The Exchanges

Q because as a VC, you have to analyze the size of each market, let's say. So, so let's, let's do that. What would be the size of, uh, uh, the battery, uh, market, right? Which is used in three wheelers and in a positive case, if all, uh, 2.5 million, uh, Electric three wheelers start using the swappable battery. What would it amount to in terms of a market size?

A So, uh, we have a company portfolio company called, uh, Battery Smart. It's one of the recent investments. This company allows for replacement, uh, of lead acid batteries into lithium ion batteries on a swapping basis. Uh, I will tell you why it works for consumers in a bit, but very important part is that each vehicle will take about two batteries, uh, roughly, uh, at, at a time, and then you can replace them. So, 2.5 million rickshaws can eventually take five million batteries. And these are small batteries, about two kilowatt kilowatt hour or smaller. Uh, and you can, you know, they're also very light, about 10, 12 kilograms can be lifted by one hand. So, that is a market in just electric rickshaws. Uh, if you talk about two million, and this is again, installed base. Uh, this is not per year. Per year, I think, About, uh, 100,000, uh, sorry, about, um, between half a 1,000,001 million e-rikshahs get sold every year. So that's, that's a separate market. But I'm using installed base. India has more than twenty million two-wheelers being sold every year. And if I simply make 10 X of that number as installed base, we're talking about 200,000,002, 20 crore two-wheelers which are installed. Each of those can carry one of these batteries. So the battery market is, is, you know, mind-blowingly large, and I'm not still talking about, you know, trucks and cars, which are much heavier…

AI assessment note: “2.5 million rickshaws can eventually take five million batteries.”

Q What, what, what were these institutions, enterprises using before Euler Motors for transportation?

A I see engine vehicle. In Delhi, CNG is very popular. So people use CNG. It's also cheaper. Uh, in most of the, in every other city, people use diesel, uh, diesel three-wheeler cargos. These three-wheeler cargo vehicles have a higher maintenance, have a higher running cost, and as a consequence, they become much more expensive to run. The simple argument, uh, you know, simple sale for any of the e-com express or delivery or Odan is that earlier, a monthly cost of three-wheeler would be about 35,000 rupees. And you cannot bring it, ah, below that, because, you know, the driver will have to make money, the owner will have to make money, the financing will have to be EMI, etc, etc. But now, the only hope that you have to reduce this cost, which is roughly about, 75 to one 20 rupees per last mile delivery, is by moving to a new technology called electric. So you can reduce a dollar down to 75 cents, and that is the only way they are going to make a lot of money, which means, which is the reason why, and of course they are smart people, so they figured this out, and they are just waiting for a good quality supplier of the vehicle around. Once a good quality supplier vehicle is available, they will simply lap it up. They will get all their vendors to buy those vehicles and put them on their fleet. Yeah.

AI assessment note: “I see engine vehicle. In Delhi, CNG is very popular... people use diesel”

Q These are very three interesting markets which you have taken, you know, positions in Arpit as Bloom. What are other parallel unexplored areas in EV space which you think entrepreneurs can still explore and renovate where there is still large opportunities left?

A Okay. I think that we have only begun. So yeah, three opportunities, uh, three investments made, but lot more, you know, remains to be captured. Let me take a step back and give you a overall framework of how to look at, uh, auto market. See, one important activity is to make the vehicle. So that's, that's the OEM world, you know, like Euler and others. Euler's three wheeler, maybe two wheeler, there'll be four wheeler, there'll be others. And older OEM, you know, Bajaj and Tata and Mahindra and Uh, and TVS are very, very strong companies. Why wouldn't they make an Aether and Ola? All of these are the OEM businesses. Second, you will need someone to be able to put the energy in them. So buying a vehicle is one thing, but putting energy another. So it could be Sun Mobility, it could be Battery Smart, could be their competitors, and there are, you know, five or 10 companies which have also raised small amount of funding in India. Those will also come in this market and The opportunities to have hundreds of such companies because the, imagine if there are millions of vehicles on the road, millions of charging ports also have to exist. Otherwise it's not going to work out. So someone has to install all of those. So energy providers is one behind the energy providers, grid providers have to work up. So there's a massive opportunity of someone to be able to give and block energy supp…

AI assessment note: “energy providers is one behind the energy providers, grid providers have to work up.”

Q And, and the third market, which, which you said is that Bloom is serving is, can you throw more light on that market? And which is your, uh, portfolio company which is solving it?

A So one of our most recent investment is a company called Electric Pay. Electric Pay is solving the very, it's a diametrically opposite problem of Uh, of charging infrastructure. The reason why charging infrastructure does not exist, very interestingly, as I mentioned, because not enough demand exists. If demand doesn't exist, then why will someone install charger? If there's no charger, how will people supply? So, you know, if you go to a three wheeler or any electric vehicle dealer, the key challenge they will tell you is that not enough charging points exist, which is why people don't buy them enough. What you want, what one needs to do is, if I can reduce the cost of installing an infrastructure to really, really low, let us say, just for argument's sake, I make it 15 dollars, right, as compared to, you know, today it may cost you as much as a couple of lakh rupees, ah, to install a charger. If I can reduce that to so low, then I wouldn't mind just installing them everywhere. Right? Suppose I have, uh, 15 dollars worth of, uh, 15 dollars per charger, and this is the cost of operating a charger. It's a simple low-cost AC charger. It runs on a mobile app. You can simply scan a QR code. It switches on, and you can charge, and then this is how much time you have used, uh, it will give you a billing, and if I install them everywhere, your office, your home, your residential compl…

AI assessment note: “one of our most recent investment is a company called Electric Pay.”

Q Got it. And, uh, let's, because you are already an investor with many early stage companies, which you highlighted, what, what does, what does it go into making an electric vehicle, right? If an entrepreneur wants to build an electric vehicle for the future, what are the capabilities and the capital he needs today?

A So, um, I, I'll tell you what, Yeah. What people have taken so far. So, uh, again, nothing against them, but Aether Energy took about 35 to fifty million dollars to come out with for their first scooter. Uh, they are very, very smart people. I'm sure this was money was well, well spent, and they were also working in an era when no one understood this. Everything had to be built from scratch. So they had to really reinvent a lot of builds, uh, to come this far. However, Euler has gotten there in less than ten million dollars, right? So this is definitely a, you know, very big change, but Euler successfully launched a vehicle. Second, I think in future, at least in two-wheeler market, you should be able to launch, when I say launch defined by generating hundred vehicles sales per month or more in less than 1.5 million dollars in less than 18 months. So back in the day when people used to, you know, work with these Chinese mobile phone ODMs, this is what is going to happen here in India as well, where the cost of making it will come down. And if you are an entrepreneur who's trying to make a new vehicle, I would ask you what, why will I invest in you? The answer should always be, I can do it faster and cheaper than what Euler etc have done. Only then you will be able to find a lot of people investing in you. It is not an easy thing because you are, if you're delivering, developing…

AI assessment note: “launch... in less than 1.5 million dollars in less than 18 months”

Q And, uh, what are the different segments, uh, you have to point out where the electric vehicle transformation is happening right now as we speak?

A One important segment is, ah, is a segment of commercial vehicles. In commercial vehicles, whether you talk about four-wheeler or three-wheeler or buses or even the two-wheeler delivery guy, all of those segments are what is called as total cost of ownership, TCO positive. What TCO positive gives you is that it makes it rational for people to adopt a new technology as compared to the old one, ah, which is already positive. In other segments, because the massive cost of the, One of the important things about any vehicle, any electric vehicle particularly, is its battery. And batteries are about 50, 60% of the cost of the vehicle. As the cost of battery is coming down on a per watt hour basis, the cost has been touching almost hundred dollars, which is very, very good, ah, from a global perspective. Once it goes much below that, more and more segments will become TCO positive. Therefore, you expect more and more people To start making this rational decision. The only question that remains to be then answered is whether you have a very good quality vehicle available, or you have enough charging and swapping infrastructure, and there is a, you know, natural user journey that people have gone through on adopting it. There's social proof. There is also, you know, to some degree of range anxiety has been put to rest. A lot, a lot of maybe policy should support in Helping people buy th…

AI assessment note: “One important segment is, ah, is a segment of commercial vehicles.”

Q So, so for example, when, when you invested in battery smart and they are currently providing swappable batteries for three wheelers and they are majorly present in Delhi. Uh, uh, so, so what, what made you excited about this particular, uh, market size, right? Uh, this, this, 2.5 million to three million, uh, swappable batteries in these three wheeler.

A Everyone thinks that the challenge is to make a vehicle. And, you know, engineers like you and me think that making a vehicle is the most exciting thing. So, you know, to be able to, you know, uh, you know, twist, uh, not, you know, uh, twist something and then the vehicle starts running, racing ahead is an exciting thing for most engineers. But I think the key challenge after you've made a vehicle and a good quality vehicle is also to figure out how will the vehicle get charged or if it requires, requires swapping or not and so on. This is one of the important cold start problems of India. Not enough charging swapping exists because not enough vehicles are on the street. There's not enough demand. There's not enough supply. And this becomes a vicious cycle where no one is able to break it. There have been government mandates where, you know, EESL has put charging spots, fast charging spots in many parking lots in, in Delhi, for example, I'm sure elsewhere also, but number one, they're not being utilized enough. So, you know, how will EESL make money on the government mandate? They've put them, put them there. Second very important thing is not enough. Demand already exists. And if demand exists, if the depth of the, the, The availability of charger is so low, it is not penetrated enough, right? This is not, it is not available where you want them, and when you want them. There…

AI assessment note: “Let me solve the problem which already exists. For example, an installed base”

Q And, uh, uh, the fuel for an electric two-wheeler, uh, ather or electric is, is, uh, you know, electricity from a charging point. So what's the per unit per kilometer charge, uh, over a long period of time, if you have evaluated that?

A So, uh, imagine, uh, ather carrying about four to five kilowatt hour battery. I think, I don't know exact specification, but let's say that much. So, charging a five kilowatt hour battery will be about 25 rupees, uh, because five rupees is a kilometer, in Delhi, for example, and he has a rate, uh, in your home, uh, and you can then run it for at least 80 kilometers. So, 25 rupees is going to run 80 kilometers, there's cost is in the range of 30 paisa. That is much different from the 2.5 rupees per kilometer that you were running a petrol scooter on. And that is fabulous. You know, think about it. You're, you're gaining 2.2 rupees per kilometer. That's outstanding. So that is going to make a lot of difference. The key challenge, you know, please note Siddharth, has been that so far in the market, not enough good quality vehicles existed. And reason why not enough good quality vehicles existed is because not enough entrepreneurs applied their mind and built a vehicle from scratch. Almost everyone was trying to play the cheap Chinese mobile strategy where they would import a kit from the China, from China and build a vehicle in India. The challenge is that the Indian road conditions and India expect consumer expectations are very different. You know, I, I, I can't, I always remember this example when I was growing up, ah, and my, my mother had a previous scooty, ah, must be 20 yea…

AI assessment note: “25 rupees is going to run 80 kilometers, there's cost is in the range of 30 paisa.”

Q to their home from a metro station. So, so we see. It's a lot popular. So, and they have been here for the last four, five years, right? These, uh, three electric three wheelers, uh, and, uh, uh, would like to start by, uh, overall identifying, uh, uh, the size of the electric vehicle market in India, right? And then slicing and dicing into various themes, uh, over to you.

A So it's about, uh, Uh, electric vehicle market can be seen as a replacement of the entire auto market in India. To me, everything that is IC engine driven can be electric vehicle, like, barring a few exceptions. You know, there was a time when diesel locomotives are very common, and today diesel locomotives are becoming un, unusual, uh, being replaced with electric. Electric is going to take over everything for a variety of reasons. One is that electric vehicle makes economic sense in many, many cases. Therefore, it is simply a rational decision to make for most people. In other cases, electric vehicle saves, ah, you know, does not have any pollution, or at least it moves pollution away from cities into faraway locations where thermal power plant may be based. So that is another positive. And on top of everything else, electric vehicles can offer a few features. They are by default connected. They are software first. They are autonomous driving enabled. They enable sharing better. They are, they can be autonomous better. It is, it is a different paradigm and a much better paradigm from what, what we have seen. Therefore, the entire eight percent that you mentioning Auto and auto company industry in India. Two 40 odd billion dollar opportunity can be entirely talked about in an electric manner. Of course, it will take time to build and get there. Today, we don't have enough solu…

AI assessment note: “Two 40 odd billion dollar opportunity can be entirely talked about in an electric manner.”

Q And, and what's it for the company to engage? Is there a repeat cost of, uh, customer service which, uh, they can incur?

A So if I could, just for argument sake, if, if I am a, if I am a father of, uh, of a teenage daughter, right, I could, I could simply pay a small fee to make sure that I know where she's taking her vehicle. Right. And where she is, or I may geofence it. This does not exist in IC engine world. And I may pay you, let's say a hundred rupees, uh, every quarter for this kind of a service. If I have a younger kid or something, that's just one thing top of my mind. Secondly, uh, can I, Can I have a console which can play music, or a console which can show me directions, a console which has, which can play Android apps, a console which, and a lot of interesting smart features, which, let's say, auto lock, remote lock-in, remote finding. All of those things can happen in an electric vehicle by default. On top of it, I can talk about, you know, can I have deep insights about my battery? How good I am driving? Can the battery management system Improve utilization of battery. This is how they have learnt my behavior. You know, my smartphone today allows for battery optimization basis how I have used it. In two days it learns my behavior and it optimizes battery in the same manner. Only because it is only software led, right? Similarly, electric vehicles have batteries and battery management system which can allow this. Such things do not exist. You know, how I will utilize the battery will …

AI assessment note: “I may pay you, let's say a hundred rupees, uh, every quarter”

Q Let's talk about Bloom's very first investment, uh, in, uh, an activity and shared mobility space, uh, which is Yulu, right? How did that Journey has played out. If you can put some data around that and how, how is it going?

A Amit is a special entrepreneur. Amit has been, uh, of course the founder of it movie. Yes. But I've now seen his journey on the sidelines for a long, long enough time. I think he's one of the most grittiest entrepreneur that you'll find. So it would have been, uh, you know, because he was available and he wanted to take money from us. Uh, we wanted to invest in him. So there's no question. Even if you were doing something completely different, although this is a much larger and much more interesting opportunity. Today, Yulu is everywhere. It is in every town. It is on everyone's mind. A lot of people depend on Yulu for their living. And I think the journey has proven that it doesn't matter whether you have raised more money or not, but it definitely matters how persistent you are on your belief, how, how much conviction you have on your thesis and how much How capable you are and keep pushing it and building it. Yulu is a, the reason is because Yulu is a product first company. It has built its miracle product. It has also built a supply. It has also built a marketplace, uh, not marketplace, sorry. It has become a, not just a product owner, which is OEM. It also is a shared mobility provider. So these things put together, uh, you know, make the way business much harder to manage, but I think they have executed very well and, uh, coming out of pandemic, they are recovering very, …

AI assessment note: “Today, Yulu is everywhere. It is in every town. It is on everyone's mind.”