EV Maker Okinawa Autotech In Talks To Raise $100 Mn Amid Funding Winter, FAME-II Crisis

Amid the ongoing funding winter and the issues around the FAME-II scheme, which have impacted the sales of electric two-wheeler manufacturers, Okinawa Autotech is reportedly in advanced talks to raise $100 Mn (about INR 800 Cr) from private equity firms.

As per a report by the Economic Times, the startup’s MD Jeetender Sharma told the publication that it would utilise the fresh funds to commission its third manufacturing facility.

Okinawa was not immediately available to comment on the development.

As per the report, Okinawa’s new manufacturing facility will have an installed capacity of 1 Mn units. The fresh funding will also be used to develop new products and manufacture powertrains indigenously.

“We will close a tranche of $100 Mn shortly. The capital will be utilised to develop products, enhance technology of the powertrain, set up capacity in-house for manufacturing powertrains and to operationalise fresh production capacity at our third facility in Rajasthan,” Sharma was quoted as saying. 

Okinawa currently has a total production capacity of 3 Lakh units annually. Its new unit is expected to be commissioned by the end of the current fiscal year, as per the report.

Sharma said that the government’s decision to stall the disbursal of FAME-II subsidy incentives has created pressure on the startup’s cash flows but it has been able to go ahead with its expansion plans. 

It must be noted that Okinawa, along with 13 other two-wheeler EV manufacturers, has been under the government’s scanner for allegedly floating localisation norms under the FAME-II scheme. Hero Electric and Okinawa were the first two OEMs whose incentives were suspended under the scheme. 

This has also impacted sales of Okinawa’s two-wheeler EVs. It saw a sharp fall in registrations of its EVs in April 2023, which stood at just 3,217 units.

It must be noted that despite its vehicles being involved in multiple fire incidents last year, Okinawa held the second spot, behind Ola Electric, for months in 2022 in terms of two-wheeler EV registrations. One such fire incident also claimed the lives of two persons in Tamil Nadu. 

After several such incidents, the company also recalled 3,215 units of its Praise Pro Scooters in April last year. Despite this, the company registered record vehicle registrations of 14,946 units in October 2022.

While there has been a recent fall in sales, Sharma said Okinawa is positive about the market and expects to grow by 30%-40% in FY24. It is also looking to expand its distribution network to 700 sales outlets from 540 currently. 

Besides, Okinawa aims to invest INR 800-INR 1,000 Cr over the next three years to increase sales to 1 Mn units per annum by 2025-26. It also aims to set up 1,000-1,200 dealerships by then.

Meanwhile, as per a latest report, the government has slapped a fine of INR 116 Cr on Okinawa for flouting localisation norms under the FAME-II scheme. However, the company denied this. 

“The company hasn’t received any notice from the government to refund subsidies from 2019-20 and [is] surprised by the media questions,” it said in a statement.