The EV Race Begins: Shared Mobility Takes The Pole Position

India, a late entrant to the e-mobility space, is fast outpacing others. Building an EV ecosystem is a time-consuming exercise, particularly due to lack of standardisation of EV policies, but Original Equipment Manufacturers (OEMs) such as Tata, Mahindra, MG, Hyundai are nudging towards it and their EV models have paved the way for market seeding.

Startups in the space are today revved up to learn the right curve to create better products every day. According to DataLabs by Inc42 Electric Vehicle Market Outlook Report 2019, the transactional market size of electric vehicles is projected to increase from $807 Mn in 2019 to $20 Bn in 2030.

NITI’s Aayog’s original ambitious target of 100% EV transition by 2030 may have sent jitters down the industry, but startups and automakers sighed a relief when the new target of 30% transition was set. Thus the transition from conventional internal combustion engine vehicles to EVs is happening and India is forecasted to become the fourth-largest market for EVs by 2040, according to BloombergNEF.

The call for green mobility has never been bigger and e-mobility is a clear winner in terms of zero direct CO2 emissions. Simultaneously, startups are trying to understand the potential impacts of EV production and its usage life cycle.

The life cycle analysis (LCA) studies in the Indian context is less and still growing, with most of the existing literature concentrated on the policy framework for EVs. India is, however, gearing aggressively to boost the studies while simultaneously focussing on the transition.

The results of India’s first multi-modal electric mobility project in Nagpur – a combination of electric rickshaws and cabs operated by the ride-hailing and rideshare platform Ola – had served more than 350K customers, clocked more than 7.5 Mn clean kilometres, saved more than 5.7 lakh litres of import-dependent fossil fuel and reduced CO2 emission by more than 1,230 tons since its inception.

How EV Life Cycle Impacts Ecofriendliness

Electric vehicles (EVs) coupled with low‐carbon electricity sources offer the potential for reducing greenhouse gas emissions and exposure to tailpipe emissions from transportation. A comprehensive technique used for estimating energy consumption and environmental impact of vehicles is known as life cycle assessment.

“Generally, there are two system modelling approaches that have been used in LCA- attributional LCA (ALCA) and consequential LCA (CLCA). ALCA methodology accounts for the immediate physical flows (resources, energy, emissions, etc.) involved, while CLCA aims to answer how physical flows can change as a consequence of change in demand for the product,” explained Souvik Bhattacharjya, fellow and associate director, Centre for Resource Efficiency and Governance, TERI.

Basically, CLCA practitioners intend to identify the cause and effect relation between possible decisions and subsequent environmental impacts. The life cycle analysis for electric vehicles is dependent on two components.

Fuel Life Cycle

Emissions from fuel life cycle are highly dependent on the vehicle’s operation energy consumption and the electricity mix of the country which led to different and sometimes conflicting results. For example, EVs in China (where electricity is predominantly coal-based) produce more CO2 emissions compared to ordinary internal combustion engine (ICE) vehicles whereas that in Germany, USA, and Japan produce fewer emissions. “Electric vehicles reduce pollution only if a high percentage of the electricity mix comes from renewable sources,” Bhattacharjya added.

Vehicle Life Cycle

Emissions are calculated based on mass and type of material used for vehicle production, type of energy or electricity used for vehicle operation and the recovery potential of materials at the end-of-life. While many studies have focused on the use phase in comparing transportation options, vehicle production is also significant when comparing conventional vehicles and EVs.

However, the global warming potential benefits of EVs reduce with lesser vehicle lifetime. For instance, for 100K Km, the potential benefits from EVs are only 9% – 14% more than diesel and almost similar to petrol vehicles, especially when you take into account the carbon emissions in electricity production.

“EVs exhibit the potential for significant increases in human toxicity, freshwater eco‐toxicity, freshwater eutrophication, and metal depletion impacts, largely emanating from the consumption of materials of critical importance and complex extraction processes like rare earth elements, lithium, etc. Thus, the circular value chain of batteries and critical materials is an important provision in the EV value chain,” TERI’s Bhattacharjya added.

India’s current energy mix is primarily based on fossil fuel-based thermal power plants and the contribution from renewable energy sources in electricity generation is nearly 17%. If India’s RE installation goals were successfully executed, the fuel life cycle impacts of switching to electric vehicles will increase immensely as the electricity for charging the batteries will be coming from non-fossil fuel-based sources.

Startups, thus, are exploring a myriad of innovative and customer-centric business models that are key to accelerating the all-electric transition. Some models may have failed, some may have emerged as clear winners and some are considered to soon take off, but we have reached a consensus that Indian roads need EVs.

Green Mobility’s Low-Hanging Fruits

The opportunities in the EV ecosystem can be classified into six broad areas that startups are targetting in the Indian market. Given the nascent nature, none of these models has become the flagbearer for the industry, however, shared mobility and EV production seems to have the easiest scale-up opportunity.

Shared Economy

Globally, mobility is expected to move from personal transport to ride-hailing. The new era of mobility as a fleet started with the arrival of ‘call taxis’ (like Fast Track which started in Chennai in 2001) which one could summon where you want to be through a phone call. It was considered convenient, safe and reliable compared to ‘regular taxis’. While not electric, the concept of the fleet was introduced by call taxis and India, with a high number of vehicular population is expected to be an early adopter of electrification via fleet model.

Today, many players including electric cab-hailing platform Blu Smart, Bengaluru-based B2B EV fleet provider Lithium Urban, EV unicorn Ola Electric have successfully replicated the same model albeit with a greener option. Ola Electric was set up as an independent entity in March 2019 and is currently running several pilots involving charging solutions, battery swapping stations, and deploying vehicles across two, three and four-wheeler segments.

“If you look at the bottom of the pyramid, selling a few thousand cars will not have any impact on pollution or reducing oil imports. Only mass transport solutions will reach larger society,” Sulajja Firodia Motwani, founder and CEO, Kinetic Green Energy said.

With traffic being a hurdle in cities and towns, the majority of the population is gravitating from personal vehicles towards ride-hailing platforms. The middle class, in particular, is chucking the burden of EMIs of car loans and going for cab services. Once charging infrastructure is resolved it is further expected to connect the dots to realise the dream of shared electric mobility.

Last-mile Connectivity

As startups in the EV market are coming up with novel business models that would enable consumers to use EVs without burning their pockets, prominent players are tapping into the growing need for last-mile connectivity in the metros by offering their customers access to their EV fleet on hourly rentals rates. Yulu, for instance, plans to increase its fleet size to 100K electric two-wheelers by Dec 2020.

“The easiest and fastest way to make mobility electric is when it is owned by companies. Globally, personal mobility is being replaced by mobility as service. India, where the percentage of people owning personal vehicle is less, emobiltiy as a serve will scale up really fast,” YULU cofounder and CEO Amit Gupta told Inc42.

Interestingly, India’s EV success started with electric rickshaws. Today, there are around a million battery-powered electric rickshaws in towns and cities. These vehicles are also synchronised with bus and metro rail timings to reduce waiting time for commuters.

With a key focus on two-wheelers and three-wheelers, startups are designing products suitable for the Indian market. They are racing to grab the new opportunities created by this shift while investors are also moving quickly in the space.

According to DataLabs by Inc42 Electric Vehicle Market Outlook Report 2019, more than $306 Mn worth of investment in Ola Electric Mobility across Series A and B rounds of funding contributed to 77 per cent of the total funding in the sector in 2019. In 2018, Ola announced ‘Mission: Electric’ with the aim to have 10,000 e-rickshaws on the road in the next 12 months, and 1 million EVs by 2021.

“See the e-rickshaws running in cities and small towns. It’s a phenomenal number which will continue to increase. It is happening because there is a business model for those looking for self-employment in public transport. It has helped country evolve from hand pulled rickshaw to electric driven rickshaw,” said Maneesh Prasad, CEO, Telematics Wire.

Delivery And Logistics

The recent announcement of Amazon India to add 10K EVs to its delivery fleet by 2025 and IKEA using electric rickshaws in its delivery fleet charged by rooftop solar energy are some of the EV successful business models being launched in India.

Besides Amazon, many companies including food delivery unicorns Zomato and Swiggy, ecommerce giants Walmart, grocery delivery company Grofers, courier delivery Blue Dart, DHL, spectacles ecommerce startup Lenskart, and fast food brand McDonald’s, among others currently use electric vehicles in their delivery fleets. Bengaluru-based hyperlocal grocery unicorn BigBasket has announced its plans to turn towards e-mobility for its last-mile delivery operations across metros. The company said it currently has 150 e-vans and 50 e-bikes. It aims to increase this to 1000 vans and 2000 bikes within the next one year.

Customisation of the vehicles to meet the needs of delivery is also being explored. For instance, Ampere Zeal scooter has carriers that enable load-carrying. Last-mile delivery executives stop at various places a number of times in a day. Such kind of usage can decrease the efficiency of internal combustion engines. However, in case of electric vehicles, the motor moves only when it is time. This increases efficiency. Additionally, the ecommerce platforms save a lot on fuel costs. Considering it is a win-win situation for startups and ecommerce and food delivery platforms, this segment is only expected to grow.

Additionally, with certain policy changes, more players are either expected to tie up with last-mile delivery startups or procure vehicles from OEMs.“Interest rate breaks for buying commercial last-mile transportation EVs – new as well as full-electric retrofit conversion from diesel to EV (else AQI will not change) will further fuel growth in the segment,” said Amitabh Saran, CEO and cofounder, Altigreen

Car Rentals

Going electric does come with its own set of challenges. It can be cumbersome and expensive as compared to their ICE-counterparts. Shifting to EVs will take a while because users at large are anxious about its range and power. Car rental startups including Zoomcar, Revv are resolving this issue by simply renting an EV instead of buying one. “Car-rentals by Zoomcar allow users to get over the range and speed anxiety by giving EVs a shot sans long-term commitments or other hassles. In times to come, we envision playing a more important role in India’s migration to EVs,” said Greg Moran, CEO and cofounder, Zoomcar.

Interestingly, Tata Power has tied up with car rental company Zoomcar to switch to electric vehicles for its operations and maintenance work. Tata Power Delhi Distribution Limited (TPDDL) has announced that the project will be rolled out in a phased manner.

The car rental space is growing in India at a fast pace because of changing consumer behaviour. More and more people are opting ride-hailing services such as Ola and Uber over vehicle ownership. The overall passenger vehicle sales declined by 17% to 2,45,599 units in April 2019 compared to 2,96,369 units in April 2018, according to a report by the Society of Indian Automobile Manufacturers (SIAM).

Moving to EVs can also thus begin with car rentals. “India is one of the largest automotive markets in the world. However, according to estimates, less than 8% of the population owns a car. So EV car rentals is also model that can work for India,” Kailash Tiwari, Consultant, Swedish National Road Consulting told us.

Charging Infrastructure & Battery Technology

The electrification of automobiles in India requires significant commitments to infrastructure, making it an expensive prospect overall. Many startups are thus investing in charging infrastructure.

However, traditional charging technology today takes between two to six hours to charge the battery. Thus, many players are offering battery swapping models (two and three-wheelers and buses) as well. Other players are expected to bring battery swapping-based business models in the country, in an attempt to offer cost benefits to their customers.

Startups in the space are making refuelling experience as convenient as petrol pumps by eliminating wait time for charging, make better use of land, and give an increased available run time, a very important aspect for effective EV transition.

Battery-swapping stations for two and three-wheelers being set up by Ola Electric, Smart E, BPCL and others are expected to spearhead the adoption of electric vehicles by drastically reducing charging downtime, and eliminating range anxiety. Battery-swapping for buses, being set up by Sun Mobility for Ashok Leyland electric buses will help to reduce the cost of electric buses, and increase range.

Over 40 % of the cost of a battery-powered electric vehicle (BEV) in India is for the Li-ion battery, which makes battery swapping, localizing and optimizing battery technology the most attractive and successful business models in the country.

“Our full-stack approach that blends advanced software, machine learning and AI with deep domain expertise in energy storage is our main USP. We are disrupting the business of traditional electronics suppliers with our unique electronics platform as a service (PaaS) model by providing full autonomy for manufacturing, transparency in technology and 30-40% savings in cost. This enables organizations to buy or build custom BMS models,” added ION’s Aryan.

Existing battery swapping solutions in the market are designed for 2Ws, and we have observed a drop in efficiency when the same solution is adopted for three-wheelers. “We are currently working on reducing our battery weight further and increase energy efficiency. In addition to static battery swapping stations, we are exploring battery swapping stations on the wheels that can carry many fully charged batteries and drive up to an EV to swap a battery within a few minutes,” Sri Harsha Bavirisetty, COO, Gayam Motor Works (GMW) told us.

It is important to note that a battery is continuously wearing out, even when not being actively used. It is harmful to let a battery sit idle at a 100% charge state and thus innovations in battery technology is the primary concern and startups are exploring options to address the same.

“The energy that has been stored, gradually escapes, this is referred to as ‘self-discharging’. And if a battery remains completely discharged for a long period of time, there could be irreparable damage caused by chemical reactions inside the battery, negatively impacting battery life,” said ION Energy’s Akhil Aryan.

Production

In most countries, electric cars have been the main drivers for EV adoption. However, in India, it is going to be electric bikes, scooters and rickshaws. This opens up wider opportunities not only for OEMs, who have already started moving towards production of EVs, but also for startups since manufacturing for two-wheelers is comparatively less expensive than cars. For instance, Ather Energy manufactures the electric scooter Ather 450 and the Ather 450X, Ultraviolette manufacturers electric sports bike, Altigreen offers drivetrain solutions including motors, controllers, distribution box, others and Tork Motors offers two-wheelers.

The most successful models till now in India has been shared mobility. And, corporate transport fleet is something that experts feel will work for the Indian market. “Some successes so far have been the use of electric vehicles for employee transportation services by Lithium Urban with over 1100 electric vehicles, conducting over 25,000 trips per day, across 9 cities. This is very encouraging and the business model is expected to flourish,” Christie Fernandez, founder and CEO, Sooorya EV added.

 

Given the high upfront EV cost, inadequate charging infrastructure, the limited choice of models, and range anxiety, startups that get the technology and product right is expected to see a high pay-off.

“We are going to be the third-largest automobile market so as we have a very big market for EVs as well. From the battery, EV components, charging components to service providers, developers, EV accessories and many others, a lot of new requirements will come provided we are more focussed on Make in India irrespective of imports which government is already trying to do,” said Varun Chaturvedi, MD and CEO, Volttic.