Drivers For EV Transition Besides Shared Mobility

As a large number of commuters move from shared mobility to private vehicles, here are the factors that will aid EV transition

By
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

One of the ways to keep pollution in check is to move commuters from personal vehicles to public transport or ride-hailing platforms. That supplemented with cost-effectiveness opens up a huge opportunity for shared mobility. According to a report by PS Market Research, India’s shared mobility market is predicted to grow at a CAGR of 56.8 per cent by 2025, “Cost-effective and convenient mobility offered by shared mobility service providers is the prime factor supporting to the growth of the market. Moreover, additional expenses, such as fuel, maintenance, insurance, and parking, are taken care by the providers, which reduces the overall burden on consumers,” says the report. 

Unsplash

Shared mobility has also been considered as an opportunity for India's electric vehicle (EV) startups to scale up faster. It is being called a low-hanging fruit for a successful EV transition.

However, the pandemic seems to have moved a large number of commuters to private transport. An increase in the sale of old cars is a testimony to the same. 

As shared mobility was the first mover in the EV space, in case of reduced usage of the same, the question is will we have more business models that will drive the growth. 

Other Opportunities

EV last-mile deliveries have been picking up since the pandemic, says Ashwin Shankar, founder, BatteryPool. BigBasket became one of the first few companies in India to introduce EVs for last-mile deliveries. Since then, many have followed suit. And as more and more people started ordering food, groceries and other essentials online since March 2020, the demand for a last-mile delivery fleet has increased. 

“We saw a spurt in last-mile deliveries while at the same time increased adoption of EVs for that use case,” added Shankar. He also added that with rising fuel prices, we are also witnessing the adoption of EVs in personal mobility.

“Focus on segments like last-mile deliveries where we are seeing an increased adoption or work towards products and services for the personal mobility space. We will see rapid growth in the near future,” he said while adding that shared mobility will be back but the usage may not be as high as it was pre-pandemic with increased flexibility around working from home.

However, some believe that shared mobility may not be a top priority nor is it an option for many at this point, but it is not going away anytime soon as there are a lot of economic reasons that act as merits of shared mobility. “Why it makes sense & why it continues to make sense. Those economic reasons are not going away anytime soon. Yes, things have changed and the public at large has become more concerned about traveling but as we’ve seen, beyond a point, economies are still running and that’s where these startups can come forward and develop some industry best practices that can allow shared mobility to prevail in a safe way. This will help bring back the demand. Just as people have gone back to offices and shared co-working spaces, I expect similar trends returning to the shared mobility segment as well,” said Ankur Mittal, co-founder, Inflection Point Ventures.

Having said that, he also believes that EV is not dependent on any one business model and is a necessary segment in which we will see many business models evolve. “We have funded Blusmart, which is a complete EV cab-hailing service. They are now also getting into charging infrastructure. We have also invested in Kazam, which is creating technology for the charging stations. Pi Beam, another investee company of ours, is solving last-mile delivery issues through EV. Opportunities are immense,” he added.

Additionally, private EV vehicles are picking up steam in the markets. “The EV transition in our view is a matter of when, and not if. There are tailwinds in the form of subsidies etc, and also the cost of lithium-ion batteries, a key component in the EV equation, has been on the decline over the past few years. In India, most major automobile OEMs have an electric vehicle among their product offerings,” said Pratip Mazumdar, principal, Inflexor Ventures.

He believes that these are signs that slowly but surely, EV adoption is on the rise. “Factors that will expedite this rise are the expansion of charging networks, battery swapping stations in the urban sector, battery infrastructure compatible with the current grid system etc,” he added. 

Things EV Startups’ Should Focus On 

Experts believe that EV startups that are gravely affected because of the pandemic, should figure out use cases where they can be relevant and what are the pivots that they can make with the technology they house currently. “But overall, the industry is independent of everything that is happening around us. There are a lot of economic & environmental factors behind the need & the consequential success of EVs. Those factors will continue to drive R&D, investment and growth in this space,” said Mittal.

Further, experts also feel that electrification of transportation is a long game, and this temporary lull in sales should not be considered as a make or break factor in terms of strategic decision-making at most EV startups. 

“In general, forging long-term partnerships with mobility players from a B2B perspective, and working on the expansion of charging and swapping networks should be on the top of the priority list for any EV start-ups. From a production perspective, given that China is a major supplier of parts for the EV industry, the sector is prone to supply chain issues as well. Startups would do well to work on alternate sources, local manufacturing and stabilizing the supply chain, in general, to avoid long periods of sub-optimal productivity as well,” said Mazumdar, 

He also believes that shared mobility is most likely going to return, but it may not be for the same set of target customers. “While remote work is on the rise, we are also seeing rapid urbanization among the lower to upper-middle-class segments of the society. A lot of people are also returning to cities, either to their own jobs or in search of new ones. Therefore, shared mobility will still continue to play a significant role in the foreseeable future,” he said.

Multiple factors will decide on the business models that will find the maximum success in the new-normal. However, experts are bullish on the overall sector.