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EV Boom: India Can Do With A Serious Infra-Insurance Overhaul

Zopper Team Industry Talk February 14th, 2024
EV Boom In India

Tucked beneath the vivid and drooping Amaltas trees around Connaught Place, small hut-like metal structures cropped up a few years ago but now lay forgotten like an old love letter. These depleted electric vehicle charging stations are scattered across the city, broken down or vandalised; of no use to anyone, least of all electric vehicle owners. In India, the EV sector has witnessed significant growth in recent years, fueled by government initiatives, increasing consumer awareness, and technological advancements. However, despite this promising trajectory, the nation faces a critical bottleneck: the inadequate infrastructure to support the EV boom.

As per the details available with the Bureau of Energy Efficiency (BEE), a total of 1028 Public Charging Stations (PCS) have been installed throughout the country in 2022. This fortifies the Indian Government’s resolve to reach net zero by 2070 and 30% EV penetration by 2030. Despite efforts to expand charging networks, the country still grapples with a significant deficit. The problem is two-pronged here: 1) Lack of EV infrastructure and 2) Noncomprehensive insurance plans for EVs.

According to a Ministry of Heavy Industries report, India had approximately 500+ public EV charging stations as of 2022, a far cry from the estimated requirement of approximately 2 million chargers by 2030. The deficiency of charging stations acts as a deterrent to EV adoption, discouraging potential EV buyers due to “range anxiety” - the fear of running out of battery charge before reaching a charging point. Moreover, the uneven distribution of charging stations exacerbates the problem, particularly in rural and remote areas, where EV penetration is low.

However, the problem goes beyond insufficient charging stations for EV owners. Say, you have an EV charging station in your neighbourhood, the Indian law dictates the compulsion of third-party vehicle insurance. From then on, another dilemma begins - the EV insurance conundrum. Top insurance companies in India are serving attractive comprehensive/third-party plans to you but if you look beyond the surface you’ll find the loophole lies in the exclusions. EVs are built differently than ICE vehicles and the battery component itself comprises 40% of an EV’s cost. Almost none of the insurers completely protect the electric battery and go as far as to exclude electrical/mechanical failure. If your battery is stolen or it catches fire, you may not qualify for a claim. Consequential damage and depreciation are also not covered.

The need of the hour is bespoke EV insurance policies that cover batteries and charging connectors. One may have to rely on add-ons for more comprehensive coverage. While the EV boom presents immense economic growth opportunities and environmental sustainability, perhaps it’s time regulators recognise specific risks in electric vehicles and encourage insurers to introduce more compatible products. With concerted efforts towards infra-insurance reform, India can accelerate its journey towards a cleaner, more sustainable future powered by electric vehicles.

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