Nov182021
Posted by:admin
Caspian Climate Conversations | Episode 7
Featuring Anand Singh Thakur, MD & CEO, VARCAS automobiles
Anand Singh Thakur has 22 years of experience in Sales & Marketing, Operations and Product Development in the 2-wheeler industry. Before Varcas, he was the VP- Operations and Sales & Marketing for Being Human e-cycles and helped set it up from concept to project launch in a duration of 16 months. He has previously worked with Suzuki, Yamaha, Honda and TVS Motors at various senior positions.
Varcas automobiles is engaged in the business of designing, developing, and assembling low-speed electric 2-wheelers for the regional B2C and B2B market. Varcas is the exclusive supplier to Kinetic Green for slow mobility electric scooter models (Zing and Zoom).
To tune into the recording, please use the available link here: https://on.mentza.com/circles/5495
Please find below a summarized transcript of this interesting conversation:
You have a unique business model where you focus on manufacturing and have a strong sales arrangement with other company. Can you tell us more about how that works?
We started as a B2C company and later pivoted to B2B due to the various opportunities available in the market. We identified that our strength was our manufacturing capabilities with established infrastructure, supply chain, and the required manpower. However, we were lacking in a brand that could help us reach pan India and beyond Indian geography. Therefore, we decided to partner with players who were working on an asset light model and had branding, customer connect, marketing, distribution, and sales as their key focus.
Can you tell us about the latest product innovations in the product development area that you are currently focusing on?
Product development is an ongoing activity and product quality improves over time with iterations, tests and technology inputs available in the market. It depends on both internal and external factors:
1. Internally, we strive for a minimum product life cycle of 4-5 years considering that the customer preference changes every three years on an average. In addition, we target for a distance capability of more than 10,000 kms in real driving conditions. We test our products for both these based on various parameters set internally.
2. Externally, the ecosystem of the EV business is still evolving. There are various components which are not available or available but not easily adaptable in line with the components available outside India. So, we need to integrate them to suit a product created for Indian market.
As we keep getting more customer feedback, we improve on our technical aspects, aesthetics, features, design changes etc.
Can you give us some insights into the kind of improvements you are expecting in terms of battery for electric scooters?
1. Two wheelers have different battery requirements compared to three and four wheelers. Two wheelers are largely deployed for personal commute or delivery services. The average distance travelled is anywhere between 25-40 kms per day for personal commute and 120-150 kms for delivery segment. Today we have batteries which can provide this 40-150 km range easily.
2. All our products have removable or swappable batteries, and the charging of these batteries is extremely convenient, like mobile phone or laptop battery.
3. One challenge that we face is the cost of battery which hasn’t come down. Batteries constitute ~30% of the total product cost and therefore a high battery cost is a deterrent to the EV adoption.
4. A lot of technological improvements in batteries in terms of battery life and battery safety are not visible on the commercial application level at an affordable cost.
What are the main drivers of end customer demand according to you?
1. Cost: Customers in Tier 2 and Tier 3 have realized that EVs have minimal running costs. In our products, the power consumed to charge a battery is close to 1.5 units- converted in cost terms, it comes to around INR 7-10 per charge. So essentially a person using our product can ride 70-80 kms in 7-10 Rs.
2. Electricity availability: Electricity is available today for at least some time during the day in Tier 2 and 3 cities where we are operating. So, charging the batteries either at home or office is not a concern.
Can you give us some insights into the emission control norms for petrol vehicles and how EVs have an edge there?
Petrol vehicles currently are governed by BS-6 norms, so manufacturers follow that while rolling out new vehicles. Any vehicle on the road has a life of 15 years as per government norms. Therefore, a bigger pollution problem is the old vehicles with outdated norms still plying on the roads. If the fleet of vehicles on the road is slowly converted to EV, then the level of pollution would automatically drop down in years to come.
What are your plans around battery recycling?
We are still in nascent stages and exploring how best we can work on this front. We are exploring if we can buy back the batteries after the three years warranty period and dispose it in a safe manner or recycle them.
How do you see the traditional two-wheeler manufacturers- as competition or collaborators?
Today EVs contribute < 5% to the total two-wheeler market per month in India. In addition, the penetration in Tier I cities is still low. The competition will be seen once the penetration of EV crosses 10% and is adopted by Tier-I customers in any meaningful way.
In rural areas, scooters and bikes have many other uses in addition to personal transport. Do you want to talk about any specific application of EV in rural areas?
Yes, in rural areas, people use two-wheeler for personal commute as well as commercial activities like say transportation of milk, vegetables etc. We have started supplying to commercial B2B segments in rural areas, but the volumes are very low. This category of customers is still evaluating the adoption of EV and will start adopting once the volumes increase and there is more visibility on the street.
If there is disruption/ scarcity of power generated from traditional fossil-based power generation, is there an opportunity for your company to collaborate with companies in our portfolio that sell solar rooftop solutions?
Yes, absolutely, there is lot of potential. Infact there are lot of battery manufacturers who started as solar battery manufacturers and then moved to electric two-wheeler and three-wheeler segments considering the opportunities. So, whether or not these is a fossil-based power disruption, solar rooftop is a very big opportunity which has not yet been completely tapped. Once new companies or existing large organizations start investing in solar rooftop, there will be collaborations.
Is there something you want to convey to our audience?
Lot of people specially in Tier 1 are concerned about various aspects of EV, like safety, reliability, and performance. In the current situation, the products, specially from certain manufacturers, are similar or better than what is available in the petrol vehicle category. People should shed the fear and start adopting EVs.