The confluence of factors in India – notably climate change policies, fuel costs and the growing demand for e-commerce – has created the ideal conditions for startups such as the launch of all-electric commercial vehicles EVage.
The startup, which has already provided five electric trucks to delivery partner Amazon India and plans to offer “in the thousands” by the end of the year, according to one investor, has just raised a $28 million seed round, led by new US-based VC RedBlue Capital. EVage will use the funds to complete its turnkey plant outside Delhi in the first quarter of 2022 and expand production to meet growing demand.
EVage’s flagship vehicle is a one-ton (2000 lb) truck built for the commercial delivery market in India using feedback from its partnership with Amazon. The truck was developed on EVage’s industry-ready platform which the company says allows it to build different types of high-quality vehicles at a much lower cost than other OEMs. The startup plans to manufacture the vehicles in “Modular Micro Manufacturing” plants, similar to micro-access plants, which should have smaller carbon footprints and require less capital to produce vehicles than traditional OEMs.
The bottom line: EVage aims to pass these savings on to customers.
Finding a way to make production cheaper is vital for expansion, and the opportunity and demand for scaling electric vehicles in India is enormous.
India’s Transport Minister Nitin Gadkari, who Olaf Sakers, general partner at RedBlue Capital and future EVage board member, said had a high-profile role in announcing EVage’s deal with Amazon, and had set a target for the country to have 30% private. Cars, 40% buses, 80% two-wheelers and three-wheelers, and 70% electric commercial vehicles by 2030.
A series of incentives such as the adoption and manufacture of hybrid electric vehicle schemes (FAME-I and FAME-II) help by providing subsidies for electric two-wheelers and commercial or all-wheel drive in transit. FAME-II subsidies only apply if the OEMs source 50% of the components from local manufacturers, which helps boost the supply side as well.
Two and three-wheelers are already well on their way to that goal, particularly with companies like Ola Electric setting up a massive e-scooter factory and Hero MotorCorp, one of the country’s largest makers of electric small vehicles, which has struck a deal with Taiwanese battery-switching company Gogoro. To build a battery replacement network in India. Four-wheel drive vehicles are a bit slower on the market, in part because the average commuter doesn’t buy electric cars. Sackers said the path to electric four-wheel drive vehicles is likely to occur via commercial roads.
The e-commerce market in India is witnessing a boom especially with the increasing presence of global companies in the country and the mobile number one country full of smartphone users is feeling more comfortable with easy digital transactions. Amazon has invested $6.5 billion in India since entering the country in 2013, and Walmart entered the South Asian country with a $16 billion acquisition of the startup Flipkart. These companies, along with national and local delivery companies, are looking to partner with Indian OEMs who can meet the unique requirements of an Indian market.
“There are some electric vehicles that operate in developed markets like the United States and Europe, and you see companies like Rivian selling to logistics fleets for these use cases, but the Indian logistics needs in the Indian market in general are very different,” Sakkers told TechCrunch. “It takes different problems to solve, and so we see a very big opportunity to create vehicles that are customized for these kinds of use cases.
Sakers noted that from a pure engineering perspective, for example, EVage cars don’t have to meet the same standards as the West for being certified to drive at highway speeds, because in India vehicles rarely exceed 40 mph. This means that everything from the requirements for the motor to the size of the battery and the types of materials that need to be made are different, and possibly much cheaper, Sackers added.
“The total cost of ownership savings to clients is very significant,” Sackers said. “Not only do they do it for visual reasons, they do it for purely economic reasons. In India, you can’t work at certain times of the day in cities if you produce a certain amount of emissions, so it also improves your ability to operate a logistics fleet if You’re running electric cars.”
“There aren’t many startups that fit this template, which is why we put so much capital into EVage,” Sackers said. The demand for this segment of vehicles is half a million annually in India. Increasing production to hundreds of thousands will be a challenge for the company, but also a huge opportunity.”