India is anticipated to be the third-largest automotive industry by the year 2030. India has massive renewable energy resources and a skilled workforce in the manufacturing and technological sectors. And hence, shifting the focus to electric vehicles (EV) will boost the resources. As per the research studies of the Centre for Energy Finance, it is expected to create a market opportunity of USD 206 billion by the year 2030. However, if turns are possible in the coming years, this will need a cumulative investment of USD 180 billion in the production and charging stations.
According to the research done by the e-Amrit portal in India, India has registered only 7,96,000 EVs by December 2021, while it has registered only 1800 charging stations across 27 States and Union territories. Thus, it clearly shows that the ratio is meager compared to the recommendations, and it still has a long way to go achieve the targets. Moreover, EVs are 2%, whereas traditional vehicles are 98% present in India. Thus, the Indian EV industry is multiplying after government supports also.
Today in this article, we will discuss a few basic terms and how one can apply for an EV charging station loan.
What are EV charging stations and related set-up costs to it?
Charging station- An EV charging station is a kind of equipment that connects the EV to the electricity source for recharge. The government mandates that EV charging stations be placed every 3km in cities and every 25km on both sides of highways. On the other hand, for heavy-duty vehicles charging station should be installed at every 100 km on the roads.
Expected stations- Since the numbers of charging stations are only 1800, the EV industry needs to set up more and more charging stations as much as practicable. It is planned to install more than 70,000 charges across the country in the next five years.
Govt’s Permission– The government of India has clearly stated that any individual can set up charging stations without obtaining licenses across all over India provided the charging station meets the standards set by the power ministry of India. This initiative has been taken to boost the EV industry.
Types of chargers-There are three types of chargers, among which level 1 is the basic charger, and level 3 is the most popular that uses DC and fast charging speed.
Set-up costs: Setting an EV charging point ranges between 1 lac to 40 lac depending on which types of chargers need to be installed and the investment capacity. However, we can estimate the set-up costs as follows-
|Charger type||Likely costs|
|Type 2 AC-7/22KW||1,00,000|
Additional costs- Apart from the cost of chargers, set up is required and below costs need to be also incurred-
- Civil Works- 2,50,000
- EVSE management software+ Integration- 40,000
- Technicians, manpower and maintenance- 3,50,000 per year
- Marketing- 50,000
- Electricity connection- 7,50,000
- Yearly Land lease- 6,00,000 (when land is on lease)
We can say it is almost around a cost of 40 lacs, and not every individual who wants to install an EV charging point can install it. Hence, some companies are offering EV charging station loans, and one can consider it and apply for the loan.
How can one apply for a business loan for an EV charging station?
Government’s take- Since the government has de-licensed the EV charging station installation to support the EV industry, a business can easily set up loans from banking or non-banking institutions.
Terms and conditions:
Few criteria must be fulfilled by the businesses to obtain a business loan for EV charging station:
- Business existence- Business must be in operations for not less than 6 months before applying for the loan.
- Loan Term– It ranges from 3 to 4 years.
- Loan Termination– It can be repaid after paying for not less than 1 EMI.
- Interest rates- Standard rate ranges from 12% to 24% per annum.
- Eligibility criteria- The person making an application must be fulfilling application eligibility as given in the checklist.
- Requirements- All the documents mentioned in the application form need to be attested along with the form.
- Scrutiny- After obtaining all documents and application forms, the bank will scrutinize them and accordingly offer the loan with the best rates possible.
Frequently asked questions (FAQs)
- How much does it cost to set up an EV charging station?
Itdepends upon the types of chargers that are being installed. In general, for a charger of 250KW, the set- up costs ranges between 1 to 40 lacs, including lease rental, maintenance, workman salary, etc.
- Can I repay the loan before expiry?
Yes, you can repay the loan but only after paying the first installment.
- Do I need to take a permit or license to operate a charging station business?
No, the government has de-licensed the policy to operate a business in the EV industry. Thus, you need not take a permit.
- What is the loan period?
It is 3 years; however, you can ask your bank to extend it to 4 years.
- What is the interest rate charged by banks?
Banks charge the standard rate of 1 to 2 percent monthly, depending upon the customer’s credit ratings.
- Can I also take a loan for additional expenses like lease rents?
Yes, the banks provide loans for the installation of charging points and all the necessary additional expenses.
- What should be my business life before applying for the loan?
The business must be in operation for at least 6 months before applying for the loan.
- Can I fill out the application form offline?
Yes, you can visit the bank branch and fill out an application by taking the necessary help of the bank officers.
- Will I be charged for repaying the loan before the loan term expires?
No, there are no such charges.
- Can I apply for a loan if my business is in the pre-revenue stage?
No, business loans for EV charging stations only when you have earned minimum revenues which differs from bank to bank.
- In how many days will I be provided a loan?
The bank will provide a loan once your documents are scrutinized.