Climate change policies, fuel costs and skyrocketing demand for e-commerce have set up ideal conditions for startup like EVage.
The startup, which has already supplied five EV trucks to Amazon India, has just raised a $28 million seed round, led by a U.S.-based VC. EVage will use the funds to complete its production-ready factory outside of Delhi in the first quarter of 2022.
The flagship vehicle of EVage was designed using feedback from its partnership with Amazon and is a one-ton truck. EVage says that it can build multiple types of high quality vehicle at a far lower cost than other Original Equipment Manufacturers because of its industry ready EV platform. The startup plans to manufacture vehicles in factories that are similar to Arrival's microfactories, which will have less capital to produce vehicles than traditional Original Equipment Manufacturers.
EVage wants to pass those savings onto customers.
Finding a way to make production cheaper is vital for scaling, and the opportunity and demand for scaling EV in India is massive.
India's Transport Minister, who is also a board member of EVage, has set a target for the country to have 30% private cars.
The Faster Adoption and Manufacturing of Electric Vehicles schemes help by providing subsidies to electric two-wheelers and commercial or transit-related four-wheelers. FAME-II subsidies only apply if the original equipment manufacturers source 50% of components from local manufacturers.
Two and three-wheelers are well on their way to that target, with companies like Hero MotorCorp and Ola Electric setting up massive factories for e-scooters and battery swaps, respectively. The average commuter isn't buying electric cars so four-wheelers are a bit slower to market. The path to electric four-wheeler adoption is more likely to occur through commercial roads.
India's e-commerce market is exploding as global companies increase their presence in the country and the mobile-first nation full of smartphone users gets extra comfortable with easy digital transactions. Walmart has invested $16 billion in India since acquiring the startup in 2015, while Amazon has invested $6.5 billion in India since entering the country. The companies are looking to partner with Indian manufacturers that can meet the unique demands of the Indian market.
There are some electric vehicles that work in developed markets like the U.S. and Europe, and you see companies like Rivian selling to logistics fleets for those use cases, but the needs of Indian logistics in an Indian market more broadly is very different. We see a big opportunity to create custom-built vehicles for these kinds of use cases.
EVage vehicles don't have to meet the same standards of the west in terms of being certified to drive at highway speeds because rarely in India do vehicles go above 40 miles per hour. It means that everything from battery size to materials you need to build are different and cheaper.
The total cost of ownership savings for the customers is significant. They are doing it for economic reasons as well. If you operate electric vehicles in India, you have to produce a certain amount of emissions in order to operate at certain times of the day.
There aren't many startups that fit into this mold so we're putting a lot of capital into EVage. In India, the demand for this segment of vehicles is half a million a year. Scaling production to hundreds of thousands is going to be a challenge for the company, but also a huge opportunity.
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