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NEW DELHI : Alleged unfair commercial agreements, misleading claims, and substandard product quality have forced more than 20 dealers of Hyderabad-based electric scooter manufacturer Pure EV to terminate contracts within months of opening the outlets, according to a Mint investigation.
Many Pure EV dealers are trying to recover their dues from the company as they look to wind up the partnership with the electric vehicle (EV) maker.
The dealers alleged that Pure EV, which ranks among the top five electric scooter brands in terms of sales, made misleading claims,and kept changing the terms of commercial contracts to ask for more money for each despatch. “We were expected to have close to ₹1 crore as working capital when we started the dealership. We had deposited a substantial amount when we went into business with Pure EV. Then, almost overnight, the company asked us to pay for three truck-loads of scooters. We made an advance payment for more than two truck loads, but we received only one, while the company held the remaining amount. That’s when our tussle started," said Dinesh Arora, director of Okhla-based Evosta Mobility.
“We told them we were ready to pay ₹1 crore as long as we get delivery of the products within 10 days. They did not commit to our terms and, instead, said they will keep ₹60 lakh as an advance payment. This is in addition to the ₹3 lakh we had already paid as security deposit," said Arora, who is to receive ₹40 lakh from Pure EV.
Dealers said they aim to give up their dealerships, following poor customer feedback, at least three incidents of fire involving Pure EVs in the last six months, and non-transparent commercial dealings. They also alleged that advance payments for despatches and security deposits amounting to more than ₹3 crore has not been repaid despite repeated reminders after ending the dealership contracts.
“They are blocking dealers’ investment and using that to conduct their business. Overnight, they demanded ₹60 lakh, which is the amount for two truck loads. After the payment was made, they said they will send only one truck load and hold the remaining money as advance deposit," said Vivek Ranjan, who runs a Pure EV dealership in Lalganj, Bihar, since 2020.
“I am incurring a loss of ₹70,000 per month to run the outlet since August," Ranjan said. “There are problems with the batteries, too. A customer had dropped off a battery with us complaining about a drop in range. The battery exploded in my showroom and caught fire. Fortunately my staff was safe," Ranjan said.
Industry insiders said Pure EV two-wheelers are not the only ones to report fire incidents, with products from Ola and Jitendra EV also facing similar issues recently.
Pure EV, which offers four variants of its electric scooters, has a pan-India network of 100 showrooms.
“Many customers are coming to return the scooters because of the frequent drop in driving range and other performance issues. We saw short-circuits inside the showroom and also an instance of a battery oozing out toxic liquid," Ranjan said.
Another Patna-based dealer claimed that the company kept on changing its terms and conditions.
“It forced us to raise capital at high interest rates from a private bank to fund a purchase order. I have not received any product from the company since August 2021 and have not heard from them about when it will release the amount it owes," he said, seeking anonymity.
Pure EV has reportedly sent notices to dealers seeking damages of as much as ₹3 crore for harming the “brand’s reputation" and causing loss in sales. The dealers subsequently shot off a letter to the Federation of Automobile Dealers Association (FADA), the apex body of dealers, seeking support.
“We are given to understand that there are more than a dozen dealers who are facing the same issue and hefty amounts the dealers had invested are held by the company. Multiple EV players who started selling E2Ws without much research and development had appointed dealers but have left them in the lurch due to one or the other reason. We have requested the government to bring in an auto dealers protection Act," Vinkesh Gulati, the president of the dealers’ body, said in a written response to Mint. Several calls, emails and text messages to Pure EV seeking comment have not elicited any response.
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