Why Electric Vehicles Are Indias Biggest 1 Trillion Opportunity

I think one of the biggest impediments for people to go electric today is there’s a lot of range anxiety or charging anxiety that exists today and I think that needs to be solved. When we talk about battery swapping, so there are some efforts going on led by the oil companies and their distribution outlets. So, how is that stacking up right now?

Three things are happening that is actually making rapid charging significantly better technology in the long term than battery swapping. One is the cost of batteries are coming down itself. One is the speed at which you can charge and then you’ve got alternate cell chemistries which is improving battery or energy density. Smaller battery capable of holding more energy and able to be charged faster means that the future is definitely going to be rapid or quick charging. Our journey to electrification is going to be commercial vehicle first. Which are form factors where America is actually quite honestly not very good at. More than 70% of the population resides in the global south. I think you talk about scale, India has an opportunity to build market leading products, solutions, and services companies catering to those areas across the EV value chain and that’s really going to be a competitive edge. Kunal, thank you so much for joining me. So, we are speaking today as we are now in the middle of an energy shock. Mhm. Uh, many of your investments as a venture capital fund have been in the area of mobility and in turn in the context more specifically in electrics. That’s right. So, uh, I was just looking at the figures that uh, the Federation of Automobile Dealers Association released and they’ve been talking about how alternate fuels now constitute almost 36% of all sales. Sales of vehicles themselves are at record highs. Um, of which electric itself is a very rapidly growing component. Four-wheelers are growing at over 80% and now are about 5% of total sales. The number may seem small, but it’s obviously growing. In the case of three-wheelers, it’s almost 65%. That’s right. Of all sales. So, electric as a proposition or is clearly gaining and very fast and was doing so even before the war began in West Asia. So, tell us I mean in a very broad sense now, where are we headed and then we’ll come to what could happen in order to accelerate this even further and what we need to do it apart from capital. No, Shabs, thank you again for having me. Always a pleasure. No, absolutely. As a fund, we have been sort of spending 10 years now in the mobility sector and the last four five years, what we’ve realized is there is over a trillion dollars of value creation that’s going to happen in the electric vehicle value chain across the entire supply chain similar to what we experienced when ICE came about with the introduction of Suzuki, which is what triggered the ICE value chain. We think we’re going to see that happening here. I’m glad and happy to see that EV adoption is increasing. And what we’ve seen I’ll just interrupt you, man. I think it’s a the background is a little interesting because you used the growth of ICE in India with the setting up of Suzuki or Maruti Suzuki. And when you say value chain, you mean the whole ecosystem of components, dealerships, employment, and so on. That’s right. And you’re saying that what we are seeing now is really a replication of that. Okay, go ahead. So, absolutely. So, just to sort of clarify further, when we look at the ICE 4 value chain 4. Exactly. So, prior to Suzuki, there was a an Ambassador or or Fiat or Premier Automobiles, sorry. Um, I think Suzuki was the one that brought in an army of joint ventures. The entire component stack was created by Suzuki. GMP, a good manufacturing techniques were brought about. The assembly line became automated. Um, they for distribution, they set up the 3S dealership. So, if you talk to FADA, you’re talking to 18,000 plus dealers today that started with Suzuki setting up dealerships. Then you needed service stations, you needed uh after market services and solutions, and you needed fuel. So, which was distributed through Indian Oil and then all these created and allowed other OEMs to set up. So, today we have about 35 or 36 OEMs today after Suzuki’s arrival. And then these vehicles have been used for commercial businesses, whether it’s delivery, logistics, public transportation. So, if you do a sum of parts of that entire auto mobility energy value, it’s about a trillion dollars. About 18 to 20 to 20% of India’s GDP sits in the auto mobility energy piece. We think electrification is a once-in-a-lifetime opportunity for us to recreate and see that value getting created, but now running on a different power train which is electric. The biggest difference is ICE today is almost 100% dependent on importing crude oil. We spend about 150, 160 billion dollars every year. Um, whereas electricity is generated locally, doesn’t need to be imported. Now, whether it’s thermal or renewable, that’s a separate matter. But ultimately, we we are not dependent and therefore if you have an electric or EV ecosystem running the auto mobility and energy system, we would not have to face the kind of geopolitical shocks or price shocks that we are experiencing today. Hence, we think what’s happening today in the Middle East will definitely help accelerate that transition. Thanks. And when when we look at the EV ecosystem, we’ve already grown quite fast and are growing. Uh, where do you think we are when you again if you were to use the Maruti or the Maruti Suzuki uh start point, right? Where are we in that journey today? I think it’s day zero if you ask me. I mean, 5, 6% of what’s happening is there and this all a majority of those sales are happening on the personal mobility side. One thing we’ve realized after doing a lot of research and speaking to everybody in the ecosystem, um, India’s journey on shared mobility also, I mean, as you know, we were one of the first investors in Rapido and we were very clear that the shared mobility business in India is going to be very different to what we’ve seen in US and China where predominantly companies like Uber and BD were four-wheeler first. In India, it was the two-wheeler that was the preferred form factor for Indians for a number of reasons. Two-wheelers is the largest installed base. It’s far more affordable and there’s about 40 million two-wheeler owners looking for part-time jobs. So, therefore a company like Rapido was able to bring the right form factor, right value proposition succeed. If I look at the electrification of America, again, it’s predominantly driven by four-wheeler personal mobility. Hence, companies like Tesla are worth over a trillion dollars. In China also, a majority of EVs today would be four-wheelers for personal mobility. In India, personal mobility four-wheelers are less than 8% of the car park. 92% are non four-wheelers. And one of the most important data point if you really pick up is that commercial vehicles constitute 10% of India’s car park, but consume 70% of our energy. That’s about 140 billion dollars of crude oil that comes in, is refined, and consumed by commercial form factors. So, if we look at how we are going to electrify, we think that priority should be on electrifying the smaller piece which is commercial, but has higher operating leverage because commercial vehicles typically drive three to 10x more than personal mobilities and are predominantly larger form factors. Um, case in point you brought up was that three-wheelers today are already 55 to 60% of electric. Um, what will help us accelerate that transition is we have to have the right form factor, the right energy solution so that the customer or the the in this case, the commercial user doesn’t have to change his behavior fundamentally and the right financing solution. I think one of the biggest impediments for people to go electric today is there’s a lot of range anxiety or charging anxiety that exists today and I think that needs to be solved. And and that’s a global challenge. I mean, it’s it’s not only an Indian challenge. But if I can come back to the the mix of commercial versus non-commercial, just walk us through the figures again. You’re saying that more than 70% of the fuel consumed in India today on a normal day is by commercial vehicles. That’s right. Right. And and the balance is personal mobility. Okay. So, you’re saying that focus on the 70% or more than 70% of the commercial, but in that 10% of commercial is 70% of fuel consumption. Right. So, 10% of what? So, let’s say there are 400 million vehicles on Indian roads, yeah. 110 million. That’s across all form factors starting from the e-rickshaw going all the way to trucks and buses. About 10% of them, it’s about 40, 45 million constitute commercial vehicles. The definition of commercial is where the owner is generating revenue from that asset okay. As opposed to personal mobility where it’s a personal commute, it’s a non-commercial use. So, that includes taxis. So, that includes taxis. Okay. So, 10% means about 40, 45 million vehicles consume 70% of fuel and therefore contribute 70% of the pollution. Right. Um, if I look at all the form factors, all the use cases, you start with something as simply as food delivery, quick commerce, e-commerce, ride hailing across all form factors, two, three, and four-wheelers, public transportation, logistics, everything from middle mile to long freight, intercity travel, agriculture, warehouses, ports, etc. So, those are all the use cases of where vehicles are used. If you notice, many of them are larger form factors, trucks, buses, etc. Um, and then you of course you’ve got the three-wheelers and two-wheelers as well. So, typically as you and I probably drive our vehicles 30-40 km a day, that same four-wheeler with an Uber or Rapido drivers probably driving 200-300 km a day. Intercity buses are driven 600-700 km a day. So, do if you do a sum of parts, these commercial form factors for commercial use cases consume 70% of fuel. Right. Now, uh and 70% of the total fuel that India is consuming. Okay. So, now as we try and switch to electric uh and we are already switching and most of that switching right now is happening in the two- and three-wheeler uh and a little bit maybe in the four-wheeler, but not for not four-wheeler for commercial commercial goods transport. Maybe some people transport, but not goods transport. So, where are we in that journey today? Uh I think in some cases there are certain form factors which are anyways 100% commercial. So, three-wheelers there’s no such concept of a personal mobility on three-wheeler. So, I would say there the adoption is far faster. Um, I think one of the things is that because personal mobility constitute 90% of sales volume, right? That’s where a majority of capital has gone in and initially the most of the investments for charging infrastructure was created for personal mobility use cases, which is why you have very low utilization on those assets because two reasons. One is anyways the penetration of EVs amongst personal mobility was very low. I mean in in four-wheelers it’s still about 4% and second is because you’re driving so such little per day, your need for charging is is limited. What we are saying is that look, even though commercial vehicles is lesser in number, pick the form factors where it’s 100%. Buses and trucks are all commercial vehicles in the first place. So, the need for them to go electric is high. Now, replacing traditional ice or petrol or diesel with EVs, just the change in that power train actually brings down your cost for operating that asset significantly. And the reason for that Govind is very simple, right? On one hand, fuel is traditionally taxed at over 100% and even today we’re paying about 100-110 rupees for a liter of fuel and on the other hand, electricity is highly subsidized. In fact, our estimation is 70% of Indians actually don’t pay for their electricity. At all. And those who do are getting it subsidized. So, if you’re converting and switching from a petrol to an EV, you’re automatically going from paying 110 rupees for a liter of fuel to probably 4 to 6 rupees a unit of electricity if you’re charging in at home and if you’re charging in in a public a network, it’s about 16 to 18 rupees. So, that alone brings down your cost of operations. So, from a business point of view, people using commercial vehicles have to look at cost per kilometer and revenue per kilometer. Revenue is fixed. India for a lot of businesses have very low average order value, food delivery, e-commerce, but cost of operations is high because fuel cost is high. In the US, their cost per kilometer, the biggest cost element is labor because there an American wants to earn 30-40 dollars an hour. So, that is why in the US autonomous driving is actually far has a higher operating leverage and in India an EV will have higher operating leverage because your cost per kilometer comes down dramatically. Right. I’m going to come to technology in a bit. So, in order to let’s say uh point us in the direction of where there is more charging infrastructure for commercial electric vehicles. Now, in a city like Mumbai, we have by BEST buses which run on batteries or electric BEST buses. So, we’re doing some of it, but and and we definitely have some bad EVs in three-wheeler uh you know, transport and so on. But the big opportunity which could be intercity or even larger transport vehicles which are transporting, let’s say uh warehouse to warehouse, that we are not really So, what do we need to do there? So, ultimately what we’re saying is that you can set up charging infrastructure, but there’s few things. Commercial vehicles have an a constant need to always have uptime. Uh and the reason that is commercial form factors are basically generate revenue when they’re on the road. And if you look at most businesses that have been around, they’ve now got used to running their operations on a 10 to 15 minute top-up at the fuel station, right? Now, two things. If you tell them that no, now from 10 minutes it’s going to take an hour or two hours or three hours for them to take, that behavior itself has a lot of friction that prevents that electrification. So, the first thing you did when I pointed out, right? Form factor, energy and financing is you need to deliver energy in such a way that the customer doesn’t need to change how he’s running his business operations, which means that in the form of first small form factors you could do battery swapping and larger form factors you’ve got to do 10 to 15 minute charging. I think that’s the real value unlock. So, it’s not enough for you to set up hundreds of thousands of charge stations and that’s why you have low utilization. We set up charging stations which take 1 to 4 hours to charge and we have low utilization because even you and I would not wait for so long. Take a break and you know, pull up on the side of the road and say, “Okay, now I’m going to spend two hours waiting for my vehicle to charge.” So, I think that’s the real one unlock. In fact, 15 minute charging or battery swapping allows brings down the cost of up uh the vehicle up front because in battery swapping you buy the vehicle, not the battery. It’s a battery as a service or an energy as a service. So, it’s capex to opex model. In the case of rapid charging, if you can charge 10 to 15 minutes, you don’t need a vehicle with a 500-600 km range. You can effectively charge every 3 to 4 hours depending on how you drive. So, it brings down the upfront cost. It increases uptime and therefore you get a faster payback on the asset. the rapid charging part I’ll come to the under the technology head in a in a moment, but but when we talk about battery swapping, so there are some efforts going on including led by the oil companies and their distribution outlets. So, how is that stacking up right now? battery swapping has been a very, very important unlock for small form factors. can you practically go for battery swapping? I think what’s happening is as we know, you know, cost of batteries themselves have come down considerably. I think over the last 10 years we’ve seen almost a 97% reduction in in lithium ion costs. Um, which means batteries are becoming cheaper. Three things are happening that is actually making rapid charging significantly better technology in the long term than battery swapping. One is the cost of batteries are coming down itself. One is the speed at which you can charge and then you’ve got alternate cell chemistries which is improving battery or energy density. Smaller batteries uh capable of holding more energy and able to be charged faster means that the future is definitely going to be rapid or quick charging. Ultimately, we feel that 10 or 12 years from now in every EV in the market will be able to uh be able to take a full charge in approximately the same time it takes for you to fill. That’s the real value unlock. So, if you look at how technology is evolving, we’ve seen battery swapping is very well established with products like e-rickshaw. Where the biggest thing was traditionally with lead acid, it was a capex model. A rich e-rickshaw driver had to fundamentally buy um your new set of lead acid batteries every 10 to 12 months and you know, the every time he had to buy it was a 40-50,000 rupee expense. What he did was battery swapping allowed them to move into a daily rental or a daily model. So, that was the real value unlock. We’ve seen a lot of food delivery businesses with low speed scooters are all on swapping networks. So, I think swapping is very, very relevant and and the need of the hour with business cases which are rapid, quick delivery um or e-rickshaws, but I think in the larger I think as battery swapping is now pretty well established um and well, you know, it has been around for 4-5 years, I think rapid charging is what we where we we are probably going to see the fastest adoption happening. Starting with things like e-rickshaws, uh sorry, three-wheelers, but then slowly, slowly moving up to the large form factor. Now, to your question from a charging and and infrastructure perspective, I think charging infrastructure has been created in a capital efficient way by starting with a form factor which has which do milk runs. So, the ability to create a charging network catering to the needs of a captive demand. So, if I’m a logistics company and I’m doing fulfillment for let’s say dark stores, I have enough data to know how my three-wheelers typically travel every every day. So, you can create an infrastructure catering mapping the the routes with that. Once you have that infrastructure created, then you can make cater to the needs of say a three-wheeler for personal for public transportation. So, a passenger three-wheeler because passenger three-wheelers have erratic routes, right? Customers want to go from A to B, B to D. Uh similarly our intercity travel, it’s the intercity buses typically that travel on the same route. We’re an investor in Zingbus, so we know exactly where our buses travel. So, creating charging infrastructure from one set of two cities. So, it could be Delhi-Jaipur or Mumbai-Pune. So, you set up one charging station, you can have five to 10 buses. That means on day one your utilization is very high. So, once you’ve created an energy distribution network for buses, you can then layer commercial vehicles or trucks over that because trucks typically don’t travel in the same routes every day. So, it’s a lot of first principle thinking that if you want to solve energy for commercial, picking the form factor which has a specific business case that gels well into how you would create that energy network in a more in a more capital efficient way. Unfortunately, if you cater to the needs of personal mobility on day one where you have low penetration, low installed base, and very low usage. That’s why you have very low utilization of the infra that’s got created in the first wave of setting up these CPOs or charge point operators. But and why are these not you know usable for both? I mean, why is it not dual use or No, no, it is usable for both. What’s happened is that charging infrastructure was created. Um but if you look at the availability of form factors for commercial purposes, that has lagged behind. Even today, I would so go so far as to say that we still don’t have a very good a four-wheeler vehicle that’s been built specifically for the needs of a ride-hailing platform. Even traditional ice, to be honest with you, should pick up the two most common products in the market, a Wagon or Swift Desire. Brilliant cars, absolutely affordable. They were never designed for people to sit in the back, you know? So, they’re not very comfortable cars. They’re not designed for should being quote unquote chauffeur-driven, but they were a round peg in a square hole. They’ve been forced into a Uber or a Rapido platform. So, I think ultimately, we’re going to see The good news of course is that the cost of the developing an ice vehicle is very high and therefore companies like Maruti and Hyundai, they were really got down to creating a vehicle specifically for ride-hailing. The cost of building from the ground up an electric vehicle for different use cases is much less. So, our thesis is that we’re going to see specific form factor for every single business use case. In fact, food delivery will have different vehicles. Within food delivery, ice creams may be delivered in a different vehicle. Um hot food will be delivered in a different. Flower delivery will be a different vehicle. On commercial use cases, four-wheelers also Rapido, Uber will have a different product because the needs are different. The energy solution is different. Again, you and I are happy to charge our EV at home or at work, but in a Rapido driver needs vehicles driven in two shifts, does can’t afford more than a 15 to 20-minute downtime in either of those shifts. So, the needs are totally different. Right. And on the technology side, and we’ll go uh we’ll spend a little bit of time on that, but on the technology side when it comes to four-wheelers, I mean, your classic big Tata Motor trucks or Ashok Leyland trucks, where are we on running them on batteries? So, I think if you look at all the electric buses that are majority of them have been designed for intercity travel, public transport. And so, we’re also already seeing you mentioned BEST has a large installed base of electric vehicles. Now, the the use case of those buses are domestic, I mean, within a city, and more importantly, they typically drive 150 to 200, and they have about eight to seven to eight hours of downtime during the night. So, I think with a with a standard 1-hour top-up charge during the day, you can you have vehicles which are sufficient for the for the use case of public transportation. But here’s the challenge. If you’re going to take to take four to five hours to charge, and if you have 4,000, 5,000 buses being and all you’re trying to charge all of them at the same time, you need tremendous amounts of real estate to which is a fixed cost, and charging capacity, which is also very, very expensive. You know, charging 5,000 buses at the same time in that means you need an energy throughput of that amount. Again, sub-optimal solution. Think about it. This intermediated or a distributed energy stack which can be charged in 15 A bus can be charged in 15 minutes, and you have, you know, 100, 150 charging stations spread across the city, which means that during a you know, shift in break break in shift, or during a you can charge the bus during across the day, reducing the need for real estate, fixed cost, infrastructure, and and capacity. Making public transportation more economical. So, we’re seeing that rapid charging is coming catching up. And the minute that happens, I think the cost per kilometer of buses will go down because your fixed cost today associated with doing simultaneous charging of thousands of buses will come down dramatically. And once you have that network in place, of course, like I said, the charging network can be common for a bus or a truck. But ultimately, what’s lagging is the form factor that meets the needs of that customer. So, we’re going to see a dramatic reduction in costs of EVs as well. In fact, smaller batteries which can be charged faster reduces the price delta between ice and EV. Today, um an electric bus is almost 1.7 to 2x the cost of a a diesel bus. I think if you’re able to reduce the battery capacity down to 100 km from the current 200, 250, um you’ll that price difference will become 1.2, 1.3x. Giving you the advice on cost high. I mean, as a very broad question. Um so, you know, the cost Why is the difference so much? Because lithium-ion prices. And the reason is couple of things. Like when you buy a diesel vehicle, effectively, you don’t buy for 10 years of diesel up front. When you think about it, how we try to explain why an EV is more expensive is ultimately, you’re buying a battery that’s going to last 10 years up front. You’re you’re basically paying in advance the cost of 10 years of energy. I mean, energy cost means I’m talking about that ultimately, it’s the battery plus energy that’s going to last 10 years. So, that’s why for EVs, you’re paying for that cost of that battery up front, which is why you need to convert that into energy and the battery as a service and pay for that on an OPEX model. That brings down the upfront cost dramatically. That price is also reducing. Again, like I said, there are three ways to reduce the cost, smaller batteries, faster charging, better energy density, and technology is solving for all three. Right. And and we’ve already seen announcements from China where they’re saying you could almost top up your battery at the as in five minutes as much time it would do to top up your fuel tank. Okay. So, now to technology in the Indian context, one of the points that I saw you argued is that India is a I mean, software-led country. A lot of input into an electric vehicle is software, and therefore we have some natural advantages there. So, where are we on that today? Very specifically when it comes to the kind of cars or two-wheelers that we’re developing in the electric space. So, if you look at ice, right? So, ice technology is I think it’s been around since 1908. It’s the Ford Model T. So, it’s a 120-year technology. Um if you look at all the OEMs today, they’ve been around for 40, 50, 60 years. You’ve really not heard of any OEM that’s come up in the last 15 to 20 years. On EVs, I think the EVs also have been around for 20, 25 years, but we’ve seen over 100, 150 OEMs come up, two-wheelers, three-wheelers, four-wheelers. Mobile phone companies. So, it’s Xiaomi is selling EVs. So, it’s it’s the entry barrier is less because it’s a less complex product. And ultimately, OEMs are very good at assembling. Whereas an ice has about 4,000, 5,000 parts, an EV is probably 70% less parts. And you’re Therefore, the entry barriers are less. That’s why we’re seeing more and more. I think number one, that itself gives India competitive edge because now we are ab initio looking at creating EV OEMs. And we’re basically not 20, you know, 80 to 90 years behind those who legacy brands. We’re probably 10 to 15 years. So, it’s a faster time to market. Second is whereas ice was predominantly the core competency was manufacturing, assembly, and all. Um Europeans and Japanese were very good at that. We’ve come up that learning curve, but the good thing is we referred think of EVs as smartphones on wheels. I mean, you referred as well as Xiaomi. If we talk about the the value of the software that goes, these are IoTs. EVs have so many sensors, are constantly on the internet, you have the ability to do so. That plays to our strength. India’s strength has always been software. You got the likes of a TCS or Wipro. Now, you’ve got 100 unicorns which are basically technology uh companies built on technology on the tech stack, and you know, and our institutions like IIT have been producing Triple IT and all these other colleges have been So, the talent exists. The capability exists, and the the capital exists. So, I think the combination of these two things is giving us hope that we can actually build world-class companies out of India across the EV. Now, whether it’s OEMs or it’s companies building for the underlying infrastructure, the picks and shovels companies, companies like Exponent that’s cracked 10 minute, 15 minute charging, companies that are building IoT devices, energy distribution solutions, battery. So, I think we will be world-class in all of these factors, but I think ultimately, it’s it’ll be different for our GTM or our our journey to electrification is going to be commercial vehicle first. Which have form factors where America is actually quite honestly not very good at. I mean, you know, Tesla’s built four-wheelers. Now, they’re talking about semis, but every other form factor doesn’t exist in America. India has the ability to build solutions for that for the global south, for developing country. Electrification is needed across Africa, Southeast Asia, Middle East. It’s not just the Japans and the Europes. And I think given that you know, more than 70% of the population resides in the global south, I think you talk about scale, India has an opportunity to build market-leading products, solutions, and services companies catering to those areas across the EV value chain, and that’s really going to be our competitive edge. So, before the energy shock, a lot of this was driven by sustainability and the larger or the general goal of achieving more, let’s say, renewable-driven mobility. Today, it’s different. I mean, the energy shock, thanks to the war, has placed the entire equation in a very different perspective and obviously increased the urgency. So, how are you seeing this journey now in terms of what we need to do, particularly from a policy perspective? I think traditionally, if you look at electrification in other markets, it’s predominantly driven by climate first need, yeah. Hence, you know, the first EVs to be launched was premium products like the Model the Tesla Roadster or the Model X, catering to a segment of customers who could afford to pay a premium so that they could reduce their carbon footprint. So, that was the initial wave of of EV adoption. India, I’m not saying that we’re not sort of climate-centric, but ultimately commercial customers will look at profit and loss, P&L, right? So, their need to electrification is driven more by the host and of making, reducing cost, improving Honestly, it doesn’t matter whether it’s more climate first or whether it’s revenue or income first, your out net outcome is the same, which is reduction reduction in carbon and reduction in pollutants in the market in the in the environment. And I think that’s what is really happening. Now, if you talk about the oil shock, of course, there’s a sticker shock of of crude oil prices have gone from 70 to 110. But if you look at it in reality, our price per liter hasn’t really gone up. In fact, it’s always been up. It’s just that the the amount of tax in that what we’re paying has gone down. So, in hindsight, we’ve been actually paying 100% tax on every liter of fuel delivery, we’re probably paying 30% tax because the raw material or the input cost has gone up. So, at the gas station, there really hasn’t been a shock, right? We’re still paying uh our crude oil prices are down today. Uh but psychologically, you realize that well, wait a minute, ultimately, whether it’s higher raw material cost or 100% taxes, I’m probably paying the most on a PPP basis, I think we’re paying about $5 to $6 or $8 a gallon, right? Our income levels are low, but our fuel costs are very high. So, anyways, that eats into people’s profit. Eats into people’s take-home salaries, right? Whether you’re a gig worker, food delivery, and all, you’re spending 30-40% of what you make on fuel. Electrification brings that down, allows you to make more. So, I think that tailwind will always be there. So, it I’m not saying that it’s not going to help accelerate that. I think what was really needed to accelerate that was the right products, the right energy solution, and the right financing solution. I mean, finance is a classic example. Um if I look at how traditional finance companies want to underwrite and and finance gig workers, traditional banks have a method of underwriting the borrower. They look at the borrower risk, and they ask people for the standard question, “Show me your bank details, income statement, and I’ll charge you every month.” Gig workers don’t have bank statements. They don’t make monthly salaries. You know, 40-50% of gig workers actually miss the and don’t make the payment on the due date. And the reason for that is they have a daily model. They earn every day, they spend every day. But when you go to the bank and say, “Well, why do you want to charge 3,000 rupees on the 1st of the month? Can’t you charge 100 rupees a day?” They said, “No, our model is fixed. The customer has to be flexible.” I was like, “No, that doesn’t work. This is not a salaried employee. You got to change your behavior.” And traditional banks are still looking at underwriting the borrower, and our opinion is the borrower risk is very less is less relevant. It’s the asset risk risk that’s more relevant. With EVs, you need to be able to know whether the battery is going to last 3 years or 4 years, whether the vehicle is going to last, right? Understanding how the energy and the vehicle and the revenue potential. Good news is with technology today, I can correlate energy sales of an individual, if he’s a gig economy worker, with how much money he’s making. So, when he misses a daily payment, and we charge on a daily basis, cuz that fits into that. So, you’ve got to use technology to be able to build solutions that fit into the customers’ way of life rather than the other. And that’s why we think there’s an opportunity for new-age companies, technology, AI, data-driven companies to come in and, you know, threat actually challenge the incumbents in all the traditional way of business is not going So, you’re saying that there is no way of or other for individuals to do daily payments right now? Traditional banks will not allow you. But I think the non-bank finance space, you can. You have the ability to build Now, it’s you got to have technology chops to build that product. Now, ultimately, it’s still a monthly payment, but collections are happening, and those are being saved Yeah. in the customer’s account, so that ultimately, even if he misses one or two payments, it doesn’t constitute as a default, but you incentivize him to catch up on that delta, and then you give him an incentive that instead of 3,000 rupees on the 1st of the month, if you’re paying 100 rupees a month, we give you a certain amount of rupees a day. 100 rupees a day. Yeah, we’re going to sort of give you back a little bit of benefit in the ball. Now, if you’re able to sort of combine the vehicles, the battery, the energy, and, let’s say, the subscription plan of a Rapido, you’ve got a winning solution, and that’s sort of the ways in which we’re trying to see how we can create value for the gig economy workers. It’s a lot of first principle thinking, being very clear on who’s the customer, what are his needs, what is his behavior, and now building a product, energy, and financing solution that fits into his way of life. So, last question or our last theme, all of this, I mean, the opportunity, just go back, you said the $1 trillion larger opportunity, 100 million EVs, and we obviously have a long way to go there, but we’re definitely going fast. What’s the capital ecosystem looking like today? And where is the capital mostly going? So, the capital, for example, funds funds like yours have invested is more, let’s say, on the equity and linked to gig workers, local mobility, and so on. The larger opportunity that you pointed out, particularly on the commercial vehicles, electric vehicle space, is does not seem to be seeing any or other much capital right now, at least. I mean, ultimately, there’s Or which part of it could it go more, and where are we right? No, I think ultimately, there is different pools of capital chasing after different investment thesis and looking at different returns, right? Early-stage investors take higher risk, come in early, pre-product, pre-revenue, and their customer because their capital is locked in, expect a significantly higher return than the the stock market, and that’s a lot of risk, um you know, liquidity, return sort of continuum. Larger funds may be more liquid, play in the public markets, so there’s capital available for that. Then you’ve got equity, and you’ve got debt, and you’ve got people in the middle, which is running venture debt and all, which is a combination of So, I think ultimately, for good ideas, good founders solving for real hair-on-fire problem, there’s enough capital available. I mean, if anything, I would say almost 200-plus funds have come up in the last uh 7 or 8 years in India alone. And we’ve seen, um you know, global funds that have entered, um you know, General Catalyst has committed almost I think 5-6 billion dollars in India. Um Peak XV has just raised about a billion dollars from here. So, there’s a lot of capital, there’s a lot of dry powder available. Um now, whether that capital is going after AI, it seems to be the flavor of the month, um or other. See, for us, we’re not driven by FOMO. We will it continue to invest in our domain because these are bread-and-butter problems that we need to solve for from India. I mean, any of us who go traveling, step out of the roads, we see there’s congestion, there’s pollution, um and gig economy workers are not making a fair, you know, salary. We want to solve for that. We want them to make more money. And for that, there’s capital. And what we’ve seen is that businesses that have built compelling products or solutions, there is enough subsequent round of capital available for them. Um of course, and that’s the way it should be. Not every business is going to get funded. Not every founder is going to succeed. Um ultimately, those who have built a business based on a hair-on-fire solution, first principle thinking, and continue to iterate, and have loyal customers willing to pay for their products or services, um you know, this remind me of when I I was in the US, and that when I moved back, my boss asked me, “Why do you want to move to India? Nothing works there.” And I said, “I want to move to India because nothing works there. Every problem in India is a billion-dollar solution that needs to be built.” So, if you have infrastructure problems, we have climate, we have There’s so many issues and problems that need to be solved, but finding solutions is difficult. It’s not easy because the envi- the the infra doesn’t exist. So, as a fund, what we’re saying is let’s solve for that. If you talk about the transition, the adoption of EVs, we’ve realized, you know, selling an EV is is easy. Making sure the customer who’s now bought that EV has the ability to use that in an efficient and effective way, for that, you have to make sure all the other pillars are available. And that’s really our focus is on solve for that, adoption will follow. And there is capital. There’s domestic capital, there’s I mean, sovereign wealth funds, just between uh and and uh you know, the Ministry of in uh technology is now the billion has gone to 10 billion dollars of funds of funds. SRI’s capital. Banks are involved capital So, capital is never a problem. It’s It’s about uh the stamina that founders need because it’s a 10-year marathon race. Very few people A lot of people give up. Okay. So, uh supplement to that last question. So, when I look at the as a as a consumer maybe, uh I see let’s say the big companies like VinFast which are electric only, Tesla which is not really I mean I mean has a presence in India but very small. Uh then there is uh let’s say uh the other companies like Hyundai, Kia, Tata Motors. Tata Motors is the biggest one in four-wheelers who’ve all got substantial electric presence. So, uh but and they will continue to grow I’m assuming. What what you’re saying is that where funds like yours or the capital investment or need will be higher is the ecosystem that supports these These companies themselves are either previously funded or being growing through other ways. Yeah. So, Tata Motors raised a billion dollars from TPG um for their EV asset uh EV uh portfolio yeah and expansion. I mean we are a small fund fix. So, we are For us, you know, our ability to invest in such big companies doesn’t make sense. Yeah. Because And and that’s happening in any case because there is other kinds of capital pool of capital cuts billion dollar, we cut one to two million dollar. So, we have to pick our battles. Of course, we like to punch above our weight uh which means that we you know, the our thesis is because we invest in the same domain, um we’re able to get constant feedback from our existing portfolio cus uh founders telling us what’s keeping them up them up at night. Rapido says, “I want to electrify what I cannot use an Ather or an Ola electric.” So, invested in Zeno has built a bike for ride sharing. Right? Uh Deepinder and Harsh used to tell me, “I want to do 100% food delivery but I can’t do it on a petrol bike.” So, we we invested in in Bounce. So, once we have feedback from customers or people in this ecosystem, we’re able to pick those infrastructure underlying asset plays. Um so, we already have a customer lined up even before we invest. So, that’s why we’re able to create category leading companies. But if I look at the amount of work that’s required, uh to your point, OEMs building vehicles for personal mobility, that will have its own adoption cycle. Customers will still want price parity. They want energy. What we are saying is we need to fix a lot of the other issues for commercial adoption. In two and three. Where uh Tata Motors is not focusing. Tata hasn’t really built an EV for ride hailing. They’ve taken a I mean even BluSmart ultimately took a Tata product that was designed and built for personal mobility and tried to run a taxi company on it and you know, had basic fundamental issues or challenges where they couldn’t run that vehicle on double shift when never designed for. Not Tata’s but just it wasn’t ever built for that. Um so, we think we need to build if VinFast is able to build a product for that, come and bring it in at the right price, the right energy and the right finance, it’ll be a it’ll win-win. And these are assets that will have very high utilization. Right? So, it’s not just able to solve the product side. There you’ll see faster adoption of EVs on the Ubers and the Rapido platform. So, slowly slowly we chip away at that and I think that’s really our core competency is to understand what the use cases are, what the opportunities are. And again, we’re building for the next 10 to 15 years. Good note to end on, Kunal. It’s been a pleasure speaking with you. Thank you so much for having me. Thanks a lot.