I have looked closely at the EV space for the better part of the last decade. While I have not made any investments in the space directly or through any of Artha’s entities – I am confident that the EV is here to stay. However, I believe that the EV space will (eventually) get dominated by the large automakers in a value-conscious market like India.  

Therefore, I sought opportunities in the EV infrastructure space, especially in charging infrastructure, as it was logical that more EVs = more charging point requirements. However, I have refrained from investments into this space as I do not see a PAN India opportunity as lucrative as EV charging point founders suggest it should be.  

My primary 4 reasons why I am bearish on this space:

1. I believe that the urban opportunity for EV charging competes with the EV chargers installed at home: an overnight charge should provide enough range for the EV owner to commute from work or for essential daily travel without requiring them to charge their vehicle necessarily.  
   
   There could be an off chance that the EV owners may run low on battery and opt to recharge. However, building a business model on the oft chance that someone runs out of battery 1-2 hours from home (or work) has a limited window of opportunity for a sustainable business model.  

2. The technology for EV batteries and EV charging stations is yet to stabilize because of rapid advances to improve the range an EV could get from a full battery. There are ongoing projects from electrified roads in Sweden to Qualcomm’s underside induction coil charging, even on the charging front.  
   
   These are just a few of the global projects seeking to solve the EV charging problem. An overinvestment into any technology that turns out to be obsolete could be devastating for a startup’s balance sheet.  

3. The rural opportunity is overhyped: the massive opportunity in inter-city or inter-state travel is a distant dream until EVs breach the tipping point for mass adoption – we are kilometers away from that in India today.  
   
   Rural level charging infrastructure is dying in the frontier markets of the US due to months (and years) of underutilization. The installed technology is now outdated (reinforcing point 2), and EV charge point owners are unwilling to upgrade chargers after the low realizations on the current installations.  
   
   Initially, the viability gap may get fulfilled by government subsidies. However, government schemes have a terrible history of promise without payment, leading to massive chunks of capital getting stuck in working capital.  

4. Limited to No IP on Technology: innovations in EV charging technology will require significant R&D outlays. However, most (if not all) of the charging technology companies rely on imported technology to fill in their requirements. This strategy leaves them defenseless to future technological changes, significantly reducing Capex costs (like it did with solar panels) or rendering Capex obsolete.  

In conclusion: EV charging startups are faced with multiple challenges.  

1. They must provide deep incentives to real estate providers to create an extensive network of charging points to convince an EV owner to patronize their platform.  
2. However, the EV charging startups must recover their CAPEX quickly to offset the risk of their installed technology getting obsolete.  
3. The price that EV charging point stations must charge to recover CAPEX and make a sustainable ROI is too high to be palatable to EV owners.  
4. The gap in what it costs to charge an EV versus what an EV owner is willing to pay must get fulfilled with unreliable government subsidies or investor capital. 

I (as an investor) am not willing to take that bet!