1、Technology at the forefront of electric vehiclesApril 20232 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limit

2、ed by guarantee.All rights reserved.2 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All ri

3、ghts reserved.3 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Contents

4、 SectionsPageForeword41.Global electric vehicle(EV)revolution72.Why transition to EV matters to India?93.Vehicle segments that are championing the shift to EVs114.As we shift from ICE to EVs,there is also a shift in quantum of technology inside andoutside a vehicle144.1.Parts of an EV being integrat

5、ed with technology14BMS has evolved from a simple Protection Circuit Module(PCM)to advanced BMS15Motor controller is responsible for regulation of driving conditions and protects themotor and overall mechanics16Interactive touch dashboard has been a new addition,replacing the erstwhile analogdisplay

6、s16Development of cell technologies beyond Li-ion and fuel cell to mitigate globalsupply chain challenges17Innovations in motor technology to de-risk the supply chain18Advanced telematics and Internet of Things(IoT)are becoming standard technology204.2.Technology permeating into support infrastructu

7、re and ecosystems as well21EV financing is witnessing innovative solution from Non-Banking FinancialCompanies(NBFCs)and start-ups21Charging solutions are evolving to provide fast,seamless experience to end-users24Distribution channel seeing a disruption with increase in adoption of omni-channelsales

8、26End of Life Solutions becoming a necessity for a sustainable supply chain265.New business opportunities are emerging from the propagation of EVs28Cell manufacturing a growing opportunity28Hub of electronics and semi-conductor manufacturing29The charging infrastructure is another area of focus29Bat

9、tery-as-a-service(BaaS)gaining prevalence to reduce upfront EV acquisition cost29Leasing a new model being adopted306.Start-ups leading the disruption from OEM to fintech to battery recycling317.Future of mobility33EV is becoming a reality33Technology to play a crucial role33EVs beyond the tradition

10、al players333 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.ForewordEl

11、ectric Vehicles are the apex of contemporary transportation.It is a revolutionary and path breaking technology which is transforming the very fabric of our society.The state-of-the-art technology,EVs represent the ultimate driving experience.Thus,offering a sustainable and efficient alternative to t

12、raditional internal combustion engines,reducing emissions,and promoting a cleaner environment.Delhi government has always been very aggressive regarding EVs since it is crucial for reduction in air pollution and improving the citys overall sustainability.Its efforts are also reflective in its polici

13、es which is evident from the mandate of all new government vehicles to be electric with a target to have 25%of all vehicles in the city run on electricity by 2024.In the year 2022,under the directives of The Honble Supreme Court of India;Transport Department of Government of National Capital Territo

14、ry of Delhi also started the work on de-registration of all diesel vehicles more than 10 years old and all petrol vehicles more than 15 years old.The initiative was aimed towards promotion of green transportation towards a sustainable future.Delhi has always been the pioneer in space of EV since it

15、is the first state in India to incentivize e-cycles,further promoting clean transportation.The state continues to take bold steps towards a sustainable future with its leadership in the electric vehicle(EV)sector and has established itself as the first one in the country to come up with a step-by-st

16、ep guide to help employers adopt workplace charging of EVs.The Confederation of Indian Industry(CII),Delhi has been working closely with various stakeholders including government,industry,start-ups,academia to develop a robust eco-system for EV in the state as well as promotion of adoption of electr

17、ic vehicles(EVs)in India.CII Delhi also played an instrumental role in drafting policies,sharing recommendations for the adoption of EVs.CII Delhi is actively promoting awareness of the advantages of EVs by organising informative workshops,conferences,and conducting surveys.With a steadfast commitme

18、nt to the EV sector,CII Delhi is driving the necessary changes that will serve as a catalyst for the success of the EV industry in India.As the EV revolution gains momentum in India,Delhis initiatives are expected to inspire other states to follow suit,creating a comprehensive and sustainable EV eco

19、system across the nation.India can achieve its vision of a sustainable and eco-friendly future fuelled by electric vehicles with the persistent backing of the government,industry,and the community.Puneet KauraChairman-CII Delhi State&Managing Director&CEOSamtel Avionics Ltd.4 2023 KPMG Assurance and

20、 Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.5 2023 KPMG Assurance and Consulting Services L

21、LP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.ForewordClimate change has become one of the most pressing issues acr

22、oss nations.While there have been many factors exacerbating the climate concerns,one of the major contributors to it is the transport sector.The role of transport decarbonisation in global climate action is garnering attention,as governments try to draft supportive policies towards the adoption of s

23、ustainable practices and achieve a carbon neutral status.Numerous initiatives are being taken to support the growth of electric vehicles(EVs)globally,resulting in a 39.1 per cent y-o-y growth in the units sold in 2022.For India as well,2022 was a prominent year for EV sales,crossing the one million

24、threshold.In the current scenario,two wheelers and three wheelers have been driving most EV sales,as these categories fulfill most of the requirements for switching to an electric fleet.High route predictability,economic viability and ability to use private chargers are some of the factors pushing a

25、doption within these segments.Additionally,the B2B segment has been driving the sales of electric four-wheeler and buses.Favourable government policies,robust charging infrastructure and focus on decreasing the cost of ownership could further lead to higher penetration into segments,including buses

26、and LCVs.With the advent of EVs,a lot of technological transformation has also come into play.For instance,the engine from traditional ICEs is replaced by a battery,accompanied by a Battery Management System(BMS),while the transmission has been replaced by motor and a controller.As technology takes

27、the centerstage,new suppliers of crucial and new components could enter this domain,leveraging new business opportunities this space has to offer.Accordingly,a large portion of the automotive ecosystem will need to be rebuilt and customised to meet the future requirements.While there has been a lot

28、of focus on digitisation,there have also been continuous efforts towards alternative battery technology.Next-generation technologies,such as advanced chemistry cells are being explored for the development of batteries using alternative raw materials that are abundant in nature,are cost effective,and

29、 are impacted less by market volatility.All such technologies are being continuously tested and are either in the concept,prototype or demonstration stages.While ACCs are being developed globally,there is also a push towards localising the production of Li-ion batteries in India.The government of In

30、dia is therefore undertaking measures towards local manufacturing and has rolled out the Production Linked Incentive(PLI)Scheme,incentivising the manufacturers for lithium-ion battery production.Advanced telematics and IoT enablement,virtual diagnostics,application-based monitoring,and OTA updates a

31、re also being developed in parallel,as part of innovative digital solutions.Technology is also permeating into the support infrastructure and wider ecosystem as well.Traditional companies have been reluctant to enter the EV financing market,owing to the fears around technology obsolescence,customer

32、defaults,manufacturer bankruptcy and low resale value,in addition to higher interest rates and limited financing options.Consequently,small NBFCs and fintech start-ups are planning to leverage their first-mover advantage in the EV lending space.While incumbents are still evaluating their entry into

33、EV financing,these players are infusing technology into the financing space with digital payments,vehicle maintenance,tracking and utilisation of data to assess risks,among others.Technological innovation is eminent in charging solutions as well,enabling faster charging technologies,integration with

34、 digital payment platforms,wireless charging and smart features.Artificial intelligence(AI),Internet of Things(IoT),and other cutting-edge technologies are also helping enhance utilisation while maximising the effectiveness and performance of products.In addition to this,end of life solutions are al

35、so being assessed to make the best use of the batteries,including battery recycling and second life application of batteries,alongside battery waste management.5 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization

36、of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.6 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member

37、firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.While newer innovations are flourishing all across the EV landscape,a lot of new business opportunities and models have also emanated through EV adoption.The development of charging in

38、frastructure is transitioning away from standalone charging stations to fragmented destination-based chargers.This is enabling ease of access and financial feasibility.Another model gaining traction is Battery as a Service(BaaS),which aims to reduce charging wait times along with high upfront cost o

39、f EVs.Battery leasing is another area that is being explored by companies,offering better flexibility to consumers when it comes to eliminating the cost disadvantages of purchasing an EV that comes with a high investment and other factors causing apprehensions around an EV purchase.Notably,new busin

40、ess opportunities are stemming as companies innovate throughout the EV value chain.Technology is playing a major role in driving the momentum in the EV domain.Many of these technologies are going to become standard offerings in the future and addition of newer features and solutions is going to be a

41、 continual process.This is where start-ups are going to gain an edge,and will play a major role in offering a technical niche,hence,outperforming the traditional players in this space.While EVs have become a part of strategic action plan for some of the traditional players recently,the start-ups hav

42、e capitalised well on the growing opportunities EVs have to offer.Therefore,it would be imperative for industry peers to develop the right technological capabilities and drive faster digital adoption to utilise the full potential of the growing EV industry.This is a fast-paced ecosystem and would de

43、mand continuous innovation from both existing peers and new entrants.6Rohan Rao Partner,Automotive and Lead Electric MobilityJeffry Jacob Partner and Lead,Automotive 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organizat

44、ion of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.7 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent mem

45、ber firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Global electric vehicle(EV)revolutionClimate change has become a critical issue across the globe,causing a serious threat to the entire ecosystem,biodiversity,and health.The year 2

46、022 was the sixth warmest year since global records began in 18801.Between 2030 and 2050,an additional 250,000 deaths per year are anticipated as a result of climate change.By 2030,it is anticipated that it could cost around INR15,000 crore to INR35,000 crore*annually towards the health damage from

47、climate prone diseases2.Road transport has been a major contributor to climate change,accounting for 16 per cent of global emissions3.The role of transport decarbonisation in global climate action is gaining attention,as governments all over the world are adopting supportive policies to phase out In

48、ternal Combustion Engines(ICE)and push for EVs,which have zero tailpipe emission.Fig 1.1 Pledges for net-zero emissions4Note:*The currency has been converted as per currency conversion rate of 1USD=82.23INR,as of 29 March 2023.This rate has been followed across the document wherever the values have

49、been converted from USD to INR,and is indicated with an asterisk(*)1.Climate Change:Global Temperature,Climate.gov,18 January 20232.Climate change,WHO3.Electric Vehicles Tracking report,IEA,September 20224.IEA Global EV Outlook 2021NorwayDenmarkIcelandIrelandIsraelNetherlandsScotlandSingaporeSloveni

50、aSwedenUnited KingdomChinaJapanUnited KingdomFranceCanadaPortugalSpainCosta RicaGermanySwedenCanadaKoreaChileNew ZealandEuropean UnionFijiUnited Kingdom100%electrified sales(Includes battery-,plug-in-hybrid-,fuel cell-,hybrid-EV)Net-zero pledge(Carbon neutrality,no more green house gases emissions)1

51、00%zero-emission vehicle sales(Includes battery-,plug-in-hybrid-,fuel cell-EV)2025203020352040204520502070IndiaNorway to ban sales of ICE vehicles by 202518 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of in

52、dependent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.1.IEA Global EV Outlook 2021Note:electric 2W sales not included in the global estimation of EV sales as only China and India dominate the global 2W marketsFig 1.2 Glob

53、al annual EV sales(million units,not including 2-Wheeler(2W)&3-Wheeler(3W)1Accelerated by the initiatives undertaken by the countries,there has been a significant growth in the sale of EVs globally,with 2022 witnessing a 39.1 per cent y-o-y growth in units sold.In 2022,9 per cent of all 4-wheeler ve

54、hicles(4W)were EVs and this number is expected to reach 22 per cent by 2030.4W EV Conversion%9%15%22%0.3 0.5 0.8 1.4 1.53.06.69.011.313.815.316.718.621.325.00.0 0.0 0.1 0.1 0.10.10.20.40.71.21.62.12.63.23.80.1 0.1 0.1 0.1 0.10.10.10.10.10.20.20.20.30.30.30.4 0.6 1.0 1.6 1.73.26.99.612.215.117.119.02

55、1.424.829.1-5.0 10.0 15.0 20.0 25.0 30.0FY16FY17FY18FY19FY20FY21FY22FY23EFY24EFY25EFY26EFY27EFY28EFY29EFY30EIncreased public spending,along with availability of new models from original equipment manufacturer(OEMs)30%Sales to start picking up as vehicles achieve Total Cost of Ownership(TCO)parity wi

56、thout subsidy support and charging network growsGovernment subsidies and incentives to drive salesSales to slowdown a bit as subsidy period endLCVs9%4WBuses9 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of i

57、ndependent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.In line with the global scenario,India too has faced significant challenges related to carbon emissions.India is the third-largest emitter of carbon in the world,with

58、 carbon emissions increasing by 6 per cent y-o-y in 20221.1.COP27:Report sees slight rise in 2022 global emissions;highest in India,Down to Earth,11 November 20222.39 Indian cities among worlds 50 most polluted,Times of India,15 March 20233.Lancet study:Pollution killed 2.3 million Indians in 2019,B

59、BC,18 May 20224.Air pollution not only bad for health but for economy too,Financial express,accessed on 30 March 20235.How EVs can help decarbonise indias transport sector,Mobility Outlook,7 September 20226.Indias FY22 crude oil imports hit 8-year high in value terms,Business Line,25 April 20227.e-A

60、mrit websiteFig 2.1 EV adoption roadway in India739 out of 50Worlds most polluted cities in India in 202221.6 millionDeaths in India linked to air pollution in 201935.4 per cent of GDPThe cost of serious health issue from air pollution in 202046.8 per centIndias contribution to global carbon emissio

61、ns from burning fossil fuels5INR978,537 crore*Oil import bill for India in FY226A key solution to achieving net zero objectives is to decarbonise the transport industry,a primary emitter of greenhouse gases.Along with the concerns around climate change,the use of ICE vehicles has also increased the

62、countrys dependence on fossil fuels.Considering that 85 per cent of Indias energy needs are imported,the transition away from ICE can be advantageous for the countrys economy as well.With the country breaking into the top three largest car markets globally in 2022,it is essential to swiftly transiti

63、on from ICE to EV.Aiming to reduce fuel consumption and mitigate carbon emissions,the central government has been increasingly pushing for the adoption of EVs,through various policy interventions.Pre 20182019202120242018202020222030Proposed end of EV30 scheme,and likely extensionNew Proposed deadlin

64、e for FAME II Scheme after extensionLaunch of Production Linked Incentive Scheme(PLIS)to bring down ACC battery pricesAnnounced phase wise installation for EV Public Charging InfrastructureGST for EVs reduced:5%from 18%Govt.plans to set-up at least 1 EV charging kiosk at 69,000 petrol pumpsLaunch of

65、 FAME-II schemeNational Electric Mobility Mission Plan(NEMMP)2020 launchedFAME-I scheme launched from 1stApril 2015 to 31stMarch 2017Central Govt.launched the EV3030 campaign4103662520ChargingBus3W2W4WAdmin InfraCentral Government has allocated INR100 billion for EV subsidy under FAME II till 2024FA

66、ME II incentives break-up(INR bn)The government,in its 2023-24 Budget,allocated INR5,172 crore to Faster Adoption and Manufacturing of(Hybrid&)Electric Vehicles(FAME-2)subsidy outlay,a 78 per cent jump than the amount earmarked in the previous Budget.The FAME-2 subsidy accounts for 85 per cent of th

67、e total Budget allocation of INR6,145 crore for the Ministry of Heavy Industries.Why transition to EV matters to India?210 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated

68、with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Along with the national policies,26 states have announced EV focused initiatives with the goal of promoting EV usage and EV component manufacturing.These policies provide a variety of incentives to boo

69、st EV demand,manufacturing,and infrastructure development 1.1.e-Amrit websiteStateGoalTarget yearDelhi100 per cent conversion in last mile fleet2030Uttar Pradesh1 million EVs on road2024Madhya Pradesh25 per cent of all new registered vehicles to be electric2026Punjab25 per cent of new e2W,e3W sales

70、in target cities2024Gujarat200,000 EVs on road2025Maharashtra10 per cent EVs for all new vehicle registrations2025Andhra Pradesh1 million EVs on road2024Haryana100 per cent electrification of public transport buses2029Odisha20 per cent of all new registered vehicles to be electric2025Assam2,00,000 E

71、Vs on road or 25 per cent of all new registered vehicles to be electric2026Fig 2.2 EV targets for select state governments1The transition to EVs is critical to Indias economic resilience and sustainability goals and presents an opportunity for the country to mitigate climate change,as well as reduce

72、 its dependence on oil.Enabling policies both,at a national and state level have made the environment conducive for e-mobility in India,helping drive towards its goal of achieving 30 per cent electrification of the countrys vehicle fleet by 2030.11 2023 KPMG Assurance and Consulting Services LLP,an

73、Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.2022 was a prominent year for EV sales in India,as the number of EVs sold s

74、urpassed the one million threshold.This was largely contributed by the sales of 2Ws and 3Ws,since these categories satisfy majority of requirements for switching to an electric fleet.High route predictability,high economic viabilityand ability to use home or private chargers for charging in 2Ws and

75、3Ws are some factors that have aided in the shift1.Fig 3.1 Propensity of adoption of EVs1Daily runRoute predictabilityCharging infra requirementEconomic viability HighHighLowPropensity of adoption of EVs1.KPMG in India analysisVehicle segments that are championing the shift to EVs3Two-wheelersThree-

76、wheelersIntra-city busesCity cabs Private carsGoods vehicles(light)Goods vehicles(heavy)MediumHighHighHighLow to MediumHighHighMedium to HighMediumHighMedium Low to MediumMedium to HighLowHome/WorkHome/StandsDepotsWidespread WidespreadParkingLotsWidespreadHighHighMedium to HighMediumLow to MediumLow

77、 to Medium Low12 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Fig 3.2

78、 Overall EV sales in India-B2B+Retail(000 units)11 Society Of Manufacturers Of Electric Vehicles,Discussions with leading automobile and automotive component players in the country2WICE TCO(INR)EV TCO(INR)TCO savings in EVs370,000210,000(40-50 km*)43%FY 20FY 21FY 2214481363179B2CB2B8*Note:1 Low spee

79、d e2W number for FY22 not reported CY21 numbers have been considered as estimate for FY22,3W passenger sales volume which were predominantly ICE fell in FY21 translating to higher EV penetrationY-o-Y Growth*Minimum kms to be travelled per day to achieve TCO parityGrowth in EVs is expected to continu

80、e for the rest of the decade,with 2Ws and 3Ws sales expected to dominate other segments.EV adoption is expected to see an inflection point once all vehicle segments show significant ownership savings over ICE vehicles.127%4WICE TCO(INR)EV TCO(INR)TCO savings in EVs2.2 million(CNG)2.1 million(170 km*

81、)5%FY 20FY 21FY 222.70.34.5162B2CB2B0.5260%3WICE TCO(INR)EV TCO(INR)TCO savings in EVs1.4 million1 million(60-70 km*)27%FY 20FY 21FY 2213918716810L3L52100%BusesICE TCO(INR)EV TCO(INR)TCO savings in EVs51 million44 million(125-130 km*)13%FY 20FY 21FY 2212B2B1100%13 2023 KPMG Assurance and Consulting

82、Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Fig 3.3 Forecasted penetration curve for EVs by vehicle cat

83、egory1Inflection points are likely to be different for each segment as different factors will play a critical role for each segment1.4W:B2B(commercial users)is currently the key customer base driving e4W sales,given parity in TCO between 4W ICE and EV with high daily usage and increasing fuel prices

84、.Significant penetration in vehicles for personal use is expected to start picking up in the next four to five years,driven by decreasing battery prices and increasing fuel prices.Buses:Government-run public buses are expected to have a greater penetration as a result of the subsidies and programmes

85、 aimed at accelerating their adoption.Limited offtake is expected in the private segment,given high upfront cost differential(3x4x)and subsidies being limited only to the public segment.Light commercia vehicles(LCVs):The viability of electrifying LCVs is stronger than for 4Ws in situations like urba

86、n delivery since LCV fleets are driven extensively,operate on predictable routes,and can be charged at commercial depots.More favourable government schemes and comparable models to ICE could drive higher penetrationIndia is gradually adopting EVs,with 2Ws and 3Ws leading the way on account of positi

87、ve TCO over ICE.Favourable government policies,robust charging infrastructure and focus on decreasing the cost of ownership are likely to lead to higher penetration of other segments such as 4Ws,buses and LCVs.1.KPMG in India analysis13%19%26%34%42%52%63%75%29%41%33%39%48%57%67%78%85%90%1%1%2%3%5%8%

88、11%15%1%2%4%7%12%16%22%27%7%7%6%7%8%12%17%23%30%37%FY21FY22FY23FY24FY25FY26FY27FY28FY29FY30eScooterse3Wse4WseLCVseBusLCVs4WBusesScooters3W14 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member

89、 firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.The interior and exterior of an EV varies significantly in terms of the technology used.The inside of an EV has seen the addition of new technological components such as Battery Manag

90、ement System(BMS),motor controller,touch dashboard,battery technology,motor technology and telematics.The EV ecosystem has also seen an extensive technology evolution i.e.,value chain and support infrastructure such as vehicle financing,charging infrastructure,insurance technology,cloud computing/da

91、ta analytics,leasing,online sales channel,and end-of-life vehicles(ELV)or circular economy.Fig 4.1 Comparison of ICE and EV vehicle components1These transitions are leading to an increase in the electronics content from 16 per cent in traditional ICE vehicles to approx.55 per cent in an EV.Fig 4.2 S

92、hare of electronics in total vehicle BOM cost for 4W14.1 Parts of an EV being integrated with technologyThe components used inside an EV are going through a major change with increasing use of technology and software.Following are some of the major developments witnessed inside an EV:The engine has

93、been replaced by battery with a technology addition of BMSTransmission has been replaced by motor and controllerNormal analogue screens have been replaced by digital touch screensIncreasing number of ECUs with advanced software programming MechanicalElectronicsICEEV1.KPMG in India analysis35%20%15%2

94、5%5%ICEOthersEquipmentChassisVehicle BodyDrive transmission+Engine20%10%8%20%35%7%EVOthersBattery packEquipmentChassisVehicle BodyEV PowertrainICE VehicleEV VehicleAs we shift from ICE to EVs,there is also a shift in the quantum of technology inside and outside a vehicle415 2023 KPMG Assurance and C

95、onsulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.BMS has evolved from a simple Protection Circuit

96、Module(PCM)to advanced BMSA BMS is a critical part of any battery system that controls and monitors the state of charge,temperature,current and voltage of the cells in the battery pack.A PCM is incapable of smart energy management and is thus more prone to failure under non-standard operating condit

97、ions.One of the consequences of such failure is battery fires that has been witnessed quite regularly in the past few months.Nine EV fire incidents of electric two wheelers have been reported since March 2022,with a total of 20-30 vehicles involved.An advanced BMS provides the right mix of safety an

98、d performance by balancing the energy stored in the cell thus preventing fire incidents.Fig 4.3 Evolution of(BMS)1Fig 4.4 How BMS can save from battery fires21 PCM vs.BMS:Which is better,ION Energy,13 June 2022,as accessed on 22 March 20232 What is a BMS protection board of lithium battery,Tritek,as

99、 accessed on 22 March 2023Way forward:The automotive ecosystem will have a long-lasting impact due to the EV transformation.A large portion of this ecosystem will need to be rebuilt,re-skilled,and expanded to meet the future needs of EVs.EVs have shown to be not only a cleaner option to fossil-fuel-

100、powered vehicles,but also have significantly lower operating cost over the vehicles lifecycle.As EV technology evolves,new suppliers of crucial components such as power electronic components,batteries,software,etc.have an opportunity to enter and challenge the established companies to diversify.Batt

101、ery management systems available in the market are completely reliant on the manufacturer,with varying degrees of efficiency.Given the systems complexity and range of functions,there is an urgent need for standardisation.OEMs must further improve the BMS design with compact batteries to maximise per

102、formance and minimise energy loss.Interoperability of batteries through swapping requires standardised BMS across vehicle segments.PCMPrimitive stand-alone protective circuit Focuses on protection from under/over current or voltage flowPurely hardware based with no software integration for decision

103、makingLack of any precision outputPerforms equalisation using a basic modelLow cost to produceUsed in small electric tools and low-end bikesBMSAdvanced circuit with multiple functionalitySignificant focus on intelligent software integration in addition to hardwareHigh level of precision and adaptabi

104、lityMeasures,operates and protects the battery packs using advanced algorithmsUsed across advanced products like EV,drones,etc.Thermal runaway protection This offers protection by activating and shutting down the battery to prevent it from overheating,when temperature of a cell gets too high.123Over

105、-discharge protection This prevents the battery from being discharged below a certain safe level.Short circuit protection This protects the battery against short circuits between cells or between an electrode and the ground.Overcharge protection This prevents the battery from overcharging,which help

106、s minimise or prevent damage.456Cell balancing This ensures each cell in the battery pack is equally charged and prevents damage to the cells and uneven charging.Current protection This protects the battery against excessive charge or discharge currents.16 2023 KPMG Assurance and Consulting Services

107、 LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Motor controller is responsible for regulation of driving condition

108、s and protects the motor and overall mechanics1 KPMG in India analysis2 IDTech,Industry reports,KPMG in India analysisAnother major component of an EV is the motor controller which has multiple utilities,creating a differentiator to ICE.The motor controller of an EV efficiently transforms the energy

109、 stored in the batteries into motion using its power elements and micro-processors.Fig 4.5 Major benefits of motor controller1Apart from the above stated benefits,motor controller also offers regenerative braking aspects,which are unique to EVs and not available in ICE Fig 4.6 Unique feature of moto

110、r controller in EVs1Interactive touch dashboard has been a new addition,replacing the erstwhile analogue displaysA touch dashboard in an EV is used for control,navigation,and entertainment systems.Touch dashboards play an integral role in providing driver assistance functions available at a single t

111、ouchscreen platform.Benefits of a touch dashboardA touch dashboard provides a user-friendly experience with multiple viewing options and emulates functionality of a smartphone.Most touch dashboards are linked to a mobile application for the purpose of vehicle tracking,vehicle health information and

112、trip analytics.These dashboards have technological features including on board navigation,charging stations tracking,music players,geo-fencing,Over-The-Air(OTA)updates amongst others.Evolving battery technologyAll EVs today use Li-ion battery technology with varying chemistry as per specific require

113、ment of energy density and thermal run-away.Fig 4.7 Emerging battery chemistries2 Maintaining constant speed,even after change of loads Dynamic response to changing system demands even during braking Evaluating machine performance/diagnosticsMajor benefits of motor controllers Speed control of the m

114、otor Torque control to govern the motors torque delivery Electrical protection of the motor and subsequently the mechanicsRegenerative braking function was introduced to EVs to leverage kinetic energy from the electric motor when the car slows down.The mechanism captures the kinetic energy from brak

115、ing and converts it into the electrical power that charges the vehicles battery.This helps batteries to extend range,while also reduces wear and tear on the usual mechanical brake system,further bringing down the maintenance costs.Traditional Li-ion(NMC,NCA,LFP,LMO)Advanced Li-ion(Lithium sulphur,li

116、thium carbon,silicon anode,solid state,etc.)Focus on incremental improvement in energy densityand cost reduction through change in composition of existing cathode materials:Increase in Nickle and Manganese contentReduction in Cobalt contentReplacement of graphite anodes,Silicon and Lithium offer hig

117、hest potential for improving energy densityReplacement of liquid electrolyte with solid/semi-solid form for higher safetyUse of alternative cathode materials like sulphur,air or carbon(Li-based anode)Emerging battery chemistries17 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Lia

118、bility Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Development of cell technologies beyond Li-ion and fuel cell to mitigate global supply chain

119、challengesLithium,cobalt,and nickel are the three most critical metals used for the development of batteries in EVs.However,metals and battery supply chains,available today,revolve around China as it is amongst the top five countries with the most lithium reserves.Chinese players have also been purc

120、hasing stakes in mining operations in other lithium-rich regions including Australia and South America and cobalt mines in the Congo region1.Fig 4.8 Reasons for global supply chain challenges1Growing concerns of child labour and human rights is leading to mining restrictions by many countries.Restri

121、cted mining practicesChina has been playing a key role in the global battery supply chains,as it produces three-quarters of all lithium-ion batteries and has over half of lithium and cobalt processing and refining capacity.Leading Chinese players have stake in cobalt mines in the African nations,the

122、reby dominating the entire production of EV battery supply chain.China has,over time,gained dominance over global supply chainsWith increasing demand outstripping the supply of critical materials,there is a growing concern for the future of the commodities/raw materials used for development of EV ba

123、tteries.According to the International Energy Agency(IEA),the world could face shortage of lithium by 2025.Limited reserve availability across the globeTechnology Readiness Levels(TRL)stages in Advanced Chemistry Cell(ACC)spaceACCs are next-generation technologies for development of batteries using

124、alternative raw materials that are either abundant in nature or are cost effective.Manufacturers throughout the world are investing in these new generation technologies to meet the expected surge in battery demand in the next decade.Battery companies are constantly experimenting to develop cutting e

125、dge technologies involving hydrogen,sulphur,calcium and zinc that are available in abundance.Companies are making efforts to reduce the cobalt content from batteries due to its questionable mining practices,price volatility,geographical concentration,and use of child labour.2 Manufacturers are devel

126、oping various ACCs that are either in the concept,prototype or demonstration stages.For instance,lithium sulphur,silicon anode,lithium air and nickel hydrogen are still in the concept stages while solid state,iron air,calcium based,zinc based,and ultra-capacitors have reached the prototype stage.Flo

127、w,sodium-ion and multi-ion are some of the many ACC in the demonstration phase whereas lithium-ion and lead acid have reached the early adoption and mature stages respectively.1 IEA,GIZ,Benchmark Mineral Intelligence,KPMG in India analysis2.India gearing up to make battery cells,leveraging the ACC-P

128、LI,ETN,8 November 2021,as accessed on 27 March 202218 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by

129、guarantee.All rights reserved.Fig 4.9 TRL stages in ACC space1While ACCs are being developed globally,there is a need for localisation of Li-ion battery in India.The government of India is therefore undertaking measures for localisation and has rolled out the PLI scheme with an outlay of INR20,557 c

130、rore*for lithium-ion battery production.Several non-lithium based chemistries are being piloted by end use industries to achieve a sustainable low-cost battery solution with a few expected to achieve commercial viability by the end of the decade.Innovations in motor technology to de-risk the supply

131、chainThe performance of Evs directly depends on its electrical motor specifications.Motor performance is determined by the torque-speed and power-speed characteristic of the traction motor.Electric motors used in EVs are primarily dominated by two technologies:Brushless DC(BLDC)motors and Permanent

132、Magnet Synchronous Motors(PMSM).These motors offer high efficiency,high power density,and precise control,making them ideal for use in EVs.However,both these technologies comprise magnet as a key sub-component,which uses rare metal concentrated in China.Fig 4.10 Cost structure of electric motor;Domi

133、nance of global magnets production locations2ConceptDemonstrationEarly adoptionLithium-ionMatureLead-acidNa-ionFlowSemi solidMulti-ionH2 Fuel cellsIron-airPrototypeCa basedZn-basedSolid StateUltra-capacitorsAl-air cellsNickel-hydrogenSilicon anodeLi-SulphurLi-airMagnets,53%Housing,18%Stator Copper,1

134、0%Insulation,1%Stator Iron,9%Rotor Iron,6%Shaft,2%Bearings,1%Cost Structure of an Electric MotorGlobal Production ShareLowHighGlobal Magnets Production Locations1 KPMG in India analysis2.Rare earths:Scarcity at your fingertips Rare earths:Scarcity at your fingertips,QZ,November 2021,as accessed on 2

135、8 March 202319 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Currently

136、,China dominates the rare earth elements market(including metals used for magnets)with 37 per cent share in global reserves and 70 per cent share in global production1.India has a 6 per cent global reserve and 3 per cent global production share in rare earth elements markets.China accounts for 35 pe

137、r cent of import value of Indias rare earth elements,which is likely to contribute to the high cost and import dependence in domestic EV manufacturing.However,stakeholders in the Indian EV landscape are trying to solve this issue with technologies on two fronts:Development of magnet-less motors:Depe

138、ndence on rare earth metals can also be reduced through the development of the magnet-less synchronous reluctance motors(SynRM),suited for high-speed application due to its robust nature.SynRM also offers high power density,wide constant power operation region and fault tolerance.The absence of magn

139、ets also eliminates the challenge with mechanical forces,enabling the motor to operate at a high torque-speed.However,due to its high manufacturing cost,SynRM technologies currently have high prices in the market.This technology is likely to receive greater focus from EV players and customers with i

140、nnovations focused on lowering its cost.Reducing dependence on rare earth metals in current BLDC and PMSM motors:There has been increased focus on developing improved low-cost rare earth-free magnets.This is likely to lead to lower manufacturing cost of BLDC and PMSM,as rare earth magnets are key co

141、mponents of these technologies.Fig 4.11 Comparison table of major motors in EVs2CharacteristicBLDCPMSMSynRMComponentsPermanent magnets constitute the major costPermanent magnets constitute the major costCopper and steel constitutes the major cost.Magnets are not presentNoise levelModerateLowHighManu

142、facturing costModerateHighLowEfficiencyModerateHighLowUsage/ApplicationLow and city speed E2W and E3WHigh speed E2Ws,E4Ws,E-LCV and E-BusCurrently a developing technology as an alternative to PMSM motors to counter the increasing usage of magnets 1 Rare earths:Scarcity at your fingertips Rare earths

143、:Scarcity at your fingertips,QZ,November 2021,as accessed on 28 March 20232.KPMG in India analysis20 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG Internationa

144、l Limited,a private English company limited by guarantee.All rights reserved.Fig 4.12 Advance telematics and IoT enabling quick product innovation,virtual diagnostics,application-based monitoring,and OTA updates1Advanced telematics and Internet of Things(IoT)are becoming standard technologyTelematic

145、s is the use of integrated technology and communications to store,transmit and receive data between devices with the help of a telecom service.It refers to the convergence of telecommunications and information processing.In the era of connected technology,EVs also require telematics and IoT for mult

146、iple applications.Some of these applications are:Real time location tracking and navigationImproving drivers experienceContinuous charging updatesFor providing vehicle to grid communicationAdvanced telematics and IoT enable quick product innovation,virtual diagnostics,artificial intelligence(AI)real

147、-time driving monitoring,application-based monitoring,and OTA updates.Firmware updates and unlocking new features-Enabling vehicles performance and features(including vehicle application updates,map software updates)to be continuously updated and improved.Product innovation through driving pattern a

148、nalysis(acceleration or braking,speeding,terrain)Helping automakers develop the vehicle reflecting the customers needsProduct innovation through vehicle health analysis-Focusing on performance,range,speed and maintenance dataVirtual diagnostics,preventive maintenance,and failure analysis Focusing on

149、 improving reliability of the vehicleBattery management,preventive maintenance system and fault alert system-Providing battery malfunction reports,maintenance schedule notifications and battery and air pressure alerts resulting in reduced accidents and better customer experienceAI real-time driving

150、monitoring and energy optimisation-Offering instant feedback to owners on dashboard and efficiency15234Application based monitoring(for controlling the vehicle remotely via mobile)Enabling parental control for geofencing,top speed capping and remote locking1.KPMG in India analysis21 2023 KPMG Assura

151、nce and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.1 Barriers to scaling up finance,EQ Mag

152、Pro,as accessed on 28 March 2023Fig 4.13 Types of asset and business model risks leading to limited EV financing options14.2 Technology permeating into support infrastructure and ecosystems as wellEV financing is witnessing innovative solution from Non-Banking Financial Companies(NBFCs)and start-ups

153、EV financing has its unique set of risks and challengesConventional vehicle financing companies are reluctant to finance the EVs due to the risk associated with both business models and assets.Some of the unique set of risks associated with EV financing are:High operations and maintenance cost,low u

154、tilisation,technology obsolescence,customer defaults,manufacturer bankruptcy,policy changes and low resale value.On the other hand,higher interest rates,low loan-to-value ratios,limited financing options,and high insurance rates are some of the challenges that are leading to low confidence in EV fin

155、ancing.Asset riskBusiness model riskFinancial institutions are risk averse due to the lack of reliable data on EV performance in terms of range,asset life,maintenance requirements,load capacity,and more.Improper maintenance owing to a lack of information or trained mechanics is also likely to impair

156、 the resale value of an EVLack of credit history of first-time borrowers increases the risk for FIs to receive the repayment of loans.Low utilisation of assets might lead to less income for end users resulting in re-payment defaultsWith EV technology still in evolution,there is high risk of technolo

157、gy obsolescenceUnstable/changing policy can create issues with financial analysis at FIs end.Difficulty in obtaining incentives can lead to poor working capital managementSelling vehicles at loss might lead to manufacturer bankruptcy in the long-termCost of EV is highly dependent on lifecycle of bat

158、tery which currently has lower life than ICE vehicles,leading to low resale valueTechnologyPolicyManufacturerResaleOperations and maintenanceCustomerUtilisation22 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization

159、 of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Current EV financing market mapIn the India EV financing market,small NBFCs and fintech lenders are planning to leverage their first mover advantage in the EV le

160、nding space.While incumbents are still evaluating their entry into EV financing,small NBFCs and fintech companies are leveraging this gap with the help of technology.The lending rates are sub-par as compared to ICE financing terms;however,the situation is improving as more players are focusing on EV

161、 financing terms.However,the situation is improving as more players are focusing on EV financing.High operations and maintenance cost,low utilisation,technology obsolescence,customer defaults,manufacturer bankruptcy,policy changes and low resale value.On the other hand,higher interest rates,low loan

162、-to-value ratios,limited financing options,and high insurance rates are some of the challenges that are leading to low confidence in EV financing.Fig 4.14 Current EV financing market map1Small NBFCsFintech lendersPublic sector banksPrivate banksCaptive NBFCsMid+large NBFCsDescriptionSmall NBFCs have

163、 asset under management(AUM)range of over INR107 crore*Fintech lenders are NBFCs that focus on providing digital loans.These lenders have AUM range of INR58-436 crore*Majority government owned banks with AUM range of more than INR109,613 crore*Mostly listed large privately held banks with AUM range

164、of more than INR109,613 crore*Financing arm of OEM groups with AUM range of INR10,937-54,847 crore*Independent large scale NBFCs with AUM range of more than INR1,069 crore*EV segments2W and 3W2W and 3W2W and 4W4WOwn 2W,3W,and 4WLimited play on case-to-case basisLending rates(Sub-B2C:23-26 per centB2

165、C:23-26 per centB2C:12-15 per centB2C:12-15 per centB2C:20-23 per centNABorrowing rates(Indicative)10-15 per cent10-15 per cent3-5 per cent3-5 per cent8-9 per cent6-9 per centDominate ICE Financiers1.KPMG in India analysis23 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability

166、 Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Innovation in EV financingCompanies in EV financing space are continuously focusing on innovations

167、to overcome risk and challenges with the help of technology.Fig 4.15 Innovation in EV financing11 How fintech can provide innovative financing solutions to Indias EV sector,The Economic Times,as accessed on 28 March 2023GeotaggingGeotagging is used to create boundary conditions on driving range.A no

168、tification is provided to the financial institutions for further actions,in case a driver breaches that boundary.Financial institutes are using geotagging to understand if the owner of 3W EV is challenging to underwrite as the owners are mostly semi-literate with no credit history and reside in geog

169、raphies that are unserviceable.Financial institutes are leveraging digital technologies and high smartphone penetration in the country to successfully provide financial services to this customer base.Digital lending platforms use a blend of data-driven tools like machine learning,algorithms and non-

170、traditional data tools like psychometrics,SMS,and biometrics to make their underwriting decisions.This also eliminates much human intervention.Automated deductionsFintech companies are looking to drive digital payments in the commercial e-rickshaw first/last-mile delivery segment.As most drivers are

171、 smartphone equipped,they can receive fare/payment in their e-wallets as well as pay their EMIs.This allows daily/weekly repayment schedules for B2B customers insuring proper utilisation and automated debit from customers account.IOT and vehicle tracking deviceIOT helps financial institutions in the

172、 following ways:To access utilisation data of asset and limit risk of defaults in low utilisation casesFinancial institutions can get in contract with OEMs to access vehicle performance data and provide financing terms basis vehicle qualityIoT is also being used for maintenance schedule alerts and r

173、egular battery health reports to the financial institutes and owner of a vehicle Using battery health data and its proprietary underwriting model,financial institutes extract a high residual value for EVs,helping customers get an effective interest rate of 7 per cent.This is almost at par with the r

174、eturn on investment(RoI)offered by PSU banks for conventional vehicles with an internal combustion engine(ICE).At present,the EV financing sector is mostly dominated by small NBFCs and fintech companies as they offer easy financing solutions.With the entry of large public and private banks,NBFCs wil

175、l start offering better financing conditions in terms of disbursal percentage and lower interest rate.24 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG Internat

176、ional Limited,a private English company limited by guarantee.All rights reserved.Charging solutions are evolving to provide fast,seamless experience to end-usersThe advancement of charging solutions is following a typical pattern of innovation that boosts functionality as well as making components m

177、ore affordable.Additionally,software innovations are already addressing various scaling issues and is likely to be crucial for EV uptake.With application-based integration evolving,home/private charging solutions are supporting the users in energy management,remote monitoring,warranty,and service ma

178、nagement,while application integration in plug and play operations is making public charging process simpler.Fig 4.16 Key features developed for private charging solutions and functions of an application based automated plug and play11 Guide To Use EV Charging Mobile App,Numocity,as accessed on 28 M

179、arch 2023Key features developed for private charging solutions12345StatisticsHelps access detailed and holistic health report of the cars battery,motor and other critical functions.Smartwatch integrationAccessibility for switching car ignition;locking and unlocking with the smart watch.Scheduled cha

180、rgingConfiguring car to stop charging when it reaches a certain limit.Remote chargingRemotely switching charging to conserve energy.Charger sharingNetwork for sharing and renting private EV charging stations.12345Favorite Charge PointsFrequently used chargers can be added as Favorite in the applicat

181、ion.FilterUsers can filter out the chargers based on their EV car compatibility.Markers on MapColor of the markers on map depicts the availability of the charge point.User profileAdding car details for better understanding of charger type;planning trip according to previous data.Scan and Pay Users c

182、an drive-in to a charge station and make the payment through a QR code.Functions of an application based automated plug and playA nation-wide master application serving as a one-stop shop providing information on the location and availability of car charging stations could speed up the adoption of E

183、Vs and reduce range anxiety among end users.25 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarant

184、ee.All rights reserved.Technological innovation in charging solutions is not limited to application-based technologies.Faster charging technologies,integration with digital payment platforms,wireless charging,smart features(with sim enabled chargers)are being developed globally to address long charg

185、ing time concerns and peak power demand management.AI,IoT,and other cutting-edge technologies can enhance utilisationwhile maximising the effectiveness and performance of products.Fig 4.17 Upcoming charging technologies1Wireless chargingWireless EV charging technology has significant potential in ov

186、ercoming some of the challenges facing the widespread adoption of EVs,such as range anxiety and the inconvenience of frequent recharging.The technology can be particularly helpful for electric buses as it could reduce operating costs,making them more affordable with smaller batteries and extended ba

187、ttery life.Fast charging:Fast charging technologies are being developed globally to address long charging time concerns and boost adoption:HyperCharging:Technology with the capability to charge 24 vehicles simultaneously and equipped with modular systems,enabling it to install 70 per cent faster tha

188、n other charging systems.Innovation in this space has led to delivering power at 1000kW and charge EVs within 6 minutes.Megawatt Charging System:MCS has been formed to meet the requirements of new commercial vehicles(trucks,buses)with high power charging solution for battery packs that can accept ov

189、er 1 megawatts of charging rate using Combined Charging System(CCS)technology.New fluid cooled cables:New cooling technology for EV high-current charging cables enables delivering current at 4 times that of the fastest available EV chargers on the market,reducing the charging time and makes it possi

190、ble to use smaller wire diameter inside the charging cable.Smart Charging SystemsCharging systems are being integrated with smart features by deploying AI,IoT and G2V(Grid to Vehicle)charging process,which is based on energy availability considering the off-peak and peak load conditions of the grid.

191、Smart charging solutions include V2G(Vehicle to Grid)or bidirectional charging technology,that enables charging of EV batteries and can also be used to pump electricity back to the grid during peak times.Payment options in charging systemsCharging systems integrated with payment solutions are likely

192、 to help users have the choice of paying with cash or using other methods such as credit/debit cards,cryptocurrency wallets,or other payment methods.Another technology,the Tap&Charge payment processing system,provides an efficient solution for business owners seeking a flexible and reliable unattend

193、ed payment solution for their EV charging stations.1.KPMG in India analysis26 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private Eng

194、lish company limited by guarantee.All rights reserved.Distribution channel seeing a disruption with increase in adoption of omni-channel salesApart from traditional offline channels,online sales as a distribution channel is picking up globally with Indian OEMs gradually warming up to the concept.One

195、 of the major Indian two-wheeler EV players has already adopted the direct-to-consumer(D2C)sales model for their e-scooters.Key benefits being offered via the online distribution channel:Doorstep product delivery Transparency in pricing provided on the applicationDoorstep service through servicing v

196、ansIntegration of financing optionsThis eliminates the need to set up a conventional dealership network,which would be a resource and cash intensive exercise.The omnichannel strategy involves a mix of physical experience centres and a seamless online sales platform to be topped up by a home delivere

197、d product.End of life solutions becoming a necessity for a sustainable supply chainWith the increasing number of EVs,there will be a need to have a well-defined end of life solution for EV batteries.The global supplies of raw material are under constraint due to the limited reserves and geopolitical

198、 considerations amidst rising demand from the EV segment.The global consumption of these raw materials is expected to increase 20 times by 2030.The five major metals used in manufacturing of an EV battery consisting of cobalt,nickel,lithium,copper and graphite comprise 50 60 per cent of the cost of

199、Li-ion batteries.With China having domestic reserves of most of the raw materials and acquiring reserves in other parts of the world to gain control over the raw material supply chain,there is a huge technology push to develop Li-ion battery recycling capabilities.The recycling technology is still e

200、merging and is taking place in three parts:Recycling of batteryReuse for stationary storage applicationsCapacities for ancillary services in the power gridFig 4.18 Emerging battery recycling and reusable technologies as part of end-of-life solutionsThe end life of batteries impacts sustainability an

201、d the value chain of materials.The end-use problem of the battery can be solved by recycling.With recycling,the demand for battery materials can be controlled.Generally,EV batteries have a useful life of 4-5 years(for 2-3 wheelers in India).However,there is a huge opportunity for the second-use of a

202、 battery in low-grade applications as the capability of the battery is not completely diminished and can be reused for stationary storage applications.Second life application of batteriesBattery recyclingVehicle to grid(V2G)is a technology that enables energy to be pushed back to the power grid from

203、 the battery of an EV.V2G applications can be introduced for battery swapping stations which have potential to operate as storage providers and respond to frequency regulation demands,power outages and peak shifting.Technology to enhance the electrical grid27 2023 KPMG Assurance and Consulting Servi

204、ces LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.There is a huge technology push to ensure recycling of EV batter

205、ies and players are exploring and adopting a variety of process technologies.Example of combination of three methods being explored by players is highlighted below:Fig 4.19 Combination of methods being explored by playersMechanical separation Physical separation of componentsPyro-metallurgical-Proce

206、ssing of spent lithium-ion cells at high temperature Hydro-metallurgical-Recovery of metal from black mass Battery waste management is also being supported and encouraged by the Government of India with new battery waste management rules that promotes circular economy for an effective recycling.Fig

207、4.20 Regulations for battery waste management11 Government notifies Battery Waste Management Rules,2022,Ministry of Environment,Forest and Climate Change,as accessed on 27 March 2023Battery Waste Management Rules 2022 by the Union Ministry of Environment Forest&Climate Changeare designed to ensure e

208、nvironmentally sound management of waste batteries including EV batteries,portable,automotive and industrial batteries.The rules are based on the concept of Extended Producer Responsibility(EPR)where the producers(including importers)of batteries are responsible for collection,recycling/refurbishmen

209、t of waste batteries and use of recovered materials from wastes into new batteries.The rules will enable setting up a mechanism and centralised online portal for exchange of EPR certificates between producers and recyclers/refurbishers to fulfil the obligations of producers.Mandating the minimum per

210、centage of recovery of materials from waste batteries under the rules will bring new technologies and investment in recycling and refurbishment industry and create new business opportunities.EPR mandates prohibit disposal in landfills and incineration and promotes setting up of new industries and en

211、trepreneurship in collection and recycling/refurbishment of waste batteries.28 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private En

212、glish company limited by guarantee.All rights reserved.The government of India has been focusing on the manufacturing of battery cell components.While Indias capabilities in the battery manufacturing value chain are currently limited to pack assembly,initiatives such as the PLI scheme could enhance

213、the domestic cell manufacturing by incentivisingplayers to further develop in this sector.The recently launched PLI scheme aims to offer INR18,912.9 crore*in incentives for building a 50 Giga Watt Hour(GWh)ACC manufacturing capacity.Additionally,NITI Aayog has laid out a strategy to capture the huge

214、 storage opportunity in the EV segment,with a target of localising 80 per cent of the value chain by 20303.1.“11 unique features found in modern electric vehicles”,Royal Automobile Club of Victoria(RACV),12 December 2022,as accessed on 20 March 20232.GIZ,KPMG in India analysis3.NITI Aayog,KPMG in In

215、dia analysis4.National Programme on ACC Battery Storage policy document,Secondary Research,KPMG in India analysis Cell manufacturing a growing opportunityThe emergence of EVs has created numerous business opportunities for OEMs,fleet operators,financiers,energy solution providers,technology players,

216、among others.For instance,new features particular to EVs including front boots,remote operations and charging station tracking,are creating opportunities for players across the landscape1.This has led to a disruption in the market,creating new opportunities for players across several domains.Moreove

217、r,when compared to ICE vehicles,EVs have new components,and hence,an opportunity for auto component companies who provide vehicle interface,chassis,charging systems,battery management systems,battery accessories and thermal management systems.Fig 5.1 Indias capabilities across battery manufacturing

218、value chain2ParticularsMiningRefiningActive materialsCell manufacturePackAssemblyLevel of localisationin IndiaLowNilLowNilHighCurrent Status Miniscule reserves of Lithium,Nickel and Cobalt PLI for 50GWh ACC scheme Cathode materials:India doesnt have players Anode:Few graphite manufacturers exist pro

219、ducing anode materials Currently importing cells from China and Taiwan Dominated by Indian OEMs and big battery pack playersFig 5.2 PLI Scheme for ACC battery storage4Scheme details Manufacturing capacity of 50 GWh of ACC and 5 GWh of Niche ACC Outlay of INR18,913 crore*Incentives only for cell manu

220、facturing and not for conventional battery pack assemblyKey eligibility criteria Set-up an ACC manufacturing facility of minimum five GWh capacity and maximum 20 GWh capacity Incur mandatory investment of INR230 crore*/GWh Domestic value addition of at least 25 per cent within first two years and 60

221、 per cent within five years either at the Mother Unit level or at the project levelIncentive rollout Selected bidder entitled to receive fiscal benefits in the form of cash subsidy Subsidy limit of INR2,055*/kWh Incentive would be distributed over a five-year period,with greater specific energy dens

222、ity and cycles and enhanced local value addition No restriction on chemistry or technologyNew business opportunities are emerging from the propagation of EVs529 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization o

223、f independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Charging solutions beyond standalone charging stationsHome/workplace chargingDestination chargingFleet chargingOn-the-go chargingAffordable charging hardwareEasy i

224、nstallationMeasure power consumptionMechanism for billingEasy access and availabilityMinimal charging tariffsHigh charging speedsEasy search and quick billingConvenient,accessibleNetwork uptime and charging speedMinimal wait timeAccessible locationsFast charging speed,network uptime Easy search func

225、tionalityQuick billingAncillary services In 2014,Indias electronics ecosystem which includes manufacturing,design,innovation,and production,was valued at INR82,230 crore*by 2022,it had grown to INR616,725 crore*,and is predicted to surpass INR2,466,900 crores*by 2025-26.The electronics and semicondu

226、ctor industries received 66 per cent of the FDI that flowed into India over the last three years.The India Semiconductor Mission(ISM),a business division of the Digital India Corporation aimed at promoting the growth of the countrys semiconductor and electronics manufacturing industries,is currently

227、 evaluating business proposals from several investors to establish fabs and chip manufacturing facilities in the country1.1.China-plus-one strategy puts India at a vantage position:Rajeev Chandrasekhar”,The Hindu,17 November 2022,as accessed on 20 March 20232.“Handbook of electric vehicle charging i

228、nfrastructure implementation”,NITI Aayog,8 December 2021,as accessed on 20 March 20233.Battery-as-a-Service(BaaS):The Revolution Ahead,EBC Publishing Pvt.Ltd.,24 June 2022,as accessed on 20 March 2023Fig 5.3 Charging solutions beyond standalone charging stationsIn India,the development of charging i

229、nfrastructure is transitioning away from standalone charging stations with dedicated area for multiple chargers to fragmented installations of destination-based chargers.For EVs,any parking site with access to an EV charging point can make vehicle battery charging more feasible.This charging infrast

230、ructure implementation strategy promotes the installation of charging points at various locations.Such a strategy provides multiple benefits to users and operators,ranging from ease of access to financial feasibility2.The charging infrastructure is another area of focusBattery-as-a-service(BaaS)gain

231、ing prevalence to reduce upfront EV acquisition cost BaaS is gaining traction,as it can reduce charging wait times along with high upfront cost of EVs.It helps consumers lease batteries separately,eliminating the need to purchase the battery upfront along with the vehicle.The model allows users to s

232、wap the battery in swapping stations for a recharged battery every time the battery gets discharged.BaaS is driving prevalence in e-buses since the model can drastically reduce the initial costs of EVs by up to 50 per cent.The battery for a 9m electric bus costs between INR0.5-0.55 crore,while the e

233、ntire bus costs between INR0.12-0.13 crores3.For OEMs,this will help match prices with fossil fuel counterparts,making it a viable option for whom prices have been a major concern.While there are numerous advantages to using BaaS as a model for EV adoption,there are certain inherent problems like re

234、quirements of EVs are currently not standardised.EV and battery manufacturers throughout the world have been adopting varying standards for the design of their products based on criteria such as financial resources,technological expertise and research and development skills and this has a trickle-do

235、wn effect on battery requirements.Given the multitude of battery and EV manufacturers,high entry barriers are expected for EV charging solutions.Hub of electronics and semi-conductor manufacturingIndia has the potential to become a significant participant in electronics and semiconductor product man

236、ufacturing as part of the China-plus-one diversification strategy.Over the last decade,the countrys electronics and semiconductor product manufacturing sector has grown tremendously.30 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KP

237、MG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.However,for the BaaS model to function more effectively,it will be crucial to have battery standardisation across EVs as well as interopera

238、bility,offering the ability to use the same battery in different types of EVs.To increase the potential of the BaaS model,a strong collaboration between all the players is critical,which could eventually help solve the issue of interoperability.Leasing a new model being adoptedDriver partners are he

239、sitant towards direct ownership of EVs,due to apprehensions around vehicle performance and financial constraints.Moreover,limited financing options in the market with only few NBFCs present in the market.Current financing has high Interest rates(23-25 per cent)are exorbitant and short tenure(two yea

240、rs).Consumers are reluctant to purchase EVs due to several factors,including high cost of investment,apprehensions around performance,after-sales service,among others.Some of the factors restraining their purchase are listed below,and these continue to be the major factors around why consumers do no

241、t go for upfront purchase of an EV.Fig 5.4 Factors that make leasing a preferable way for last mile aggregators to acquire EVs are as follows:The rise of EVs has created several economic opportunities throughout the value chain,particularly for technological players and charging infrastructure opera

242、tors.In addition,the Indian government has launched a variety of initiatives and schemes to capitaliseon the enormous opportunity given by the EV industry.Additionally,the China-plus-one diversification strategy is expected to boost domestic electronics and semiconductor production.Moreover,battery-

243、as-a-service is expected to continue gaining traction as it could help reduce charging wait times and high initial cost of EVs.Lack of product focus for B2B needs Lack of clarity around vehicle performance(such as range,battery life,maintenance)resulting in lack of confidence amongst driver partners

244、 High upfront cost differential(approx.40 per cent without subsidy)while TCO parity in the B2B segment with ICE counterparts Given the limited fleet and adoption of EVs till date,the ecosystem is currently at a nascent stage,owing to:Lack of standardisation of charging infrastructure Absence of trai

245、ned mechanics/EV personnel The secondary market for EVs has not evolved,given the limited end of life providers for EVs:Lack of battery repurposing players/options Limited technical awareness to evaluate battery residual valueAsset QualityHigh Upfront costLack of ecosystemResidual valueConsequently,

246、leasing as an option helps eliminate these factors and hence is gaining preference among consumers.Leasing eliminates the pros of investing a dedicated amount to an asset,while offering the same benefits of owning an EV.Residual valueLack of ecosystemHigh Upfront costAsset Quality31 2023 KPMG Assura

247、nce and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.1.Unlocking Indias electric mobility pot

248、ential,Arthur D little,August 2022Fig 6.1 The EV Value chain from OEMs to customerThe traditional hegemony of auto OEMs is unlikely to provide them a clear“right to win”in the Indian EV industry.With a large technology component and ability to adapt to fast changing regulatory and customer needs bei

249、ng key to success,start-ups have the ability to disrupt the space occupied by large auto OEMs.In recent years,Indias start-up ecosystem has grown exponentially,garnering attention from both traditional and non-traditional OEMs.Smaller EV OEM start-ups are competing against big industry players in th

250、e two-wheeler and three-wheeler spaces,where the volume is expected to see growth in the near future.Moreover,start-ups are gaining prevalence across various phases of the EV value chain in terms of providing technological tools and software,battery solutions,leasing,ride hailing,and charging infras

251、tructure.As of March 2022,the Indian EV industry hosts 592 start-ups1spanning across battery production,charging infrastructure and battery recycling.Indian start-ups are becoming increasingly prominent in the EV value chain,offering advanced technology solutions.PhaseOEMsFleet operatorsLessorsEnerg

252、y solutionsKey activities Manufacturing EVs such as two-wheelers,three-wheelers,and buses Electric mobility solutions Electric motors Battery as a Service solution Vehicle maintenance services Logistics services Mobility services like Ride hailingCar rentals First and last mile connectivity Fleet ma

253、nagement Shared micro-mobility service Vehicle tracking Payment collection Renting services Battery leasing Subscription of EVs Maintenance and repair services Battery packs Battery/cell manufacturing Battery swapping Energy storage solutions Smart energy delivery ecosystem Pay-as-you-go system for

254、battery usagePresence of start-upsFactors supporting/hindering entryTechnical know-how and capabilitiesGovernment policies and initiatives Huge capital requirement in heavy vehiclesSeveral small players with technological nicheUnavailability of comparable EV models in the commercial segmentHigh upfr

255、ont cost of EVsNew business model along with EVsNew business model along with EVsTechnological know-howGovernment policies and initiativesFactors supporting growthFactors hindering entryStart-ups at the forefront of the disruption from OEM to fintech to battery recycling632 2023 KPMG Assurance and C

256、onsulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Fig 6.2 The EV Value chain supporting infrastruct

257、urePhaseEnd of life solutionsFinancing/insuranceChargingKey activities End-to-end solutions for recycling and disposal E-waste management Battery disposal Battery recycling Battery second life management Assessment of residual value Vehicle refurbishment Financing services Insurance solutionsInsurte

258、ch Digital insurance Providers of EV charging stations and equipment for private and public space AC(Alternating current)and DC(Direct current)charger Fast and slow charging solution Charge point operations Wireless charging Software platforms for charging networksPresence of start-upsFactors suppor

259、ting/hindering entrySeveral small players focusing on sustainability solutionsProgressive government regulationsTechnological know-howPoor focus by traditional playersstart-ups leveraging technology to overcome challenges of loan defaults and asset lossNew business model along with EVsModerate inves

260、tmentsEasy to set upIncreasing demand for infrastructure Government policies and initiativesFactors supporting growthFactors hindering entry33 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent memb

261、er firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.Future of mobility7The shift to EVs is no longer an uncertainty but only a question of when.Adoption levels are expected to see exponential growth in future with developing infrastr

262、ucture,government incentives and the launch of new EV models.EV 3W and 2W are already in the consideration set of buyers while purchasing a new vehicle due to availability of comparable performance with ICE,low TCO over the life of vehicle and strong government subsidiesEV buses to see continued ado

263、ption in intra-city public transport followed by inter-city transports with governments focus on decarbonising the public transport systemUnavailability of affordable models,under-developed charging infrastructure along the highways are some hinderances for e-4W.However,with increased thrust by OEMs

264、 on EV development programme and improving charging infrastructure,EV transition in 4W private segment is expected to pick up soon.EV is becoming a realityTechnology is at the forefront of the EV revolution.The shift from ICE to EV has increased the electronics content from 16 per cent to 55 per cen

265、t in a vehicle with the addition of new features and controls.Many of these technologies are going to become standard offerings in the future and the addition of newer features/development of new technology is going to be a continual process.Adoption of Advanced Driver Assistance Systems(ADAS),telem

266、atics is expected to intensify with the advent of EVs in the market.Outside the vehicle also,the automotive ecosystem will continue to transition with the support of technology in product development,sales support,servicing,charging infrastructure,financing,end of life ecosystem,among others.Such a

267、high proportion of technology in and out of the vehicle brings into play a diverse set of players that were not auto focused.For instance,software players,cloud and analytics platforms,telecom operators,infotainment providers,among others.Technology to play a crucial roleWhile EVs became part of str

268、ategic plan for the traditional players in the past few years,Indian start-up ecosystem has capitalised on the void at the early stages and now play a significant role in the EV ecosystem.Most of these start-ups are setting the pace for technological innovation in the EV ecosystem.It will be critica

269、l to leverage the technical niche that these players offer,to utilise the full potential of the growing EV business.As adoption continues,many of these start-ups are expected to grow and take market share away from the traditional ICE players.EVs beyond the traditional players34 2023 KPMG Assurance

270、and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.AcknowledgementsResearch teamReshma PaiAanch

271、al BehlAnukriti SahRohan BaruaDamini ShardaShubham PatilSharada ParulekarWe are sincerely grateful to the following people from the ecosystem who have helped in the preparation of this report.Compliance and DesignSameer HattangadiHrishu SandhuVenkatesh RSector teamRaghavan ViswanathanGovinda Bhuwalk

272、aAkarsh Mahendra34 2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.35 20

273、23 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.35 2023 KPMG Assurance and

274、 Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.The information contained herein is of a genera

275、l nature and is not intended to address the circumstances of any particular individual or entity.Although we endeavour to provide accurate and timely information,there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the f

276、uture.No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.The views and opinions expressed herein are those of the quoted third parties and do not necessarily represent the views and opinions of KPMG in India.KPMG Ass

277、urance and Consulting Services LLP,Lodha Excelus,Apollo Mills Compound,NM Joshi Marg,Mahalaxmi,Mumbai-400 011 Phone:+91 22 3989 6000,Fax:+91 22 3983 6000.2023 KPMG Assurance and Consulting Services LLP,an Indian Limited Liability Partnership and a member firm of the KPMG global organization of indep

278、endent member firms affiliated with KPMG International Limited,a private English company limited by guarantee.All rights reserved.The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization.This document is for e-communication only.Document Classification:KPMG P in India contacts:Rohan Rao Partner,Automotive and Lead Electric MobilityE:Jeffry Jacob Partner and Lead,Automotive E: