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Electric mobility offers massive investment opportunities

From left: Rahul Taneja, partner, Lightspeed Venture Partners; Anup Jain, managing partner, Orios Venture Partners. Nilesh Kothari, co-founder and managing partner, Trifecta Capital and (virtually) Ankur Thadani Partner and Co-Head, India, TPG growth attend a panel discussion at MINT Mobility Conclave . pradeep gaur/mintPremium
From left: Rahul Taneja, partner, Lightspeed Venture Partners; Anup Jain, managing partner, Orios Venture Partners. Nilesh Kothari, co-founder and managing partner, Trifecta Capital and (virtually) Ankur Thadani Partner and Co-Head, India, TPG growth attend a panel discussion at MINT Mobility Conclave . pradeep gaur/mint

  • Within e-mobility, investors see battery as a key area, with many models in charging and battery swapping

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NEW DELHI : India’s transition journey to electric mobility will offer investors massive opportunities across the ecosystem—from electric vehicles and batteries to financing and software —said private equity and venture capital investors at the Mint Mobility Conclave 2022.

“It’s inevitable that the EV space is growing to grow massively; early numbers say that it is going to grow at 70% per annum for the next seven-eight years. And we have been actively looking for opportunities in this space. There are different facets, there are people who are assembling batteries, people who are assembling vehicles, people who are offering battery as a service, people who are providing the financing, people who are building the charging infra," said Nilesh Kothari, co-founder and managing partner, Trifecta Capital.

“There is also an element of software; in fact EVs are more software than ICE (internal combustion engine) vehicles. So that’s a tremendous opportunity as well and India has core strength in developing software," added Kothari.

Kothari added that the fund sees an increasingly significant part of its capital going into the EV ecosystem. According to Ankur Thadani, partner and co-head, India, TPG Growth, the broader climate change opportunity including electric mobility is a generational opportunity.

“We see climate as a generational opportunity...it’s a multi-trillion dollar opportunity. When we saw this market it was clear that this is an existential question that most OEMs were asking—how do we get to 100% electric mobility in the next x number of years?—and they have different strategies for that. We think the next three-five years will see lots of opportunities, whether its at the OEM, the supply chain, the technology provider, the service providers, the entire ecosystem has to evolve." said Thadani. He added that India is a very important market for TPG and climate is a strategic mandate for the investor.

“We are hunting for opportunities and it’s not just at the OEM side of things. Beyond the OEM side, we are looking at the battery supply chain, on the technology aspects of it, on the autocomp ecosystem," said Thadani. Within electric mobility, investors see battery as a major area, with different models coming up on charging and battery swapping. They said that there will be no ‘one size fits all’ model for all EVs and different market segments will need different models as they evolve.

“We are in the early days of evolution of the ecosystem, there are enough slices of the ecosystem that are emerging. Battery charging vs swapping: there are going to be enough segments in the market that are going to be catered by different go to market models... For different segments charging networks will be better, because if you look at your own personal vehicle, it is not in use for more than four-five hours a day. During the day its sitting at your office, at night at your home. So maybe charging networks are a better option," said Rahul Taneja, Partner, Lightspeed Venture Partners

Anup Jain, managing partner, Orios Venture Partners added that segments such as two-wheelers and three-wheelers will benefit more from battery swapping than going the charging route.

“In the case of the common person, for the first mile and the last mile, the most reliable and most affordable mode for mobility is e-rickshaw. There are almost 2.5 million e-rickshaws in the country. Until now it was all lead acid batteries. This rickshaw would operate only 40-50 kilometres a day, in the morning and the evening peak hours and in the middle and in the night this rickshaw would be parked and charged by an unauthorized charging point. And the rickshaw couldn’t be used; that’s a wastage of capital expenditure; it deprives the market of network effects, because if the rickshaw drivers are not on the road, people won’t have a cheaper mode of transport and the drivers have no income, which means fewer drivers want to take up that profession. So battery swapping liberates this entire market," said Jain.

“Two-wheeler logistics, deliveries, are now increasingly dependent on electric two- wheelers and these also need to be on the road every minute of the day because every minute, every kilometre which is substituted by electric vehicles is leading to a better climate and its lower cost to the consumer, better margins to the e-commerce companies, availability increases making the business more viable and also driving income for the driver," said Jain.

Jain added that for battery swapping to work efficiently and scale up, standardization would be needed.

“In a battery station you can’t have 5 different SKUs—it will be very difficult to match the demand and supply. This is the need of the hour as we are creating a lot of inefficiencies while we are building for scale. It introduces friction in the entire ecosystem achieving scale, so it has to be done," he said.

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