Almost every commercial electric vehicle finance company is currently focusing on the passenger mobility segment. However, Uday Narang believes that there is much more potential in the logistics segment as well. Here are some interesting excerpts from the exclusive conversation.
Q. How do you perceive the dynamics of the Indian electric three-wheeler industry, especially in comparison to larger companies like Mahindra and Bajaj with their financial advantages?
A. In the electric vehicle (EV) market, the playing field is more level compared to the internal combustion engine (ICE) market. Different technologies like powertrains and batteries set us apart. I don’t favour comparing EVs with ICE vehicles. Big companies like Mahindra and Bajaj do have more resources, but that doesn’t guarantee market dominance.
Drawing a parallel with Tesla’s rise in a market dominated by giants like GM and Ford, our focus is on innovation and speed. We are working on various electric vehicles, including three-wheelers and trucks, and prioritising fast-charging technologies. The agility of a startup allows it to make decisions and innovate faster than larger companies. In the end, it is about delivering superior products to consumers.
As a startup, we are competing well, as shown by our top rankings in the industry. Our approach is to build a long-term, profitable business that benefits all stakeholders, not just a few at the top. While big players have capital, the market is large enough for multiple players to succeed. We are forming alliances and investing heavily in our business, challenging the notion that only incumbents can lead in this market.
Q. What is the bigger challenge for your startup: charging infrastructure or finance?
A. Two years ago, financing was a major concern, but it is no longer an issue now. Our company even established its own finance company, Anglian FinVest, to address this. Today, we have partnerships with major banks and financial institutions across India, making finance readily available.
The real challenge now lies in expanding charging infrastructure, particularly in tier 2, 3, and 4 cities, as well as rural areas. Our focus is on building fixed fast-charging and swap stations nationwide to support electric vehicle adoption in these regions.
Q. Do you see a trend where OEMs collaborate to establish charging infrastructure for electric vehicles in India, similar to the battery swap model?
A. Yes, I believe there is potential for such collaboration in India, especially for electric three-wheelers and trucks. Different OEMs might work together or with charging companies to develop a widespread charging network. This approach, which includes various partnerships and strategies, is crucial for expanding charging infrastructure beyond major cities to rural areas.
Q. Do you agree with specialised finance companies that see passenger electric three-wheelers as a viable business in rural India, but are hesitant to finance logistics vehicles?
A. Yes, there is definite potential in the passenger segment, and our aim is to be a top player in this category. However, the logistics sector, involving companies like Flipkart and Amazon, shouldn’t be overlooked. Although it is challenging to profit from logistics due to the high demands of these companies, it is an important market.
We, at OSM, are committed to providing commercial cargo solutions, including three and four-wheelers. The focus should be on building a strong, cohesive logistics company. Moreover, the shift towards electric and green technology is inevitable and significant, not just in India but globally. Our goal is to create a cleaner, greener India and to export our products worldwide, proving that if a product works in India, it can work anywhere.
Q. How soon will electric three-wheelers, particularly those for logistics, become widely available to retail consumers in remote areas of India, with full financing options?
A. Within the next three to four years, I foresee significant changes in the electric vehicle (EV) sector, especially in states like Uttar Pradesh, which is a key focus for us. The cost of batteries, a major component of EVs, is expected to decrease, making these vehicles more competitive with internal combustion engines.
Post the 2024 elections, you will likely see a stronger push in this direction. We are committed to establishing a presence in areas like Bulandsher, UP, and improving the EV ecosystem, including logistics solutions. Our goal is to be a major player in states like UP, Madhya Pradesh, and Bihar, focusing on safe and efficient vehicles and building a robust infrastructure.
Q. In terms of battery swap versus fixed charging in UP, Bihar, and similar areas, which do you think is more viable considering finance and long-term availability?
A. Battery swap is an excellent solution, especially as it can reduce battery costs by 30%. However, establishing swap infrastructure in tier three and four cities might take around three to five years. Meanwhile, fixed and fast charging options, including 30-minute or even 5-minute charging, are being developed. We are collaborating with companies like Sun Mobility and Honda to explore these options. Initially, fixed and fast charging might be more feasible in smaller cities.
The ecosystem will evolve to include various solutions as needed. The EV market is rapidly changing, and it is becoming increasingly challenging for new players to achieve national scale in the two and three-wheeler segments.
Q. Considering the challenges of the battery swap and charging ecosystem in tier three or four cities in UP, where electricity availability is an issue, do you think it’s a big ask from the authorities?
A. Yes, it is a significant request, but it aligns with Yogi Adityanath’s vision of making UP an economic powerhouse. Addressing electricity issues for the charging ecosystem is a relatively small challenge compared to past accomplishments, like improving law and order. A planned approach is essential, and I urge the UP government to prioritise this. We are actively discussing potential initiatives in UP, and I’m committed to making significant progress there, especially in the 2024-25 financial year.
Q. What is your perspective on the development of the component ecosystem in India, especially regarding components sourced from outside?
A. Four years ago, the quality of components wasn’t up to par, but there has been a significant improvement since then. The challenge has been the hesitance of major players to commit to startups due to concerns about volume commitments and the desire for quick returns on investments. However, this scenario is changing.
We are seeing advancements in battery supply and powertrains, and with government initiatives like the PLI schemes, the next two to four years will bring substantial growth in the automotive sector. We are collaborating with major players in EV parts for both the Indian and international markets. This growth in manufacturing for Western markets will also benefit the Indian ecosystem.
Q. Do you see a potential market for electric three-wheelers outside of India?
Definitely. OSM is expanding globally, with upcoming ventures in Africa and active projects in Latin America. We are conducting tests in the Philippines, Malaysia, and adapting to recent policy changes in Thailand, a country I am closely connected with. We have established joint ventures in Bangladesh and Egypt and are exploring exciting opportunities in the Middle East.
I aim for 35-40% of OSM’s production to be for the export market in the next four years. In Europe, although it is a costly market, we are focusing on electric trucks. I am visiting our CEO in Hamburg next week to discuss developments. We are planning something unique in France soon, involving an India-made product with a European alliance, to be revealed at a renowned racetrack.
