While eScooters have traditionally had to be charged at charging stations, the name of the game now is Battery-as-a-Service (BaaS), which involves swapping your battery for a fully charged one at a charging station when needed. The transition to EV is a global phenomenon. Vehicle electrification is critical for decarbonizing transportation, which is a major contributor to climate change. As part of the Paris Accords, India has set an ambitious electrification target, which will necessitate a significant change in mobility. Meeting this 2030 target could provide a $200 billion investment opportunity while reducing India’s road transport emissions by 15%.
So the EV revolution has already begun, and adoption is expected to increase as a result of political will to shift towards clean mobility. The government announced FAME-II, an initiative to encourage EV adoption in India. Similarly, Niti Aayog has published a draught battery swapping policy that will make these vehicles interoperable and improve ecosystem efficiency by promoting BaaS. All stakeholders in the battery-swapping ecosystem – end users, energy operators, OEMs, real estate owners, power companies, and the government – are expected to benefit from this. Last year, India experienced unprecedented growth in the e-scooter market, with sales increasing by 132%.
Why Is Shared Micro-Mobility So Lucrative?
The current EV market is reminiscent of Uber’s heyday when the company pioneered mobility-as-a-service. It changed people’s mindsets at the time it accomplished something nearly impossible. It introduced shared mobility to the global stage and made it as simple as the click of a button. Today, e-scooter rental startups in India want to do something similar.
According to Niti Aayog, shared transportation will account for 35% of all passenger miles in India by 2030, and 50% of passenger miles by 2040. However, despite the fact that two-wheelers are by far the most popular vehicle segment in India, shared mobility has so far ignored micro-mobility, which includes bicycles, e-scooters, and small electric vehicles with one or two seats.
India is rapidly urbanizing, with the urban population expected to double in the next decade. Already, traffic congestion has returned to pre-pandemic levels, and air quality is deteriorating. The urban transportation infrastructure is under severe strain. Last-mile mobility for the population is lacking, i.e. from their home to public transportation and back.
Three biggest deterrents for EV startups
The fact that e-scooters don’t cover much ground is the biggest turnoff for customers. Most e-scooter rentals in India offer only 60-80 kilometers of range on a single charge. This increases riders’ anxiety about reaching their destination – or at least a charging/battery-swapping station – before their battery runs out.
The main reason for this is a lack of EV infrastructure in India. There simply aren’t enough charging stations, and building new ones is prohibitively expensive. A Grant Thornton Bharat-FICCI poll found that India would require 400,000 charging stations by 2026 to meet the demand for two million electric vehicles on the road. To meet this demand, there is still a long way to go. To alleviate range anxiety, businesses will have to either invest in their own EV infrastructure or limit their operations to smaller areas.
Vandalism of ride-hailing two-wheelers is a major issue in the country. There have been numerous reports of cycles and bikes being stolen or vandalized from their parking stands. According to Yulu, approximately 300 of its bikes were vandalized or stolen between 2018 and 2019, resulting in a loss of 40-50 lakhs. Authorities in Pune claimed that 25% of the bikes in the city’s bike-share programme had been vandalized. These incidents not only result in a direct financial loss, but also make customers feel unsafe and discouraged in the long run.
In most cases, these startups are already asset-heavy businesses because they own their own vehicles, as opposed to ride-sharing companies like Ola and Uber. And the vehicles are not inexpensive. The battery, which uses metals such as lithium, cobalt, nickel, and manganese, accounts for roughly 60% of the total cost of manufacturing the scooter. These raw materials are costly, and prices have risen dramatically in the last two years.
Startups will also need to invest in charging infrastructure and contribute to the overall EV ecosystem, which includes swappable batteries, charging grids, energy storage, and energy management. There is also the high cost of running the vehicles on coal-powered electricity.
Alternate Use-cases For The E-Scooter Rental Market
- Services on Campus
Going hyperlocal is one way to alleviate range anxiety. There is a huge opportunity to collaborate with university and office campuses and provide ride-sharing to students and employees to help with transportation. In fact, many campuses are already utilizing electric cycles in this manner. Hero Hexi, a collaboration between Hero and China-based Youno, is already available on some university campuses, including Vadodara’s MSU and Jalandhar’s LPU. The same service can be used for offices with large campuses or other hyperlocal areas in cities, such as Mumbai’s BKC district. Tilt is a bike-sharing service that operates on large residential campuses. These bikes are simple to maintain because they are contained within a single area and provide users with monthly or yearly subscriptions.
- Services for Metro Feeders
Cities are pushing metro services to partner with e-scooter rental companies to provide residents with last-mile connectivity. Customers will be able to walk up to an e-scooter, unlock it with an OTP sent to their phone, and drive themselves to the metro. This will help to alleviate traffic congestion and is a much cheaper alternative to hailing a cab. These services have already begun in some cities, including Lucknow, Delhi, and Nagpur, with others considering them. Another advantage of this use case is that it saves companies money by providing parking spaces and sharing charging costs.
- Collaboration with Delivery Services
By 2024, the food and grocery delivery business in India is expected to be a $6 billion profitable market. Many e-scooter rental startups are collaborating with delivery services and logistics firms to provide electric vehicles to their riders. Governments encourage this practice, with the Delhi government recommending that businesses involved in e-commerce, logistics, and delivery convert at least 50% of their delivery fleets to electric by 2023, with a full 100% switch by 2025.
Because these scooters have a top speed of 25 mph, they don’t require a driver’s license or address proof, which greatly expands the labor pool for these businesses.
