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Mobility startups such as Bounce, Vogo and Rapido are increasing the share of electric vehicles (EVs) in their fleet to benefit from lower operating and maintenance costs of these vehicles compared with two-wheelers running on petrol.

Bengaluru-based scooter rental startup Vogo aims to turn 70% of its fleet into EVs over the next five years, while Bounce has raised capital to invest in transitioning a significant portion of its fleet to EVs. Rapido, another two-wheeler taxi startup, has not set any target but it also aims to reduce its carbon footprint.

“For us, EVs make sense purely because of the math," said Anand Ayyadurai, founder and chief executive officer (CEO), Vogo.

The cost of electricity is less than a quarter that of petrol, resulting in a sharply lower running cost per kilometre of an EV. The Centre’s policy that allows EV makers to sell the vehicle and the battery separately has also helped to reduce the upfront cost for startups.

“The battery then becomes a variable cost that can be paid over a period of time rather than upfront," Ayyadurai said.

The EV market currently makes up less than 1% of total vehicle sales in the country and experts said that this has not helped to bring down the cost of batteries, which account for almost half of the vehicle’s cost.

More than 90% of all EVs in India comprise low-speed electric scooters, but several large two-wheeler makers such as Hero as well as startups such as Ather Energy are ramping up production of the eco-friendly vehicles. The induction of more EVs is expected to help bring down operating costs for mobility startups, which were hit hard due to the pandemic and the strict nationwide lockdown.

Demand has begun to recover since the lifting of the restrictions as the fear of contracting covid-19 in public transport is prompting more people to choose personal transport.

Vivekananda Hallekere, CEO and co-founder, Bounce, said EVs also reduce the risk of fuel pilferage in petrol-run vehicles. It is also easier to set up charging infrastructure for EVs, compared with petrol pumps.

Bounce, one of India’s biggest mobility startups, raised $6.5 million from venture debt investor InnoVen Capital in March, which will be used to fund the expansion of its EV fleet among other plans.

But not all states have extended subsidies to EV makers or their customers. This makes it challenging to grow the segment as the current low battery life, and high cost can deter potential buyers.

“For every 10 degrees, your battery life comes down by half," said Chetan Maini, co-founder and vice-chairman of Sun Mobility, a company that has set up battery-swapping stations in several cities.

Maini, who built India’s first electric car, Reva, in 1999, said battery swapping brings down ‘range anxiety’—a term used to describe the fear of EV drivers running out of charge, and reduces the risk of battery ownership.

This ‘flexibility of range’ helps increase utilization, he added.

“Imagine a company like Bounce or Vogo charging their vehicles for 4-5 hours in the middle of the just doesn’t work, and becomes very difficult," Maini said, adding that swapping stations are just like fuel stops wherein a battery is fitted into a vehicle in less than a couple of minutes that give them a full charge to travel.

“EV is a long-term good, and the cost of doing business will come down, but it is still sometime away before it gains critical mass," Vinod Murali, managing partner, AlteriaCap, a venture debt firm, said

Meanwhile, online retailers such as Flipkart and Amazon have begun using electric two- and three-wheelers for deliveries. Several states and the capital city of New Delhi have also brought in policies to induct more e-autorickshaws and e-buses to arrest rising air pollution levels.

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