EVage raises 28 million to become a leading force in India’s commercial electric vehicle revolution

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

The business, which has already given five EV trucks to Amazon India’s Delivery Service Partner and expects to supply “thousands” more by the end of the year, has now secured a 28 million seed round headed by new U.S.-based VC RedBlue Capital. The money will be used by EVage to build its production-ready plant outside of Delhi in the first quarter of 2022 and to ramp up production to meet expanding demand.

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

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

Finding a solution to reduce the cost of manufacturing is critical for scaling, and the potential 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 percent buses, 80 percent two and three-wheelers, and 70 percent commercial vehicles electric by 2030, according to Olaf Sakkers, the general partner at RedBlue Capital and future EVage board member.

Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles programs (FAME-I and FAME-II) assist by giving 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 improve 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 purchase electric automobiles. As a result, the route to electric four-wheeler adoption is more likely to take place on commercial roads, according to Sakkers.

India’s e-commerce business is expanding, particularly as multinational corporations expand their presence in the country and the mobile-first population of smartphone users becomes more used to simple digital transactions. Since its entry into India in 2013, Amazon has spent 6.5 billion, while Walmart entered the nation with a 16 billion purchase of the startup Flipkart. These firms, together with national and local delivery providers, are eager to work with Indian OEMs that can address the specific needs of the Indian market.

“There are certain electric cars 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 demands of Indian logistics in an Indian market more generally are quite 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 a technical standpoint, EVage’s cars, for example, do not have to satisfy the same criteria as those in the West in terms of being approved to operate at highway speeds, since automobiles seldom exceed 40 miles per hour in India. That means everything from motor needs to battery capacity and building materials is different, and possibly a lot cheaper, according to Sakkers.

“The total cost of ownership savings for the customers is quite significant,” said Sakkers. “They’re not only doing this for optic reasons, they’re also doing it for purely economic reasons. In India, you can’t operate at certain times of day in cities if you produce a certain amount of emissions, so it also improves your ability to operate a logistics fleet if you’re operating electric vehicles.”

“There aren’t many startups that fit into this mold so that’s why we’re putting so much capital into EVage,” said Sakkers. “The demand for this segment of vehicles is half a million per year in India. Scaling production to the hundreds of thousands is going to be a challenge for the company, but also a huge opportunity.”