Companies

How start-ups can turbocharge the EV conversion

Nandana James Mumbai | Updated on June 26, 2019 Published on June 26, 2019

Both traditional automotive companies and start-ups are investing in the EV technology for two-wheelers   -  THE HINDU

Players like Tork and Okinawa have a head start over existing firms

While the government’s proposal mandating electric three-wheelers and two-wheelers (by 2023 and 2025, respectively) has faced stiff opposition from the conventional players, mobility solutions start-ups seem all set to benefit from the move.

Kapil Shelke, CEO and Founder of Pune-based Tork Motors, which calls itself ‘India’s first electric motorcycle manufacturing start-up with proprietary drive train technology’ said: “It is (the government mandate) definitely a great opportunity for start-ups like us because we have spent a good amount of years building this robust technology. Now, it’s time for us to build vehicles on it and roll out the electric motorcycles, considering that there is a market for at least 10 million vehicles,” he said. The company will be launching its electric motorcycle, T6X, soon.

While both traditional automotive companies and start-ups are investing in the EV technology for two-wheelers, the only difference is that the start-up business is focussed on EV alone, pointed out Subrata Ray, Senior Group Vice-President - Corporate Sector ratings, ICRA.

Rajeev Singh, Partner, Deloitte India, said the government mandate would definitely be an opportunity for start-ups which may have faced headwinds in their initial years due to the dearth of a suitable ecosystem for EVs. Despite such constraints, since these companies have gone ahead and developed products right from the scratch, this would be an opportunity to “encash some of the efforts that they may have put in for the last so many years”, he explained.

“We are ready for this revolution whereas the existing players will have to invest a lot in changing their existing systems and manufacturing units,” said Shelke

Charging infrastructure

Tork Motors is in the process of building its own charging infrastructure, starting with Pune, with plans to extend to other cities. “We are glad with the urgency in the government's voice to move the automobile industry to electric by 2025. Electric vehicles are the need of the hour and the sooner we get them on roads, the better it will be. With the start-ups, government bodies and consumers enthusiastically reacting to electric vehicles, it is time to get them out at the earliest,” said Shelke.

As for Okinawa Autotech Pvt Ltd, the Gurugram-based electric two-wheeler maker which came into being in 2015, its Founder and Managing Director, Jeetender Sharma, said that if the established players also work towards the new mandate, it would give support to companies like Okinawa, as it will generate more awareness in the market about electric two-wheelers.

“The industry is huge with more than 20 million units, so there is a big scope for everybody to grow (and) it’s the right time to start now,” he added. Okinawa is planning to launch a motorcycle and scooter this year, with at least two launches planned every year going forward.

Talking about the advantages that the start-up community has in this situation, Singh said, “I think the established players will look to acquire some of these start-ups, rather than trying to do everything in-house. If someone has already got the business model and products established, then they would like to acquire them rather than trying to build everything in-house because that’s the way to cut down the development time, to meet the deadlines. In case there is pressure on some of the existing players, then they may want to look at these start-ups from the perspective of acquiring them.”

The conversion challenge

Meanwhile, the challenges facing the industry when it comes to ensuring this conversion remain the same for both established players and start-ups alike.

This is despite the start-up community being “definitely far more agile” and quicker in terms of execution, as pointed out by Singh. But, contrary to the start-ups that are starting with a clean state and whose go-to market is different, the established players will have to rethink their entire business model, especially in terms of their large dealer networks and related factors, he added.

“Due to high prices, at present, two-wheeler EVs primarily target affluent urban youth, whereas rural and semi-urban market accounts for the bulk of two-wheeler sales. Apart from the high upfront cost, the EV charging infrastructure is a key bottleneck in India which should be addressed effectively to expect any meaningful pickup in EV penetration in India,” said ICRA’s Ray.

Deloitte’s Singh was of the opinion that given the size of the market, this conversion can be done in phases, starting with the cities, as opposed to implementing it across the country right away.

“The domestic two-wheeler industry is large with volumes of over 21 million and any technology transition roadmap needs to keep the same in mind. The automobile industry is highly capital-intensive, and the industry can invest on new technology only when there is a clear and stable road-map on policy fronts,” cautioned Ray.

Published on June 26, 2019
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