Battery swapping is the optimum solution for three-wheeled commercial electric vehicles operating in the passenger segment in Bharath—or is it? Varun Goenka, co-founder and CEO of Chargeup, chats with EFY’s Mukul Yudhveer Singh.
Q: How many swap stations have Chargeup set up so far in India?
A: We have set up 350 stations in ten cities so far. Each city has one station owned and operated by the company, while the rest are set up on franchise and dealer models. Previously, we were limited to only swapping, but as we are expanding beyond Delhi NCR, we have also introduced battery-as-a-service for fixed batteries, asset financing, and asset management. We are doing almost 10 million km every month via batteries powered by us.
Q: Does your ecosystem now have more players?
A: Chargeup is now a platform where multiple players are working together to accelerate electric vehicle adoption in India. Organisations such as NBFCs, vehicle OEMs, battery OEMs, insurance providers, and others are on the platform.
Q: What does the platform do?
A: We use this platform and our distributor network to reach out to the EV drivers operational in the B2B space. We also use the same platform to set the go-to-market (GTM) for drivers and ecosystem partners. Then, using our tech deck, we help drivers get batteries financed and manage them.
Q: Is vehicle finance also a part of what you do?
A: No, Chargeup does not operate in the vehicle financing arena. Our core focus remains battery swapping, BAAS (battery leasing), and battery financing.
Q: How is battery swapping different from battery financing?
A: Battery swapping and battery financing are entirely different, as the former entails swapping a used battery with a charged one. At the same time, the latter holds for charging the same battery repeatedly. The trend we have seen is that electric rickshaw drivers do not need battery swapping in tier 3 and tier 4 cities. Swapping is more suited for people who are using their vehicles for over 140 km in a day.
Q: Does battery financing occur when someone replaces older batteries with new ones, or does it also occur when someone purchases new electric rickshaws?
A: The trend in deeper India around the business of electric rickshaws is evolving. More and more individuals are now opting for separate finance for electric rickshaws and the batteries that power them. In some cases, only the batteries get financed, while the vehicle is bought without finance. The same happens in the case of battery replacement as well. There are so many electric rickshaws operating in Tier 3 and 4 cities that it is in itself a huge market to attend to and address.
Q: How does this work in favour of the driver?
A: The core idea here revolves around lowering the overall total cost of ownership (TCO). A vehicle with a battery can be financed for 18 months, whereas a vehicle without a battery can be financed for 24 months. Additionally, the batteries can be financed for four to five years.
Q: Does the platform we spoke about earlier have a play here?
A: We use tech to offer 95% uptime to the drivers by ensuring that batteries do not run out of juice or do not become non-functional.
Q: But a lot of drivers in the geographies you mentioned earlier use fluctuating power supplies to charge batteries. How do you ensure health and uptime in such cases?
A: This is where the standardisation is brought into the picture and is helping us as well as the drivers. We provide them with standardised chargers, and our tech does not allow the batteries to be charged using unauthorised power. We can predict in advance where a battery is going to fail and can also help prevent the same.
Q: Theft of batteries from electric rickshaws has been a hurdle for the industry. How are you addressing that?
A: The tech embedded in the batteries is used as a safety layer by the drivers and the owners of electric rickshaws. In case of theft, these batteries can be immobilised remotely, leaving them unusable.
Q: It’s been about a year since you entered the battery finance and lease business. How is the contribution of the same towards your business when compared with battery swap?
A: The breakup between the two is 50:50. The usage patterns in Bharath (Tier 3, 4 and beyond cities) are more inclined towards battery finance and less towards battery swap. This trend has helped the battery finance and lease vertical scale at a promising pace.
Q: Does swapping make sense for the L5 category of three-wheelers?
A: An L5 three-wheeler runs for about 130 km every day. The same can be done with fixed batteries. The cost per km for them in such cases comes to about 35 paisa. In case of swapping, this cost will go up to Rs 1.10 per km. Additionally, they will have to make a trip to swap stations every day to be able to run for over 70 km. L5s are more pin code deliveries.
Q: When we say “tech”, how much are we referring towards data in that statement?
A: It is all about data. Every battery has a component called the internet of things (IoT). It emits data around 35 parameters of the battery every 30 seconds. This includes parameters of each and every cell present in a battery. We use the same to enable a proactive model of service instead of the reactive one.
Q: Do all drivers opt for finance and battery parameter subscriptions? Are there other revenue sources as well?
A: It is a mix of 50:50. Apart from what drivers pay us for subscriptions and availing our services, we also have a revenue-sharing model with NBFCs and battery OEMs.
Q: There’s this situation of finance not being available in India. Where does Chargeup fit into that?
A: The whole problem of EV finance in the commercial EV space stems from the basic idea that by the time an asset is recovered, its battery becomes zero in value. We have been able to solve that. These drivers are not intentional defaulters. A lot of them have defaulted because the range promised to them by the OEMs was never delivered.
Financers, instead of underwriting a product, have always underwritten drivers. At Chargeup we underwrite the asset, and use our tech to have control over the asset. The same helps us mitigate the risks with the assets. The same also helps NBFCs in the used commercial EV market.
Q: Does the process also open the avenue for enabling commercial EV sales?
A: We are enabling sales of commercial EVs but are not majorly into it. There are about 30 partners with us, and we want to focus on battery financing and battery buy back at the moment.
Q: How does ‘Battery Buyback’ come into the picture?
A: Batteries that are sold via our platform or managed by the same qualify for buybacks. This is great enabler for drivers and EV ecosystem in India as it ensures drivers get maximum value for the used batteries. Moreover, the same also enables the used batteries to reach a proper end of life or second life instead of being mishandled.
Q: Will Bharath embrace swapping more or fixed charging more?
A: Unless it is a city like Ayodhya or Vrindavan, a commercial EV’s maximum range in Bharath is not required to be more than 100 km. This range does not require the region to embrace swapping, as fixed batteries can do the trick. On the other hand, a swappable battery can offer a maximum range of 70 to 80 km.
