Tork Motors' electric dream hits funding block

An electric dream is sputtering in Pune. Tork Motors, once a beacon of India’s EV aspirations, increasingly resembles a cautionary tale for India’s burgeoning EV startup universe. 

The company, known for its ambitious electric motorcycles, seems to be caught in a downward spiral, complete with tales of lay-offs, unpaid dues and frustrated business partners. According to sources, the bike maker – majority owned by Pune-based auto-components maker Bharat Forge – has laid off nearly 100 employees in July, and has outstanding dues with some of the workers dating back to March. 

Moreover, reports have indicated that dealers have not been receiving the products on time. An insider said things are looking “really uncertain” at the company.

Fallen Angel

Tork was, at one time, the ideal startup. Under the leadership of a high-profile team led by mechanical engineer Kapil Shelke, the electric two-wheeler maker had everything a startup could ask for - media attention, high-profile investors, motivated employees, and a respectable dealer and supplier network.

But, as is often the case with startups in sunrise industries, the company seems to have made several missteps that have resulted in its current travails.

A Tough Product to Crack 

The first mistake that the company seems to have made is to not read the market correctly and to underestimate the engineering challenges associated with its chosen product.

While the overwhelming majority of two-wheeler EV startups chose to focus on the less glamorous scooter segment, Tork was one of the handful who went after the big prize – the lucrative motorcycle segment that accounts for nearly 70% of India’s two-wheeler sales.

Like RattanIndia backed Revolt, and fellow start up Ultraviolette, Tork wanted to target the largest segment, calculating correctly that without winning over the motorcycle buyer, India’s EV revolution will never be complete.

But the task was arguably tougher than the company anticipated.

“It's technologically far more complex in motorcycles as the placement of the battery becomes very complicated,” says Kumar Rakesh, Associate Director, Equity Research, BNP Paribas. “If you put it in place of the fuel tank, the centre of gravity moves up and the handling of the vehicle will fairly deteriorate.”

The second problem is related to range. Unlike an electric scooter, an electric motorcycle cannot do with only 80 or 100 km per charge, and require twice that due to the higher distances traveled by motorcycle users. 

However, this in turn requires a substantially larger battery, which would also make the product more expensive, which will in turn affect its commercial viability. “The difference between ICE and EVs would be much higher than what it is in scooters,” Rakesh pointed out.

However, Tork is not the only player to face these challenges. Revolt had faced a battle with the government over subsidy claims under the FAME II scheme. Revolt later repaid the money to make itself eligible for the government’s new Electric Mobility Promotion Scheme (EMPS)  2024. Ultraviolette, on its part, has been grappling with challenges such as high initial cost and lack of charging infrastructure among others.  

Funding Challenges

The second major challenge for Tork was the changing environment around EVs. While EV startups had no problems attracting investors until about 2022, the funding environment got much tougher over the last two years as global interest rates started going up and EV sales started slowing down.

Experts believe that globally, the EV sector is seeing a slowdown because the segment has more or less saturated the so-called early adopter category of consumers.

According to Rakesh, the next phase of growth for EV adoption will come only when companies can successfully move from targeting early adopters to the early mass segment, and these customers may not always look at startups in the same way as early adopters.

“As we move to the next level of adoption, that customer may be a little more traditional in their purchasing behaviour. Things like tech features may work for early adopters but not necessarily work for the early mass. They would go by a more traditional buying behaviour where price, durability, word of mouth, etc. would matter a lot more,” he pointed out.

Meanwhile, the regulatory environment too has changed, with governments cutting down on EV subsidies. The Indian government, for example, slashed the subsidies under the FAME II scheme in May last year and withdrew the scheme completely in March this year, causing much disruption in the e-2wheeler space. 

Many two-wheeler EV players saw a sudden dip in volumes as prices went up by around 25% overnight in the absence of lucrative subsidies. Since then, the industry has been waiting for the government to unveil the successor to the program, known as FAME III. However, very little has come by way of information so far, either on the  allocation or the date of its likely launch. 

Strategic Missteps

Besides the challenges related to the product and the external environment, the current predicament of the company also owes a lot to strategic missteps by the management, claim people close to investors.

According to an insider, differences of opinion started developing between the Tork management and the company's primary investor, Bharat Forge, as sales did not keep up with projections. 

According to them, Tork was not able to meet the target metrics laid down by investors, including Bharat Forge. At the same time, Tork badly needed extra funds to scale up their business and even to meet the basic business day to day operations.

This forced CEO and co-owner Kapil Shelke to look at other investors. It was in this context that Tork announced a $6 million funding from Maxis Capital in February. However, the money never materialized. 

Some from the Tork management side feel that lack of support from the main investor also resulted in the failure of the company's latest funding round.

Speaking to Autocar Professional, Bharat Forge denied it had anything to do with the failure of the funding round, pointing out that it had nothing to gain from denying funds to a company in which it had invested more than Rs 200 crores.

Bharat Forge said: “It would be incorrect to allege that Bharat Forge had negatively influenced Maxis or other investors. Incidentally, it was Bharat Forge that introduced Maxis to the management team at Tork. Unfortunately, due to some challenges unknown to us, Maxis could not close the funding round,” it said. 

Kapil Shelke did not respond to Autocar Professional’s calls or messages.

Looking Ahead

Irrespective of who or what is responsible for the funding failure, the future of Tork Motors remains uncertain. Whether it can resurrect itself from the sea of uncertainty, only time will tell. But one thing is clear: India’s EV sector has more than just range anxiety to worry about.