For electric startups to withstand competition from bigger brands, they need to focus on their value proposition, customer engagement strategies, and market expansion, while optimising working capital and sustaining investment in R&D, writes the CEO of Altigreen, Amitabh Saran.
05 Jan 2025 | 5201 Views | By Amitabh Saran, CEO, AltiGreen
The electric vehicle (EV) sector in India is witnessing a significant transformation, particularly in the last-mile mobility (LMM) segment. Startups are at the forefront of this change, driving disruption and innovation while competing with established incumbents – the internal combustion engine (ICE) players. This article explores the role of LMM ...
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The electric vehicle (EV) sector in India is witnessing a significant transformation, particularly in the last-mile mobility (LMM) segment. Startups are at the forefront of this change, driving disruption and innovation while competing with established incumbents – the internal combustion engine (ICE) players. This article explores the role of LMM startups like Altigreen, the challenges they face, viable business models, and their long-term impact on the industry.
The Role of Startups: Driving Disruption and Innovation
Startups are pivotal in reshaping last-mile mobility in India by introducing innovative solutions in the two- and three-wheeler segment (some in the small commercial vehicle four-wheeler space) that cater to urban transportation needs. Companies like Altigreen, Ola, Yulu, Ather, Charge+Zone, Exponent, Eka, River, Simple, Euler, EVage and many more are leveraging technology to create efficient and sustainable EVs tailored for Indian conditions. These companies stand out through their innovative approaches: advanced battery technology and efficient swapping solutions; IoT-enabled vehicles offering superior connectivity and smart features; customised solutions designed specifically for Indian conditions and use cases; asset-light business models reducing capital intensity; and digital-first customer engagement enhancing user experience.
EV startups in India are leveraging advanced technologies to gain a competitive edge in the last-mile mobility space. These technologies not only enhance vehicle performance but also improve customer experience, making EVs more appealing to consumers. Here's a closer look at the key technological advantages these startups are harnessing:
Superior Battery Management Systems
One of the most critical components of EVs is their battery management systems (BMS). Startups are investing heavily in developing sophisticated BMS that optimise battery performance, extend lifespan, and ensure safety. Advanced BMS can monitor battery health, manage charging cycles, and prevent overheating, thereby enhancing the overall efficiency of EVs. For instance, Ather Energy and Altigreen utilise cutting-edge battery technology that allows for longer ranges and faster charging times, addressing one of the primary concerns of potential EV buyers—range anxiety.
Advanced Connected Features and Telematics
The integration of connected features and telematics is revolutionising how EVs operate and interact with users. Startups are equipping their EVs with IoT-enabled devices that provide real-time data on vehicle performance, location tracking, and maintenance alerts. This connectivity allows for better fleet management and enhances user experience by providing insights into driving behaviour and energy consumption.
Regular Over-the-Air Updates
Many startups are adopting a software-driven approach to vehicle management by offering regular over-the-air (OTA) updates. This capability allows manufacturers to improve vehicle performance, add new features, and fix bugs without requiring customers to visit a service centre. Such updates can enhance everything from battery efficiency to infotainment systems, ensuring that vehicles remain up-to-date with the latest technology. This approach not only improves customer satisfaction but also reduces long-term maintenance costs.
Enhanced Performance Metrics
Electric vehicles inherently offer superior performance metrics compared to traditional ICE vehicles. Startups are capitalising on this advantage by designing EVs that are lightweight and provide instant torque, smooth acceleration, and regenerative braking capabilities. These features contribute to a more responsive driving experience while also improving energy efficiency. For instance, Ola, River & Ather has focused on delivering high-performance scooters that appeal to younger consumers looking for both style and substance.
Innovative Charging Solutions
To address the challenges associated with charging infrastructure, startups are developing innovative charging solutions such as fast chargers and battery swapping technologies. Fast chargers (Type 6 & 7) significantly reduce charging time, making EVs more convenient for users who may need to recharge during short breaks.
Battery swapping allows users to quickly exchange depleted batteries for fully charged ones at designated stations, minimising downtime for commercial fleets. Companies like Yulu are exploring battery swapping models to facilitate quick recharges for their electric bikes used in urban deliveries.
These startups are not just offering products; they are creating ecosystems that support sustainable urban mobility. By integrating technology, such as battery management and connected vehicle systems, they enhance driving predictability and operational efficiency. This innovation-driven approach helps them capture market share from traditional players who may be slower to adapt, given their fossil-fuel baggage.
Market Challenges: Overcoming Barriers to Acceptance
The EV startup ecosystem in India faces a complex web of challenges that extends beyond typical market entry barriers. Infrastructure limitations stand as a formidable obstacle, with the charging network still in its nascent stages across most Indian cities. The existing power grid infrastructure often struggles to support rapid charging stations, leading to concerns about reliability and consistent power supply. This infrastructure gap is particularly pronounced in tier-2 and tier-3 cities, where the potential market remains largely untapped.
Financial hurdles present another significant challenge for EV startups. Unlike their traditional counterparts, these companies face higher initial capital requirements for research, development, and manufacturing setup. The cost of battery technology remains high, despite recent advancements, impacting the final vehicle pricing. Traditional financial institutions often view EV startups as high-risk investments, making access to working capital and growth funding more challenging and expensive. This financial constraint is further complicated by the need to invest in service networks and customer education simultaneously.
Supply chain vulnerabilities have become increasingly apparent, particularly in the post-pandemic landscape. Dependence on imported components, especially battery cells and electronic systems, exposes startups to international market fluctuations and geopolitical risks. Building a localised supply chain requires significant investment and time, while competing with established players who benefit from economies of scale in their ICE vehicle production.
Consumer perception and acceptance remain critical challenges, especially with customers whose livelihood depends on the EV. Though range anxiety is NOT a primary concern among potential buyers of cargo EVs, it can be a concern for passenger vehicle owners, particularly in regions with limited charging infrastructure.
The higher upfront cost of EVs, despite lower running costs, creates a psychological barrier for price-sensitive Indian consumers. There used to be a general scepticism about the longevity and reliability of EV technology due to the imports in the past, but that has greatly reduced, especially in the three-wheeler segment.
There are concerns about battery life and replacement costs. The limited understanding of EV technology among traditional auto mechanics further adds to customer apprehension about long-term maintenance.
The regulatory landscape, while increasingly supportive, presents its own set of challenges. Policy frameworks vary across states, creating operational complexities for startups looking to expand nationally. The interpretation and implementation of central government subsidies and state-level incentives can be inconsistent, affecting business planning and pricing strategies. Additionally, the evolving nature of EV regulations, particularly around battery disposal and recycling, requires startups to remain adaptable and maintain compliance reserves.
Market competition is intensifying as traditional automotive manufacturers enter the EV space with their established brand value and extensive dealer networks. These legacy players can often afford to operate at lower margins initially, supported by their ICE vehicle revenues. For startups, this creates pressure to differentiate through technology and service while maintaining competitive pricing, a challenging balance given their resource constraints.
Viable Business Models: Strategies for Startups
To thrive in this competitive landscape, EV startups can adopt various strategies aimed at building sustainable business models:
Target Niche Verticals with Focused Offerings
Many startups focus on specific segments within the last-mile delivery space where they can differentiate themselves from larger competitors. For example, while our neEV is specifically designed for cargo transport in urban environments, the Bhai variant caters to businesses that require efficient delivery solutions in semi-urban / captive environments. Similarly, our first passenger variant is not the urban city auto-rickshaw, but the shared passenger three-wheeler intended for semi-rural areas.
Innovative Financing Options
Integration of telematics data and offering powerful vehicle monitoring and usage information will make possible collaborations with commercial banks and leading vehicle financing service providers like Alt Mobility, Gentari, Turno, Sundaram, Shriram, IDFC, HDFC and Sidbi, allowing startups to offer competitive financing rates (as low as 9%) tailored specifically for EV purchases or leases, further incentivising their adoption.
Recognising the importance of charging networks, some startups like Massive, SCU, Bolt, Charge+Zone are already investing in establishing their own charging stations or partnering with existing providers to ensure that customers have access to necessary infrastructure. Others like Exponent, Clean Energy are focusing on use-case oriented battery and charging solutions. Some startups are launching mobile apps for locating & booking charging stations.
Emphasising Total Cost of Ownership (TCO)
Startups need to focus on demonstrating the long-term cost savings associated with EVs. By highlighting lower operational costs and reduced maintenance, startups can make a compelling case for adoption. EVs in the two- & three-wheeler segments are already more economical than their ICE counterparts for commercial use. With daily utilisations of 70-90 km for two- & three-wheelers, all electric models have a lower TCO per km, even when compared to CNG. The same is typically true to other commercial vehicle formats including taxi (vs personal use cars) and buses.
Here are some additional areas that will help in EV adoption:
Battery-as-a-Service (BaaS)
BaaS is an innovative model that allows customers to lease batteries separately from the vehicle purchase, significantly lowering the initial investment required for EVs. While allowing lower upfront costs, BaaS providers typically handle battery maintenance and replacement, alleviating concerns about battery degradation over time. This service model enhances customer confidence in adopting EVs due to cost predictability.
Mobility-as-a-Service (MaaS)
MaaS platforms are transforming how consumers access transportation by integrating various mobility services into a single accessible interface. Using data-driven insights, successful MaaS implementations often involve partnerships between various transportation providers, including public transit agencies and private mobility companies, thus simplifying travel planning and enhancing convenience.
Competing with Legacy Players: Sustaining Operations
EV startups can adopt a variety of strategies to compete with established automakers:
Leveraging Local Innovation
Startups like Altigreen emphasise indigenous technology tailored for Indian conditions. By focusing on local needs—such as vehicle performance under diverse weather conditions—they can offer compelling alternatives that resonate with consumers.
Collaborating with Fleet Operators
Partnering with logistics companies and fleet operators allows startups to gain access to larger customer bases while providing tailored solutions that meet specific delivery needs.
Adapting Quickly
Startups often have the advantage of agility compared to larger corporations bogged down by legacy systems and processes. This flexibility allows them to respond quickly to market demands and consumer preferences.
Utilising Data Analytics
Many startups leverage data analytics to optimise operations and improve vehicle performance based on real-world usage patterns. This data-driven approach enables them to enhance customer experience while reducing operational inefficiencies.
Apart from the usual suspects above, I strongly believe that EV startups can prioritise brand loyalty through customer experience leveraging digital tools and community engagement, and make that a valuable differentiator. In addition to the above, they must also focus on other areas of their business to increase their chances of success:
Digital-First Approach to Sales and Service
Startups should adopt a digital-first approach to streamline their sales process. By utilising online platforms for showcasing products, facilitating test drives, and managing transactions, companies can reach a broader audience while providing a seamless purchasing experience. We have found the approach particularly effective in urban areas where consumers prefer convenience and efficiency.
Personalised Service Experiences
Startups should focus on delivering personalised service experiences both at the service locations and by leveraging data analytics to understand customer preferences better. By analysing user behaviour and feedback, companies can tailor their services—such as maintenance reminders or providing onsite support—to meet individual needs effectively.
Quick Response Times to Issues
Customer service is crucial in building trust and loyalty among consumers. Startups should invest in responsive customer support systems that ensure quick resolution of issues related to vehicle performance, breakdown or charging infrastructure. Data can indicate patterns of usage and breakdowns in disparate geographies and use cases, so that proactive measures like availability of float stock can be taken a priori. Utilising AI-driven agents can also enable companies to provide immediate assistance, especially in routine queries.
Strong Community Building Initiatives
Building a community around electric mobility is essential for fostering brand loyalty and encouraging word-of-mouth marketing. Startups like Ather Energy have established community engagement programmes that include events, workshops, and forums where customers can share experiences and provide feedback on products. At Altigreen, we do chai-samosa meets, along with financiers, to reach out to references of existing customers. Such initiatives not only enhance customer relationships but also create brand advocates who promote the benefits of EVs.
Transparent Communication
Transparency in communication is vital for establishing trust with customers and in making the shift from incumbents. Startups should focus on clear communication whether for pricing structures, warranty terms, or service agreements, to eliminate confusion or mistrust among potential buyers. By providing detailed information about vehicle specifications and performance metrics upfront, these companies can help consumers make informed decisions.
The Long-Term Role of Startups in India's Evolving EV Ecosystem
The future landscape of electric two- & three-wheeler mobility in India shows continued promise for both disruption and consolidation. As the EV market matures, the long-term role of startups raises important questions:
Can disruptive startups redefine the industry? Will market pressures drive consolidation? Will sustainability be pursued as a core value? What will be the impact of policy changes like no-subsidy? Can technological advancements remain differentiators?
The EV industry in India is headed toward consolidation, where mergers between complementary startups will become increasingly common as companies seek to achieve scale. We're likely to see acquisitions by larger automotive players looking to quickly acquire EV capabilities, alongside the merger of smaller players into larger mobility ecosystems. Strategic alliances will form around technology sharing and market access, while joint ventures between startups and traditional OEMs will bridge innovation gaps.
Partnership dynamics will evolve as component suppliers transform into technology partners, and cross-border collaborations open doors to global markets. Battery manufacturers will establish exclusive partnerships with vehicle makers, while infrastructure players will increasingly join forces with OEMs. Financial institutions are expected to create specialised EV financing programmes, recognising the changing ownership patterns of this sector.
Integrated charging solutions will incorporate renewable energy sources like solar power / microgrids, which can significantly reduce the carbon footprint of EV charging, while making EVs viable in such towns / villages. Further, systems that combine photovoltaic panels with battery storage can also provide clean energy directly to charging stations.
While specialisation will become a key differentiator as companies focus on specific vehicle segments or platforms, sustainable unit economics will be crucial for long-term survival. OEMs must optimise production costs while maintaining efficient supply chains. Strategic pricing models will need to balance market penetration with a clear path to profitability, while revenue diversification will help buffer against market fluctuations. The challenge lies in maintaining balanced growth while achieving profitability and managing cost-effective customer acquisition.
In all this, a strong software technology foundation will be non-negotiable. Successful companies will need to develop proprietary battery management systems and advanced vehicle diagnostics, while offering fine-grained drive controls. Predictive maintenance capabilities and over-the-air update infrastructure will become standard offerings. Data analytics capabilities will drive decision-making, while robust cybersecurity measures will protect both company and customer interests.
At the same time, supply chain resilience will determine survival in an increasingly competitive market. Successful companies will focus on localising component manufacturing while maintaining multiple supplier relationships. Vertical integration will be pursued where strategically critical, as will sophisticated inventory optimisation and risk management strategies. Quality control systems will become increasingly important as the market matures.
Meanwhile, service network development will play a crucial role in market success. Companies will likely adopt hybrid service models combining company-owned and franchised operations. Mobile service capabilities will become standard, complemented by comprehensive preventive maintenance programmes. Spare parts availability, technical training programmes, and robust customer support infrastructure will differentiate successful players.
On the policy side, non-financial incentives such as toll waivers, reserved parking, and access to low-emission zones can promote EV adoption in segments that have not yet achieved TCO parity with ICE vehicles.
Conclusion
Market positioning and financial sustainability will ultimately determine long-term success. Companies must maintain clear brand differentiation and focus on well-defined target segments. Value proposition clarity, customer engagement strategies, and careful market expansion planning will be essential. From a financial perspective, successful companies will maintain a balanced funding mix, optimise working capital efficiency, and sustain investment in R&D while managing risks effectively.
Amitabh Saran is the CEO at Altigreen. The views expressed are purely those of the author.