While numerous electric two-wheeler brands are thriving in Tier 1 and Tier 2 regions of India, Quantum Energy, supported by Kusalava International, contends that the real growth lies in Tier 3, 4, and beyond regions in Bharat. How does this emerging player in the electric two-wheeler market pose a challenge to the established giants? Let’s hear from Chakravarthi C, MD of Quantum Energy.
Q. Kusalava has partnered with several automotive OEMs, many of which are planning to introduce electric vehicles. Is there a conflict of interest here?
A. In our component manufacturing business for automotive OEMs, we have always focused on commercial and off-road vehicles. The decision to enter the OEM business was solely based on Quantum’s aim to design, develop, manufacture, and retail electric two-wheelers (E2W).
We have never collaborated with a two-wheeler company, and we made a deliberate choice not to engage in a business model that involves retailing components for the two-wheeler industry.
Q. The electric two-wheeler market has attracted interest from players outside the automotive sector. Do you see a future for Quantum in this market?
A. Globally, brands like Tesla and BYD have demonstrated the challenge legacy OEMs face in m aintaining their market share in EVs compared to the internal combustion engine (ICE) segment. India also has examples like Ola Electric and Ather Energy.
There may be numerous players with small market shares. Many legacy players adhere to a certain way of operating, which they maintain even in the case of EVs. However, EV architecture is straightforward, allowing companies to develop high-quality products with proper testing and validation.
Q. Could you elaborate on the statement “legacy players adhere to a certain way of operating”?
A. Sure, since Quantum is not involved in the ICE two-wheeler segment, we can focus on meeting the specific EV market needs. We do not have to worry about potential cannibalisation of existing ICE products by new electric scooter additions. For many legacy OEMs, their ICE two-wheelers are their primary revenue generators.
Q. Does your approach differ between retail and B2B?
A. Principally, we see ourselves as manufacturers of electric two-wheelers. While there may be variations in products for different markets, the underlying architecture remains consistent. How we refine and adapt products to different use cases depends on our research and development capabilities and our understanding of the market.
Q. How do collaborations, such as those with Log 9 and ScooEV, fit into your strategy?
A. These collaborations enable us to focus on meeting end-consumer needs. Leveraging the R&D conducted by these companies allows us to integrate innovative solutions into our products. For example, through our partnership with Log 9, we can offer fast-charging solutions to our customers. Additionally, we are collaborating with two swap partners to provide alternative energy options for our electric two-wheeler users.
One significant outcome of these partnerships is the introduction of a 90,000km warranty on one of our products, demonstrating our commitment to understanding and addressing consumer needs.
Q. Typically, product development takes two to three years. Is this timeline similar for Quantum?
A. The two to three-year cycle applies when developing a new product from scratch. However, when modifying existing products, this cycle shortens to four to five months as only minor adjustments are required. Developing entirely new products typically takes over a year for us.
Q. Vahan Data indicates that most E2W sales are from developed towns. What are your thoughts on this?
A. Our focus is primarily on Bharat rather than India. While the Honda Activa is popular in both Bharat and India, sales predominantly come from the former. We aim to surpass the value delivery of ICE Activa by focusing on Bharat. We anticipate significant B2B sales through partnerships with fleet operators and in the commercial sector, while also targeting retail sales in Bharat.
Q. The EV industry faces challenges in accessing finance. How does this affect Quantum?
A. Finance availability has been a challenge to some extent. However, we anticipate resolving this issue by the end of the quarter through partnerships with two banks, two NBFCs, and other financial institutions.
Q. How many regions does Quantum aim to penetrate by the end of the next fiscal year?
A. Currently, our focus is on expanding our presence on a statewide basis, prioritising South and East India. This approach allows us to allocate resources more effectively across entire states rather than individual cities.
Q. What is Quantum’s manufacturing strategy, especially following the recent FAME II developments?
A. Some of our products qualify for FAME incentives, while others do not. However, all our products are ARAI-certified. For those eligible for FAME incentives, we exceed the necessary requirements. We aim to source components locally wherever possible, with the exception of imported cells.
