Lithium Urban Technologies calls itself the company which delivers tomorrow’s transport transportation today(their tagline “TOMORROW’S TRANSPORTATION. TODAY.) and that might sound like an audacious claim from an Indian cab service provider that too from a startup. But that is true, it is the only company in India to have 100% electric fleet, it is the first zero emission transport service provider of India.
Lithium Urban Technologies Pvt Ltd is founded in October 2014 by Sanjay Krishan in Bengaluru. The company initially started off with 10 Mahindra e2o’s and now they have a fleet of 200 plus electric vehicles and several hundred more are in pipeline. They started their operations initially in Bengaluru and now they are planning to enter North Central Region(NCR) of India. Despite many oddities the company is successfully marching ahead into new regions and new segments.
Why Electric Vehicles? Simple, the founders are feeling responsible for the the environment and are daring enough to do something good.
Is it Commercially Viable? Looking at the oddities the answer must be a big no, but the company is proving that it is possible to strike balance between commercial viability and environmental friendliness.In general, addressing one negates the other and growing while balancing both(profitability & environmental friendliness) is a commendable job.
What are the oddities before the company?
- Lack of Charging Infrastructure: Charging stations to electric vehicles are like petrol bunks to IC engine cars. In America there are very few charging stations compared to the number of gas stations, let alone India the number is minuscule.
- Lack of uninterrupted power supply: If somehow the company manages to find or establish charging stations, then there is this problem of getting 24*7 power supply let alone quality supply. Getting quality power without interruptions throughout the year throughout the country is a tough ask in India.
- Lack of Proper Electric Vehicles: The only electric vehicle available for purchase in India is Mahindra e2o(at the time founding Lithium Urban) which in many aspects is inferior to its conventional counterparts. Aspects like cramped interiors, rear seats access and range per charge are a few to say.
- Battery Life and Replacement Costs: Battery pack to electric vehicles is like a fuel tank to IC engine cars. Let me use an analogy to help you understand the problems associated with battery packs. Imagine if your car’s fuel tank decreases in size over time & it cannot hold same amount of fuel as it does in the initial days and also it cannot take fuel at higher inflow rates so you have to slowly pump the fuel or it will spill off. And you have replace the fuel tank a couple of times before you replace the car itself. That is how it is with Electric Cars & Battery Packs. Though this a problem now, in the future this might not be a problem as the batteries are constantly improving and also battery costs are constantly falling.
- Establishment Costs: Apart from the real estate costs,telemetry platform costs and other costs, the major capital requirement for any cab service provider is capital to purchase the fleet. In case of electric vehicle fleet the cost is multiple times higher than that of the conventional fleet. Mahindra e20 base variant on-road price in Bengaluru is INR 7.10 lakh and Tata Nano base variant on-road price in Bengaluru is INR 2.32 lakh. (*According to Cardekho and Tata Motors websites respectively ** Mahindra e20 is now discontinued and replaced with Mahindra e20 Plus)
- And many more challenges like customer perception towards electric vehicles, safety(possibility of battery explosions),…etc are to be addressed by the company.
Lithium Urban Technologies despite all these challenges is managing to succeed and move forward. And apart from these inherent challenges associated with electric vehicles there are challenges like competition from established players and biggies national & international like Ola and Uber etc.
How the company is overcoming all these difficulties and progressing? The answer is simple, to start with, they chose a sub segment which they can serve despite their limitations. And as the numbers rise they will explore new segments and new geographies.
What is the segment and city that they chose to start their operations? The segment is Corporate Employees Transport and the city is Bengaluru/Bangalore. The company found out that catering to corporate customers can solve many of their hurdles at once. Well, but why & how choosing corporates as their clients can help them. And what is the business model adopted.
- Lithium is counting on the corporate companies to recharge their cars as the companies will already have the required infrastructure to supply uninterrupted & quality power. Lithium establishes a charging station at the premises of a company that signs up with them for their transportation services.
- The corporates have to pay Lithium on per-car-per-month basis irrespective of the miles driven. And the companies(clients) have to bear the electricity bills.
- As the routes are fixed, timings are known and passengers are known, predictability is more and the complexities involved are less compared to that of their counterparts.
- Coming to financial hurdles, apart from the founding members own investments, Lithium got backing from Robin Chase and Ramachandran. Ramachandran is chairman at InKlude Labs and former head of Morgan Stanley India. Robin Chase is a transportation entrepreneur and co-founder of ZipCar. Both the investors are happy and optimistic about Lithium Urban.
Companies saw partnering with Lithium Urban Technologies as a tool to reduce their carbon footprint and as a part of their social responsibility. Soon, Lithium roped in Tesco Plc as their first client. And other companies followed the suit. Companies like Accenture, Adobe Systems and VMware are few of their clients. VMware is one of their biggest clients.
Where Next and What Next? Lithium is planning to operate pan India. As most of their corporate clients have offices at more than one city and have thousands of employees at each city, Lithium is planning to extend the services to their existing clients at their other locations. This includes cities like Mumbai, Delhi, Pune, Ahmedabad and Hyderabad etc.
As they spread across various cities and scale up, they will start catering to non corporate clients i.e., to public. Until then they will concentrate only on corporate clients.
Coming to the what next question, The future of urban public transportation will be driven by four key tenets: clean, distributed, shared and connected, according to Krishnan. Keeping that in mind, he wants Lithium to eventually engage across the electric mobility value chain.
Sanjay Krishnan plans to collaborate with more OEMs to introduce different new form factors (vehicles) for freight, mass transit and consumer transport by April 2017, and wants the company to expand its fleet to 6,000 vehicles in four years.To do all that and more, the company, which has raised $1.3 million of equity and $1.3 million of debt, is looking to raise $6-7 million.
In addition to Ramachandran and Chase, Lithium counts KPIT promoters’ group, Kewal Nohria, Cognizant’s Lakshmi Narayanan, H.V. (Prasad) Subramaniam and Subrata Ghosh as its angel investors.
And another member to back Lithium Urban Technologies is none other than the man who gave India its first electric car Reva, Chetan Maini. Maini is also very optimistic about Lithium.
“When I started Reva, it was way ahead of its time. What is happening today is a host of factors coming together” such as better technology, awareness of electric cars and a more favourable policy stance from global lawmakers, he said.
“The long-term vision is to move into several different product platforms,” said Maini, who is a co-promoter, board member and investor of Lithium.
While Lithium is currently focused on corporate transport in India, Maini expects a future where it could dabble in other mobility areas such as goods transport and “first-mile/last-mile” delivery, and think beyond India.
Reference links and source links:
- Company Profile
- Sanjay Krishnan
- Company Website
- The Better India
- Company Profile @ Zauba Corp