EVage raises $28M to be a driving force in India’s commercial EV revolution

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A confluence of circumstances in India, most notably climate change policies, rising fuel costs, and soaring e-commerce demand, has created ideal conditions for businesses such as all-electric commercial vehicle company EVage.

EVage raises $28M to be a driving force in India’s commercial EV revolution

According to one investor, the business already has five EV trucks on the road for a variety of e-commerce customers, including Amazon India’s Delivery Service Partner, with ambitions to offer “thousands” more to Amazon by the end of the year. EVage just raised a $28 million seed round lead by new US-based venture capital firm RedBlue Capital. The funds will be used to build its production-ready facilities outside of Delhi in the first quarter of 2022 and scale up production to meet expanding demand.

EVage’s flagship vehicle is a one-tonne (2,000 pounds) truck that was designed for India’s commercial delivery market based on input from its Amazon relationship. The truck is built on EVage’s industry-ready EV platform, which the business claims allows it to create a variety of high-quality vehicles at a much cheaper cost than other OEMs. The business intends to construct vehicles in “Modular Micro Manufacturing” factories, similar to Arrival’s microfactories, which are expected to have lower carbon footprints and require less capital to make vehicles than traditional OEMs.

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As a result, EVage intends to pass on those savings to customers.

Finding a solution to reduce the cost of production is critical for scaling, and the opportunity and demand for developing EVs in India is enormous.

Nitin Gadkari, India’s Transport Minister, has set a target for the country to have 30 percent private cars, 40 per cent buses, 80 per cent two and three-wheelers, and 70 per cent commercial vehicles electric by 2030, according to Olaf Sakkers, the general partner at RedBlue Capital and future EVage board member.

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Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles programmes (FAME-I and FAME-II) assist by providing subsidies to electric two-wheelers and commercial or transit-related four-wheelers. FAME-II subsidies are only available if OEMs purchase 50% of their components from local manufacturers, which helps boost supply as well.

Two- and three-wheelers are already well on their way to that goal, with companies like Ola Electric establishing a massive factory for e-scooters and Hero MotorCorp, one of the country’s largest micro-EV manufacturers, signing a deal with Taiwanese battery swapping company Gogoro to establish an Indian battery swapping network.

Four-wheelers are taking a little longer to reach the market, in part because the ordinary commuter does not buy electric cars. As a result, the path to electric four-wheeler adoption is more likely to take place on commercial roads, according to Sakkers.

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India’s e-commerce business is expanding, especially as global corporations expand their presence in the country and the mobile-first nation of smartphone users becomes more accustomed to simple digital transactions. Amazon has invested $6.5 billion in India since its entry in 2013, while Walmart entered the South Asian country with a $16 billion acquisition of upstart Flipkart. These companies, together with national and local delivery companies, are eager to work with Indian OEMs that can address the specific needs of the Indian market.

“There are some electric vehicles that operate in developed markets like the United States and Europe, and you see firms like Rivian selling to logistics fleets for those use cases,” Sakkers told TechCrunch. “But the needs of Indian logistics in an Indian market more broadly are very different.” “It necessitates the resolution of many challenges, and hence we see a significant possibility to develop custom-built vehicles for these types of application cases.”

Sakkers observed that, from an engineering standpoint, EVage’s vehicles, for example, do not have to satisfy the same standards as those in the West in terms of being certified to operate at highway speeds, because automobiles rarely exceed 40 miles per hour in India.

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That means everything from motor requirements to battery capacity and building materials are different, and possibly lot cheaper, according to Sakkers.

“The total cost of ownership savings for clients are fairly significant,” Sakkers added. “They’re doing it not merely for aesthetic reasons, but also for plain economic reasons.” In India, you can’t operate during certain times of day in cities if you emit a certain amount of pollution, so using electric vehicles increases your capacity to operate a logistics fleet.”

“There aren’t many startups that match this model, which is why we’re putting so much resources into EVage,” Sakkers explained. “In India, demand for this sector of vehicles is half a million each year.” Scaling production to hundreds of thousands would be a challenge for the company, but it will also be a big opportunity.”

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