A congruence of factors in India – notably climate change policies, fuel costs and skyrocketing demand for e-commerce – has created ideal conditions for startups such as the all-electric commercial vehicle start-up EVage.
The startup, which has already delivered five EV trucks to Amazon India’s Delivery Service Partner and plans to deliver “thousands” more by the end of the year, has just raised a $28 million seed round, led by an investor, according to an investor. new US VC RedBlue Capital. EVage will use the money to complete its production-ready facility outside Delhi in Q1 2022 and scale production to meet growing demand.
EVage’s flagship truck is a one-ton (2,000-pound) truck designed for the commercial delivery market in India using feedback from its partnership with Amazon. The truck was developed on EVage’s industry-ready EV platform, which the company says can build multiple different types of high-quality vehicles at a much lower cost than other OEMs. The startup plans to manufacture vehicles in “Modular Micro Manufacturing” plants, similar to Arrival’s micro-factories, which should have a smaller carbon footprint and require less capital to manufacture vehicles than traditional OEMs.
The result: EVage wants to pass those savings on to customers.
Finding a way to make production cheaper is vital for scaling up, and the opportunity and demand for scaling EVs in India is enormous.
Indian Transport Minister Nitin Gadkari, who Olaf Sakkers, general partner at RedBlue Capital and future EVage board member, says had a high-level hand in announcing EVage’s deal with Amazon, has set the goal that the country 30% private cars, 40% buses, 80% two- and three-wheelers and 70% electric commercial vehicles by 2030.
A range of incentives, such as the Faster Adoption and Manufacturing or (Hybrid &) Electric Vehicles programs (FAME-I and FAME-II) are helping by providing subsidies for electric two-wheelers and commercial or transit-related four-wheelers. FAME-II subsidies only apply if OEMs source 50% of components from local manufacturers, which also boosts the supply side.
Two- and three-wheelers are already well on their way to that goal, especially with companies like Ola Electric setting up a massive e-scooter factory and Hero MotorCorp, one of the country’s largest micro-EV manufacturers, signing a deal. closes with Taiwanese battery exchange company Gogoro to build battery exchange network in India. Quads are a bit slower on the market, in part because the average commuter doesn’t buy electric cars. The path to the adoption of electric four-wheelers will therefore be more likely through commercial avenues, Sakkers said.
India’s e-commerce market is exploding, especially as international companies expand their presence in the country and the mobile-first country full of smartphone users becomes extra comfortable with convenient digital transactions. Amazon has invested $6.5 billion in India since it entered the country in 2013, and Walmart entered the country through a $16 billion acquisition of startup Flipkart. These companies, in addition to national and local delivery companies, are looking to partner with Indian OEMs who can meet the unique demands of an Indian market.
“There are some electric vehicles that work in developed markets like the US and Europe, and you see companies like Rivian selling to logistics fleets for those use cases, but the needs of Indian logistics in an Indian market in general are very different,” he says. Sakkers. told BestFitnessBands. “It requires solving different problems, and so we see a pretty big opportunity to create custom vehicles for these kinds of use cases.
Sakkers noted that from a purely technical perspective, for example, EVage’s vehicles don’t have to meet the same standards of the west in terms of certification to run at highway speeds, as vehicles in India rarely exceed 40 miles per hour. That means everything from motor requirements to battery size and types of materials you need to build are different and potentially much cheaper, Sakkers added.
“The total cost of ownership savings for the customers are quite significant,” says Sakkers. “They do this not only for optical reasons, but also for purely economic reasons. In India, you can’t operate in cities at certain times of the day if you produce a certain amount of emissions, so it also improves your ability to operate a logistics fleet if you drive electric vehicles.”
“Not many startups fit this mold, so that’s why we put so much capital into EVage,” Sakkers says. “The demand for this vehicle segment in India is half a million per year. Scaling production to hundreds of thousands will be a challenge for the company, but also a huge opportunity.”