Electric Vehicles in Sri Lanka - Critical Numbers needed for sustainability

Part 1 of this post presented some statistics from Green Frontiers automated fast charging records. 

This post is about some analysis and few key numbers which we need to achieve if EVs are to be sustainable in here. When we have a goal, backed up by statistics, numbers and analysis, we could think about practical ways of getting to it.

Those who missed the first post can find it in here. It would be helpful to read the numbers in that article first.

There is no promise these numbers (which we are about to calculate) would magically appear in our country. It is just that EVs will at least survive if these numbers are met. All these numbers are inter dependent, we will not get one number if we fail in others.

EVs in here had different and changing challenges from start in 2015 to now. 

Initially it was lack of fast chargers, membership fees and the range anxiety. Then in mid 2016 it changed to minor issues of lack of faster charging speeds, apps and automation, facilities at charging stations etc. As a community, all of us managed to overcome and improve on each of those. By 2017, it was clear that the main obstacle for the progress of EVs is the government import tax, as no new vehicles were arriving in numbers. 

That last problem is still very much there, however it has now overtaken by an even bigger and immediate issue of battery degradation and replacements. As things stands now, even if the government reduces the EV tax tomorrow (which will not happen), it is doubtful how many would buy one given the battery replacement problem hasn't been answered yet.

So let us start our number game with battery prices. What could be the realistic and best battery price we can hope to get? for a brand new and 30kw battery.

1) Brand new 30KW battery price 
I think that fair number we should aim is around Rs 1m (or $5000). However we have work to do to achieve that, more on that later. First, let us find how this number came about.

According to current market research and predictions Li-ion battery pack prices (standard market prices, without going after particular expensive brand names) are coming down towards $150 per kwh this year. Expected to be below $100 before 2025. Assuming Rupee will be below 200 per $ when the prices hit $150, that gives us Rs 30000 per kwh and that's below Rs 900 000 per 30kw, add shipping and taxes and prices can remain around 1m. 

This is justifiable in yet another angle as well. It is usually being said that the 1/3 of the electric car's cost and weight is it's battery. Most of us have bought our cars around 3m. What this also mean is that a price higher than this will not make sense to many users in here and will not help towards popularizing EVs.

Note however, this is the price for Brand New, and 30KW. This price will then set suitable market price upper limits for used batteries. 

Currently, there are not many avenues for us to get our hands on a brand new battery. This is partly due to us relying on the original manufacturer and a particular brand. Above mentioned global market prices are not that valid if we limit ourselves to a specific brand name. So the scope and focus should be towards open standards and specification/technology/battery chemistry driven solutions than towards brand names which would just add to the cost and put additional restrictions on us. (having to go through the sole agent for instance)

What are those specification driven approaches, why 30KW and not 24KW etc are interesting subjects to discuss and require longer explanations, I will perhaps do that on a separate post and not in here to keep the length of this post to a sane level.

2) Number of battery assembling workshops/personal and importing/installing places

As we have shown at other places, we will have to face the challenge of replacing around 4000 LEAF batteries in around 4 years starting from this year. That is around 3 batteries every day! Battery replacing with a used one could be done quickly but it does not likely that there will be enough damaged new cars in Japan to provide us with a steady source of used (but good and new) branded batteries. There are legal limits also. While we should encourage that solution, we also need to prepare for the eventual worse case scenario. Most of us are simply not going to find a good used battery. 

To replace 4000 batteries, we will have to assemble most of that number in here. Assembling modules is a time taking activity. Once again, I will not go into too much details in here but hoping to cover that in a dedicated post for batteries. For now, lets just say that we may need around 20 small workshops island wide to meet that demand.

Since this is the most critical issue gripping us all at the moment, most of other numbers in this post will actually depend on how successful we will be at making this particular number. Luckily, there is a way to achieve this! A sure fire way which will then help us achieve all other numbers as well and make the EVs stay and thrive in here for good. It is not going to be an easy one but a worthwhile one.... 

Anyway, that is a topic for a different lengthy post.....  Now, first things first. Let's get the rest of numbers.

3) Fast charging rate (How many Rs per kWh)
Any government will (after elections) have to increase the cost of electricity.  I think the highest rate for domestic would be Rs 50 per unit, currently it is at 45. Mostly that would then be the cost for someone to charge their car at home. In last post we saw, EVs are going outstations less and less and the average mileage they run per day is either already very low or going down. This is no way for promoting EVs or getting the benefits of EVs. This also is very bad for fast charging infrastructure. 

In order to encourage vehicles to drive more, get rid of range anxiety and also to get them to visit fast chargers often, we will eventually have to make the Charging cost at the same rate as domestic electricity cost. Rs 50/= This does not mean it will actually happen in the short term, infact, Current rates (Rs 60-100 at the moment depending on location and network) might even go up in the short term. However, 50 is the best number for users and more users mean more business for charging stations.

This is why the numbers in this list is important. All these numbers are dependent on each other. While charging rate can not come down on its own, it can come down if the other numbers align right. That would be a win-win situation for all. 

4) What is the minimum number of EVs we need in here to feel safe. (critical mass)
Current number of EVs in the country is not big enough for new investors to come in or to initiate new solutions/services/experiments. However, still we are making ourselves heard, got few vital services going and putting up a fight to survive. Most these issues going to turn for better if the vehicle numbers are bit higher than they are now. 10 000 is that critical mass I think. Of course it's good if there are even more of them but 10K will start to make things happen. Fast charging for instance can get profitable if the vehicle numbers are twice as they are now.

That nice and round five digit number will also see few more organizations investing in the EV industry and eco system.

5) Electricity cost for Fast Charging
To Make Rs50 charge rate possible, just having 10K vehicles is not enough, electricity costs need to be sensible. Currently there is a legal basis to provide fast charging stations with i1 industrial tariff which is normally about Rs 13 per kWh. However, our of about 20 running stations we have only 2 have got this tariff so far. That's the gap between policy and practice in the country! This need to be improved at the decision making level. 

High electricity cost is a killer for EVs and that much is well known. 

EV users also have a responsibility in here, We need to contribute in generating as much electricity as we can (home solar systems) and we need to charge at off peak times.

6) How many fast charging stations we need in the island.
Earlier we said the initial number of vehicles we would like to have is 10 000, so this question get reworded as how many fast chargers do we need to serve 10 000 cars. According to stats from last post, only a fraction of vehicles are using fast chargers and only a fraction of that using charging stations regularly. Currently we have around 40 working stations island wide as a country. Some of those are struggling to survive. While we may like to have as many stations as possible, having too many stations is not optimal. It could make all to incur losses and then the familiar issues of lack of repairs, upgrades, closures etc 

It's my estimate that for 10 000 total vehicles, 60 fast chargers is enough. When the vehicle count rises, then we will have a case for more.

7) What should be the ideal investment of a 30KW fast charger
In order to meet Rs50 charging rate, having 10000 vehicles and having Industrial tariff, are again not enough. Biggest issue of fast charging is the cost of the charger and Return Of Investment (ROI). 

When we started we brought down 30KW fast charger cost to around 1.3m (from 2m and above). Even this cost is too much since ROI then typically is around two years in main cities but can be considerably more than that in outstations. While we encourage different business models for outstation charge centers (such as using the charger as a support service to a existing other business), charger investment cost need to come down if we are to push for Rs 50 rate and more and more EV journeys and miles. 

When the technology improves prices always come down. Computers, electric vehicles, batteries for example. Similarly fast charger cost also has to come down. When it eventually comes down to Rs 1m mark, we will see many willing investors and even existing investors will go for upgrades, replacements.

In case of a imported fast charger, one has to deal with shipping and taxes as well so the price cost may have to be below $5000. For locally made chargers it will have to come to the mark of Rs 1m. This would mean more sales, more upgrades, more charging and will fit in well with the bigger picture. 

8) What's ideal vehicle price
About 3000 Nissan Leaf cars have come to the country in a space of 6 months in the later part of 2015. Vehicle price was around 2.5m to 3m in those days. Some users Even paid close to 3.5m happily when the car had a favorable public opinion. 

So, if we assume the other numbers in the list are there, then people would be happy to pay around Rs 4m today (adjusting for inflation since 2016) for a high end electric car like the LEAF. It has to be a 3 year old previous model, reconditioned car of course to fit into that budget. Prices close to Rs 5m mean that they are simply out of reach for most of middle class in here and hence will fail to make a noticeable impact on larger society and country. So the taxes will have to come down for 3 year old cars.

This could mean a mid range EV would do well for 3m and a low end one for around 2m. This is also a good space for a creative local manufacturer to fit in!  It is difficult to say anything more than that with any level of assurance because vehicle prices depend on so many things, personal preferences, support, reputation of the dealer etc... 

So, there we have it, 8 magic numbers! 

$5000 brand new battery, 20 battery replacement/assembling places, Rs 50 per unit fast charging, 10 000 vehicles, Rs 13 electricity cost for fast charging stations, 60 fast charging stations and Rs 1m priced 30KW charger. (Rs 4m LEAF would be nice too!)

Little more than just a wish list... We will need these or similar numbers for EVs to thrive in here and to pass that point of no return for adaption. Currently we are far away from these numbers so we have all these present problems and are facing immediate survival challenges.

I owe you more explanations for first two items regarding batteries, how to achieve those, plans and more details. 

We can do this if we are prepared to act! 

Let's meet again in the next post to discuss just that.

Similar posts on EVs - 
Business Model differences between a fuel station and a charging station
Outlook the future of electric vehicles in Sri Lanka

Lessons from EV fast charging in Sri Lanka and other stories. Part 1

Now that we consider our mission in Sri Lanka on EV charging is successfully concluded (we may still put a new charger or two but mostly will maintain the existing infrastructure and focus on some new area), thought of sharing some of things we learned about doing business in Sri Lanka especially in the field of environmentally sustainable solutions.

First, two little stories about "patriotism"

I met an old friend of mine who has a university science education as well as some business experience of his own as well. When discussing other things the topic turned towards the home solar energy solutions we do on a limited scale. The Solar Drive project. He asked why we don't try to manufacture solar panels in Sri Lanka. To him, it didn't look like a patriotic enough activity to import panels from another country and install solar systems in here. He actually was willing to postpone thinking about solar energy until the day Sri Lanka start to produce panels of it's own. Perhaps you also have a friend like this.

What should we call this attitude.. naive patriotism, extreme patriotism or is it just a lack of objectivity? While I do appreciate and share his passion to see things made in Sri Lanka, I'm simply amazed at the big picture being missed there. We are already wasting trillions of Rupeess worth of solar energy every year which fall upon our lands! If we could harness that, it could do following things :

1) Save billions of Rupees which would otherwise go to middle east.
2) Prevent environment pollution
3) Contributing to the battle against global warming and climate change
4) health benefits
5) Ability to run our vehicles also from solar power (via use of EVs)
6) Become a nation with near total energy self-sufficiency. (considering the amount of hydroelectricity and wind power resources we have)
7) A strong and stable local economy
8) Many business opportunities and new jobs for our youth in the solar market.

Considering all that and considering the fact that we are now losing all those benefits and wasting billions daily... Isn't it much better to import solar panels from whatever country which do it well and reach our primary goals?

There is the side of manufacturing as well. Solar panels are something which needs to manufacture in very high quantities to be profitable. Sri Lanka is not such a huge market for very large scale production. We also do not currently have the expertise in this kind of high tech products. China has such a stranglehold in the global market for solar panel production that even many US factories had to shut down due to not being able to compete with China on price. It would be naive indeed, to wait until the day we produce our own panels.

This reasoning applies to few other products as well. Electric Vehicles,  computer microprocessors, etc products which help us save money or generate revenue. It does not apply to luxury items, things we can produce in here, things we are already producing or many other products which we can easily do without.

BTW, our take on the future of Electric Vehicles in Sri Lanka can be found on here, if you are interested.

Another side story related to 'patriotism'..

This is a bit long and not all that pleasant as the first one, but gives a strong and useful lesson for someone who is new to business in Sri Lanka.

When we started EV fast charging, two other parties joined us and we together imported few fast chargers. We even got an easy payment option where we could pay some amount of the investment monthly within 6 months. Chinese factory has trusted us and issued chargers. Actually, all three of us got the easy payment scheme due to one party (let's call them A) and we (let's call B) managed to get a very good price quote from them. Both A and B have already bought chargers from this company before. Party C was totally new at this stage, they were just placed to benefit from this collaboration.

Unfortunately, once receiving the chargers, this party C, would not pay up as promised. He has suddenly become a patriot and would say things like "saving Sri Lankan Rupees from going to China", safeguarding people from buying 'low quality' Chinese chargers etc. after more than a year of delay, the Chinese company got frustrated and stopped support services for all 3 of us. Whole EV network in the country was facing a shutdown. Two remaining parties in our collaboration (A and B) then went to China alone and settled payments and got the support and trust back. For us, they even awarded the sole agentship for Sri Lanka. The party which would not pay up was finally forced to pay after a few more months of delay. They also asked for agentships and training etc but the Chinese company who by now knew what's happening didn't give them any. From this day onwards they have stopped any more easy payment schemes for whole Sri Lanka for all their businesses. Ironically, this was the end result for the country which came out of 'patriotism'.

Now, if we bought something from someone and came to an agreement, we have to pay up as promised. It is laughable to think about the country losing foreign exchange only at the time of paying up for the things we already bought.

It did not stop there. When we developed charger automation kits, the same individual asked us to install these on his chargers too. We did and he again did not pay up, to this date, did not even return us our equipment back. Now that he does not have an automated system, he has adopted another tone. His new tone then was that: EV charging automation and self-service systems are bad, manual operators are the best thing, charging networks are bad and not necessary, people should not buy access cards etc..  in short, grapes are sour. Indeed!

These experiences got us thinking... there is a thing called getting fooled by own propaganda. After a  while, liars start to think that they are actually telling the truth!

Patriotism is something one should show by their own actions, no need to advertise it in words. Those who talk about patriotism but do not have anything to show for it in their past actions... well, it's better for others to be a bit careful from such people. Patriotism also is not an excuse to cover up a lack of objectivity or common sense.

Working towards achieving even a little thing is far better than just wishing we have everything but doing nothing towards achieving anything.

Not to say that we do not have real patriots among us, we do. We wouldn't have managed to defeat terrorism and save the country if we didn't have any, for instance. Just that real patriots don't have to shout out loud and advertise it, because they have their own past actions and achievements to show for it.

Until we meet from part two... What's your take on this?