, developed under a joint venture involving Indian Oil Corporation Ltd. and Tata Motors, will ply — as part of a scientific test experiment 

• June 2023: US, India to build payment security system  to put 10,000 e-buses on roads

• May 2023: Olectra to have new e-bus  factory operational by March ‘24 quarter

Do write in to us with topics in Climate-tech, Mobility, and New Energy that you’d like us to cover in future editions.

Thanks for reading The Ostara Advisors Newsletter! Subscribe for free to receive new posts and support my work.

We are back with our monthly edition to dive into India’s recent Battery Waste Management Rules as well as feature select global actors in this space & their recycling technologies.

The potential value creation for EV battery recycling, estimated at $95 billion per year by 2040, is massive and is attracting attention from automotive OEMs, battery OEMs, and investors. Source: McKinsey insights

Happy Reading!

India’s Waste Management Policy - who does what!

The Indian government notified the Battery Waste Management Rules, 2022 late last year to ensure efficient management of and clear accountability for waste batteries in the country. Key definitions in this Policy include:

Battery materials include metals such as nickel, cobalt, lead, lithium, and other materials such as plastics, paper, etc.

‘End of Life battery' refers to batteries that have been used, completed their intended use, and are not meant for refurbishment.

‘Extended Producer Responsibility (EPR) means the responsibility of any Producer of Battery for environmentally sound management of Waste Battery.

The Producer:

• They must ensure batteries in the market meet collection and recycling targets, registering and renewing before 60 days of expiry.

• Central Pollution Control Board(CPCB) must be informed of any changes in EPR registration and permanent cessation of the battery.

• An EPR plan must be provided to CPCB by 30th June for the Battery manufactured in the preceding financial year including its quantity & weight, dry weight of Battery materials.

• Annual returns regarding the Waste Battery collected and recycled or refurbished must be filed. 

Recycler 

• It requires them to register with the State Pollution Control Board via the online portal.

• Must ensure that hazardous waste is managed according to the Hazardous and Other Wastes Management and Transboundary Movement  Rules and other waste is managed according to the Solid Waste Management Rules, Plastic Waste Management Rules, and E Waste Management Rules.

• Quarterly Returns should include waste battery quantities, recycling compliance, and hazardous waste generation.

•  Batteries Recycled must not exceed installed capacity while meeting minimum weight targets. 

• A Committee reviews recovery targets for battery materials every 4 years.

Central Pollution Control Board

• It registers the Producers and ensures compliance with these rules.

• It shares EPR plans and registration details with the State Pollution Control Board. 

• Periodic inspections and audits are conducted to enforce rule compliance. In case of violations, registration suspension or cancellation may occur.

• It publishes EPR certificates, a list of non-compliant producers, EPR plans, and annual returns. 

• It establishes a stakeholder dialogue mechanism and forms a Committee to implement the rules, submitting reports and recommendations every six months to the Ministry of Environment, Forest, and Climate Change.

Portal

• An online system for the registration and filing of returns by producers, recyclers, and refurbishers of Waste batteries within six months of the commencement of these rules.

• It reflects the audit details of the Producers and entities involved in recycling. 

Target of EPR

The EPR targets new producers of batteries in the market, encompassing collection and 100% recycling goals. 

• The regulation mandates a minimum collection of 70% of batteries placed in the market in the previous financial year, with 100% of collected batteries to be refurbished or recycled within a seven or fourteen-year cycle. 

• Additionally, up to 60% of the average yearly quantity of batteries placed in the market can be carried forward to the next compliance cycle.

Source: Battery Waste Management

Key Players in the EV Recycling Value Chain:

Source: Science News, Niti_Aayog

International Actors in this domain

Recycling companies — including American Battery Technology Company and Redwood Materials, both based in northern Nevada and headed by former Tesla engineers — say they are making the processes more efficient.

• American Battery Technology Company is a US-based battery recycling startup founded in 2011 by CEO Ryan Melsert. Their innovative approach utilizes machines to break down used batteries, replacing traditional hydrometallurgy. 

They extract and sell lower-value components like plastic, aluminum, and steel, while their proprietary chemical reactions enable the extraction of valuable elements such as nickel, cobalt, manganese, and lithium.

This process achieves a recovery rate exceeding 90% for these high-value elements.

The Company is establishing partnerships with General Motors, Ford, and Stellantis (owners of multiple brands like Dodge, Jeep, and Maserati) to ensure that traded-in car batteries are sent for recycling.

• Redwood Materials, Inc., headquartered in Carson City, Nevada, was founded by JB Straubel, former Tesla CTO and co-founder. The company has partnered with Volkswagen, Toyota, Ford, and other automakers for battery collection and recycling initiatives.

Redwood's advanced process can recover over 80% of lithium and 95-98% of nickel, copper, and cobalt from batteries, resulting in high-quality lithium carbonate for new battery production.

To support its expansion, Redwood Materials secured a $2 billion loan commitment from the Department of Energy. The funding will be utilized to construct and enhance a battery recycling facility near Reno, Nevada. The facility processes end-of-life electric vehicle batteries and automotive production scrap, generating raw materials used in the production of new EV battery cells.

In a significant economic development announcement, Redwood Materials revealed a $3.5 billion investment to establish operations in Berkeley County, South Carolina, creating 1,500 new jobs over the next decade.

Read more

• Li-Cycle is a Canadian clean technology company specializing in environmentally friendly lithium-ion battery recycling. Their process utilizes leaching instead of smelting, resulting in minimal waste, air emissions, and water consumption. The low-temperature process ensures a small environmental footprint.

Having raised a total of $1 billion in funding across 7 rounds, Li-Cycle recently secured a conditional $375 million loan from the Department of Energy. The funding will support the development of a battery material recycling facility near Rochester, New York. Read more

Some of the largest companies in the world are buying as much recycled battery metals as available, the challenge, right now, is really about who can scale up the quickest.

Source: CNBC

Do write in to us with topics in Climate-tech, Mobility, and New Energy that you’d like us to cover in future editions.

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Yes, this month marks the 25th monthly edition of “All about EVs”, a newsletter we launched in May 2021 to foster a conversation among investors about the Clean Mobility ecosystem in India. Little did we foresee the impact it would have and the number of people it would reach. It's remarkable to note that we’ve gained close to 30,000 views so far on our editions! Some of the most read editions include 2022: The Ostara Rewind, The Indian EV Ecosystem in 2022, EV Retrofitting among others. Even more heartening is the love and appreciation this newsletter has received. Thank you all!

On with our topic for this month, Battery Recycling! We are doing a two-part series on this topic. Watch out for more on this next month as well.

Why recycle EV batteries?

Imagine landfills being filled to the brim with used EV batteries! It’s barely sustainable given we don't have an infinite supply of battery materials like lithium, nickel, cobalt, etc. 

With the EV revolution well underway, the amount of Lithium-ion EV batteries available for reuse each year in India may go well beyond 100 GWh by 2030. Researchers say that recycling could help avoid the buildup of hazardous battery waste and provide a valuable source of scarce battery materials while mitigating the environmental impact of additional mining.

Source: Advanced Energy 

Source: knowable magazine

The Waste Management Hierarchy

• Battery Repurposing is the first step in this hierarchy, where used cells or packs could be repackaged to be used for non-intensive tasks like powering street lights. This is based on the cell-level assessment of battery health.

• The next step is to recycle the spent batteries that could not be repurposed. The EV batteries are manually disassembled to separate the plastic and metal parts (yes, it is quite labor-intensive but efficient too!). Next, the batteries are discharged before any further extraction, and the electricity recovered is used to run recycling processes (Nothing should be wasted after all!).

• Once the battery is shredded, it's separated into groups: one of them being the crown jewel black mass, as suggested by the name it is the most sought-after thing by the companies for the presence of prized metals like Lithium, Nickel, and Cobalt, Copper, Manganese,  Cadmium, etc. 

• This is followed by the extraction of pure battery materials from the black mass. using techniques such as pyrometallurgy, hydrometallurgy, among others.

Source: makeuseof

Why Repurpose Batteries?

Ideally, to ensure the smooth functioning of EVs, the battery should maintain 80% of total usable capacity and achieve a resting self-discharge rate of only about 5% over a 24-hour period. A failure of these conditions marks the end of the first life of an EV battery.

Repurposing involves assessing the State of Health of batteries, dismantling, reassembling, and repackaging for the new application.

Energy Storage is the most suitable application for second-life EV batteries: 

• It can provide reserve energy capacity to maintain power grid reliability

• It can help defer transmission and distribution investments 

• It can help benefit from power-arbitrage opportunities by storing renewable power for use during periods of scarcity, thus providing greater grid flexibility.

Source: Repurpose, mckinsey

Battery Material Extraction Technologies

The most common techniques include hydrometallurgy and pyrometallurgy.

Hydrometallurgical treatments involve the use of aqueous solutions to leach the desired metals from the cathode material. By far the most common combination of reagents reported is H2SO4/H2O2, it was found that leaching efficiency improved when H2O2 was added. Once leached, the metals may be recovered through a number of precipitation reactions controlled by manipulating the pH of the solution. 

The pyrometallurgical process uses a high-temperature furnace to reduce the component metal oxides to an alloy of Co, Cu, Fe, and Ni. It follows that in this process there is typically no consideration given to the reclamation of the electrolytes and the plastics (~ 40–50% of the battery weight) or other components such as the lithium salts. 

Direct recycling of lithium-ion is more efficient than classical methods because it recovers the functional cathode particle without decomposition into substituent elements or dissolution and precipitation of the whole particle. This process includes extraction of electrolyte with carbon dioxide, industrial shredding, electrode harvesting, froth flotation, cathode-healing and finally, building new cells with recycled cathode and anode. 

A quick comparison of these technologies is presented below (thanks to the good folks at Speciale Invest for this)

Source: Speciale Invest, Science Direct,  sae

Deals & Developments

• May 2023: Lohum, a lithium-ion battery recycling firm, on Tuesday announced a partnership with insurance provider ACKO to incorporate recycling and reuse provisions in India's first-ever electric vehicle (EV) battery insurance.

•  April 2023:  Gravita India Ltd. has successfully secured ESG Funds from prestigious European institutions. 

• Jan 2022: Lithium-ion battery recycling offers a $1,000 million opportunity by 2030, says JMK Research. The recycling market in India is expected to pick up from 2022 when batteries presently in use in EVs reach their end of life. 

Ostara Update!

Our founder Vasudha Madhavan spoke on the Centre Stage at Asia's foremost Mobility and Energy Conference, Future Mobility Asia Exhibition & Summit 2023 Bangkok, Thailand on the 18th of May, 2023.

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The Institute of Electrical and Electronics Engineers (IEEE) defines IoT as a system of self-adaptive and complex networks of objects.  IoT uses intelligent physical objects, primarily electrical ones, that are network-connected and capable of data exchange, thanks to integrated software, sensors, and other technologies.

Ever wondered how IoT plays a role in Electric Vehicles? Well, IoT gives an EV its digital identity! Read on to find out more, in, IoT- The Digital Identity of EVs.

The Role of IoT in EVs

The drivetrain in an ICE vehicle contains 2,000+ moving parts typically, whereas the drivetrain in an EV contains around 20, predominantly using electronics. This makes it eminently suited to IoT applications in automotive engineering.

IoT in EV can be used in several ways, including to improve customer experience. This can be done by analyzing  performance parameters of the vehicle, warning drivers of possible malfunction, helping find the nearest charging station and many more.

IoT & Telematics

Telematics is a method of monitoring vehicles, equipment and other assets by using GPS technology and on-board diagnostics (OBD), through data received from vehicle sensors, to plot the asset’s movements on a computerized map. 

How does IoT in Telematics work?

• Collect: Gather data from sensors and various other devices in a home, vehicle, or manufacturing plant.

• Communication: Send the data to a cloud platform or a personal data centre using a communication gateway through Wi-Fi, 4G, or 5G, etc.

• Analysis:  Collect useful information from the raw data to visualize, generate reports, and to make predictions.

• Action: Based on the analysis, communicate with other devices through machine-to-machine (M2M) protocols, or send notifications (SMS, email, etc) to the concerned persons for rectifying any errors.

What is the use of this data to the Driver or the Fleet Operator?

The data can be put to use broadly as follows:

Driver Analysis:

• Data gathered from the DTG (Digital Tachometer Graph) and GPS indicates vehicle status in terms of distance traveled, time taken, over-speeding during the journey, malfunctioning, records the exceptional events, and warnings.

• Telematics provides the best route for travel and by comparing the driving analysis data it refines the result for better route optimization, provides warnings on exceeding the driving speed limit, and vehicle services status.

Safety and smart driving:  

• EV score over ICE vehicles on reliability. Thefts are prevented through real time tracking, geo-fencing and immobilization thus reducing dependence on insurance which is usually a hassle for common people.

• The driver gets alerts about possible future battery malfunctions, technical glitches, keeping in mind the geographies and moisture conditions to increase the accuracy while also buying users time to deal with it easily. Thus,  instead of being randomly ditched in the middle of the road, now drivers have a chance to be prepared for the worst. 

• Pairing the IoT with fleet management technology helps service providers and fleet operators embrace predictive analytics. 

Sources: Electronicsforum, iotforall, iot-fleet-management

IoT & EV Charging

IoT can help optimize energy consumption during peak hours, charging time etc. It taps data from the Charging Equipment, the Mobile App and sends it over to the Cloud platform and improves customer experience in the following ways:

• User verification: As soon as the customer taps her RFID card/tag or uses a smartphone for access, the charging station sends this data to the IoT platform over the cloud. The IoT platform then checks the driver’s profile, performs Authentication, Authorization, and Accounting activity, and ensures secure transactions and billing.

• Charger availability: Similar to booking a seat at a restaurant, the EV charging app can search for nearby stations, check availability, and reserve a slot for the required time, based on the battery capacity. The app can also indicate charging rates or advise off-peak hours for low-cost charging.

• Automated operations: While the EV is charging and the driver is away, the station can notify drivers of the exact charging time left, any error in cable connection, automatic payments, or even call for emergency assistance in case of any critical events working autonomously.

How does it help the CPOs?

Smart charging – Energy rates vary during seasons, for example, summertime with abundant solar energy production and demand during peak hours during the day. The chargers can automatically start charging when they find the lowest rates available from the grid and vice versa. In order to be sustainable and to make sure we can provide during the peak hours the IoT tries to accordingly schedule slots to distribute load and utilize the grid efficiently.

Remote management – IoT enables Charge Point Operators (CPOs) to quickly resolve issues and remotely manage operations by presenting insights into usage and device performance. Insights such as charger availability, utilization, fault monitoring, and troubleshooting greatly help in predictive maintenance and reducing downtime.

EVSE control – IoT platform collects data from various sensory nodes and analyzes grid limit, energy tariffs, EV battery capacity, and state of charge. Taking this data into account, it becomes easier to control and manage a large fleet of charging infrastructure.

Source: einfochips

Deals & Developments 

Mar 2023: BlackBerry sets up State-of-the-Art IoT Center in India to revolutionize software-defined vehicles

Mar 2023: Railways To Equip Nearly 9,000 Locomotives With IoT Devices For Live Tracking Of Trains With ISRO Help

Feb 2023: India’s mobility sector to be supercharged by IoT in 2023

Dec 2022: Plugzmart’s IoT-Enabled Chargers Can Charge All Kinds of EVs In 40 Minutes

Dec 2022: ThingsUp, An IoT Platform Raises Seed Funding from Silverneedle Ventures & Others

Ostara Update!

We’re back with another juicy edition of the Ostara newsletter! First up, a couple of quick Ostara updates…

Ostara Updates!

Now, for our topic for this month…

India’s first large-scale CNG programme kickstarted in 1998, in Delhi, after the Supreme Court of India then issued several directives centred around the clean fuel. Since then, almost a million automobiles in India have been successfully converted to CNG. 

25 years later, a similar revolution is taking place in our country, but this time it involves converting to electric. With a total of 325 million vehicles on India’s roads today and the EV transition picking up steam, we believe it's timely to think about converting the ICE vehicles to electric. And so, this month, we will be focusing on EV conversions in the Ostara Newletter’s EV Retrofitting edition.

What is EV Retrofitting?

EV retrofitting, or EV conversion, terms that are often used interchangeably,  refer to the process of converting an existing gasoline or diesel-powered vehicle into an electric vehicle (EV). This process involves removing the vehicle's internal combustion engine and replacing it with an electric motor, battery pack, and other necessary components to make it run on electricity.

The process of retrofitting can vary depending on the type of vehicle being converted, and the complexity of the conversion can depend on the age and make of the vehicle. Some companies specialize in EV retrofitting and offer conversion kits for specific models of vehicles.

What’s included in an EV Retrofitting Conversion kit? 

Motor, Controller, Shunt

Transmission adapter kit, Charger, Chill plate

DC/DC converter, Throttle controller, Controller mount 

Source: Inverted

A retrofitted vehicle uses almost the entirety of the body frame from the original vehicle. During its operation, it provides the same economic and environmental benefits which a new electric vehicle of similar specification provides, while also enabling the re-use of body parts and materials, which would be otherwise disposed of. 

Types of Retrofitting

• Hybrid retrofitting: This entails adding an electric motor, battery pack, and related control systems to the vehicle’s existing internal combustion engine. The battery pack is charged through regenerative braking and adds extra energy when demand is at its highest, while the electric motor helps the diesel or petrol engine accelerate.

• Battery electric retrofitting: The internal combustion engine is removed and an electric motor, battery pack, and related control systems are installed in their place. 

• Plug-in hybrid retrofitting: This involves retrofitting a hybrid vehicle with a bigger battery and a plug-in charging system, enabling the car to be charged from an external power source and run on electricity alone for more extended periods.

• Range extender retrofitting: This involves retrofitting a battery electric vehicle with a small gasoline or diesel engine that acts as a generator to recharge the battery pack when it runs low on charge. This extends the vehicle's range and reduces the need for frequent charging.

• Regenerative braking retrofitting: This involves retrofitting a vehicle with a regenerative braking system that captures energy normally lost during braking and uses it to recharge the battery pack, increasing the vehicle's efficiency and range.

Source: AFDC, Progressive

Conversion Process

The procedure for EV retrofitting can vary depending on the specific vehicle being converted and the conversion kit used. Generally, it involves the following steps:

• Vehicle evaluation: The first step is to evaluate the vehicle and determine if it is a suitable candidate for conversion. Factors to consider include the age and condition of the vehicle, its weight, and its overall design.

• Engine and fuel system removal: The internal combustion engine, fuel tank, and associated components are removed from the vehicle.

• Electric motor installation: The electric motor is installed in the vehicle, along with a motor controller, which regulates the motor's speed and torque.

• Battery pack installation: The battery pack, which provides power to the electric motor, is installed in the vehicle. The number of batteries and their placement in the vehicle will depend on the specific conversion kit used.

• Charging system installation: An onboard charging system is installed, which allows the battery pack to be charged from an external power source.

• Wiring and controls: The vehicle's wiring and control systems are modified to work with the new electric components.

• Testing and calibration: Once the conversion is complete, the vehicle is thoroughly tested to ensure that all components function correctly. The motor controller is calibrated to provide optimal performance, and the battery pack is tested for capacity and efficiency.

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Regulatory framework for Retrofitting

ARAI (Automotive Research Association of India) has set out clear technical requirements for the approval of EV retrofitting kits. The Type Approvals for EV Retrofitting kits ensure the performance and safety of the retrofitted electric vehicles across a wide range of 2W and 3W categories, in addition to LCVs, Buses, Trucks, etc.

Type Approval procedure

The type approval procedure has 2 steps –

• Kit Component Level Approval: All the component aggregates being added to the vehicle, that can include traction motor, battery, inverter, wiring harness, connectors, state of charge indicators, and any other electronics such as vehicle control unit, on-board chargers, need to be approved first as a kit – for conversion into either a hybrid or pure electric vehicle.

• Vehicle Level Approval: The applicant must submit a retrofitted electric vehicle, the target vehicle in use, to ARAI for Type approval.

Once both the type of tests are conducted successfully, the Type Approval certificate is approved for the vehicle. Based on this, the kit manufacturer can appoint dealers to sell those kits for that particular vehicle. The dealer can retrofit on behalf of the kit manufacturer.

India’s Retrofit Standards:

• AIS 123-Part 1

  CMVR (Central Motor Vehicle Rules) Type Approval of Hybrid Electric System (HES) intended for retro-fitment on – (i) Vehicles of M & N Category with GVW <= 3500kg, (ii) L Category

• AIS123-Part 2

  CMVR Type Approval of Hybrid Electric System (HES) intended for retro-fitment on vehicles of M & N Category with GVW > 3500kg

• AIS123-Part 3

  CMVR Type Approval of Electric Propulsion kit Intended for conversion of vehicles for pure electric operation

Source: EVReporter

Policy Framework for Retrofitting

Several states in India have implemented policies to promote EV retrofitting. Here are some examples:

• Tamil Nadu EV Policy 2023 provides financial incentives of up to 15,000 rupees for retrofitting two-wheelers and up to 20,000 rupees for retrofitting of three-wheelers.

• In 2022, the Delhi Govt. announced faceless retrofitting services, a first in the country, which would allow owners to get their diesel vehicle to be retrofitted with an EV kit at their homes from an authorised dealer.

• Chandigarh Draft EV Policy 2022 states that a discount of up to 25,000 rupees can be availed if fuel goods & commercial vehicles are retrofitted with electric kits.

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Select EV Retrofitters in India

Deals and Developments 

Mar 2023: AMU Leasing, 3ev Industries, and 3eco Systems have announced a new collaboration to introduce India’s first commercially proven ICE-to-EV converted 3-wheel L-5N, e30x, for 3ev’s hyper-local transportation services in Mumbai.

Feb 2023: Karnataka Government wants to convert all diesel buses in the state to electric via retrofitment by 2030.

Jan 2023: Solapur-based Precision Camshafts Limited (PCL) will soon introduce retrofitted light commercial vehicles on electric drivetrains for on-road testing.

Jan 2023: Renault to offer retrofits for its most iconic cars to turn EV!

From the Founder’s Desk:

We have had an exciting start to the year! Lots of new launches in the Indian Electric Mobility landscape and a growing focus on clean mobility across stakeholders including in policy-making at the Central Government level.

As deal activity increases in Mobility and Sustainability, we are looking to partner at mid-to-senior levels. If you are or know of a creative, entrepreneurial investment banker with a passion for catalysing global climate investments in India, do write to me directly at vasudha@ostara.co.in 

On with our newsletter for this month…

An Electric Vehicle (EV) consists of an interconnected system of electronics and connection networks that manage the various functions in the vehicle, including the BMS (which, for instance, measures the battery temperature and accordingly, initiates the cooling or heating operation by sending a signal to the ECU), among many others such as the electronics of the powertrain, the infotainment system,  etc. all of which we call the  Internal Network of the EV.

What does the EV’s Internal Network do?

The internal network helps:

• manage the distribution of power to different systems and components, 

• control the motor, such as its torque and speed, as well as manage regenerative braking,

• manage the charging process, monitoring the battery's SoC (state of charge) and temperature during charging, and

• collect data for vehicle diagnostics and performance analysis.

In our earlier editions, we’ve talked about the powertrain, the motor, and even the battery, which constitute the internal network's hardware components. These components are connected through an Electronic and Electrical communications network, called the Controller Area Network (CAN Bus).

So what is the CAN Bus?

CAN  is a robust and reliable communication protocol widely used in the automotive industry due to its high data transmission rate and low complexity. It was introduced in 1986  by Robert Bosch, at the Society of Automotive Engineers (SAE) congress.

Think of the EV as a human body. Just as the body has various parts in organs, muscles, and bones, so does the EV, in the many constituent components and functions (ECUs to be precise, we’ll talk about them in a bit), and the primary system assisting the coordination of all these parts, is the CAN bus, which functions as the central nervous system, enabling communication across the EV.

The CAN bus is a 2-wired communication bus, i.e., one wire is used for transmitting data (often referred to as the "CAN high" line) and the other wire is used for receiving data (often referred to as the "CAN low" line).

The CAN bus is used to connect various ECUs within the EV. Each ECU has a unique identifier (known as an "address") and can use the CAN bus to send and receive messages with other ECUs in the vehicle.

Overall, the CAN bus plays a critical role in ensuring an electric vehicle's safe and efficient operation, and its design and implementation must meet strict safety and reliability standards.

ECU

The internal network contains several regional systems responsible for the function of some sections of the EV. There is an ECU, which acts as a node for the CAN bus, receiving information, and relaying it across.

An electronic control unit (ECU) is a small device inside a vehicle that controls one or several electrical systems in that vehicle. It tells electrical systems what to do and how to operate. ECUs consist of one or more microcontroller CPUs (Central Processing Unit,  integrated circuits designed to perform specific tasks) and embedded software.

While the entire powertrain of an EV is much simpler than that of their ICE counterparts, the number and sophistication of the electronic control units (ECUs) distributed around road-going EVs, in particular, continue to grow as more functions within the powertrain, chassis systems, driver aids and automation require computer control. Also, more of them have to be certified to safety standards, particularly ISO 26262, which governs electrical and electronic safety in road vehicles.

How the ECU works

An ECU receives input from one or several parts of the vehicle and uses that information to take action if needed. Let’s look at some examples:

Bringing it all together

In an automotive CAN bus system, ECUs can for e.g., be the engine control unit, airbags, audio system etc. A modern car may have up to 70 ECUs - and each of them may have information that needs to be shared with other parts of the network. This is where the CAN standard comes in handy. The CAN bus system enables each ECU to communicate with all other ECUs - without complex dedicated wiring, but a simple 2-wire system as shown above.

ECUs & AUTOSAR Architecture

AUTomotive Open System ARchitecture (AUTOSAR), founded in 2003, is a development partnership of automotive companies that seek to establish an open and standardised software architecture for automotive electronic control units (ECUs). 

AUTOSAR is an open and standard software architecture which was jointly developed by automobile manufacturers, suppliers and tool developers. As of February 2023, there are 350+ companies in this partnership.

Following the AUTOSAR standard made it possible to have a common software stack, leading to scalability to different vehicle and platform variants, transferability of software and easier updation during the product life cycle.

Auto Expo Showcase: 13-18 January 2023

Auto Expo is the biggest automotive event in India that takes place every two years, organised by the Society of Indian Automobile Manufacturers (SIAM), which is the apex governing body of the Indian automobile manufacturing industry. 

2023 saw the beloved event coming for its 16th edition, returning after three years, rather than the usual two. The event witnessed some exciting activity in the EV space:

4W Segment

From Maruti Suzuki, we saw the evX concept, which is set to become the OEMs first electric

vehicle. Tata showcased multiple vehicles, in the 4W as well CV segments. The 4W segments saw Tata Tiago Blitz EV, Tata Harrier EV, Tata Sierra EV, as well as their concept, Avinya.

Commercial Vehicle Segment

In the CV segments, we saw multiple OEMs showcase upcoming models of small-to-medium trucks as well as buses, including the Tata Group, Omega Seiki, JBM, Greaves Electric, etc. Ashok Leyland showcased its electric truck, the Boss EV, and Jupiter Wagons debuted their EV commercial vehicle line with the JEM Tez and the EV Star CC.

2W Segment

The 2W segment was bustling with activity, with several interesting displays. Ampere Vehicles showcased their Primus e-scooter while Liger Mobility presented their Liger X and X+ models. Matter Energy showcased its new concepts in the form of Concept EXE and Concept UT. Tork displayed their Kratos X e-Bike, while Ultraviolette showcased their F99 racing platform. Motovolt launched their multi-purpose e-scooter, while Hero Motocorp displayed their Vida V1 model.

EV Sales hit a million! 

A total of 1,006,412 electric vehicles were registered in India in 2022, of which 2W accounted for 62%,  3W for 34%, and 4W for 4%. The graph below depicts the sales trend over the past 4 years. This was a whopping 233% higher than the EV sales in 2021 and the highest ever in any year!

VC & PE Funding in the Indian EV ecosystem in 2022 

2022 witnessed investments of ~$1.3 Bn, across 41 deals into the Indian EV ecosystem, almost 5x the funding raised in 2020, though 25% lower than in 2021. The largest deal was Mahindra & Mahindra raising $250 Mn from British International Investment for investing in their 4W Passenger EV program, followed by Ola Electric raising $200 Mn from Tekne Private Ventures & others, and Ampere Vehicles raising $150 Mn from Middle Eastern investor Abdul Latif Jameel.

We did a deep dive into funding trends across various sub-segments of the EV Ecosystem. 

• In 2022, as in the previous year, EV OEMs in India took the lion’s share of the investments. Even though the absolute amounts were smaller - $931 Mn in 2022 as compared to $1561 Mn a year ago - funds invested in EV OEMs in India accounted for 75% of the total capital raised in the EV space in 2022. 

• EV end-user solutions, including rental platforms as well as ride-hailing services, had the second-highest share with 9% of the total investments. 

• EV components and technology formed about 7% of the funding pie, followed by Energy-as-a-service (Battery Swapping & Charging solutions) with 5%, and EV financing, at 4%.

Y-o-Y funding trends

As we predicted a year ago, 2022 witnessed significant growth in VC fund flows into the EV financing segment, almost 17x the value of funding this segment received in 2021. Another segment that observed high growth was the EV components segment, which saw 6 times more venture capital flows than last year.  The End-user segment was 2x of that in 2021, while the charging segment raised 1.4x more funding than in the previous year.  

Compared to 2021, the total funding decreased by $0.43 Bn, but the investment activity in the EV ecosystem has been much more diverse, as evidenced by the tremendous increase in other segments.

Key M&A Deals in 2022 Indian EV ecosystem 

Cellestial E-Mobility: Muruguppa group firm Tube Investments of India (TII) acquired a 70% stake in startup Cellestial E-Mobility for Rs 161 crore. Cellestial E-Mobility is engaged in the design and manufacture of electric tractors, aviation ground support, electric equipment and other electric machinery.

APM Finvest: Mufin Finance acquired APM Finvest, a BSE-listed NBFC, for over Rs 76 crore, in a bid to create India’s first financing ecosystem for the fast-growing electric vehicles(EVs) market. This came after Mufin Finance acquired Rupee Circle, a P2P (peer-to-peer) non-banking financial company, in June 2021.

ION Energy: Maxwell Energy Systems (MESPL), the advanced electronics business unit of ION Energy, was acquired for $40M (Rs 308 Crores) in an all-cash transaction by Endurance Technologies. ION Energy is an AI-enabled platform offering Battery Management Systems.

Numocity: Swiss technology company ABB’s e-mobility division has acquired a 72% controlling stake in Numocity. The acquisition cost, however, was not disclosed.  ABB had made an initial investment of 7% in the EV charging solution startup as part of its seed-stage. 

IPL Tech: Muruguppa group firm TI Clean Mobility acquired a 65% stake in IPLTech, for Rs 246 Crore. IPL Tech is a leading OEM startup in the electric heavy commercial vehicles.

EMF Innovations: Auto component company Shriram Pistons & Rings Ltd acquired a majority stake in EMF Innovations. The deal size was not disclosed. EMF Innovations is an electric motor design and manufacturing company.

Ostara’s Take

2022 was a notable year for the Indian EV ecosystem. Not only did EV sales hit all-time highs in India with over a million EVs sold, but there were also strong and swift policy moves by the Indian administration to strengthen battery safety as well as towards enabling battery swapping. These are good signs for strong and stable growth in zero-emission vehicles.

As we foresaw, leading startup OEMs in the electric 2-wheeler and 3-wheeler segments raised important funding rounds that set them up for scale. Clearly, the most notable trend of the past year in VC funding was the diversity of EV ecosystem startups that raised institutional funding - 4 segments of the EV landscape raised funds of $50m or above. 

We see 2023 continuing these trends of a wider spread of funding across sub-sectors, as well as greater capital flows into the EV components segment. 

Here’s to an electrifying 2023 from all of us at Ostara!

We started the year with a bang! Our client Altigreen Propulsion Labs, India’s leading commercial EV manufacturer, raised their Series A funding round. The $40m investment round was led by Sixth Sense Ventures, along with Xponentia Capital, Accurant International, LLC USA, Reliance New Energy (a wholly-owned subsidiary of Reliance Industries Limited) and Momentum Ventures (the Corporate venture arm of SMRT Corporation, Singapore). This was the largest fund-raise from Indian venture and corporate investors by an electric 3W startup and the first-ever investment in this space by all participating investors. During the year, we also helped close a few bridge rounds for our clients and are working on several exciting fund-raising and M&A transactions for industry-leading companies across the Indian EV ecosystem. 

Ostara’s Research in 2022

In our monthly newsletter, we covered several core topics that are relevant to the electric mobility landscape in India:

• In our February newsletter, titled “The Emerging Opportunity in Micro-mobility”, we discussed the huge trend towards purpose-built vehicles for daily commutes as well as emerging consumer trends in sharing and ownership of such vehicles.

• In our March edition,  titled “Oh SPAC!”, we demystified this much-talked-about phenomenon and gave a round-up of their rise and fall in the past year.

• April saw the “Ostara Guide to Safe Charging”,  where we explored the causes of battery fires and the need for safe charging practices, given rising EV adoption in India. This was Part 1 of our 4-part series on the EV Charging Value Chain.

• May 2022 marked one year of publishing our monthly newsletter. Our “First Anniversary Edition”, being Part 2 of our 4-part series on the EV Charging Value Chain saw us discuss the Indian  Charge-point Operator (CPO) landscape in some detail.

• In our June edition, “A Quick Overview of EV Chargers”- Part 3 of our 4-part series on the EV Charging Value Chain, we covered EV chargers and their manufacturers.

• Our July edition, “The EV Battery Management System (BMS)”, marked the final issue of our 4-Part series on the Indian Charging Landscape.  In this issue, we discussed the role and key functionalities of the BMS, different types based on design, topology and voltage, as well as our listing of key BMS players in India, and Deals and Developments.

• With the logistics sector being a major contributor to the Indian economy, and greenhouse gas emissions, electrification is the need of the hour, which is why our August issue saw us discuss various emerging business and operating models for  “Electrifying Freight”.

• Continuing where we left off,  September’s edition delved into how the world is electrifying freight and some interesting case studies from across the globe.

• October’s issue shed light on the frameworks and trends in  Financing India’s EVs. This was Part 1 of our 2-part series on EV financing.

• The November edition saw us take a look at Green Bonds and the Banking system’s role in Financing India’s EVs, Part 2 of our EV financing Series.

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Ostara’s Thought Leadership in 2022

This year saw the launch of India’s first Freight Electrification initiative. NITI Aayog invited us to the launch of e-FAST India (Electric Freight Accelerator for Sustainable Transport – India), the country’s first national electric freight platform which aims to accelerate the decarbonisation of India's freight and logistics sector.  We were also invited to speak at the World Resources Institute (WRI) Roundtable on the Decarbonization of India's Freight & Logistics sectors,  and their workshop on financing and creating an investment ecosystem for Electric Rickshaws in India. 

At the Impact Investors Council's invitation, we also penned our views on the private capital flows into the Indian EV ecosystem. We were also invited to speak at IET India’s Future Tech Congress 2022,  India’s first industry-driven Mobility conference,  Micelio Global Clean Mobility Summit as well as the Confederation of Indian Industry (CII) Infrastructure Conclave: Rebooting Infrastructure.  

Vasudha Madhavan, Founder of Ostara Advisors,  was featured on Energizing India Podcast, India's only EV-focused podcast where she spoke about Financing EVs and the EV startup ecosystem, and in the List of 5 inspiring women founders, compiled by The Better India, who also featured her as the “Woman Behind India’s First Electric-Mobility Focused Investment Bank”

As the year comes to a close, we feel truly grateful for the love and support from our clients, industry stakeholders and investors over the past year and look forward to reaching greater heights in 2023. 

Wishing you all a Merry Christmas and a very Happy New Year,

Team Ostara.

EV Financing by Indian Banks

Most Private sector banks are currently providing car loans to EV buyers at the same or similar terms as for regular ICE car buyers. This is currently happening mainly for the B2C segment, i.e. end consumers who look to buy EV cars or even two-wheelers for personal use. These loans take into account credit scoring models on the borrower, and place lesser emphasis on the type of car or scooter. 

This changes when it comes to commercial EVs, mainly 2Ws and 3Ws used for cargo or shared mobility, where the type and usage of the vehicle plays a critical role in the risk assessment and loan pricing by banks. Most banks are currently assessing EVs in order to accurately estimate residual value and are putting together loan products for buyers of electric commercial vehicles. We expect many EV bank loan products to be present in the market in 6-12 months from now.

Key Instruments and Concepts relevant in Global EV financing

Green Bonds 

A green bond is a type of fixed-income instrument that is specifically earmarked to raise money for climate and environmental projects. Basically,​ Green bonds work like regular bonds, with one key difference: the money raised from investors is used exclusively to finance projects that have a positive environmental impact, such as renewable energy and green buildings. 

The Green Bond Principles (GBP) are voluntary process guidelines clarifying the approach for issuance of a Green Bond. The ICMA (International Capital Market Association),  serves as Secretariat to the Green Bond Principles (GBP). 

The four core components for alignment with the GBP are:

Green Bond Market

Green Bond issuances are at an all-time high. Ending 2021, annual issuances crossed the half-trillion dollars mark for the first, showcasing the growing potential of the Green Bond market. The USA, at $81.9 bn,  was the most prolific source of green bonds, followed by China at $68.1 bn. 

Europe was the most prolific region, with cumulative issuance reaching $758 bn by year end. Asia-Pacific became the second most prolific region for green bonds reaching a cumulative total of $371.7 bn by year end. North America fell one spot to third place  with cumulative green bond issuance  of $343 bn. 

2021’s leading sovereign green issuer: The UK.

21 sovereign green bond issues were priced in 2021, including a GBP 10bn (USD13.7bn) UK Gilt, the largest single debut sovereign green bond to date and the largest green bond of 2021. A smaller GBP 6bn ($8.25 bn) deal followed later in the year, making the UK the third largest sovereign green bond issuer after France and Germany by volume. 

Green Bonds in India

India emerged as the sixth largest country in the Asia-Pacific region in terms of total amount of green bonds issued in 2021. Green bonds issuance from India jumped 523% from a year ago to $6.8 billion.

India’s growth in green issuance is especially evident when compared to other emerging markets (EM). India stands third in EM cumulative green issuance and is the second largest source of Climate Bonds Certified deals. Following Turkey, South Korea and Argentina, India is also the fourth fastest growing EM, with 484% year over-year growth in 2021.

India’s first Sovereign Green Bond Framework

On Nov 9, 2022, Finance Minister Nirmala Sitharaman approved the final sovereign green bonds framework to fund environmentally sustainable projects. The approval is the fulfilment of the announcement in the Union Budget FY 2022-23 by the Union Finance Minister that Sovereign Green Bonds will be issued for mobilising resources for green projects.

Source: Business Today

First Loss Guarantees

The first loss guarantee is a mechanism whereby a third party compensates lenders if the borrower defaults. As the third party pays for the losses, it gives lenders confidence to give out loans. It is an insurance against a loss. The government uses it to ensure that banks are not averse to lending because of the risks involved. 

For example, if the government provides 100% credit guarantee for loans of up to ₹1 crore. It means that if a bank lends up to ₹1 crore, and the borrower is unable to repay, the government will make good the entire loss. If the guarantee is for 20% of the loan, the government will compensate up to ₹20 lakh for a ₹1 crore loan.

For EV financing in India, the government, World Bank and Small Industries Development Bank of India (SIDBI) are set to launch a $1 billion fund to provide guarantees against loan default to lenders financing purchase of electric two- and three-wheelers. 

The entities will initially set up a $300 million first-loss risk sharing instrument,   which would act as a hedging mechanism for banks to access in case of defaults of loans on purchase of electric vehicles. This is expected to bring down the cost of financing EVs by 10-12%.

Source: Livemint, Economic Times

Risks

Just as any investment, financiers assess the risk involved in lending, irrespective of the loan being retail or commercial. The asset risks can be categorised under different use cases, as shown in the table below:

Priority Sector Lending: The Messiah of EVs?

The Reserve Bank of India (RBI) introduced the priority sector lending (PSL) guidelines in 1972 to expand financial access to vulnerable sections of society by enhancing credit for “priority” sectors with high employment and poverty alleviation potential but low bankability.

Priority sector status to EVs can address the lack of availability of finance. Banks that have not yet ventured into financing EVs may consider doing so. Further, for the ones already financing EVs, PSL may become a motivation to create financing options with lower interest rates and longer loan tenures.

There is a strong case for EVs as livelihood-generating and supporting assets across urban as well as rural India, especially for economically weaker sections of society.

Source: RMI, Saur Energy

Ostara in the news!

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Increased consumer interest in electric vehicles and strong policy support point to a positive growth trajectory for the Indian EV ecosystem. Financing of EVs has continued to remain a challenge both for B2C and B2B customers. Having said that, solutions continue to evolve and we take a look at some frameworks and trends in our two-part series on Financing India’s EVs.

An overview of EV Financiers in India

In India, EV loans are provided by financial institutions such as Banks, where the State Bank of India (SBI) is the frontrunner, offering its “Green Car Loans”, Non-Banking Financial Companies (NBFCs) that include both captive (e.g. Greaves Finance) and non-captive NBFCs as well as Leasing Companies that allow owners to lease electric vehicles instead of owning them, thus encouraging the mass adoption of EVs, including in government and commercial fleets.

EV Financing Frameworks in India: 

NBFCs and Specialised EV financing companies in India often assess the loan viability on the following parameters:

1. Is the EV being used for personal or commercial use? The latter is often preferred as it is easier to assess the current and projected revenue streams from the product.

2. The monthly income that the EV generates i.e. fee revenues or rental income earned by the commercial use of the vehicle.

3. The direct costs of running the vehicle and hence, the contribution margin which is left over for covering interest payments on the loan. 

4. Warranty offered by the OEM: This is critical to loan viability as it offers an OEM-backed safety net for the financier to cover product and battery risks. This is especially important as EVs lack vast historical data on vehicle performance and quality.

5. Service Network offered by the OEM or fleet operator: This is important as it determines the vehicle uptimes and hence, revenue generating ability of the EV. The better the service network, the lower the downtime and hence, the greater the revenue generation by the EV.

Although electric 2-wheelers have the greater market share, those used in last-mile logistics present a higher financing risk, given concerns around daily uptime and reliable after-sales service networks, both of which impact the revenue-generating ability of the e2W. In comparison, the electric three-wheeler (L5) offers a more viable financing option.

A general misconception surrounding EMI and loans is that they are only dependent on the interest rate. While the interest rate  is a contributing component, tenure is the bigger factor. In the case of L5 vehicles, the tenure is around 3 years, which helps bring EMIs down as compared to shorter-tenure e2W loans.

The cKers perspective: 

cKers Finance is a specialised Sustainability finance company that operates in the rapidly growing segments around clean energy and resource efficiency. Launched in 2017, it is developing new instruments for providing finance to electric vehicles, among other segments, and building data around risk metrics for these sectors. cKers have financed over 4000 electric vehicles in India so far, of which ~1000 are L5 three-wheeler loaders and bulk of them are financed to B2B fleet customers.

To understand the financing frameworks applied by the EV-focused NBFCs, we spoke with Deepak Gupta, Head of Business Development at cKers Finance Private Limited.

Unit Economics for e2W and e3W used for commercial applications

For a typical e-2W, average monthly revenue earned in a commercial use-case is in the range of Rs. 18,000-20,000 and the average direct cost per month comes to ~Rs. 16.000, including driver salary, charging, parking and maintenance costs. The ability of an e2W fleet company to service their monthly loan payments, which range around Rs. 1800-2200, will depend on effective cost control as well as revenue maximisation.  

In comparison, monthly revenue earned by an electric 3W, deployed for last mile logistics or a similar commercial use-case, is in the range  of Rs. 36,000-38,000, with the average direct costs in the range of Rs 20,000-23000, including driver salary (~Rs 18,000), charging, parking and maintenance costs. The leftover sum amounts to ~ Rs 13,000, which is utilised for the monthly loan payments. Most leading e3W brands also tend to offer better after-sales service networks leading to improved vehicle uptimes, and hence better revenue generation.

Financing Models:

Financing frameworks for an EV OEM include the Asset Financing and the Order Financing model. In the former, the borrower leverages its assets to take a loan and in the latter, the working capital financing is provided on the basis of the orderbook of the borrower.

Asset financing provides loans for both B2B and B2C segments. The B2C segment in turn, has three separate segmentations:

• Attachment Model: The financier provides a loan to the driver for the EV and the driver is also provided work opportunities in a company which the financing firm is in partnership with.

• Open Market Captive Model:  Clients are fleet businesses with pre-established markets (already captured market/have loyal customers) having ICE vehicles and intending to transition to EVs.

• Open Market Delivery Model: Clients are small vendors and enterprises, in contract with or partnered with local chains and/or big companies with a running ICE fleet, intending to shift to EVs.

Challenges of Financing EVs in India

There are a few challenges in the EV financing domain, which can be broken down into three major categories:

• OEM and Technology Challenge

  For decades, automotive OEMs have found the captive financing sector to be both reliable and profitable. However this model is being challenged today by the emergence of EVs, regulatory reforms, financial digitisation, and other challenges.

• Policy Challenge

  Despite strong policies such as FAME-II and various other government schemes to increase EV adoption, smooth execution and awareness of these policies will alleviate the financing challenge.

• Resale Challenge

  Unlike ICE vehicles, resale value of EVs is not established due to lack of lifetime usage data of the vehicle, battery residual value and uneven OEM warranties in certain categories like e2Ws and e3Ws.

Solutions

The good news is, all isn’t lost. With certain measures, the Indian EV Financing sector will be able to mend the chinks in its armour. A few them can be:

• Priority sector lending (PSL): The Reserve Bank of India (RBI) requires 40% of net bank credit to be deployed towards priority sectors. Inclusion of EVs in PSL guidelines would incentivise banks to increase lending towards the sector.

• Secondary market development: Industry-led buyback programmes and battery-repurposing schemes will help OEMs and the central government catalyse a secondary market for EVs. This would improve the residual value of EVs, providing FIs (financial institutions) with an avenue for resale in case of borrower default.

• Risk-sharing mechanism (government and multilateral-led): Mechanisms and facilities that partly or entirely cover possible losses associated with financing EVs (due to their unclear resale value) can be capitalised at the national or multilateral level. These would distribute risk and provide FIs with an opportunity to build their trust in the sector.

• Risk-sharing mechanism (fleet operator-led): Fleet operators and last-mile delivery companies can leverage their existing FI relationships to provide partial credit guarantees and utilisation guarantees to driver-partners. They could share the risk between stakeholders in case of default and enhance loan availability for delivery drivers.

• Interest rate subvention: Subventions act as a subsidy on commercially offered interest rates, with the government bearing the balance through associated banks. Such schemes would substantially improve the affordability of loans. 

• Product guarantees and warranties: Reducing the uncertainty associated with EV models will improve their bankability. OEMs can provide assurances in the form of guarantees (to FIs) and warranties(to buyers) on the performance of their products.

Source: NITI Aayog

Major Players in EV financing in India

Recent Deals And Developments

Oct 2022: Revfin raises $10 million to expand its EV financing presence to 25 states.

Oct 2022: Mufin Green Finance raises Rs 45 crore in its Series A funding from Incofin India Progress Fund (IPF). 

June 2022: Turno has raised $3.1 million in funding led by Stellaris Venture Partners and Avaana Capital.

May 2022:  EV Financing Startup Three Wheels United Bags $10 Mn To Launch In 10 New Cities

Jan 2022: Investment platform Grip Invest has raised $1 million in a funding round led by its top 200 users, making these users shareholders.

We started covering Freight Electrification in our newsletter last month, as we believe this to be one of the most compelling use-cases for the clean mobility transition. We wrote about various zero-emission technologies currently available for freight vehicles, the limitations of these technologies for long-haul trucking and also shared a snapshot of the Indian policy framework for electric freight and logistics.

Quite coincidentally, earlier this month, we were invited by NITI Aayog, the premier policy ‘Think tank’ of the Government of India to the launch of e-FAST India (Electric Freight Accelerator for Sustainable Transport – India), the country’s first national electric freight platform. This platform, launched in collaboration with WRI India and the World Economic Forum (WEF), aims to bring together Shippers, Truckers, Fleet Aggregators, OEMs, EV Financiers and other stakeholders to accelerate the decarbonisation of India's freight and logistics sector. The platform also saw the release of the RMI report on Pathways to Zero-Emission Truck Deployment in India.

This marks a significant positive move towards Freight Electrification in India and we could not be prouder to have participated.

Moving on to our this month’s edition of the Ostara Newsletter. 

In our previous edition, we delved into the budding freight electrification trend in India. This month, let’s have a look at how the world is electrifying freight and some interesting case studies from across the globe.

Rising gasoline, fuel, diesel, and petrol prices are offering attractive chances for the global electric truck market to take off. Furthermore, prominent market participants are utilising renewable energy sources in the production of electric vehicles on a global scale. Countries and states worldwide are setting zero-emissions freight targets, and there are now multilateral actions aimed at accelerating the manufacturing of Zero-emission Trucks (ZETs).

In the electric truck sector, the concept of solar-powered trucks and recharge stations is gaining traction, with many countries increasingly forming partnerships to develop joint pathways to reduce vehicle emissions, particularly for scaling electric Heavy-Duty Trucks (HDTs). 

The Global electric trucks market is projected to reach 1,413,694 units by 2030, at a CAGR of 39.7% from 2021 to 2030.

Additionally, as part of the Drive-to-Zero Campaign, several European countries as well as Canada and Australia signed a memorandum of understanding to foster leadership and international coordination to accelerate ZET adoption.

The Frontrunner in Freight Electrification: Shenzhen

The city of Shenzhen, in southeastern China, is the global pioneer of electric logistics vehicles (ELVs). Shenzhen began to implement a policy framework to support ELVs in 2015, increasing the share of ELVs from less than 1% to over 30% . This is due in part to the near-ubiquitous charging infrastructure that has been installed across the region.

From the beginning of 2015 to the end of 2018, Shenzhen’s fleet of electric logistics vehicles, vans, and light/medium trucks expanded from 300 to approximately 61,857.

As of 2019, the ELV population stands at 70,417, with more than 80% of the ELVs being registered during or after 2017. The ELV fleet is composed of 39,363 minivans, 24,330 light trucks, and 5,597 medium vans.

While vigorously promoting the use of ELVs, Shenzhen is also actively building out the infrastructure to meet the demand for charging from this rapidly expanding vehicle fleet. By the end of 2019, about 83,000 public chargers had been built in the city—including about 30,000 DC fast chargers.

On the commercial side two key factors have supported the rapid growth of the vehicle market:

• Strong model availability, with over 45 brands delivering electric urban vehicles at acceptable price points and operational performance

• The emergence of leasing companies that bundle the provision of vehicles, charging, maintenance, and, at times, even drivers for a flat monthly or annual fee

Policy support has been a key driver of ELV adoption in Shenzhen.  In the Shenzhen market, policymakers have implemented four types of policy to spur rapid adoption of ELVs and associated charging infrastructure:

• Subsidies lower the upfront cost of ELVs compared with similar ICE vehicle alternatives and support private deployment of charging infrastructure. 

• Preferential road access for ELVs increases their utilisation and, therefore, revenue.

• Preferential electricity rates and fee exemptions for charging operators, and therefore ELV operators, lower fuel costs.

• Mandates and targets at the city and district level for the number of chargers within a specified timeline support growth of the charging network.

Ownership Models

Another notable feature of the ELV market in Shenzhen is the prevalence of leasing rather than vehicle ownership, which is how more than 95% of ELVs are acquired by operators. Short-term leasing models, with contracts as short as one month, have been critical for enabling operators to adopt ELVs with confidence. 

There are three major reasons that operators choose to lease, rather than to purchase, ELV:

• Lack of a strong ecosystem of maintenance and refuelling for ELVs: Individual vehicle operators cannot build up maintenance and charging systems themselves, but leasing companies, which own thousands of vehicles, can. Once leasing companies establish these systems, they can provide them to customers as an overall package when leasing the vehicle. 

• Cost structure of vehicles: Vehicle operators often have little or no access to credit. However, leasing companies often have strong balance sheets and are able to finance the high up-front cost of vehicles at relatively low rates. 

• Policy preference for large-scale vehicle owners.

Source: RMI-New EV Horizon

The European Trucking Climate

In Europe, heavy vehicles account for 5-6% of total CO2 emissions. Policymakers have been contemplating ways to reduce these amounts. Among the many initiatives,  electrification is one that’s fast gaining traction.

The electrification scenario in Europe is very optimistic, with zero-emission transport gaining momentum in the continent. Other than vehicle OEMs making strides on the R&D front, the governments are making moves to further the transition to EVs:

• MOVE21 and FREVUE  are initiatives funded by the EU to encourage, and promote, electrification of freight vehicles. 

• Switzerland is encouraging fuel cell electric truck growth through its road tax on diesel truck operations, making alternative fuels more attractive for large Swiss retail associations.

• In February 2022, EU member states have adopted new legislation which states that all EU member states have until 2023 to implement a new system of road tolls that give big incentives for zero-emissions trucks.

• By May 2023, haulers operating zero-emissions trucks, i.e., battery electric or hydrogen, must be given at least 50% discounts on distance-based road tolls. Member states could opt to levy extra CO2-based charges on fossil fuel lorries instead or implement both measures. With road tolls costing haulers up to EUR 25,000 a year per truck annually, switching to zero-emissions vehicles will cut their overheads considerably.

From the market standpoint, the Europe Electric Truck Market was valued at USD 286.87 million in 2021 and is expected to reach USD 4,358.25 million in 2027 by registering a CAGR of 57.13% during the forecast period (2022 – 2027)with medium- and heavy-duty trucks accounting for close to 70% of road transport emissions.  

The ACT Regulation in USA

On June 25, 2020,  the California Air Resources Board (CARB) unanimously adopted the world’s first zero-emission commercial truck requirement, the Advanced Clean Trucks rule. 

The regulation, first of its kind in the world to require manufacturers to sell increasing percentages of zero-emission trucks, is expected to reduce the life cycle emission of greenhouse gases (GHGs), eliminate tailpipe emissions of air pollutants, and foster a market for zero-emission Heavy-Duty Trucks(HDTs). 

Since California holds a sizable share of the HDT market in the United States, this regulation will have implications far beyond the state’s borders. The truck brands that represent the majority of sales in California sell in multiple regions around the world. 

The sales requirements in the ACT are complemented by a series of fleet purchase requirements, such as the Innovative Clean Transit rule for buses, which goes into effect in 2023 and requires 100% zero-emission bus purchases by 2029.

Source: Atlas EV Hub, ICCT-Policy Update, Green Mobility Library

Recent Deals & Developments

Sept 2022: First electric logging truck to be trialled in SA's Green Triangle forestry region

Aug 2022: Bosch will invest $200 million to build fuel cells for electric trucks in South Carolina

Aug 2022: Luxfer Gas Cyclinders has partnered with E-Trucks Europe to help power a fleet of zero-emission refuse trucks which, individually, will save 30,000kg of CO2 each year

Feb 2022: Sweden’s Volta raises $260M at a $490M valuation to get its all-electric trucks into production by the end of this year

Ostara Updates

1. At the invitation of Impact Investors Council, we also penned down our views on the private capital flows into the Indian EV ecosystem in their inaugural India Climate Bulletin released at their Flagship Impact Investor Conference, Prabhav 2022, in New Delhi.

2. Ostara Advisors was invited to share their views at WRI India’s workshop on financing and creating an investment ecosystem for #ElectricRickshaws in India. The workshop saw industry stakeholders discuss current challenges and suggest ways to optimise innovative financial tools to accelerate the e-rickshaw transition.

Today, the logistics sector represents 14%  of India’s Gross Domestic Product (GDP) and handles ~4 bn tonnes of goods each year, Trucks and other vehicles handle most of the movement of these goods. Railways, coastal and inland waterways, pipelines, and airways account for the rest.

As the transportation sector is responsible for nearly 14% of India’s total greenhouse gas emissions, a transition to clean/electric mobility is an imperative for India’s road freight and logistics industries. 

And so, this month, we delve into the various emerging business and operating models for Electrifying Freight.

Freight vehicles in India are classified on the basis of their gross vehicle weight (GVW) as light, medium, and heavy goods vehicles. Among the 14 million freight vehicles on India’s roads today, light goods vehicles (LGVs) dominate the vehicle stock with 56% of the share, followed by heavy goods vehicles (HGVs) contributing 38%.

The Gross Vehicle Weight (GVW) is the weight of the empty vehicle plus that of the maximum payload that the vehicle was designed to carry.

Short haul trucking, or local trucking, involves driving smaller trucks within a 250-km radius of the truck's origin, to deliver materials to construction sites, retail products from fulfilment centres or food to grocery stores.

Long haul trucking, or "over the road" trucking, involves driving larger trucks with heavier loads across long distances, typically above 400km and typically on highways more than on city roads.

Zero-emission technologies for freight vehicles

The above table summarises findings for three main technology areas: plug-in battery electric, dynamic electric charging (EVs can be considered to be dynamically charged—via overhead catenary transmission, on-road conductive tracks, or in-road inductive wireless charging), and hydrogen fuel cell vehicles.

• Each technology offers the prospect of lower climate emissions, no tailpipe pollutant emissions, lower fueling cost, greater renewable energy use, and higher on-vehicle energy efficiency. 

• Dynamically charged trucks on dedicated e-roads could be implemented on a regional basis in a way that greatly reduces the battery electric truck barriers of battery cost, weight, size, and range.

• Hydrogen fuel cell heavy-duty vehicles could play a key role for low-carbon freight transport in several applications, offering much faster refuelling times compared with electric charging times, along with the potential for much greater range from hydrogen than battery electric trucks with similar specifications.

Limitations of Current Zero-emission Technology for Long-haul Trucking

As technology improves, there are a series of success factors electric utilities must understand as they work to support long-haul trucking customers transitioning to electric truck fleets. ( Powermag, 2021)

Five Charging Options for Electric Trucks - McKinsey Report

These  options for medium-duty and heavy-duty electric trucks  vary by location, cost, feasibility, and flexibility.  The initial costs for each charging solution will include charger hardware, installation, any storage or distributed generation equipment, one-time site construction and grid connection costs, or one-time software development fees. Ongoing operating costs will include maintenance, electricity, demand charges, and labour.

Indian Government Policies to Electrify Freight

The government policy interventions at both the national level and state level support the transition of the freight segment from a fuel based industry to an electrified one. At the national level, the National Electric Mobility Mission Plan (NEMMP) has envisaged electrification of light commercial vehicles (LCV) and has nudged the states to enable both manufacturing and adoption. 

Thus, various State-level policies have been formulated to further push the penetration of electric vehicles. A few of these state policies have been shown below.

Freight Vehicle OEMs in India

Recent Deals and Developments in India 

August 2022: Altigreen and Exponent partner to make 15-minute rapid charging a reality for electric commercial vehicles (eCVs)

August 2022: Hyundai to export heavy-duty hydrogen electric trucks to Germany

July 2022: Tube Investments of India to acquire majority stake in electric truck maker, IPL Tech Electric for Rs 246 crore

April 2022: Magenta ties up with Euler Motors to deploy 1,000 e-cargo vehicles in key cities

Feb 2022: Jet Freight Express deploys electric vehicles in last-mile delivery for e-commerce player

Ostara in the news!

Our founder, Vasudha Madhavan, is featured in the Better India’s list of 5 inspiring women leaders! Click on the image to see the list.

Next month, we cover the Global context and case studies around Freight Electrification. Stay Tuned!

To give you an idea of the EV Battery and its safety,  with the final issue of our 4-Part series on the Indian Charging Landscape,  we shine the spotlight on the Battery and the BMS. 

Lithium-ion Batteries - A Quick Refresher

Lithium-ion batteries are currently used in most electric vehicles because of their high energy per unit mass relative to other electrical energy storage systems. They also have a high power-to-weight ratio, high energy efficiency, good high-temperature performance, and low self-discharge.  Two of the more commonly used lithium-ion chemistries are Nickel Manganese Cobalt (NMC) and Lithium Iron Phosphate (LFP).

New BIS Battery Standards 

Following recurring incidents of fire in electric vehicles, the Bureau of Indian Standards (BIS) has for the first time formulated performance standards for batteries used in electric vehicles. (We have shared a quick explainer on  BIS in our Safe Charging edition )

On June 24, 2022, BIS published standards for Test Specifications for Lithium-ion Traction Battery Packs and Systems (Performance Testing) for EVs. The standard IS 17855: 2022 for these battery packs and systems is harmonized with ISO 12405-4: 2018, and incorporates the test procedure for basic characteristics of performance, reliability and electrical functionality for the battery packs and system for either high power or high energy application.

Source: Business Standard, Vajiram Ias, The Print

BMS

The Battery, given its criticality, requires the most care as it could become unstable beyond a certain high temperature andis susceptible to thermal runaway. 

Thermal runaway happens when there is a huge current flow and the temperature of the cell and battery start rising rapidly. This rise in temperature can be caused due to many factors, such as  thermal failure, mechanical failure, internal/external short circuiting, and electrochemical abuse. Conditions like these can harm the lifespan or the capacity of the battery. To ensure this does not happen, we require BMS to monitor its voltage and current.

The Role of BMS

The role of BMS can be categorised into three aspects:

The key blocks of a BMS system are provided below:

Thermal Management Block: This block measures the battery temperature and accordingly initiates the cooling or heating operation to maintain the temperature within the optimal range. It also sends signals to ECU if the temperature goes beyond the allowable limit.

Measurement unit: The measurement unit tracks voltage, temperature, current at different places and the ambient temperature.

Capability estimation block: This block sends information regarding the safe charging/ discharging levels to ECU and the charger unit.

Cell equaliser block: It compares the highest and the lowest voltages across all the cells to apply balancing techniques

State of Health (SoH): State of Health (SOH) is a measure of the battery’s ability to store and deliver electrical energy.

State of Charge (SoC): State of Charge (SOC) describes the level of charge of an electric battery relative to its capacity

Spotlight on The Tesla BMS

It is impossible to talk about EVs and not mention Tesla. Apart from designing battery powered vehicles, Tesla has also been using software to make the batteries more efficient. The BMS is a big part of achieving this efficiency.

Tesla’s BMS has a unique design concept, adopting a master-slave architecture design. The master controller (BMU-Battery Management Unit) is responsible for functions such as insulation detection, high voltage interlock,  contractor control, and external communication whereas the slave controller (BMB-Battery Monitoring Boards) is responsible for cell voltage and temperature detection and reports to the BMU.

The BMU has a dual-MCU(Motor Control Unit) design, with a primary and secondary MCU, with the secondary MCU able to detect the working status of the main MCU and obtain control if it is found to be invalid.

Tesla Model-S BMS

Source: Circuit Digest, Tesla-info, manlybatteries

The BMS used by Tesla in Model-S is based around Texas Instruments’ Battery Monitoring integrated circuits. The BMS is integrated into every module and monitors the battery life, temperature, and charge-discharge cycle of cells. It is a stackable Battery Monitoring System and uses a High-Speed Serial Peripheral Interface (SPI) for Data Communications.

Other than looking after the battery and managing charging,  it also works out the available amount of energy stored in the battery and in turn the number of miles that energy can drive the car for. It does this by using an algorithm that adapts over time, constantly updating itself based on data points it collects from stable battery readings.

Types of BMS

Battery Management System can be categorised depending on the type of circuit design, topology and the voltage range.

Based on Design

• PCM (Protection Circuit Model) is an electronic circuit which protects every single cell in the lithium battery pack against extremely high and low values of voltage, current and temperature. 

• BMS (Battery Management System) is a more sophisticated and intelligent protection circuit, incorporating additional modules like control circuitry and display modules. 

Based on Topology

• Centralised BMS has a single board, comprising a centralised controller and a smart circuit for all the operations and internal communication. The centralised controller performs the functions of monitoring, maintaining cell voltages, temperature and cell balancing.

• In Decentralised BMS, the cell monitoring and smart circuit board are part of different assembly units. There are two approaches, namely modular and master slave, for implementation of this kind of BMS. This topology ensures higher reliability compared to the centralised BMS.

Based on Voltage

• Low Voltage (LV) Battery management System comprises low voltage class 1 which is less than or equal to 60 V DC.

• High Voltage(HV) Battery management System comprises high voltage class 2 which is less than or equal to 900 V DC and high voltage class 3 which is less than or equal to 1500 V DC. 

Battery & BMS OEMs

Recent Tech Developments

Texas Instruments (USA) has announced its new wireless battery management system (BMS) solution for electric vehicles. 

AmpereHour Energy (India) has released MoviGEN, a new lithium-ion-based, mobile energy storage system. The system is scalable and can provide clean energy for applications such as on-demand EV charging, remote construction sites, and large-scale outdoor events.

Xing Mobility (Taiwan) has introduced a new battery system with immersion cooling. It combines a battery pack with a battery management system and an active safety module.

New i-BMS Battery Management System by Sensata (USA) Enables Battery Hot Swapping to minimise Charging Time for Low Voltage EVs

Simple Energy (India) has developed a proprietary Battery Management System (BMS) that enables the electric powertrain to achieve 95% efficiency

Recent Deals in India

July 2022: Automotive tech company Pricol has announced a technology partnership with BMS PowerSafe, a part of the Startec Energy Group to manufacture Battery Management System (BMS) for Electric vehicles across all segments.

June 2022: Okinawa Autotech To Adopt NITI Aayog’s Open-BMS Solution For EVs

June 2022: The GST rates on lithium-ion battery packs have been reduced by the government from 18% to 5%, in an effort to increase EV adoption.

May 2022: Tata Group readying plan for battery company in India, abroad to deepen its push to build electric vehicles

May 2022: Endurance Technologies to acquire ION Energy’s BMS unit

May 2022: Marelli launches wireless distributed battery management system for EVs

Ostara in the news!

Our founder, Vasudha Madhavan, was invited to speak at the World Resources Institute (WRI) Roundtable on “Decarbonizing India's Road Freight - Towards a cleaner future for commercial vehicles” on June 30, 2022. This was a meaningful dialogue between industry stakeholders to highlight the key challenges and opportunities.

Previously, on the Ostara Guide, we talked about Chargepoint Operators. This month, continuing with Part 3 of our 4-Part series on the Indian Charging Landscape,  we are shifting our focus to EV chargers and their manufacturers.

What is EVSE?

EV chargers, also known as EVSE (Electric Vehicle Supply Equipment), are used to charge a vehicle. The speed at which an electric vehicle can be charged is, among other things, dependent on the power of a charger.

EVSE OEMs are the EV equipment manufacturers who produce EVSE and its components, like the connector, etc.

What’s inside the EV Charger?

The Hardware

Globally, EV Charging is categorized into Level 1, Level 2, DC Chargers and Superchargers. 

Level 1 & 2 is only AC power transfer whereas DC chargers are sometimes referred to as Level 3 Chargers. 

All charging systems take AC power from the grid and convert it to DC power at a suitable voltage for charging the battery. In EV applications, except for bicycles, Level 1 and Level 2 chargers are completely contained within the vehicle. In Level 3 charging systems, however, the charging functions are split between the charging station and the vehicle's on board charger.

The diagram below illustrates how the key functions of Level 1, 2 and 3 chargers are implemented. 

• The Power Control Unit delivers a variable DC voltage to the battery

• The Rectifier transforms alternating current (AC) into direct current (DC). Its normal function is charging batteries and keeping them in optimum condition while, at the same time, providing DC power for other loads.

• The Protection Circuit cuts off the power if there is a fault in the battery or the charger, along with other measures to prevent misuse, electric shocks and inadvertently driving away with the power cord still plugged in.

Level 3 chargers have the same functionality as the Level 1 and 2 chargers but due to the higher power levels used, the AC/DC conversion as well as the power conditioning and control circuits require larger, more expensive components. Hence, it makes sense to carry out these functions in the charging station rather than the charger so that the equipment can be shared by many users.

One drawback of this system is that the vehicle can only be charged at public charging stations, with compatible charging standards. We have talked about these Charging standards in our Safe Charging Newsletter.

The Software 

Charging software is designed to manage and administer charge stations and their networks, and should not be confused with EV applications created to oversee the electric vehicle. The software functional elements are illustrated in Figure below. 

This functionality allows operators to remotely configure, manage, and update charge station software; set and control driver access to charging; set pricing; manage billing; and run usage reports. Software applications also enable drivers to easily locate and reserve available charge stations. Software tools can also be configured to send notifications to operators (hardware/software issues) and to EV drivers (“charge completed,” and “charge station available.”)

EVSE Market

Global

The global electric vehicle (EV) charger market size was estimated at USD 7.01 billion in 2021. 

The demand for the EV chargers is expected to grow at a significant pace in the upcoming years owing to the rising demand for the electric and alternative fuel vehicles across the globe.

India

The Indian EVSE market is expected to witness the fastest growth in the northern region.

The Indian EVSE market is witnessing an uptick in the investments from global players in the charging industry such as ABB and Delta Electronics, as well as emerging players such as Ador Digatron and Exicom, among others.

Supportive Government Policies and Initiatives are a Major Factor Driving the Market

The Government of India is actively taking steps to support the adoption of EVs, which, in turn, is driving the growth of the Indian EVSE market. 

Segmentation Analysis of India EVSE Market

• DC chargers are expected to be the faster growing category in the Indian EVSE market. DC chargers require a lot of power from the grid and are costly owing to their heavy-duty components. However, due to their faster charging capability, when compared to AC chargers, these would be more preferred in the coming years. These types of chargers are mostly found along highways, rather than at business complexes or at homes.

• Private chargers have been dominating the Indian EVSE market. Their early adoption in the country owing to low cost, high customer demand for overnight charging at homes and commercial places helped the private charger market grow.

Geographical Analysis of India EVSE Market

Geographically, the western region is estimated to hold the major share in the Indian EVSE market. The extensive state government support for EV adoption, especially in Gujarat and Maharashtra, and the presence of major EV and EV component manufacturers make the region the potential leader in the coming years.

The high per capita income in this region is also a major factor behind the growth of the EV market, and in turn, the EVSE market, here. The northern region is predicted to be the fastest growing region during the forecast period. The poor air quality in most of the regional cities and government concerns, as a result of this, are expected to benefit the EV and EVSE markets.

Key EVSE OEMs in the Indian Market

Recent Deals & Developments

June 2022  Reliance, MG Motor and Castrol team up to build electric charging infrastructure across India

May 2022 A new project by the Power Grid Corporation of India Limited is planning to deploy forty-five EV charging stations across the nation, with Tirex Transmission Pvt. Ltd. as the  frontrunner to supply their DC fast chargers in the market for this upcoming project.

May 2022 ABB’s e-mobility division has agreed to acquire a controlling stake in Numocity, a digital platform for electric vehicle (EV) charging in India.

May 2022 Ashok Leyland joins hand with Tirex Chargers to create the charging Infrastructure for their e-Bus Fleet in Bangalore

May 2022 Statiq has partnered Hero Electric to promote EV adoption by setting up a charging ecosystem in north India. 

May 2022 Tata Power has entered into a strategic partnership with Hyundai Motor India (HMIL), to build a robust EV charging network and accelerate the adoption of EVs across India.