Skip to main content

Legal Capsule by Veyrah Law

Charging Infrastructure: Final Building Block For Electric Mobility?

Rapid economic development coupled with a never-ending surge to save travel time has resulted in widespread adoption of automobiles throughout the globe. The first combustion engine was invented in the late 19th century and there was no turning back after that. While combustion engines have helped human beings develop at an exponential rate, they have also adversely contributed to global warming. India, along with various other countries, has signed and ratified the Paris Agreement to limit global warming in the interest of climate change.

This has led to the Indian Government effecting various methods to decrease India’s CO2 emissions. Some initiatives were by adopting stricter emission norms for combustion engines, promoting electric vehicles (EVs) by giving a host of incentives to manufacturers and end-customers etc. Initially, EVs were plagued with various issues such as less range, mediocre performance, lack of electric vehicle charging infrastructure (EVCI) etc. Most of all, they lacked the cool quotient that comes with owning a vehicle. All of this was singlehandedly transformed by Tesla Motors who pushed the general masses to embrace EVs. With passage of time, while most of these issues were resolved to an extent so as to allow practical usage, EVCI was yet to catch up. In this article, we will discuss the emergence of startups developing EVCI to bridge the gap and provide fast and reliable charging solutions for EV owners, who are set to grow at a rapid pace.

Advent of EVCI

Reports suggest that several potential customers are shying away from purchasing an EV as they suffer from charging anxiety. The Indian Government has set an ambitious yet realistic goal of having 30% EVs on its road by the year 2030. As is obvious, the increase in demand for EVs directly translates to the requirement for building EVCI. Eyeing this opportunity, many startups like Charzera Tech Private Limited, Sharify Services Private Limited etc., have come up in this sector.

These startups provide charging facilities to the general public in exchange for a specific amount. The user can simply drive up to a charging station, plug-in the charging cable to the EV, wait for the EV to charge and thereafter drive away. Charging stations are generally of two types i.e., fast charging stations and standard charging stations. Many startups are finding innovative places to set up these charging stations where users can easily access them like in parking lots of supermarkets, restaurants etc. This minimizes the waiting time required for charging an EV. By the time the user is done with his errands, the EV is conveniently charged and ready to go. Some of these startups are also encouraging people to host a charging station by installing it in their business premises and sharing the revenue with the startups.

Regulatory regime governing EVCI

The Ministry of Power (MoP) released the revised guidelines and standards for charging infrastructure for electric vehicles on October 1, 2019 (Guidelines). The Guidelines superseded the earlier guidelines issued on December 14, 2018. The objectives of the Guidelines clearly show the MoP’s intention to support faster adoption of EVs and create a market for EV charging business. The Guidelines broadly differentiate between two types of charging stations i.e., private (for personal use) and public (for use of public at large). Setting up a public charging station is categorised to be a de-licensed activity subject to such station being compliant with certain technical, safety and performance standards. The Guidelines also state that a person seeking to set up a public charging station may apply for connectivity, for which he will be provided a connection on priority by the distribution company.

Further, the Electricity Act, 2003 (Act) also provides for certain licensing requirements in relation to transmissions, distribution or trading in electricity. In another positive move for this nascent industry, the MoP has released a clarification dated April 13, 2018 (Circular) which states that the charging stations, while charging the battery for use in an EV, do not perform any such activities for which a license is required under the Act.

Reviewing the Guidelines and the Circular, it seems that the current regulatory regime in India is in favour of developing the EVCI by enticing startups to enter this sector.

Growth opportunity

According to Infoholic Research, the Indian EV infrastructure market is expected to grow at a compound annual growth rate of over 40% during the forecast period 2019-2025. The recent incorporation of a company by Tesla Motors in Bengaluru has further added fuel to the fire. Established OEMs are also partnering with private players to set up charging stations at various locations.

The automobile sector is a completely open market for foreign investors to enter. 100% FDI is allowed in the automobile sector under the automatic route i.e., without taking permissions from the Government. On similar lines, the setting up of EVCI is also permitted under the automatic route for foreign investors. There is no doubt that EVs are here to stay and with time will only expand their presence throughout the globe. However, EVs cannot grow without an infrastructure to support it. Therefore, it is very clear that the development of both EVs and EVCI are inter-dependent and must happen simultaneously.

As on date, there are no restrictions or licensing requirements on new entrants from entering the EVCI market. The Government also seems to be very bullish and might soon realize the attraction of tying up with growing startups, led by innovative investors, to encourage the use of EVs and develop EVCI at the earliest. Considering these circumstances, it seems like a bright opportunity for investors to hop on the bandwagon by spotting innovative startups in this space.

Ajay Joseph | Partner, Veyrah Law; Anshul Pandey | Associate, Veyrah Law

Views expressed above are for information purposes only and should not be considered as a formal legal opinion or advice on any subject matter therein.

Popular posts from this blog

VC Interview: Shailendra Singh of Sequoia Capital India

In a recent interview to Venture Intelligence, Shailendra Singh discussed some of the firm’s newer investments in the early stage segment including in the online payments space, the progress at a few existing portfolio companies and the active role the firm is playing in helping its portfolio companies scale and succeed in India and globally. Prior to joining the firm in 2006, Singh was a strategy consultant at Bain & Company in New York and before that, an entrepreneur in the digital media industry. Venture Intelligence: How does Sequoia go about identifying potential early stage investments in India? Is there anything different you are doing today than, say, a couple of years back? Shailendra Singh: There is a lot more focus on technology investing and early stage investing. In general, as you might remember a few years ago, we were doing primarily growth investing but in the past 18-odd months, we have had a very strong focus on early stage and that’s continuing. In terms

ChrysCapital, Motilal Oswal PE & Sequoia named PE-VC Firms of the Decade

Press Release ChrysCapital, Motilal Oswal Private Equity and Sequoia Capital India have been named the top Private Equity & Venture Capital investors in India during the last decade, as part of Venture Intelligence’s APEX Awards. The Venture Intelligence “Awards for Private Equity Excellence” (APEX) is dedicated to celebrating the best that the Indian Private Equity & Venture Capital industry has to offer.  While ChrysCapital won the “Private Equity Investor of the Decade” award, Motilal Oswal Private Equity was feted as India’s “Growth Capital Investor of the Decade”. The Indian arm of the storied Silicon Valley VC firm, Sequoia Capital, was named the country’s “Venture Capital Investor of the Decade”. The APEX Awardees are selected based on both Self Nomination by the participating PE-VC firms as well as "crowd sourced" nominations and voting from the Limited Partner, PE-VC and advisory communities. (The main criteria were Exit Track Record, New Fund Raises & Fo

Ambit tops League Table for Transaction Advisors to Private Equity deals in 2019

Ambit Corporate Finance topped the Venture Intelligence League Table for Transaction Advisor to Private Equity Transactions for the year 2019. Ambit advised PE deals worth $2.4 Billion (across 4 qualifying transactions) during the period. Citi ($1.1 Billion across 2 deals) and  Avendus  ($969 million across 12 deals) took the second and third spot. Edelweiss Financial Services ($758 million across 9 deals) and  PwC  ($708 million across 15 deals) completed the top five in 2019.  The  Venture Intelligence League Tables , the first such initiative exclusively tracking transactions involving India-based companies, are based on value of PE and M&A transactions advised by Financial and Legal Advisory firms. Ambit Corporate Finance advised the $1.9 Billion buyout of Pipeline Infrastructure from Reliance Industries   by Brookfield Asset Management  and the IFC and I Squared Capital-backed   Cube Highways' acquisition of Delhi-Agra Toll Road from Reliance Infrastructu

Inventus, Sixth Sense, Blume & Norwest win Apex'20 Venture Capital Awards

Inventus Capital Partners, Sixth Sense Ventures, Blume Ventures and Norwest Venture Partners were voted the top Venture Capital investors in India during 2019. The Venture Intelligence “Awards for Private Equity Excellence” (APEX) is dedicated to celebrating the best that the Indian Private Equity & Venture Capital industry has to offer. Other 2019 winners in the VC segment included  Axilor Ventures which was voted   the  Accelerator of the Year for the second year running, 3one4 Capital (VC Fund Raise of the Year) and Innoven Capital (Venture Debt firm of the Year). The APEX Awardees are selected based on both Self Nomination by the participating PE-VC firms as well as "crowd sourced" nominations and voting from the Limited Partner, PE-VC and advisory communities. (The main criteria are Exit Track Record, New Fund Raises & Follow-on Funding Rounds for Portfolio Companies).    " It is an honour to be recognised by entrepreneurs and investors as

PE-VC investments in 2020 cross $39-B to create a "hat trick" of all time highs

Press Release:  Private Equity - Venture Capital (PE-VC) firms, shrugged off the pandemic induced blues, to invest a record $39.2 Billion in Indian companies (across 814 deals) in 2020,  shows data from  Venture Intelligence  - a research service focused on private company financials, transactions, and their valuations. The $17.3 Billion* invested by US-headquartered private equity and other global sovereign wealth funds in Reliance Industries Limited (RIL) Group firms - including in the telecom-focused holding company  Jio Platforms ($9.9 Billion), Reliance Retail ($6.4 Billion), and  Reliance Digital Fibre Infrastructure Trust ($1 Billion) - accounted for 44% of the total PE-VC investment value in 2020. (*This figure excludes the $10.2 Billion in strategic investments by Silicon Valley tech giants Google and Facebook in Jio Platforms). On the back of the RIL deals, PE-VC investments in 2020 grew 6.6% over the   $36.3 Billion (across 1012 deals) invested in 2019 and helped create a