It’s an exciting time for entrepreneurs entering the field of electric mobility, because the way people and goods will move in the near future is being revolutionised across the globe.
Rohan Choukkar
Fast-paced technology trends have brought the automotive industry to the cusp of perhaps the greatest disruption in over a century, shaking up a hitherto stable industry dominated by a few large players. It is no surprise why this subject commands the attention of so many – the automotive industry accounts for over 7 per cent of India’s GDP, with an extended value chain ranging from auto manufacturing and sales, to financial services, oil companies, fuel retailers, insurance, medical care, parking, and in the public sector—taxes, tolling and traffic enforcement.
Increasingly sophisticated on-board electronics, new powertrain technologies and advances in materials science have brought connected, autonomous vehicles from science fiction into the realm of mainstream reality. This broadening of the automotive technology stack is causing industry incumbents to not just compete harder among themselves, but also look to fend off challenges from digital giants like Apple, Google and Uber, along with a horde of startups, with all platforms arcing towards the same eventual technology paradigm – shared, autonomous and electric vehicles (EVs).
Set aside all the hype around either utopian or dystopian futures, and allow this phrase “shared, autonomous and electric vehicles” to sink in for a moment. The convergence of these three parameters that is unfolding today promises to address major hurdles to the adoption of sustainable transport. At the Bharat Innovation Fund, we are closely watching the intersection of these three trends, to understand the competition and the cooperation dynamics in emerging business segments.
One of the barriers for passenger-vehicle electrification is that private vehicles are a lousy asset – they depreciate, they spend over 90 per cent of their lifetime in storage (parking), and it isn’t a simple matter to predict where and when consumers will be able to charge their EVs. While operating expenses for EVs are dramatically lower than that of traditional vehicles, it is difficult to earn a return on their higher capital costs with such low average utilisation.
The dropping costs of energy storage and electric powertrains is one answer to this problem. On the other hand, shared mobility and technology-enabled multi-modal transit are increasingly becoming the norm in urban areas, and are boosting vehicle capacity utilisation. With the spread of enabling infrastructure, like charging stations and battery swap facilities, we can expect electrification of India’s automobile fleet to gather pace. The light commercial vehicle segment, where higher utilisation and more predictable charging needs (which can be optimised out of local delivery hubs) are the norm, is understandably showing early interest with companies attacking the electrification problem.
Mature supply chains and substantial engineering talent are available for ICE (internal combustion engine) vehicles, and this strong ecosystem is giving rise to greater expectations in connectivity and the electrification of transport. Autonomous vehicles as a full system are some distance away from mass deployment. This is particularly true for emerging markets like India, where the infrastructure is often poor, and drivers must contend with interference from pedestrians and lack of respect for traffic regulations. That being said, we believe there is substantial room for breakthrough startups throughout portions of the autonomy technology stack, from telematics to electronic component makers catering to the increasing demand for sensing, vision, imaging and condition monitoring.
Drastic changes in a sector as crucial to the economy as mobility and transportation are bound to reverberate beyond the automotive industry. Insurance, for example, will see a shift away from today’s driver-centric insurance model, where human error is the primary source of accident risk, to having manufacturers assume greater liability. Dramatically increased sensing capabilities will allow insurers to work with many new classes of data on how, where and when a vehicle is being driven. Moving up the assisted-driving ladder will see a decrease in the frequency of accidents and improved safety, while shared transportation will chip away at personal vehicle ownership rates. Vehicle repair and replacement costs will change substantially, and new categories of risk will have to be factored in—malfunctioning software/hardware, flawed algorithms, security breaches, etc. Grappling with these complex changes over the next few years is going to create a number of opportunities for the early movers – whether they are disruptive startups or nimble incumbents.
How we ‘consume’ mobility, i.e., how we move people and goods, is on the verge of tremendous changes. It is an exciting time to be part of a venture capital fund with an eye on the transportation space, and we look forward to sharing our learnings along our journey.Fast-paced technology trends have brought the automotive industry to the cusp of perhaps the greatest disruption in over a century, shaking up a hitherto stable industry dominated by a few large players. It is no surprise why this subject commands the attention of so many – the automotive industry accounts for over 7 per cent of India’s GDP, with an extended value chain ranging from auto manufacturing and sales, to financial services, oil companies, fuel retailers, insurance, medical care, parking, and in the public sector—taxes, tolling and traffic enforcement.
Increasingly sophisticated on-board electronics, new powertrain technologies and advances in materials science have brought connected, autonomous vehicles from science fiction into the realm of mainstream reality. This broadening of the automotive technology stack is causing industry incumbents to not just compete harder among themselves, but also look to fend off challenges from digital giants like Apple, Google and Uber, along with a horde of startups, with all platforms arcing towards the same eventual technology paradigm – shared, autonomous and electric vehicles (EVs).
Set aside all the hype around either utopian or dystopian futures, and allow this phrase “shared, autonomous and electric vehicles” to sink in for a moment. The convergence of these three parameters that is unfolding today promises to address major hurdles to the adoption of sustainable transport. At the Bharat Innovation Fund, we are closely watching the intersection of these three trends, to understand the competition and the cooperation dynamics in emerging business segments.
One of the barriers for passenger-vehicle electrification is that private vehicles are a lousy asset – they depreciate, they spend over 90 per cent of their lifetime in storage (parking), and it isn’t a simple matter to predict where and when consumers will be able to charge their EVs. While operating expenses for EVs are dramatically lower than that of traditional vehicles, it is difficult to earn a return on their higher capital costs with such low average utilisation.
The dropping costs of energy storage and electric powertrains is one answer to this problem. On the other hand, shared mobility and technology-enabled multi-modal transit are increasingly becoming the norm in urban areas, and are boosting vehicle capacity utilisation. With the spread of enabling infrastructure, like charging stations and battery swap facilities, we can expect electrification of India’s automobile fleet to gather pace. The light commercial vehicle segment, where higher utilisation and more predictable charging needs (which can be optimised out of local delivery hubs) are the norm, is understandably showing early interest with companies attacking the electrification problem.
Mature supply chains and substantial engineering talent are available for ICE (internal combustion engine) vehicles, and this strong ecosystem is giving rise to greater expectations in connectivity and the electrification of transport. Autonomous vehicles as a full system are some distance away from mass deployment. This is particularly true for emerging markets like India, where the infrastructure is often poor, and drivers must contend with interference from pedestrians and lack of respect for traffic regulations. That being said, we believe there is substantial room for breakthrough startups throughout portions of the autonomy technology stack, from telematics to electronic component makers catering to the increasing demand for sensing, vision, imaging and condition monitoring.
Drastic changes in a sector as crucial to the economy as mobility and transportation are bound to reverberate beyond the automotive industry. Insurance, for example, will see a shift away from today’s driver-centric insurance model, where human error is the primary source of accident risk, to having manufacturers assume greater liability. Dramatically increased sensing capabilities will allow insurers to work with many new classes of data on how, where and when a vehicle is being driven. Moving up the assisted-driving ladder will see a decrease in the frequency of accidents and improved safety, while shared transportation will chip away at personal vehicle ownership rates. Vehicle repair and replacement costs will change substantially, and new categories of risk will have to be factored in—malfunctioning software/hardware, flawed algorithms, security breaches, etc. Grappling with these complex changes over the next few years is going to create a number of opportunities for the early movers – whether they are disruptive startups or nimble incumbents.
How we ‘consume’ mobility, i.e., how we move people and goods, is on the verge of tremendous changes. It is an exciting time to be part of a venture capital fund with an eye on the transportation space, and we look forward to sharing our learnings along our journey.
The author is an associate at Bharat Innovation Fund, a US$ 100 million venture fund set up by IIM Ahmedabad’s Centre for Innovation Incubation and Entrepreneurship (CIIE). He has a track record across diverse industries, in roles that have allowed him to develop techno-commercial strategies and business development skills, and he is driven by the challenges of scaling up emerging business and market models.
