Ep# 14 | WTF is Happening with EV? Nikhil ft. Founders of Reva, Ather, Blusmart, and Ossus

Nikhil Kamath 0:00 So the point of today is to talk about electric vehicles. Anybody new looking to get into the industry, [upbeat music] we want to tell them the good, the bad, the ugly. [upbeat music] Ready? Rolling.

Nikhil Kamath 0:31 And action!

0:32 Uh, hi, guys. Thank you for coming to Bangalore, and, uh, thanks to my friends who are already in Bangalore. So the point of today is to talk about electric vehicles in the manner that anybody new looking to get into the industry after college, or someone who wants to start a business in EV, a young entrepreneur, we want to tell them the good, the bad, the ugly, uh, which part of the industry wi- may make sense for them to focus on, and what are the skill sets they might need to inculcate to have a long career, a good career in this industry. So maybe we can start with introductions. Uh, I'm sure many people know all of you, but, uh, let's start with Puneet.

Speaker 1:22 So I, uh, was born and brought up in Calcutta, and I, um, did my schooling there. Uh, I'm born in '84, so I'm thir- thirty-nine. Um, shifted to Bombay in the year 2000. Uh, went to Sydenham College for my graduation.

Nikhil Kamath 1:37 Where is that?

Speaker 1:38 Uh, Sydenham is in Bombay.

Nikhil Kamath 1:39 Mm-hmm.

Speaker 1:39 On Churchgate B Road. Um, then I finished my graduation in 2005. Um, then went to London School of Economics for my master's in finance. Uh, did a year of, uh, MSc in finance there. Didn't want to come back to India, and, um, so studied one more year. Went to Aston Business School for my second master's. Um, so while I was there studying at Aston Business School-

Nikhil Kamath 2:01 So you did two masters in?

Speaker 2:03 Yeah, in the UK. Yeah, one in London, one in Birmingham. Um...

Nikhil Kamath 2:07 Are you married? Do you have a girlfriend? [laughing]

Speaker 2:09 [chuckles] Okay. I didn't-- I was not focused.

Nikhil Kamath 2:12 On girls?

Speaker 2:12 Yeah.

Nikhil Kamath 2:13 What were you focused on?

Speaker 2:14 Maybe just, uh, trying to find my way out, figuring out to start a business or something.

Nikhil Kamath 2:19 Have things changed at thirty-nine? H-how is this not an interview? [laughing]

2:24 [laughing]

Speaker 2:24 I don't like that. I feel like that. Things have changed a little bit. Um, I come from a family business background, so my, third-generation entrepreneur, so everybody was doing something in the family. So I didn't want to join my family business and was twen- wanting to start on my own, so was trying to figure out what to do. I did two or three small startups, which didn't go along well. They were in the plastic space, small, very small startups, uh, that didn't go along well. So I... Yeah, so I decided that I'll go study outside. Let's probably learn something, and while I was studying at, um, at Aston, I chanced upon... During my dissertation, I read about the role of clean energy and renewable energy. That will be-- That was game changing for me. And I came back to India, and I met some solar panel manufacturers, who at that time were manufacturing solar panels. Uh, met them in India and realized that there could be a massive opportunity to make solar panels in India and export into Europe. Europe at that time was the biggest market. Uh, they were setting up these massive solar power plants in Spain and Italy. They had that fit feeding tariff. So I then decided that we'll set up a solar panel manufacturing facility, and it was called PLG Power, my first company. PLG is the initials of my grandfather, Prashottamlal Goyal. He passed away, uh, in April 2007, at the age of seventy-eight. So I thought, "Okay, my first company that I'll f- uh, that I'll start should be with his initials." And I started that in 2007, uh, eight, uh, Jan of 2008, to manufacture solar panels. Uh, the manufacturing facility was at Nashik, at Sinnar. So that was the whole idea, to make solar panels. So did that for four years, uh, between 2008 to 2012. Uh, the idea was to go back into solar cell manufacturing, uh, further back into wafer manufacturing, and each was a larger investment. But then the market just crashed in Europe. It was very bad timing. Market just came down, you know, string of bankruptcies in, in-

Nikhil Kamath 4:17 Market for?

Speaker 4:18 Uh, for solar panels.

Nikhil Kamath 4:19 Mm.

Speaker 4:19 Nobody anticipated that, and people were ramping up capacities for supplying panels and cells to Europe-

Nikhil Kamath 4:25 Mm.

Speaker 4:25 -and we were also ramping up capacity. The market just kind of crashed in two years, between '11 to '13, and I also had not anticipated that. Um, and so that was-- It took a big beating. I had to shut down my first startup after achieving that, uh, you know, that kind of manufacturing capacity. Mentally, I was also very-

Nikhil Kamath 4:42 You ran this with your family?

Speaker 4:44 Just myself. And big lesson learned, I didn't have any co-founder at that time. Uh, just by myself-

Nikhil Kamath 4:49 Came away from it with some liquidity?

Speaker 4:51 Yeah, so I raised bank funding, uh, raised some private equity from the market, from friends and family, initial capital, then went out to raise some equity. We, we needed a large working capital. We had about hundred and fifty crores of, uh, working capital at that time, uh, to buy the materials, stock it, sell it, and all that. But anyway, so that, [sighs] uh, the first venture shut down, I-

Nikhil Kamath 5:09 Which year was this?

Speaker 5:10 2012. Eleven, twelve. And so I took a big beating there, uh, and I realized that, you know, manufacturing is tough. It's not everybody's cup of tea to do. Uh, and I did not anticipate that this will happen overnight also. But yeah, so God shuts one door, opens another. At that time, government of Gujarat came out with a solar policy, [lips smack] um, in Gujarat, and, uh, they allowed people to set up solar power plants. We signed a forty-megawatt power purchase agreement with the government of Gujarat, and we set up a twenty-megawatt power plant. Uh, so we built that project, operated it for two years, and then sold it to a large Saudi, uh, company that was looking to buy an operating asset in India.

Nikhil Kamath 5:48 For a sum of?

Speaker 5:50 Sixty-eight million dollars. And so that was kind of a good project, and that's when I met my co-founder, Anmol Jaggi. Uh, Anmol is the founder of Gensol. Uh, at that time, Gensol was building many solar power plants. Uh, the solar policy was about three hundred, so they were building nearly half of that capacity, design, engineering, EPC. They were doing various stuffs. So I met Anmol, and Anmol's company did the entire EPC. Gensol did-... that twenty-megawatt power plant they built in record time of about four months. So we became friends, um, and that's when I first met him. I had no idea that we'll start BluSmart probably eight years later. Uh, so that was my second venture, and, um, uh, and I took a break of a year, for a year. My wife was studying in the US at, uh, in Wharton, so a lot of back and forth, uh, India, US.

Nikhil Kamath 6:33 Wait, you're married?

Speaker 6:34 Yeah.

Nikhil Kamath 6:35 Why wouldn't you say that when I was badgering you with all these questions? [laughing]

Speaker 6:38 Oh, I thought... [laughing] Yeah, yeah. No, it'd be nice if I didn't-

Tarun Mehta 6:40 Yeah, you did, you did make us all feel like-

Speaker 6:42 Yeah!

Tarun Mehta 6:42 ... your kids are still out, out in the market.

Speaker 6:43 Oh, really?

Nikhil Kamath 6:44 Yeah.

Speaker 6:44 Oh, really? Okay, yeah. [laughing]

Nikhil Kamath 6:46 I'm looking at you from a different light now.

Speaker 6:47 Okay. [laughing] Really? Oh, nice.

Nikhil Kamath 6:50 For a second, I was like: "Wait, what is going on here?" [laughing]

Tarun Mehta 6:52 So it's an absolute twist.

Speaker 6:54 Okay. [chuckles]

Nikhil Kamath 6:56 Okay, then you started BluSmart. What is BluSmart? Tell us.

Speaker 6:59 Yeah, so after my third venture, okay-

Nikhil Kamath 7:01 Mm.

Speaker 7:01 ... that was another small, uh, seventy-odd megawatt plant.

Nikhil Kamath 7:03 You walked away with sixty-eight million dollars.

Speaker 7:06 Yeah.

Nikhil Kamath 7:06 You had a lot-

Speaker 7:06 I didn't walk it away. I mean, I had to give some money back to, uh, lenders also.

Nikhil Kamath 7:09 Okay, you walked away with fifty million dollars.

Speaker 7:11 Some money, some money. Uh, let's keep it at some money.

Nikhil Kamath 7:13 Did you buy something nice?

Speaker 7:15 Some money. [chuckles] And then, uh, my third venture was another solar project.

Nikhil Kamath 7:19 Mm.

Speaker 7:20 Uh, founded PLG Clean Energy Projects. We did a small seventy-megawatt solar power plant in Dhule, Maharashtra. Again, Anmol's company, Gensol, played a part there-

Nikhil Kamath 7:27 Mm

Speaker 7:27 ... in getting up that power plant also. So three solar ventures, and I was kind of done-

Nikhil Kamath 7:29 Again, sold it to?

Speaker 7:31 Sorry?

Nikhil Kamath 7:31 Again, sold that-

Speaker 7:32 Yeah, yeah, sold that to a large-listed entity in India. They're also into renewable space, a very large renewable energy company.

Nikhil Kamath 7:37 Suzlon?

Speaker 7:38 Suzlon, correct, yeah, absolutely spot on. Um, so, so these are three ventures, and I was kind of done with solar, and, uh, I-

Nikhil Kamath 7:44 So you've been making money for a long time.

Speaker 7:47 Actually, I lost the money in my first venture, tons of money.

Nikhil Kamath 7:49 Third one? Third one?

Speaker 7:50 Third one, yeah, third one made money, yeah.

Nikhil Kamath 7:52 How much did you sell that for?

Speaker 7:53 Uh, for fifty-five million dollars. So, and then I, uh, kind of was thinking what to do.

Nikhil Kamath 7:59 Mm.

Speaker 7:59 And, uh, I, I had, um... I met this amazing entrepreneur called Brent Halanikias. Um, I'd gone to see Hyperloop One-

Nikhil Kamath 8:09 Mm

Speaker 8:09 ... in Las Vegas, in Nevada, and I met, uh, there, uh, Shervin Pishevar. He was the CEO of Hyperloop One, and he was showing me this, this big tunnel where you can travel really fast in that tunnel with pods. You know, they're, they're making these pods, and you can sit in the pod, and they travel really fast, at great speeds-

Nikhil Kamath 8:26 Mm, mm.

Speaker 8:26 -and they were going to do it also for logistics. Somehow in the discussion, uh, it, a lot of solar conversations came out because of my background, and the guy on the other side was Brent Halanikias. He was, uh... I later learned from him over dinner that he was CFO of Uber. And Shervin, I learned later that evening, we were sitting in Malibu Club, and we were having dinner in, um, Los Angeles. Uh, and, uh, he was a Series B investor in, uh, in-

Nikhil Kamath 8:53 Now I'm getting a mental picture of you. Sold one company for fifty million, another for seventy, sitting in Malibu Club-

Speaker 8:59 [chuckles] No, no

Nikhil Kamath 8:59 ... went to fancy colleges.

Speaker 9:00 I was learning from these, uh, mavericks, what they did in their past life.

Nikhil Kamath 9:04 Mm.

Speaker 9:04 I like meeting people, like I'm meeting you today, I'm meeting Chetan-

Nikhil Kamath 9:07 Mm

Speaker 9:07 ... I'm meeting another amazing EV entrepreneur also.

Nikhil Kamath 9:09 Mm. Okay, and then?

Speaker 9:10 Yeah, so, so yeah, so that evening, I, um, learned from them that what the world of, uh, mobility could be like.

Nikhil Kamath 9:18 Mm.

Speaker 9:19 And, uh, so Shervin and, um, and Brent spoke a lot about EVs. In fact, when we came out of the conversation, uh, from that lunch meeting, that dinner meeting that we had, we saw a ChargePoint charging station, which was right outside the Malibu Club, and it was charging a BMW i8 car. And, and I, I'd seen EVs before at the Stanford Shopping Center. I've driven the Tesla in, on and around Stanford campus in sixteen, seventeen. But, you know, I was not, never thinking about EVs so much or the role EVs could play in the future, like I thought for solar at that time.

Nikhil Kamath 9:48 So what is the big idea with

Nikhil Kamath 9:50 BluSmart? If you had to define BluSmart in one line.

Speaker 9:52 Yeah. So, so we are building an energy infrastructure and mobility company, intertwined and connected. Uh, the whole idea is, uh, which my mentor, uh, Brent, also said, that, um: "Look, it's imminent that in the future, all cars will become EVs over the next ten, twenty years." I mean, some countries will do it over thirty years. Faster countries will be, could be maybe five, ten years. Mediocre countries could take still about fifteen, twenty years. The biggest challenge will be the charging infra-

Nikhil Kamath 10:19 Mm

Speaker 10:19 ... challenge, and that nobody's talking about it.

Nikhil Kamath 10:20 So are you focused on the charging infra or running a fleet of electric cars?

Speaker 10:24 Both. Uh, actually, it's absolutely interconnected. If I take anything out, the entire model will crumble, and that was the whole idea to build-

Nikhil Kamath 10:32 So if your company has a CapEx of hundred that it has done up until now, how much went towards fleet of electric cars? How much went towards charging infra?

Speaker 10:41 Well, you need more money for charging infra, because charging infra is a direct investment-

Nikhil Kamath 10:45 Mm

Speaker 10:45 ... in our case, if I can speak so.

Nikhil Kamath 10:46 And do you charge only your vehicles there, or is it open for others as well?

Speaker 10:49 Well, the whole idea is to build the threat of charging model. I'll, I'll, I'll come there, but, but initially, we need all the charging infra ourselves. We need to help ourselves first. But the idea, the bigger idea was to let's create an ecosystem, interconnected, where we will create massive EV charging infra, but that EV charging will, uh, infra will be of no use if you don't have an anchor tenant. So then we need an anchor tenant, which is in-house anchor tenant, which is BluSmart fleet, which will then u- utilize the charging infra, right? And this charging infra, and then that creates a virtual cycle. So you create charging infra, you bring in the fleet of EVs-

Nikhil Kamath 11:27 And why EVs?

Speaker 11:28 The utilization happens, you build more charging infra.

Nikhil Kamath 11:30 Why EVs instead of ICE right now?

Speaker 11:31 So-

Nikhil Kamath 11:32 What is the big advantage?

Speaker 11:33 Yeah, I mean, EVs have massive advantages, right? So on the business side, the operating costs are super low.

Nikhil Kamath 11:38 Because?

Speaker 11:38 Right, so the operating cost of running EVs is low.

Nikhil Kamath 11:41 Because?

Speaker 11:41 The cost of fuel is cheaper. So look, in 2018, when we were starting up BluSmart, um, the cost of CNG in India, which was a darling fuel at that time, um, was about thirty-seven, thirty-eight, thirty-nine rupees a kg.

Nikhil Kamath 11:55 Mm.

Speaker 11:55 And that, over the next, over five years, uh, went up to about eighty-six, ninety rupees, ninety-five rupees a kg. Now, with government subsidies, again, come down between eighty, ninety rupees a kg, depending on the city you live in. And petrol and diesel at that time was about seventy-two rupees a liter, uh, in 2018, circa, and then that went up to now, I'm from Bombay, it's north of hundred and five-

Nikhil Kamath 12:18 Mm

Speaker 12:18 ... hundred and six rupees a liter.... we always knew that, that this is a game of energy, and this is not a game of mobility. And, uh, if you don't build in alph- alphabetical order, energy and mobility company, I mean, it'll not make sense.

Nikhil Kamath 12:30 So how much does it cost you today to ply one kilometer on your EV? What vehicle do you use?

Speaker 12:36 I personally?

Nikhil Kamath 12:37 No, BluSmart.

Speaker 12:38 BluSmart, we have, uh, a fleet of, uh, five thousand plus Tata Tigor cars.

Nikhil Kamath 12:44 And how much does it cost you to go one kilometer in a Tata Tigor versus the equivalent model in, uh, ICE? Maybe something-

Speaker 12:52 Look-

Nikhil Kamath 12:52 -Ola uses or Uber uses.

Speaker 12:53 Look, the operating cost could range between... And that diff- I mean, I could speak for BluSmart-

Nikhil Kamath 12:59 Yeah

Speaker 12:59 ... and also for an individual. Could range between, you know, a doll- a, a rupee twenty paise per, uh, per, um, kilometer to about, maybe about two rupees also, depending what you're charging and price like, you know. Say, for example, I give you a r- rough math.

Nikhil Kamath 13:13 And on ICE-

Speaker 13:14 Say, I give you an example of MG car, you know, so MG today, uh, it, on a full charge, gives you three hundred plus kilometers.

Nikhil Kamath 13:21 Mm.

Speaker 13:21 And if you have a green meter installed in your house with BST in Bombay, uh-

Nikhil Kamath 13:27 What is a green meter?

Speaker 13:28 I mean, it's a special meter that you need to take.

Nikhil Kamath 13:30 Mm.

Speaker 13:31 Uh, society will provide you a different meter, but they have a special system, a special tariff for EVs.

Nikhil Kamath 13:35 Mm.

Speaker 13:36 So if you install-

Nikhil Kamath 13:37 Is that true for me? If I have a electric car, and I charge it here, I have to take a green meter and-

Speaker 13:42 You can. I don't know about the Karnataka...

Tarun Mehta 13:44 You-

Speaker 13:44 Obviously-

Tarun Mehta 13:44 Actually, I haven't heard of green meters in Karnataka.

Speaker 13:47 In Karnataka?

Tarun Mehta 13:48 Yeah.

Speaker 13:48 You, you can, uh-

Nikhil Kamath 13:49 But you don't have to.

Speaker 13:50 But you cannot have-

Nikhil Kamath 13:51 The rate is cheaper, right?

Speaker 13:52 The rate is cheaper.

Tarun Mehta 13:52 So the rate for electric mobility may be five bucks.

Speaker 13:56 Yeah.

Tarun Mehta 13:56 And the rate for regular energy could be anywhere from-

Speaker 13:59 Seven

Tarun Mehta 13:59 ... seven, eight bucks, depending how much energy you're using.

Speaker 14:01 Doesn't, but for most, most individual owners, users, it probably will not justify the effort, because it will-

Nikhil Kamath 14:08 But two rupees a kilometer is a lot, no?

Speaker 14:10 No, no, no.

Tarun Mehta 14:11 No, it depends on the kilowatt hour.

Speaker 14:12 Two rupees a kilowatt-

Tarun Mehta 14:13 Kilowatt, yeah. Sorry, kilowatt hours, yeah.

Nikhil Kamath 14:14 And how much does that translate into per kilometer? How many kilometers do you get in a kilowatt hour of energy?

Tarun Mehta 14:20 If you drive a thousand kilometers in a month-

Speaker 14:22 Mm

Tarun Mehta 14:22 ... you will spend fifteen hundred rupees using a regular meter.

Speaker 14:26 Mm.

Tarun Mehta 14:27 With a green meter, maybe you'll spend six, seven hundred rupees, I'm guessing.

Speaker 14:31 Well, he talking, he's talking of a scooter. What's-

Tarun Mehta 14:33 No, I'm talking about, uh...

Suruchi Rao 14:35 Just kilowatt hour.

Nikhil Kamath 14:36 Car, electric car.

Tarun Mehta 14:37 Car will give you around-

Nikhil Kamath 14:38 Electric car costs you one rupee per kilometer.

Tarun Mehta 14:39 You could probably six kilometers-

Speaker 14:41 Mm

Tarun Mehta 14:42 ... per kilowatt hour, probably-

Speaker 14:43 Yeah

Tarun Mehta 14:43 ... would be a good number.

Speaker 14:44 The range could be around-

Nikhil Kamath 14:45 Which one rupee per kilometer

Speaker 14:46 ... fifty paise per, per kilometer-

Tarun Mehta 14:47 That's right

Speaker 14:47 ... basically, in short.

Nikhil Kamath 14:49 So how much is it in ICE versus EV today?

Speaker 14:51 I, I mean, today-

Nikhil Kamath 14:53 On EV-

Speaker 14:53 Today is about four rupees, four and a half rupees. The cost of CNG went up. It was only two rupees seventy-five paise. Now, cost of CNG went up. Petrol, diesel today costs you about eight rupees.

Nikhil Kamath 15:03 And ICE costs you two rupees?

Speaker 15:05 No, EV costs you.

Suruchi Rao 15:06 EV costs you.

Speaker 15:06 EVs, depending on what your energy mix is, what your capacity is... I mean, for BluSmart, it's a different scale, right? So our cost is very low. Our scale is much larger.

Nikhil Kamath 15:15 How much would it be for Ola, if there a comparison, because they have a fleet which is-

Speaker 15:18 I mean, that depends again on the fuel. If they're using CNG, the driver, I mean, Ola is a, is an app. They're an app, but the driver, if he's using petrol or diesel, and then depends on the car, say, Innova car

Speaker 15:30 or a small car.

Nikhil Kamath 15:30 Wait, do you own your cars?

Speaker 15:32 I- in a way, yeah. So, so we lease all these cars, but we have an obligation to pay for the lease. So-

Nikhil Kamath 15:36 Lease from?

Speaker 15:38 Leasing, lease from DFIs. So we have secured-

Nikhil Kamath 15:40 What are DFIs?

Speaker 15:41 Development financial institutions who fund these cars.

Nikhil Kamath 15:43 Give me an example.

Speaker 15:44 So IRIDA, Indian Renewable Energy Development Agency, Power Finance Corporation.

Nikhil Kamath 15:47 So they buy it, and you lease it from them?

Speaker 15:49 Yeah, so, so we have an SPV. They, they buy these cars-- I mean, they fund these cars. That SPV takes the loan from these large DFIs.

Nikhil Kamath 15:58 And what is their contribution in the SPV, and what is yours?

Speaker 16:01 So they give the loan to that SPV.

Nikhil Kamath 16:03 Mm.

Speaker 16:03 And that SPV, that entity, will lease cars to BluSmart. We give the deposit, say, the margin money for procuring that loan, for example-

Nikhil Kamath 16:11 Can you, can you break it down for me? How much does this Tata car, car cost?

Speaker 16:14 Say, the car cost, say, for example, say, will be thirteen lakhs. That's an average.

Nikhil Kamath 16:18 Okay.

Speaker 16:18 I mean, it could be lower for, for us at this scale.

Nikhil Kamath 16:20 Only for that car in particular?

Speaker 16:22 Say, say, say for example, twelve and a half, thirteen lakhs. So we have to give certain margin. So, say, two lakh rupees per car is a margin that BluSmart will provide.

Nikhil Kamath 16:29 Okay.

Speaker 16:30 And then the loan is given.

Nikhil Kamath 16:31 Okay.

Speaker 16:31 And, uh, the money is paid to Tata Motors for the cost of the car.

Nikhil Kamath 16:35 Right, and they charge you a rate of interest on that?

Speaker 16:37 Yes. So there's a... Yeah, so the DFI will charge the rate of interest-

Nikhil Kamath 16:41 About?

Speaker 16:41 ... for the loan, it's up ten percent. It's about nine, nine percent.

Nikhil Kamath 16:44 And if anybody who-- any young entrepreneur who wants to start a EV car fleet can create this, an entire model on their own?

Speaker 16:52 Yeah, well, it is tough to do it also. Securing financing for, uh, at large scale is tough. I mean, that was the whole idea, uh-

Nikhil Kamath 16:59 But these people who are lending you, the DFI, which you said, wouldn't they give them as well?

Speaker 17:03 Of course, they will give.

Nikhil Kamath 17:05 They want to encourage this, right?

Speaker 17:06 Yeah, they want to absolutely encourage this, yeah.

Nikhil Kamath 17:07 What happens with the depreciation on the asset? If I'm a DFI and I'm lending you at ten percent-

Speaker 17:12 Yeah

Nikhil Kamath 17:12 ... in five years, the car is-

Speaker 17:13 So that is where the SPV comes in, that is where the entity comes in. So this could be exciting with depreciation.

Nikhil Kamath 17:18 Mm.

Speaker 17:18 So if the entity involved could be a renewable energy company-

Nikhil Kamath 17:21 Mm

Speaker 17:22 ... or in both businesses-

Nikhil Kamath 17:23 Mm

Speaker 17:23 ... with also profits, you can also enjoy depreciation benefits, forty percent depreciation benefits of owning and leasing that asset.

Nikhil Kamath 17:29 Right.

Speaker 17:29 So debt bene- be- benefits come in with the asset owner, who is the owner of the asset.

Nikhil Kamath 17:33 At the end of the cycle, these cars are valueless in a manner, right?

Speaker 17:38 Mm. Valueless? I wouldn't say they're valueless. I mean, uh, in fact, the best part about EVs is that it has life one and life two. So there's life one, where you-

Nikhil Kamath 17:46 But the cost of the battery, let's assume, is sixty percent of the cost of the vehicle.

Speaker 17:49 Not really. I mean, I wouldn't say sixty percent.

Tarun Mehta 17:52 It's rarely more than thirty-five.

Speaker 17:53 Yeah.

Nikhil Kamath 17:53 Yeah.

Speaker 17:53 It's, it's not sixty. Uh, I mean, could be, say, between, for a car, thirty-five, forty percent. And, and, and when you exhaust life one, you can obviously replace and, and infuse, buy a battery-

Nikhil Kamath 18:07 Mm

Speaker 18:07 ... work with the OEM or another startup-

Nikhil Kamath 18:09 Mm

Speaker 18:10 ... to, say, install new battery. That's when the beauty of EV is coming, life two, because then you've already paid for the car.

Nikhil Kamath 18:16 Yeah, the point of-

Speaker 18:17 The body, the body is built to last for eight to ten years. The body-... uh, is, is built to last for eight to ten years. The battery needs to be changed after four years. After-

Nikhil Kamath 18:25 So wait, if the body is built for ten years-

Speaker 18:27 Yeah

Nikhil Kamath 18:27 ... even if you change, how long is the battery built for?

Speaker 18:30 It depends on utilization. So for an individual-

Nikhil Kamath 18:32 On average.

Speaker 18:33 Whose utilization is only sixty-

Nikhil Kamath 18:34 On average for-

Speaker 18:34 ... two hundred kilometers -

Nikhil Kamath 18:35 For BluSmart.

Speaker 18:36 For BluSmart. Now, for BluSmart-

Nikhil Kamath 18:37 I'm focusing on somebody who can start, somebody young, an entrepreneur, who can start a business such as yours. So he can go to a DFI, borrow money, lease a vehicle, run it at scale at two rupees a kilometer, but maybe when he begins at a higher value. Now, what is the battery life beyond which he has to change the vehicle? And what happens to the vehicle at the end of five years or ten years?

Speaker 19:02 Yeah. Good, so now for BluSmart, our utilization is about nearly two hundred kilometers a day. Uh, uh, so which means in layman language, about six thousand kilometers a month, seventy thousand plus kilometers a year. Uh, you know, depends what kind of warranties or guarantees you have negotiated with the leasing in- institution or with the manufacturer. Some will give you, say, hundred and sixty thousand kilometers, some will two hundred, some maybe two hundred and fifty thousand kilometers. So your... It depends how much can you exhaust. We can utilize between, between two hundred to two hundred and fifty thousand kilometers in four years, right? So, which means the battery is done.

Nikhil Kamath 19:37 So you do two cycles, four years each. Eight years, the body of the car is gone, then you have to ditch the car.

Speaker 19:41 That again, depends how you use your car. Mm.

Nikhil Kamath 19:43 I am young. I want to start a business like BluSmart. I'm trying to figure out which DFI do I go to, how to borrow money, how to create a SPV, how to lease cars. What efficiencies do I build in to run a business of aggregating electric cars like a Uber or, or a Ola would do?

Speaker 20:03 Yeah, I mean, you could start small. So you, you may not need to go to DFIs. You can go to probably smaller institutions who are funding cars. They are, you know, probably platforms which are also leasing hundred, two hundred electric cars.

Nikhil Kamath 20:13 Is there a cap, like a DFI will only do above a certain number?

Speaker 20:16 I mean, they, uh... It's easier for them because the fact that they are a DFI-

Nikhil Kamath 20:20 Mm

Speaker 20:20 ... uh, they want to give a, they want to give larger loans-

Nikhil Kamath 20:23 Mm

Speaker 20:23 ... uh, or larger amounts. It's easier for them to process. But there are small institutions also who are funding hundred, two hundred, three hundred, four hundred cars. And I know a few fleet aggregators who are also now buying EVs and deploying on the platform of Uber or trying to start micro, mini fleets for B2B purposes, uh, in cities. Maybe one in Bangalore, could be in West Bengal, somewhere, some in Bombay also. Um, so we have a very different mindset, uh, Nikhil. So we, uh, we believe that asset financing is key for us. I mean, both Anmol and myself, we have raised tons of, uh, financing for renewable energy projects. So we went back to the same institutions who funded us in the past, and, uh, we said that you've been supporting our renewable energy story, and now it's time for your, you to support our EV, uh, story. So-

Nikhil Kamath 21:10 Is that an opportunity, too,

Nikhil Kamath 21:12 uh, setting up solar power plants today?

Speaker 21:14 Yeah, of course. I mean, Anmol continues to, uh, also run and operate Gensol-

Nikhil Kamath 21:20 Mm

Speaker 21:20 ... which has today actually grown to a massive, uh, company. It builds gigawatts of solar projects, uh, today, uh, and the solar story has just begun. Um, massive, massive opportunity for-

Nikhil Kamath 21:32 What is the yield on investment, if somebody were to ask? Because I'm thinking, running a solar power plant is largely commoditized by area and the amount of power you can generate. If somebody were to set up a one megawatt plant, how much will it cost and what kind of return would you make?

Speaker 21:47 Depends on your offtake. I mean, a megawatt plant investment could be in the range of three to three point two five crores. Um-

Nikhil Kamath 21:53 And that number has come down from ten, twelve, whatever.

Speaker 21:55 It used to be f- eighteen crores a megawatt, uh, back in 2012.

Nikhil Kamath 21:59 Mm.

Speaker 21:59 And came down, uh, when I was setting up my project in Gujarat, was fifteen, sixteen crores a megawatt, fifteen point five. Came down further to about twelve crores to a million dollars a megawatt back in 2000, uh, '17 time, '16 time. Further has come down half, and the best-

Nikhil Kamath 22:17 And how much do you yield on that?

Speaker 22:19 I mean, it depends what your offtake was. So that doesn't change.

Nikhil Kamath 22:21 Explain offtake, please.

Speaker 22:23 At the price at which you're selling the power.

Nikhil Kamath 22:25 Mm.

Speaker 22:25 So today you need to also figure out, because you have invested a certain amount, uh, you have to work out the cost at which it'll become profitable for you. So you need to work out at the cost that you want to sell.

Nikhil Kamath 22:34 Who determines what rate you sell power at?

Speaker 22:37 Discom does, the offtaking entity does, the, the-

Nikhil Kamath 22:39 What is the offtaking entity?

Speaker 22:40 ... regulator does. So there are, so, so there are two ways, right? So you can sell power to state.

Nikhil Kamath 22:46 Mm.

Speaker 22:46 Like, for example, in my case-

Nikhil Kamath 22:47 Mm

Speaker 22:47 ... I sold power to Gujarat Ujva Vikas Nikam Limited. We entered into a fixed price contract for twenty-five years. For the first twelve years, the price was X, which is fifteen rupees per unit kilowatt-hour, and then for the balance thirteen years, it was five rupees per unit kilowatt-hour, right? So it was a fixed price contract. You could also probably do open-ended today if you negotiate with a, you know, industrial house who needs power and for power savings.

Nikhil Kamath 23:09 Can you do that? Can you sell not to a Discom or the government, but sell individually?

Speaker 23:13 You can also do individual, yeah, yeah, for individual complexes-

Nikhil Kamath 23:14 But do you have to be near the company that you're selling to? Otherwise, how do you transport it?

Speaker 23:18 No, no. I mean, I mean, it could be near if you have empty land.

Nikhil Kamath 23:21 Let's say I buy... How much land do you need for one megawatt?

Speaker 23:24 Four acres of megawatt.

Nikhil Kamath 23:25 So how much can I sell that power for?

Speaker 23:27 In India, the lowest, uh, bidding that happened at gigawatt level-

Nikhil Kamath 23:30 Uh-huh

Speaker 23:30 ... when, uh, Solar Energy Corporation of India, SECI or NTPC, do large bids for calling for a five hundred megawatt solar investment or a gigawatt investment, those bids have been hovering around two rupee, seventy-five pesos.

Nikhil Kamath 23:41 Okay, so typically on average, what is the yield of that four-acre land and three ac- three crores invested?

Speaker 23:47 I mean, what is the money that you're going to make on the investment?

Nikhil Kamath 23:49 Yeah.

Speaker 23:49 Um, I think about, uh, post-tax, anywhere between eighteen to nineteen percent, um-

Nikhil Kamath 23:55 Even today?

Speaker 23:56 Even today, yeah.

Nikhil Kamath 23:57 Right. And how big has BluSmart gotten

Nikhil Kamath 24:00 to today? On the five thousand fleet, what is the top line, bottom line?

Speaker 24:05 [chuckles] So we are, uh, nearly four hundred and, uh, forty crores, uh, around ARR.

Nikhil Kamath 24:12 Mm-hmm.

Speaker 24:12 Uh, we're doing a revenue of close to one point three to one point four crores per day revenue.

Nikhil Kamath 24:18 Mm-hmm. Mm-hmm.

Speaker 24:18 Uh, good days, it's a little higher.

Nikhil Kamath 24:20 Charging-... and the car put together?

Speaker 24:23 The ride-hailing revenue is about nearly four hundred and forty, four fifty crores per ARR. The charging revenue is about hundred crores ARR today, but that's in-house. So we have BluSmart Mobility, which is a hold co, and then we have BluSmart Charge-

Nikhil Kamath 24:35 Mm-hmm.

Speaker 24:35 -BluSmart Fleet, and BluSmart Tech.

Nikhil Kamath 24:37 Mm.

Speaker 24:37 Which are three independent subsidiaries, but all reporting to the hold co. BluSmart Charge-

Nikhil Kamath 24:42 Mm-hmm

Speaker 24:43 ... invests in the real estate, uh, and probably leases the land-

Nikhil Kamath 24:46 Mm-hmm

Speaker 24:46 ... builds all the charging infra, operates all the charging infra. The BluSmart Fleet, uh, SPV leases electric cars-

Nikhil Kamath 24:54 Mm

Speaker 24:54 ... pays for the drivers, and runs all the paraphernalia on the ride-hailing business. BluSmart Tech, which owns the IP, the, the BluSmart app-

Nikhil Kamath 25:01 Right

Speaker 25:01 ... for consumers. And they all work together in tandem, where the charging company charges for the charging services-

Nikhil Kamath 25:09 Mm-hmm

Speaker 25:09 ... which have, uh, which are used by the ride-hailing fleet. The fleet company's job is to bring in fleet, amounts of fleet, so we have secured financing for twenty thousand cars as of now, right? Trying to secure financing for forty thousand cars. So-

Nikhil Kamath 25:20 And are you able to, at this scale, do it profitably?

Speaker 25:23 Yeah. So the charging infra is today profitable.

Nikhil Kamath 25:25 Mm-hmm.

Speaker 25:25 Uh, because we had the in-house anchor tenant-

Nikhil Kamath 25:27 Mm-hmm

Speaker 25:27 ... so that was profitable. Ride-hailing is a, you know, network effect game-

Nikhil Kamath 25:32 Mm

Speaker 25:32 ... so we have to really go deep and wide. Um-

Nikhil Kamath 25:34 You really have to scale before-

Speaker 25:35 Yeah

Nikhil Kamath 25:35 ... you break even. What is the rate of growth right now?

Speaker 25:38 I mean, uh, it's not massive, uh, because it takes a lot of time to build up charging infra.

Nikhil Kamath 25:42 What is it?

Speaker 25:43 So, so, so we can probably add thousand, two thousand cars a month.

Nikhil Kamath 25:47 Right.

Speaker 25:47 But we are not able to do that. We are only able to add four hundred cars to five hundred cars a month. So car financing is secured, and adding cars is easy-peasy, right? So you write a cheque, you get a car, the cars are ready, the manufacturer, OEMs in India can supply you cars. But again, I go back to my initial opening statement and say that this is not easy for somebody to do, because adding cars is not what we want to do-

Nikhil Kamath 26:09 Mm-hmm

Speaker 26:09 ... without availability of charging infra.

Nikhil Kamath 26:12 The point of this entire thing is we want more young people to start working in the EV industry in one place or another. So we want to throw all the information they might require to make up their mind on whether to start a business here or get a job here. Yeah?

Nikhil Kamath 26:30 Uh, who'd like to go next? So Ruchi, would you?

Suruchi Rao 26:35 Really?

Nikhil Kamath 26:35 Yeah.

Suruchi Rao 26:36 Okay. So this is how I thought I'd describe myself. So, um, I am a glorified brewer of green hydrogen, and let's not even give a color to it. I, I'd say I'm a brewer of hydrogen. So why I say brewer is that, you know, when you're trying to break down technology so that you can pitch it to people for funding, or you're talking to people to sort of introduce them to a new molecule, um, you try to dumb the science down, but that's not what I want to do. Uh, my skills that I've developed over the last sort of twenty years of, you know, engineering and PhD, is to be able to, um, manipulate microorganisms, not at the genetic level, but to come together as a group and do what I ask them to do. And I'm really grateful to them for what they do for me. Typically, when we talk about microorganisms, we talk about things like brewing and idli dosa and food. That's, that's something that's, that's tangible, we touch that. But my microorganisms produce electricity. So anytime we have the conversation about solar or wind, uh, I always tell myself: "We should have a conversation about microorganisms that generate electricity as well." Um, so that's, that's the sort of play.

Nikhil Kamath 27:56 Yeah.

Suruchi Rao 27:56 Still talks about what I do-

Nikhil Kamath 27:58 Yeah

Suruchi Rao 27:58 ... but, uh-

Nikhil Kamath 27:58 But give us more.

Suruchi Rao 28:00 Right, um-

Nikhil Kamath 28:00 Start from the beginning.

Suruchi Rao 28:02 I'm a child of energy. My dad is a geologist. Uh, he started as a graduate trainee in ONGC, and he was with them for forty years. And so all I've known all my life is, what is Brent price for the day? Uh, did we strike oil at a particular site? And the fact that my dad is, um, really sorry, Dad, very active climate denier.

Nikhil Kamath 28:24 Mm.

Suruchi Rao 28:24 To him, everything is in cycles of centuries.

Nikhil Kamath 28:27 Mm-hmm.

Suruchi Rao 28:27 Not a single century, but multiple centuries. So he says, "We weren't alive, and it must have been so hot so many centuries ago. Uh, we don't really know what happens, and geology only gives us a clue." The way he puts it is, puts it, is that geology is nothing but alcohol and good guesswork. So to him, um, us guzzling petrol and his very big contribution in getting all of this oil out, um, was, was not the reason why we were in this situation.

Nikhil Kamath 28:54 Mm-hmm.

Suruchi Rao 28:55 But I've sort of had a contrarian opinion for exactly that reason, so I've done nothing but energy.

Nikhil Kamath 28:59 Would you like to, just for context-

Suruchi Rao 29:01 Yeah

Nikhil Kamath 29:01 ... like, uh, would you like to explain-

Suruchi Rao 29:04 Mm

Nikhil Kamath 29:04 ... climate change in a brief

Nikhil Kamath 29:06 minute?

Suruchi Rao 29:06 Absolutely.

Nikhil Kamath 29:07 Because everybody has a different opinion. Like, for a long time, I assumed every surface has a albedo effect. Sun's rays hit Earth, different surfaces reflect different kind of heat back. The atmosphere blocks different kind of rays differently by virtue of what gases are present there. But the more people I talk to, sometimes somebody is telling me carbon is no longer a problem, methane is a problem, water vapor is a problem. So I want to learn what exactly is climate change today?

Suruchi Rao 29:42 So what does greenhouse-

Nikhil Kamath 29:44 Yeah.

Suruchi Rao 29:44 What's a greenhouse, right? You're trying to create an environment for plants, where there's a constant recirculation of CO2, because that's what plants need. Which means you're creating a dome, where everything is more humid, everything is more moist and more wet. We aren't meant to live in an environment which is supposed to be so highly heated. I'll give you a great example, and this is something that I find very troubling now. Has anybody noticed that turbulence has gotten far worse now than, say, a decade back? Did you know that's an effect of climate change? Air is thinner up there than it used to be, so aircraft would hit a particular height, above which there was no turbulence. And now, as the air literally heats up, even at higher sort of altitudes, you feel, uh, the effect of turbulence. So-

Chetan Maini 30:29 I mean, a simpler way to look at it is if you're thinking of... You think of Mercury and Venus, what do you think is hotter?

Suruchi Rao 30:35 Mm.

Nikhil Kamath 30:36 Mercury?

Chetan Maini 30:37 Hmm? No, Venus.... right? And, uh, it's because of the atmosphere.

Nikhil Kamath 30:43 Mm-hmm.

Chetan Maini 30:43 Right? So just because you're closer to a heat source doesn't mean it's hotter. The atmosphere plays a much larger role on that front.

Nikhil Kamath 30:51 So, so climate change is the wrong kind of gases in our atmosphere-

Chetan Maini 30:54 That's correct. And so-

Nikhil Kamath 30:55 -make it harder for heat to escape.

Chetan Maini 30:57 So, so what's happening is by the temperature going up, right, you're now melting the polar ice caps. You're therefore, at the result of that, getting, um, changing how currents would go. So an El Niño may come in here, your monsoons may shift as a result of it because you're putting a lot more, um, you know, changes in ocean currents, which then change, affect temperature patterns, right? Um, a rise in that would means Mauritius may be under, Maldives may be under water as a result of that. So it's all starting from the fact that it's, it's, uh, methane, it's carbon dioxide, is the main ingredients. There are others, too.

Nikhil Kamath 31:37 All of what we are talking about is in a way to curtail climate change. Can each of you define climate change in one minute, in your own way?

Speaker 31:47 Yeah, I mean, like, I don't know. What I understand of climate change is obviously, to even Chetan's point, is, um, you know, heating is obviously causing a lot of challenges. If you see the, uh, the temperature which has im- you know, gone up in the last ten years, it's really bad for us. I was reading somewhere, uh, in-

Nikhil Kamath 32:03 I, I think the question is, why is the heating happening?

Speaker 32:05 Yeah, it's happening because of emissions, right? So every year, world produces fifty-two billion tons of, you know, CO2 emissions. Industries, more industrialization, more cars on the road, more manufacturing, uh, more power plants.

Nikhil Kamath 32:20 And because of that emission, what is happening?

Speaker 32:22 Two, two, two important contributors are, I could say, even, and BluSmart plays a role there to probably curb, uh, pollution. Uh, transportation and electricity generation. These two sectors, electricity accounts for twenty-five percent to twenty-six percent of the world's, uh, CO2 emissions, and, and logistics, delivery, you know, mobility, all put together, uh, transportation as a whole, uh, not just cars, uh, contribute, uh, and you can say airlines also are part of it, because airlines also contribute, again, another twenty-seven percent. So fifty-two percent, this is Bill Gates' book, which he wrote-

Nikhil Kamath 32:58 Mm.

Speaker 32:59 Uh, that fifty percent of the global CO2 emission that happened is because of transportation on ground.

Chetan Maini 33:05 So if you look at the correlation between the temperature, and look at the correlation between, between the concentration of CO2, they have a, a direct correlation, right? So that's very critical, because the curve is like that right now.

Nikhil Kamath 33:15 Mm-hmm.

Chetan Maini 33:15 Right? And all we can do today is, it's going to continue. What do we do to reduce that kind of, you know, the slope of that?

Nikhil Kamath 33:23 Mm-hmm.

Chetan Maini 33:24 So if you reduce the slope, we may hit this point hundred years later.

Nikhil Kamath 33:27 Mm-hmm.

Chetan Maini 33:27 If we don't, we may be twenty years from today.

Nikhil Kamath 33:29 Mm-hmm.

Chetan Maini 33:29 So all we can do is probably reduce that slope. If we do it today, the impact is much bigger.

Nikhil Kamath 33:34 Mm.

Chetan Maini 33:34 We start to do it ten years from today, then that im- you know, you need to have a much more drastic change-

Nikhil Kamath 33:40 Fair

Chetan Maini 33:40 -as we think of it.

Nikhil Kamath 33:40 Fair. Tarun, climate change?

Tarun Mehta 33:43 Chetan's almost a professor. He's pretty much finished between him and Punit, Punit. Um, and I'm probably not the right guy to describe anything more, because, uh, we didn't actually start Ather because of climate, and we're not selling you electric vehicles primarily because it'll save the climate. So our view is more energy than climate.

Nikhil Kamath 34:04 Explain, why are you selling electric vehicles?

Tarun Mehta 34:07 So what

Tarun Mehta 34:10 we believed always is that, um, a lot of this problem fundamentally boils down to using something that's a finite source.

Nikhil Kamath 34:17 The electricity you're using today-

Tarun Mehta 34:19 Yeah

Nikhil Kamath 34:19 ... to run Ather is generated from finite sources.

Tarun Mehta 34:21 Seventy-five percent is finite, but twenty-five percent is not, right? Uh-

Nikhil Kamath 34:24 Has India moved to twenty-five percent renewable?

Tarun Mehta 34:27 Actually, capacity, so I think, is almost thirty.

Nikhil Kamath 34:28 No, much lower.

Tarun Mehta 34:29 No, no, no.

Suruchi Rao 34:30 No, no.

Tarun Mehta 34:30 Five percent.

Suruchi Rao 34:31 Less than that now.

Tarun Mehta 34:31 I think either twenty-five or twenty-seven, something.

Speaker 34:33 No, no, so, so, so, so earlier, uh, that number was-

Tarun Mehta 34:35 Mm.

Speaker 34:35 Uh, so today, renew-- non-coal, I would say, so thermal.

Tarun Mehta 34:38 Non-thermal, actually.

Speaker 34:39 Yeah, non-thermal. So earlier, that number was ninety-five percent.

Suruchi Rao 34:42 Yeah.

Speaker 34:42 So renewable percent was less than one percent. Today, total installed capacity is about one seventy-five gigawatts in India.

Nikhil Kamath 34:47 How much is the percentage?

Speaker 34:48 One seventy. Uh, I would say-

Tarun Mehta 34:50 Total is four hundred

Speaker 34:50 ... about twenty-six, twenty-seven percent-

Tarun Mehta 34:52 Yes

Speaker 34:52 ... is renewable capacity, because the capacity utilization factor. Installed capacity of thermal is two sixty gigawatts, but the CUF, the capacity utilization, or PLF, plant load factor, is about seventy percent. In solar or wind, now, again, wind is slightly higher on the PLF side, but the installed capacity is one seventy-five, but the capacity utilization factor, the plant load factor, hovers between twenty to twenty-five percent in solar. Now, depending on new solar power plants could have higher PLF. Wind is above forty. Actual utilization of that one seventy-five gigawatt could be in the range of about fifty gigawatt north, which is the power actually coming out, or sixty gigawatt actually coming out of the installed capacity, depending.

Suruchi Rao 35:28 About four to five percent is the numbers are.

Speaker 35:29 So then you would say, in layman language, that it could be one-fourth of the capacity of today.

Nikhil Kamath 35:35 So in summary, that would mean right now, electricity generation, five percent renewable, ninety-five percent-

Tarun Mehta 35:40 No, no, no, no.

Speaker 35:41 No, no, I didn't say-

Tarun Mehta 35:41 More like twenty-five percent.

Speaker 35:43 Twenty-five percent. So layman language, one fourth, right?

Suruchi Rao 35:44 Installed capacity basis, it's twenty-five percent.

Speaker 35:47 Of the extraction. No, no, of the extraction also. So I s- I said one seventy-five gigawatt is installed.

Suruchi Rao 35:50 Okay.

Speaker 35:50 You are getting, in terms of plant load factor, capacity utilization factor, you are getting fifty g- gigawatt. There, with two sixty odd gigawatts, as a ministry of MNRE, I keep checking data, is two seventy odd gigawatts, but your PLF is about seventy percent.

Nikhil Kamath 36:04 What is PLF?

Speaker 36:05 Plant load factor, capacity load.

Nikhil Kamath 36:06 So for the-

Speaker 36:07 Installed plant, your utilization-

Nikhil Kamath 36:07 Just because we are speaking to, like, all, like, you know, stupid people like me who don't know much about this industry, no abbreviations, like, no, like...

Speaker 36:17 Yeah.

Nikhil Kamath 36:17 Simple, simple words.

Speaker 36:18 Correct. So-

Suruchi Rao 36:18 So fifty gigawatt is how much? So sorry to interrupt. Fifty gigawatt is how much of this country's, uh-

Tarun Mehta 36:24 Twenty-five percent, twenty-five percent.

Suruchi Rao 36:25 It's twenty-five percent.

Tarun Mehta 36:26 That's what he's saying.

Suruchi Rao 36:27 Twenty-five percent, is it?

Tarun Mehta 36:27 Renewable is about one-fourth of current-

Nikhil Kamath 36:29 Today, today

Tarun Mehta 36:29 ... current requirement.

Nikhil Kamath 36:29 Which is an amazing feat, uh, in the last, uh, twenty years.

Tarun Mehta 36:33 I, I think it's, uh, renewable is growing about five times.

Nikhil Kamath 36:34 In the research that I did, there are variable numbers. Five percent seems to be a number from some places.

Tarun Mehta 36:41 No, no.

Nikhil Kamath 36:41 Twenty-five or not?

Speaker 36:42 It's twenty-five percent.

Tarun Mehta 36:43 Yeah, it's-

Speaker 36:43 Five percent we've lost a long time ago.

Nikhil Kamath 36:44 Yeah. Chetan?

Chetan Maini 36:45 I think we're using around fifteen percent, ten to fifteen percent, not more.... That's my, that's what I, you know, and again, the numbers vary. Karnataka is pretty high. We're probably close to 45 to 45% in Karnataka, 'cause we have a lot of hydro and stuff, but that's not true for every state.

Speaker 37:01 India's energy mix today, uh, uh, is about 25% is renewables.

Chetan Maini 37:05 Yeah.

Speaker 37:05 That's the published data, and-

Chetan Maini 37:07 Me too.

Speaker 37:08 And, um-

Nikhil Kamath 37:09 It's okay, we're all different places.

Speaker 37:10 I'm just trying to tell you-

Nikhil Kamath 37:11 5%, 10 to 15%, 25%. What is the loss of power in transmission in India?

Speaker 37:16 10%.

Nikhil Kamath 37:17 Is that all?

Speaker 37:17 10 to 20%. The rest is theft.

Nikhil Kamath 37:19 Yeah.

Speaker 37:20 The 25% number that you hear-

Nikhil Kamath 37:21 Uh

Speaker 37:21 ... is theft.

Nikhil Kamath 37:22 Mm.

Speaker 37:22 Only half of that is actually transmission losses.

Tarun Mehta 37:25 That also comes from the states, from the states.

Speaker 37:25 From the, uh, yeah.

Nikhil Kamath 37:26 So what we're talking about is power is generated in point X, utilized in point Y. Who does this generally? Like, is it, uh, power grid? How many companies are there which are doing transmission? Is there a different number where different kind of losses are happening at different transmission people?

Speaker 37:43 The north, south, east, west, India now has a one grid, one nation policy.

Nikhil Kamath 37:46 Mm-hmm.

Speaker 37:46 That came into effect in, uh, the Ministry of Power in 2003 came with the Electricity Act, where they said that all these different transmission distribution companies which are now there, there should be one grid, one nation policy. Power grid came in and said that somebody's producing power in north, east, west, south, there's one central grid of India. Everybody reports. You can go on this website called vidyutprwah.in, where you can see on real-time basis where the power is being generated, what is the source of that energy.

Nikhil Kamath 38:11 Mm-hmm.

Speaker 38:11 So in fact, that's the right website to go and check out what's India's energy mix.

Nikhil Kamath 38:15 Mm.

Speaker 38:15 It's called vidyutprwah.in by Ministry of Power.

Nikhil Kamath 38:17 On average in the country, would you say 10 to 25%?

Speaker 38:20 Yes, 10 to 12%.

Nikhil Kamath 38:21 Okay.

Speaker 38:22 And, and that's come down post this one grid, one nation policy.

Nikhil Kamath 38:24 Right.

Speaker 38:25 Because earlier, nobody was answerable to anyone.

Nikhil Kamath 38:26 Okay, then, then the question to Tarun: if, let's assume midway between all of you guys, let's say 15 to 20% of power is renewable. If you're gonna lose 10 to 20% of that in emission, let's say we are left with 15, 16% in India is renewable, 85% is fossil-based. Does it still make sense to pay the premium to buy an electric vehicle because your net, net, in today's state, putting the same amount of emissions out there?

Tarun Mehta 39:01 Even if it was 100% coal-based, it will still make sense.

Nikhil Kamath 39:05 Because? So the thing is, uh-

Chetan Maini 39:06 Yeah, you'll be around 30% better. In India's current grid, 30 to 35% from-

Nikhil Kamath 39:12 Because?

Chetan Maini 39:12 ... an ICE engine vehicle. Huh? So an internal combustion engine vehicle is an efficiency of around 25%.

Nikhil Kamath 39:18 Mm-hmm.

Chetan Maini 39:19 An electric machine is around 90%, probably in drive cycles around 85. So you're talking of around three times efficient-

Nikhil Kamath 39:26 Per unit of energy.

Chetan Maini 39:27 Per unit of energy. So now if I take the fuel and burn it, then I'm using three times more energy a unit.

Tarun Mehta 39:32 No, Chetan, the comparison of this is with the power, power plant, right?

Chetan Maini 39:36 Yeah, so-

Tarun Mehta 39:36 So the gap there is the power plant is far more efficient.

Chetan Maini 39:38 The power plants are far more efficient than-

Tarun Mehta 39:40 Yes

Chetan Maini 39:40 ... an ICE, an ICE engine vehicle.

Tarun Mehta 39:41 Scooter and cars' engines, they would be actually lucky to hit 25%. That's at the good efficiency factor.

Chetan Maini 39:47 Mm-hmm.

Tarun Mehta 39:47 They are usually hovering in the 20 wala number, but the power plants operate at, like, 35%, like pretty good efficiency factors.

Chetan Maini 39:54 Mm-hmm.

Tarun Mehta 39:54 So waha pe aapka saara maths work out ho jata hai.

Chetan Maini 39:57 Mm-hmm.

Tarun Mehta 39:57 Uske and you can... Sure, the 35, 10% efficiency will become 32, but still way better.

Nikhil Kamath 40:01 So you're saying even if the power is generated in, in one way or another-

Tarun Mehta 40:05 You're still better off running electric

Nikhil Kamath 40:06 ... at the end point-

Tarun Mehta 40:07 As emissions go

Nikhil Kamath 40:08 ... electric vehicles are a lot more efficient-

Tarun Mehta 40:10 Yeah

Nikhil Kamath 40:10 ... at using that energy?

Chetan Maini 40:11 Well, yeah, and there's also multiple things, right? I think there is an issue around climate change.

Nikhil Kamath 40:15 Mm-hmm.

Chetan Maini 40:16 But there's also an issue on local emissions-

Nikhil Kamath 40:18 Mm-hmm

Chetan Maini 40:18 ... right? And today in cities, if you think of NOx and what's happening in Delhi-

Nikhil Kamath 40:21 Mm

Chetan Maini 40:21 ... even with CNG and stuff, you know, you, you have zero emissions at the local level.

Nikhil Kamath 40:26 Mm-hmm.

Chetan Maini 40:26 It's also easier to control emissions at single point-

Nikhil Kamath 40:30 Mm-hmm

Chetan Maini 40:30 ... right, at a power plant. It's hard to control that over a million vehicles, right? And that deteriorates. So now let's look at today and 10 years from today, the ICE vehicle that's giving you X today, will probably be emitting 2X 10 years from today.

Nikhil Kamath 40:43 Mm-hmm.

Chetan Maini 40:43 Right? The electric vehicle today, which is 30% less, right, but probably 70% less in the future, because in the next 10 years, the grid will become cleaner. So in a way, then you start to look at the differential-

Nikhil Kamath 40:54 Mm-hmm

Chetan Maini 40:54 ... it becomes far bigger, no?

Nikhil Kamath 40:56 Again.

Chetan Maini 40:56 Right. So that's an important thing, too.

Tarun Mehta 40:58 Zero emissions-

Chetan Maini 40:58 Because you can't-- once you've bought the electric-

Tarun Mehta 40:59 Zero emissions, right?

Nikhil Kamath 41:00 Yeah, so it's only getting better.

Chetan Maini 41:01 It's only getting better.

Speaker 41:01 For me, the only concern is that imagine a scenario, and it's a, it's a best case scenario for the both of you, specifically, maybe specifically

Speaker 41:10 for you. Imagine if all vehicles suddenly, boom, overnight become EVs. Aren't you just taking a problem-

Tarun Mehta 41:17 We have enough electricity, we have enough energy.

Speaker 41:19 No, it's not about how much electricity you have. I'm glad you think we have enough-

Tarun Mehta 41:23 We are not... I just said, like, it is, it is h- uh, in scooters, at least, our math was, it is-

Speaker 41:27 We don't have enough, you're saying

Tarun Mehta 41:29 ... it is 40%, it is 40%, uh, less emission than a petrol scooter.

Speaker 41:33 So what- all that I'm saying is that-

Tarun Mehta 41:34 You're at least reducing emissions by 40%.

Speaker 41:36 Are you saying-

Tarun Mehta 41:36 Even if the grid does not re- uh, become greener at all, like, forget become greener, re- green, green at all, even if the grid becomes worse, 100% coal, uh-

Speaker 41:46 Yeah, so it remains-

Tarun Mehta 41:46 ... even in that case, you'll still be at least, as you said, 30% more efficient- more, less of emissions.

Speaker 41:51 But is it 50% when it comes to-

Tarun Mehta 41:53 No, and that's a super bad scenario. It's like the world is going back. We, we, we start producing solar.

Speaker 41:57 We just crossed 1.5 degrees this year.

Tarun Mehta 41:59 No, no, no, I'm saying it is the world is going back on generation. The world is going forward.

Nikhil Kamath 42:02 I heard, I heard the Senate hearing of Elon Musk in the US-

Tarun Mehta 42:05 Mm

Nikhil Kamath 42:06 ... where the senator who was questioning him said, "If everybody were to buy a Tesla today, you would need 20X the energy- 20X the electricity America is producing today."

Tarun Mehta 42:19 Yes.

Nikhil Kamath 42:19 So are you saying the way to do this is transition slowly?

Tarun Mehta 42:22 The Senate math seems wrong.

Chetan Maini 42:23 No, no.

Tarun Mehta 42:23 Yeah.

Nikhil Kamath 42:24 4X or 20X? I can't remember.

Chetan Maini 42:25 So let's look at India, right? India has around a park size of around 250 million vehicles.

Nikhil Kamath 42:30 Mm-hmm.

Chetan Maini 42:30 Scooters, cars, buses, trucks, everything put together. Let's look at-

Tarun Mehta 42:34 A little bit more, 300.

Chetan Maini 42:35 300, close to 300 now, right? So let's look fast-forward to 2030, say 450 million. Let's say if we have some connected vehicles and more, you know, uh, maybe we have 400 or, you know, 350 to 400. Now, if everything was electric, the park size, right, which is highly unlikely, you'd need around 300 gigawatts of renewable energy.... India is targeting 575 by 2030.

Nikhil Kamath 42:59 Yes.

Suruchi Rao 42:59 Mm.

Chetan Maini 42:59 Right? So now to put that in context, that's 0.5%, less than 0.5% of the land size of, of, uh, Rajasthan-

Nikhil Kamath 43:09 Mm-hmm.

Chetan Maini 43:09 Okay? With solar panels. We're estimating, you know, two-wheelers maybe 50 to 70% by 2030-

Suruchi Rao 43:17 Yeah.

Chetan Maini 43:17 -cars maybe 30%-

Suruchi Rao 43:18 Mm.

Chetan Maini 43:19 -three-wheelers maybe 100% by 2030, buses and stuff, maybe... That's only new vehicles.

Suruchi Rao 43:24 Mm-hmm.

Chetan Maini 43:24 But that new vehicles is, say, you know, 25 million a year.

Suruchi Rao 43:28 Mm.

Chetan Maini 43:28 And then you're saying maybe 50% of that is electric, right?

Suruchi Rao 43:32 Mm.

Chetan Maini 43:32 It's 10 million. But then if the park is already 300, you're adding 10 million more, right?

Suruchi Rao 43:37 Mm.

Chetan Maini 43:37 So in the next five years, you'll be adding 50 million.

Suruchi Rao 43:39 Mm-hmm.

Chetan Maini 43:39 Right? So 50 million of that is still 25%, or less than that, 20% of the park size, right?

Suruchi Rao 43:46 Mm-hmm.

Chetan Maini 43:46 I've given you, I've given you the example of everything going electric.

Suruchi Rao 43:49 Mm.

Chetan Maini 43:49 But if you then just look at that piece of it, you may need significantly less amount of energy, right? Last year, India added probably the amount of energy for air conditioners that we've just added in India could power over 5 million vehicles. So to put that in perspective, we forget that what our LED TVs are doing and what air conditioning is doing, right? And the amount of energy we're using for that, compared to, guys, we put a million vehicles on our roads, but a lot of them was two-wheelers, right? This is with cars and everything.

Suruchi Rao 44:21 But, and all of these are essentially burning coal, if not in your vehicles-

Nikhil Kamath 44:26 No, no, the, the numbers come down from 100 to 70.

Suruchi Rao 44:28 They're burning coal somewhere.

Chetan Maini 44:28 So the, so the thing is, you're talking about once you buy the electric vehicle-

Nikhil Kamath 44:32 Yeah.

Chetan Maini 44:32 Right? Today, it's 30% better. Next year, the energy grid gets better, it's 35. The following year is 40, then it's 50, then it's 60.

Suruchi Rao 44:39 What happens to the increase in temperature, though? So you, you, you're saying the trade-off is still-

Chetan Maini 44:45 No, no, you're saying that-

Suruchi Rao 44:46 In favor, so-

Chetan Maini 44:46 All you're saying is-

Suruchi Rao 44:47 We're trying to still control the 1.5 degrees somewhere here, right? Or we want to do that.

Nikhil Kamath 44:50 No, I think the, I think the point they're trying to make is, if the renewable mix in energy generation is going up at the pace that it is, electric vehicles will make more sense even in the future.

Chetan Maini 45:05 Right? Yes. And also what you have to see is that, that-

Suruchi Rao 45:07 But until then, we burn coal.

Chetan Maini 45:08 Certain policy change... Certain-- Sorry?

Nikhil Kamath 45:10 But that's changing.

Suruchi Rao 45:11 Uh, but until then, we burn coal.

Nikhil Kamath 45:12 I'm saying an- something, and I'm saying-

Chetan Maini 45:13 No, I want to-

Nikhil Kamath 45:14 What are the options?

Chetan Maini 45:14 Let's, let's put it-

Nikhil Kamath 45:15 What are the options?

Chetan Maini 45:15 I mean, let's look at it. Today, policies are changing, right?

Suruchi Rao 45:18 Right.

Chetan Maini 45:18 It was, it was right now at 100 gig- kilowatts, you can now get a connection.

Nikhil Kamath 45:23 Open access.

Chetan Maini 45:24 Open access, which was earlier a megawatt. In some cities, some states, it's 500 kilowatts, right? Um, we're talking to them to cumulate demand, which is not happening.

Suruchi Rao 45:34 Right.

Chetan Maini 45:34 But if the government now talks of cumulating demand on energy infrastructure-

Suruchi Rao 45:37 Mm.

Chetan Maini 45:38 -I could ask Nikhil, "Hey, guys, here's a ten-year purchase agreement."

Suruchi Rao 45:41 Mm.

Chetan Maini 45:42 Right? "Put up a solar plant outside Ba- Bangalore."

Suruchi Rao 45:45 Mm.

Chetan Maini 45:45 "I don't need it here."

Suruchi Rao 45:46 Mm-hmm.

Chetan Maini 45:46 "Right? I'll buy energy for you ten years."

Suruchi Rao 45:48 Mm.

Chetan Maini 45:48 "You can make your 17, 15% return, 17% return on your money-

Suruchi Rao 45:52 Mm.

Chetan Maini 45:52 - and I will get energy 20% cheaper than the grid, and it'll be green. My customers are in, so environment is good, and everyone makes business." You could not say this five, seven years ago.

Suruchi Rao 46:03 Right.

Chetan Maini 46:04 Today, you can say that, "I can actually make business sense to put renewable energy in place." Some policy frameworks have to be cleaned up. If that policy framework is cleaned up, in Delhi, we need 10 megawatts, I get it overnight. You need probably 50 megawatts-

Nikhil Kamath 46:20 Yeah

Chetan Maini 46:20 ... or 40 megawatts, we'd get it overnight, which means all of us in the business will do that. If he has an Ather network on his charging infrastructure, and he can cumulate the demand, he says, "I'm going to buy this much from you, because I'm using this demand." So in the next couple of years, what has to happen is energy and mobility have come together, and these departments have been separate.

Suruchi Rao 46:39 Mm.

Chetan Maini 46:39 Right? And once they come together, and they look at the bigger picture of 80 billion of imports, 100 billion of imports of oil, I mean, what we've talked is, one is climate, the second is really the energy equation for the country. What's driving policy is energy equation of- and climate.

Suruchi Rao 46:54 Mm.

Chetan Maini 46:54 But energy equation is much bigger.

Suruchi Rao 46:56 Mm.

Chetan Maini 46:56 If what we've talked about by 2030, that all surface transportation could be electric-

Suruchi Rao 47:00 Mm

Chetan Maini 47:01 ... That's $100 billion to $150 billion of less import, right? What does that do to the economy?

Suruchi Rao 47:07 That's insane.

Chetan Maini 47:08 So, so I think we have to look at it from both sides.

Nikhil Kamath 47:09 And the number doubled.

Chetan Maini 47:10 Yeah.

Nikhil Kamath 47:10 It was $60 billion in 2018-

Chetan Maini 47:12 Yeah

Nikhil Kamath 47:12 ... when we were writing the white paper for BluSmart.

Chetan Maini 47:14 Yeah.

Nikhil Kamath 47:14 Uh, now that number is $120 billion.

Chetan Maini 47:17 Yeah.

Nikhil Kamath 47:17 In fact, Nirmala Sitharaman in the last budget said that-

Suruchi Rao 47:19 Mm

Nikhil Kamath 47:19 ... first time, it, it was $100 billion last year.

Chetan Maini 47:21 Yeah.

Nikhil Kamath 47:21 And it's projected to say $120.

Chetan Maini 47:22 Yeah.

Nikhil Kamath 47:22 So in five years, 2X. Suruchi, why don't you finish your introduction?

Suruchi Rao 47:26 Sure.

Nikhil Kamath 47:26 Can we, can we start this conversation off with what is green hydrogen

Nikhil Kamath 47:30 and the fuel source? Everybody-

Chetan Maini 47:31 Green hydrogen is, is creating hydrogen from a renewable source.

Nikhil Kamath 47:35 Renewable source.

Chetan Maini 47:36 Right? Gray hydrogen would be, I take methane and I split it, so I'm, I'm still putting emissions out, and I get hydrogen or ammonia, other different, different-

Nikhil Kamath 47:44 Mm

Chetan Maini 47:44 ... depending on how you think about the structure. So green is from renewable.

Nikhil Kamath 47:47 Mm.

Chetan Maini 47:47 I take wind energy, I take solar, I take any renewable energy, and create green electrons. So that's green hydrogen.

Nikhil Kamath 47:52 And Suruchi, you take industrial waste and make hydrogen.

Suruchi Rao 47:55 Absolutely. So, so for us, the problem here is exactly what-

Nikhil Kamath 47:58 Come, come from the back of your story, so people have context as to how you started making hydrogen.

Suruchi Rao 48:03 Sure, sure. So going back to the original story, I've, I've always been in and around energy. Definitely thought bioenergy is critically important, maybe because I have a degree in the field. Uh-

Nikhil Kamath 48:16 Talk about your education.

Suruchi Rao 48:17 Right. Um, I... This table is so intimidating right now. I, I come from a very humble engineering background.

Nikhil Kamath 48:25 You're not.

Suruchi Rao 48:25 I'm glad I have an education. It is insane to me that I have a PhD degree, but I think that just, it was, it was, it's just-

Nikhil Kamath 48:32 Great

Suruchi Rao 48:32 ... it's just something that happened.

Nikhil Kamath 48:33 What is your PhD in?

Suruchi Rao 48:34 It, it's a degree known as bioprocess technology. I'm from-- I got my PhD from Institute of Chemical Technology, which is, used to be known as UDCT, University Department of Chemical Technology. It's a pre-independence institute that was created for the textile industry in Bombay. Still sits out of Matunga. Um, unfortunately, because of the textile industry collapse in the '60s and the '70s, they had to look for other things to do, but they stuck to only one thing, which is chemical engineering.

Nikhil Kamath 49:02 To a stupid person like me, how would you explain what your PhD is in, one line?

Suruchi Rao 49:07 ... very simple. Um, I just engineered a few microorganisms to break down agricultural waste, basically crop residue, which continues to remain a problem five years after I finished my PhD, and convert it to ethanol. So ethanol as a fuel additive. Um, it was at the Center of Energy Biosciences, and, and, uh, the key skills I developed was, once again, how do you create a community of microorganisms to do what you want them to do? But the problem we were solving was: how do you prevent crop burning, uh, instead of coming up with ways of disposing of the crop in more meaningful ways? Suppose you could convert it to something more useful, which in our case, we thought was ethanol. The government was making a heavy push for something known as second-generation cellulosic ethanol, which is basically to use non-food sources as a feedstock for making ethanol as a fuel additive.

Nikhil Kamath 49:59 How did you go from your PhD in this to starting to create hydrogen and also your company?

Suruchi Rao 50:04 Oh, my God. Um, I had finished my PhD-

Nikhil Kamath 50:08 Mm-hmm.

Suruchi Rao 50:08 -and, um, I was working for my professor, my advisor's engineering company. It was an engineering procurement and construction company. That's what chemical engineers do. Technologies out of our lab needed to be pitched to, and we were heavily working with the PSUs. So you need to go out and talk about what value the technology can bring, and that was me in the business development role. Um, in between all of this, I had my professor's friend, who is very wealthy but not formally educated. He has a sort of sugar, uh, mill, which runs one half of the year producing ethanol and the other half making sugar. And one day his plant was shut down, and he didn't quite understand because for some bizarre reason, the notification was in English, not in Marathi, as you would expect, coming from Maharashtra. And he came, came to my professor and he said, "Uh, what is going on?" And he said, "You've been illegally dumping your wastewater." Effluent, as it's called. And he said, "I have no idea. I, I give a dude money to sort of take it away from my site." This man who has been collecting money from my professor's, uh, sort of friend, has been going around the block and dumping it right there because, "Hey, somebody paid me to take care of it, I took care of it." Um, that's when my professor gave me a sort of brief to say, "What do you think are the pathways," as it's called in sort of biochemistry or biology, "that we can use to treat this sugar industry wastewater?" That's when I happened to find this very neat biology, which was not typical. These were microorganisms which are minor in community. They occur in our gut, our brain, and soil, and they produce, uh, electrons or electricity, and they're constantly stressed, and I really related to them for that reason. Uh, these microorganisms-

Nikhil Kamath 51:48 [chuckles]

Suruchi Rao 51:48 Yes, um, you... It's a stressful- I would not recommend a PhD to anyone. I would, in fact, say, "Don't get an education, just-

Nikhil Kamath 51:55 I'll, I'll give you some context, okay?

Suruchi Rao 51:57 All right.

Nikhil Kamath 51:57 So in Suruchi's company, we are an investor, and every time I've been on a Zoom call with her and heard something, it takes me a lot of time to go back and research and figure out what she said in the first place.

Suruchi Rao 52:08 Oh, no, I'm so sorry.

Nikhil Kamath 52:09 [chuckles] But continue.

Suruchi Rao 52:10 I apologize for that. So basically what happened was I, I needed funding to test this out, and I said, "Hey, Professor, give me some money." And he said, "No, sorry. Um, I think you've-- I think you should, you should stick to this. You, you give good presentations." And honestly, I've, I, I thought I'd be a career academic. This was a break before I'd start off my postdoc in the US, and, uh, I'm someone who's used to working with what's known as a mass spectrometer. It's this big device that breaks down proteins and tells you what, what's there, and I was really keen on that. And then I said: "Wait, what if I, I, like, get funding to test out this technology?" And, uh, fortunately for me, Shell had a program known as the Shell E4 program. I have zero idea about entrepreneurship at this point. I'm pretty sure I misspelled it all the time as well. And once I joined the program, they gave me some money to test it out. Uh, the only credit I'd give myself was that I had a very specific problem I had identified for them. Um, fracking, back in 2017, '18, um, was producing more water than oil, and here I had the opportunity to produce green hydrogen using these microorganisms and simultaneously recycle water. It was a win-win. But this was not a technology meant for India. I was ready to go off to the US, uh, as [chuckles] as I had planned. And '20... When, when did COVID happen? About four days before lockdown in Bangalore, I had my tickets booked and, and I had to sort of shut shop and say, "Can't do anything." But one thing led to another. We got Tata Steel as a customer, and, um, it's, it's- there's no- there's not been much of a [chuckles] turnaround after that. Good thing we did was select green hydrogen as a molecule. There was no policy. I'm pretty certain people, when we had, when we had demo day pitches, people would ask us: "What do you use the hydrogen for?" Um, so it's, it's, it's been a long journey to this point.

Nikhil Kamath 54:01 I still want you to explain-

Suruchi Rao 54:03 Um

Nikhil Kamath 54:03 ... in a very layman way, what exactly you do.

Suruchi Rao 54:05 We're producing electrons, which is used for hydrogen gas. The water is intact and is recycled for reuse on site.

Nikhil Kamath 54:12 Okay, so there's dirty water, comes to you?

Suruchi Rao 54:15 Yes.

Nikhil Kamath 54:16 You create electrons?

Suruchi Rao 54:17 Yes.

Nikhil Kamath 54:17 Where is hydrogen coming from?

Suruchi Rao 54:19 Think of it as this vessel, right?

Nikhil Kamath 54:20 Mm.

Suruchi Rao 54:20 Uh, there's wastewater in it, not-

Nikhil Kamath 54:23 Mm

Suruchi Rao 54:23 ... demineralized or desalinated water. Ganda paani sitting in that.

Nikhil Kamath 54:27 Mm.

Suruchi Rao 54:27 You have a couple of electrodes placed inside. On one electrode, you have microorganisms, so they're trapped onto the electrode surface, and they're doing their business of producing electrons.

Nikhil Kamath 54:38 Mm-hmm.

Suruchi Rao 54:39 There's a, there's a difference in potential [chuckles] between the two electrodes. That's why the electrons, which are produced by the microorganisms, are carried from the anode to the cathode, which is the opposing electrode. Two electrons, two protons, which are coming from water, combine to make hydrogen gas. So hydrogen gas is the product that you get out of the reactor. Electron is an intermediate, but the source of the electron is biological in nature and not electrochemical. So it's not coming from solar, it's not coming from wind, uh, and the added advantage is that-... here's some clean water for you to reuse. We request you to please reuse it. It's free of cost.

Speaker 55:19 What is Ossus doing now? How much have you scaled to?

Suruchi Rao 55:22 Mm.

Speaker 55:23 Uh, who is this feasible for today, to use Ossus?

Suruchi Rao 55:28 So anybody who has, um, wastewater at their site and also requires green hydrogen is obviously our beachhead market, because then we don't- you're doing away with the distance problem, which is, which is honestly what people talk about when it comes to green hydrogen. Uh, w- you would much rather produce green hydrogen as a storage molecule during renewable energy production, which is a whole other can of worms I'm about to open now. So anytime there's surge, so you have all of this power that you can't put in the grid, whether it's wind or solar, um, you can use pumped hydro, and there's other sort of strategies for-

Speaker 56:07 Mm

Suruchi Rao 56:07 ... storing that excess power, otherwise you're having to scale back-

Speaker 56:11 Mm-hmm

Suruchi Rao 56:11 ... or worse, completely stop production. If you use that excess energy to split water, voila, you have hydrogen gas that has industrial use, et cetera, et cetera. But it's basically used to store energy that you couldn't otherwise put onto the grid. The problem with all of this that no one will talk to you about is that for producing one kilogram of hydrogen using, by splitting water, you would need, depending on who you speak to, nine kilograms of water, which is nine liters, going all the way up to 30 liters of water if it requires treatment. Treatment is basically making it desalinated water. In a country where 500 million people don't have access to drinking water, India's target of five billion tons of indigenous green hydrogen production would require approximately 50 million tons of water. We don't have that.

Speaker 57:06 Nikhil, that, on this table, nobody supports hydrogen then. [laughing]

Suruchi Rao 57:10 Except if you use Ossus technology, in which case you get water back again.

Speaker 57:13 [laughing]

Suruchi Rao 57:13 So there is a, this is a Nazi-era technology-

Nikhil Kamath 57:16 But our company is, like, growing really fast.

Speaker 57:18 That's what I'm saying.

Nikhil Kamath 57:18 So who are the- They're using it now.

Speaker 57:20 So what does it cost for a kg of hydrogen?

Suruchi Rao 57:23 I can give you the good number, I can give you the bad number. So everybody wants to hear... It's, it's officially known as, uh, S-H-O-T, Shot. So it's, it's hydrogen priced at under a dollar. It's an Indo-US joint program. Um, so it's about 0.8, 0.8 US cents.

Nikhil Kamath 57:39 It's really cheap.

Speaker 57:39 One kilogram of hydrogen?

Suruchi Rao 57:40 One kilogram of hydrogen. Hanji.

Speaker 57:41 So, and, and that generates how much, uh-

Suruchi Rao 57:44 33 kilowatt hour-

Speaker 57:45 ... electricity?

Suruchi Rao 57:45 It's the highest in energy density compared to anything.

Nikhil Kamath 57:48 Uh, three, so we got two rupees per kilowatt.

Speaker 57:51 So that is-

Suruchi Rao 57:51 Converting, it took-

Speaker 57:52 This is really cheap. I- I mean, I'm just-

Nikhil Kamath 57:54 No, no, conversion is only 30% efficient.

Suruchi Rao 57:55 This is massively horrible efficiency for-

Nikhil Kamath 57:58 Yeah

Suruchi Rao 57:58 ... converting it back into electricity.

Speaker 57:59 So actually six times. There is heat energy.

Nikhil Kamath 58:00 So, so six, seven rupees.

Speaker 58:02 But why would you convert it back into electricity? You would just use the hydrogen.

Nikhil Kamath 58:05 Because then you only have electricity.

Suruchi Rao 58:05 Yes, that's exactly why, uh, mobility talks of-

Speaker 58:08 But, but you're talking for a dollar? I mean, that you, you-

Suruchi Rao 58:11 For certain PSUs, uh, in refining, it's 40 rupees per kilogram. Um, it's a very interesting chemistry. So you basically have, before electrons are generated, you need to break all the organic content down to what are known as short-chain fatty acids. Those of us interested in gut health have heard a lot about short-chain fatty acids because it talks about how well you- your stomach is doing at digesting. But it's the very same short-chain fatty acids that you need as precursor.

Speaker 58:40 Right.

Suruchi Rao 58:41 Refineries produce a lot of, uh, acids and alcohols in their wastewater, which means you're, you're starting with exactly what you need, so that's the cheapest. Having said that, if you add compression, because you need to use the hydrogen... Thank you so much. It basically bumps all the way up to 112 rupees per kilogram. Compared to market price, of course, it's one-fourth. If you bought from certain large multinational corporations using long offtake agreements, it would cost you about 400 bucks per kilogram. So this is still cheaper than-

Nikhil Kamath 59:18 Well, that's damn it.

Speaker 59:19 What is Ossus' use case?

Suruchi Rao 59:21 For us, um, it, it, it's completely different from the whole mobility angle.

Speaker 59:26 Mm-hmm.

Suruchi Rao 59:27 Um, it's-

Speaker 59:27 Tell us your angle.

Suruchi Rao 59:29 It's industrial use,

Suruchi Rao 59:30 right? Um, for us, we're not even talking about, uh, steel, for example. Steel is very specific. We got lucky. Uh, we had a team that worked with us that was great-

Speaker 59:41 Mm

Suruchi Rao 59:41 ... so we could accelerate very quickly. We're looking to produce about 21 tons of green hydrogen per day at a certain site. However, going beyond that, the capacity for consumption currently doesn't exist. Even government policy asks us to wait until 2030, then they'll have the export system set up, and then they'll, uh, force certain industry like, uh, chemicals, ethylene, cement, and, uh, steel, to sort of decarbonize using hydrogen as a molecule. But we can't really afford to wait, right?

Speaker 1:00:14 So who are you selling to today?

Suruchi Rao 1:00:15 So th- those who use it as a raw, uh, raw material. Uh, chemical industry uses hydrogen quite frequently in processes such as hydrogenation. So it's not energy, it's not heat, it's basically a, a building block molecule to upgrade certain chemicals. So those-

Nikhil Kamath 1:00:32 That's what Reliance is, right? That's why, like, they're interested in hydrogen. They just need a lot of hydrogen.

Suruchi Rao 1:00:38 They need a lot of hydrogen because they refine. So refineries are obviously-

Nikhil Kamath 1:00:41 That's all. Yeah.

Suruchi Rao 1:00:42 But the government would have-

Nikhil Kamath 1:00:43 It's not always energy. Sometimes it's a good raw material.

Suruchi Rao 1:00:45 Absolutely.

Speaker 1:00:46 So how much are you selling now, in terms of sales as a company?

Suruchi Rao 1:00:50 It's not much. It's, it's our largest plant, it's with another starch sorbitol manufacturer in Ahmedabad. Um, our maximum capacity currently is 250 kilograms per day, and we use only 18 cubic meters or 18,000 liters of, uh, this particular effluent to do it. That's our largest sort of plant so far. We have an offtake agreement that we're [chuckles] really scared of, for about one ton per day, uh, for another certain client in the steel industry. But the idea is that-

Speaker 1:01:23 Mm

Suruchi Rao 1:01:23 ... the active working operation is 250 kilograms. It's a drop in the ocean. Uh, for you to hit five million tons per year, you need about 10,000 tons per day. Uh, fortunately for us, we, we know that we need only about 35 sites.... where there is enough density of organic matter-

Chetan Maini 1:01:43 Mm.

Suruchi Rao 1:01:43 -in the wastewater.

Chetan Maini 1:01:44 Mm.

Suruchi Rao 1:01:44 But once again, we can't really wait until twenty thirty, so a few months down the line, we will have to start, uh, dumping the hydrogen on the open mar- markets. It's basically spot trading, exactly the way LNG is traded. And you use the same sort of LNG route. Go from Australia, Japan, South Korea, and on- onwards, because there's a detailed pipeline for hydrogen that exists, but that's gray hydrogen. The idea here is to sort of, uh, bust the market by selling it at such low values.

Chetan Maini 1:02:15 So, Suruchi, if I were to ask you the question-

Suruchi Rao 1:02:17 Mm.

Chetan Maini 1:02:18 Not for two-wheelers or cars-

Suruchi Rao 1:02:20 Mm

Chetan Maini 1:02:20 ... but for trucks-

Suruchi Rao 1:02:22 Mm.

Chetan Maini 1:02:22 -or buses.

Suruchi Rao 1:02:23 Mm.

Chetan Maini 1:02:24 Is green hydrogen, tomorrow, going to be a viable source of energy compared to EVs, electric, all of that?

Speaker 1:02:32 We are not sources of energy. We are the consumers. So if they could generate hydrogen, generate electricity out of it, we'll use it.

Suruchi Rao 1:02:40 So that we don't see as, as a-

Speaker 1:02:41 Energy-

Suruchi Rao 1:02:42 ... genuine option.

Speaker 1:02:43 Very inefficient, we won't, but [chuckles]

Suruchi Rao 1:02:44 Mm-hmm. Converting it back into electrons is not really-

Chetan Maini 1:02:47 No, I'm talking about a bus which runs on hydrogen.

Suruchi Rao 1:02:49 Yes, so fuel cell vehicles, given our, our-

Chetan Maini 1:02:52 Versus a bus which runs on electricity.

Suruchi Rao 1:02:55 In terms of...

Speaker 1:02:56 So-

Suruchi Rao 1:02:56 No, please.

Speaker 1:02:56 No, go ahead, please.

Suruchi Rao 1:02:57 In terms of tailpipe emissions, I think it's as good as batteries. Um, I think the whole equation here is that the longer, uh, the distance trucks have to go or transportation has to go, the economics of hydrogen start to work out better, because here, the whole transmission, storage, et cetera.

Chetan Maini 1:03:17 So you still have that ratio we talked about, right? So if you're taking the same electron from the renewable energy, you're using three times more. So whatever the cost of electricity tomorrow is, even one rupee, it's going to cost... The cost for a hydrogen fuel cell vehicle will be three times more than a, a battery-operated electric vehicle, whatever that works out on that front.

Speaker 1:03:39 But you might get a longer range.

Chetan Maini 1:03:41 Right. So you, yes, you may get longer range. And now, um, with batteries, with battery swapping, it address that range piece of it in a much better way. Um, so where I think there could be an opportunity is in, in some locomotive applications-

Suruchi Rao 1:03:57 Mm

Chetan Maini 1:03:57 ... where you've electrified a certain piece and you haven't done a large piece. Maybe it could be a transitional area. That would make sense, because long distance.

Speaker 1:04:04 Mm-hmm.

Chetan Maini 1:04:05 Um, markets like US, where you would actually do-

Suruchi Rao 1:04:09 Travel day

Chetan Maini 1:04:09 ... you know, a thousand miles a day, and you, you, you, and you want to run it, and you run two shifts on it-

Suruchi Rao 1:04:13 Mm-hmm

Chetan Maini 1:04:13 ... right? Uh, with autonomous trucks coming in-

Suruchi Rao 1:04:16 Mm-hmm

Chetan Maini 1:04:16 ... you want to run maybe 18 hours a day, right?

Suruchi Rao 1:04:18 Mm-hmm.

Chetan Maini 1:04:18 Out there, you're refueling, maybe a thing. So it could, could, it could play a role, right?

Suruchi Rao 1:04:23 Mm-hmm.

Chetan Maini 1:04:23 But markets like India, where you're probably doing 500 kilometers a day-

Suruchi Rao 1:04:27 Mm-hmm

Chetan Maini 1:04:27 ... or 600, you're probably stopping every three hours for a break, from a driver fatigue point of view-

Suruchi Rao 1:04:33 Mm

Chetan Maini 1:04:33 ... or four hours. That could fit within swapping, fast charging, others, so it won't make sense. And India is a very... or most markets globally are very economically-

Speaker 1:04:44 Yeah

Chetan Maini 1:04:44 ... the commercial market is very economically oriented, right?

Speaker 1:04:46 Every market is.

Chetan Maini 1:04:47 Right. So, so, it, unless it makes economic sense-

Speaker 1:04:50 Mm-hmm

Chetan Maini 1:04:50 ... it doesn't. It could make sense to replace diesel-

Speaker 1:04:54 Mm-hmm

Chetan Maini 1:04:55 ... but electrics, pure electrics could still be cheaper.

Speaker 1:04:58 Mm.

Chetan Maini 1:04:58 So it would still be, let's say, if diesel is costing you X, this could be maybe 10% less, and the other one could be 40, I mean, 40% less. So in that, from that point of view, it could still be an area of zero emission and make sense in certain-

Speaker 1:05:10 I think hydrogen was sort of born as a concept for vehicles-

Chetan Maini 1:05:15 Mm

Speaker 1:05:15 ... in a time when vehicles just couldn't do large range.

Chetan Maini 1:05:18 Mm-hmm.

Speaker 1:05:18 Like, batteries, I think, quite paradoxically, for some reason, it's hydrogen that's first looked at if you're talking about buses. Everybody's looking, Tata Motors, uh-

Chetan Maini 1:06:12 I'm telling you, it's because coming from that same legacy.

Speaker 1:06:14 It comes from the same-

Chetan Maini 1:06:14 Like, it's, it's the same set of bureaucrats, same set of consultants still writing the reports-

Speaker 1:06:18 Yep. [laughing]

Chetan Maini 1:06:19 ... who are still basically saying, "Well, batteries are $400 a kilowatt hour. You know, they can't do more than 300 kilometers of range." It's, it's, it's coming from that era.

Suruchi Rao 1:06:27 So if you're looking for a-

Chetan Maini 1:06:27 Like a decade behind

Suruchi Rao 1:06:28 ... sort of market for,

Suruchi Rao 1:06:30 um, clean buses, you would definitely see more tenders, whatever be the mindset-

Chetan Maini 1:06:37 Yeah

Suruchi Rao 1:06:37 ... um, for FCEVs over batteries.

Chetan Maini 1:06:41 It-

Suruchi Rao 1:06:41 When it comes to buses, and, and I'm not even sure about distance here, how big is Leh? Um-

Chetan Maini 1:06:46 And Suruchi, another question. Young entrepreneur, 20-year-old going to college-

Suruchi Rao 1:06:53 Mm

Chetan Maini 1:06:53 ... is there an opportunity to work in your industry? And if so, what? Punit gave us two things.

Suruchi Rao 1:06:58 Hmm.

Chetan Maini 1:06:59 He said you can set up a solar plant, earn between 15 to 18, 19% interest, or you can raise funding, lease vehicles, set up something like BluSmart. In your industry, what is the opportunity for an entrepreneur?

Suruchi Rao 1:07:13 I think it, it, ours is more of, uh, an opportunity with roots in climate change as a problem. Um, we're looking for kids who are driven by the need to change the way things are or to build a future for themselves. So they are willing to address very large problems which aren't, um... So you could work for IT services company, and I'm sure you're solving a problem, which is-... like, large on scale, but this is an existential crisis. So all of that engineering skill set, which would otherwise have gone into MNCs, need to come into climate change and green jobs. So I would not say it's still a nascent industry. It isn't even really an industry. It's pretty much a cottage industry. I remember when it was just us and another company for a long time. Now, you, you have mom-and-pop establishments all talking about electrolyzers. So from a business point of view, sure, if you could export-- import electrolyzers into the country, you have all-- you have two ministries. So there's Ministry of New and Renewable Energy and Ministry of Power, each with sort of different parts of the hydrogen equation that they're dealing with. So MNRE typically deals with what happens-- how do you push consumption, what's known as site? So it's just green hydrogen consumption, which it's trying to push for. And Ministry of Power basically says, "I will take anything, electrolyzers and more, um, as a source for green hydrogen, and I will re- give you whatever power you require to produce or to reach five million tons per day." So if somebody who is a twenty-year-old said, "The opportunity here is for me to access these bids and subsidies by getting electrolyzers in," sure, there's a business there as well. I don't think there's even ten to twenty percent that you can make, that you would probably be able to make in solar, because you'd have to spend a lot. But according to me, the opportunity is in trying to create a, create massive disruption. And there's a lot of people working on making even water splitting more efficient. Seawater splitting, for example, I've, I've heard so much about it. So you, you need vocational training more than an engineering degree right now, and if you could join the twenty companies that exist that help with this, it- you'd be doing your bit.

Nikhil Kamath 1:09:46 Thanks.

Suruchi Rao 1:09:46 So I'm not sure-

Nikhil Kamath 1:09:47 Super. [metal clanking]

Suruchi Rao 1:09:49 It really answers

Suruchi Rao 1:09:50 your question, but-

Nikhil Kamath 1:09:51 But very interesting, no? [metal clanking]

Suruchi Rao 1:09:53 Sure.

Nikhil Kamath 1:09:53 Should we go to Chetan next? Chetan, would you like to...? [laughing] So I've known Chetan a while. Each time I meet him at a party or somebody else's house, I keep bugging him and asking him questions. It's become like second nature, but today I get to bug you in isolation, like- [chuckles] get you stuck in one location for many hours. So tell us a bit about your long, illustrious journey in EVs. By the way, I have to add this thing. I called Anand, uh, Mahindra, for like... I was just trying to do research on this industry.

Chetan Maini 1:10:27 Mm-hmm.

Nikhil Kamath 1:10:28 And then I told him you're coming.

Chetan Maini 1:10:29 Mm.

Nikhil Kamath 1:10:29 And he was like: Chetan is like the godfather of our industry.

Chetan Maini 1:10:33 [chuckles]

Nikhil Kamath 1:10:33 He started the-

Chetan Maini 1:10:35 Yeah.

Nikhil Kamath 1:10:35 He started this off before EVs-

Chetan Maini 1:10:38 Tesla

Nikhil Kamath 1:10:38 ... were a thing in India.

Chetan Maini 1:10:39 Before Tesla, right?

Nikhil Kamath 1:10:40 When did you begin first?

Chetan Maini 1:10:42 So I got into electrics in 1990, and I, I know, maybe I don't know if you were born at that point. [laughing] No, so I, I got into, um, uh, uh, racing solar cars at, when I was at college.

Nikhil Kamath 1:10:58 Wow!

Chetan Maini 1:10:59 And, uh, we-- was part of the team at Michigan, and we raced from Florida to Michigan, and we came first in, in the US. And, uh, GM sponsored us to, uh, race in Australia for the world championship. So a bunch of twenty-year-olds, we raised a million bucks, uh, put a solar car together, and we raced from Darwin-

Nikhil Kamath 1:11:20 You raised twenty million bucks?

Chetan Maini 1:11:21 One million.

Nikhil Kamath 1:11:22 One million.

Chetan Maini 1:11:23 Yeah. We raised... Twenty-year-olds, but, you know, we, we raced from Darwin to Adelaide, which is three thousand two hundred kilometers in the world championship, and we came third in the world. Um, um, Honda came in second, and, uh, for me, that you could travel a continent on sun energy, was like: "Wow, this is the future," right? "So that's what I want to do." So, uh, um, and, uh-

Suruchi Rao 1:11:49 Fantastic name.

Chetan Maini 1:11:51 Sorry?

Suruchi Rao 1:11:51 It had a fantastic name. I think it's called SunRunner.

Chetan Maini 1:11:54 SunRunner, yeah.

Suruchi Rao 1:11:55 Yeah.

Chetan Maini 1:11:55 Yeah, yeah. Um, so we're-- and then a bunch of us said that when we graduate, let's start something in electric vehicles. So five of us used to meet and every, uh, two weeks and decide what business plans would come out.

Nikhil Kamath 1:12:11 In the US?

Chetan Maini 1:12:12 The US. And then one of my friend's father, uh, he was a PhD from Caltech. He invented the airbags and, uh, did a lot of seatbelt work and sold that company to TRW. He loved our idea, he was a mentor, and he says, "Come and work for me." So we all ended up working in California in '91, doing electric vehicles. Um, and, uh, I, I went to grad school after that at Stanford, and I did a lot of work on hybrid electric vehicles. I felt that, uh, electrics needed a host of, uh, ele- electronic, software, mechanical, and that was a great program that kind of combined, uh, all of this stuff. And went back to this company, it had already gone public by then, um, and started doing electric vehicles with them in, uh, in California. And that's the time California was switching from, uh... They were-- the, the aerospace industry was dying, and so they were switching it to, uh, EVs.

Nikhil Kamath 1:13:05 Mm.

Chetan Maini 1:13:06 So there was a big push from, uh, you know, both, uh, Bush administration, later the Clinton administration, to, to get electrics on that front. Um, and that's when the time when I came back to work for him, I said, "Listen, I think the market..." My mentor, I asked, "Oh, and the market, I think, is going to be on, um, [lips smack] uh, in India and China and in developing countries, and the solutions we need for these are different." So he liked the idea, and the concept of Reva was born as what I would initially call an Asian electric vehicle for developing countries. Um, and, uh, post that, as things-

Nikhil Kamath 1:13:44 When did Reva launch? Which year?

Chetan Maini 1:13:46 We launched in 2001.

Nikhil Kamath 1:13:48 Wow!

Chetan Maini 1:13:50 ... 22 year- 22 years ago.

Nikhil Kamath 1:13:51 Mm.

Chetan Maini 1:13:52 We developed in the late '90s, right?

Nikhil Kamath 1:13:54 Mm.

Chetan Maini 1:13:55 So it's, um, it was a very different time then, right?

Nikhil Kamath 1:13:57 Mm.

Chetan Maini 1:13:57 'Cause you just didn't, you didn't have people, you didn't have investors, you didn't have the tech side of it.

Nikhil Kamath 1:14:03 Reva started in 2001.

Chetan Maini 1:14:05 Yeah, so, um-

Nikhil Kamath 1:14:06 Why Reva, the name?

Chetan Maini 1:14:07 My mother's name.

Nikhil Kamath 1:14:09 Revati?

Chetan Maini 1:14:10 No, Reva.

Nikhil Kamath 1:14:11 Reva.

1:14:12 Man, I-

Chetan Maini 1:14:12 Means a, means a new beginning in Sanskrit.

Nikhil Kamath 1:14:15 Mm.

Chetan Maini 1:14:15 And, uh-

Nikhil Kamath 1:14:15 I always thought Reva was like revolution or-

1:14:17 Yeah. [chuckles]

Chetan Maini 1:14:18 Well, once you get the marketing guys, they say revolution, electric vehicle, alternate-

Nikhil Kamath 1:14:22 Yeah

Chetan Maini 1:14:22 ... the EV joined together, which almost every company uses that same EV that I- we put 21 years ago. I look at them, I go, "I thought we trademarked that," but it seems like everyone's using it. [laughing] Anyways, I was doing work in India and the US at that point. Half the tech was here, half the tech was there. So, uh, honestly, I'm a technologist. I wasn't an entrepreneur, right? Just to me, I was passionate about my tech side. But then I said, "Okay, to build a business, I had to become an entrepreneur." Had a friend to teach me how to put spreadsheets to create a business plan, right? [chuckles] And, um, tried to go and start to raise capital, and got some seed capital from our family business, uh, ICICI-

Nikhil Kamath 1:15:04 What was your family business?

Chetan Maini 1:15:06 Uh, automotive components, aerospace, electric material handling. So if you look at the golf carts, in most of the airports are from us. So we've been doing all of that for a while. Um, but this was, uh, quite different from, from that point of view. And so I got some seed capital there. I got ICICI-

Nikhil Kamath 1:15:23 Mm-hmm

Chetan Maini 1:15:24 ... and Technology Development Board.

Nikhil Kamath 1:15:26 Mm-hmm.

Chetan Maini 1:15:27 Which is hard because, you know, you're 29

Chetan Maini 1:15:30 and you ask someone that you want to get money for electric vehicles in India, and the first thing they ask: "Where does this work in the world?"

Nikhil Kamath 1:15:36 Mm-hmm.

Chetan Maini 1:15:37 And, um, and to give a 29-year-old, uh, that was... You know, I must say, it was very good for those financial institutions to give you debt at that time, 'cause VC money and that was just non-existent at that point. Built that out, and then, um, in 2001, we launched. Uh, one month after we launched, the government pulled the plug, uh, on subsidies, and actually one month before we launched, and doubled the taxation on electric vehicles-

Nikhil Kamath 1:16:07 Why was that?

Chetan Maini 1:16:08 -and reduced taxes on petrol vehicles.

Nikhil Kamath 1:16:10 Why?

Chetan Maini 1:16:11 Well, [laughing] look at who were the, who were the players at that time in the country. [laughing] And it was just, you know, it didn't feel... I mean, people didn't want electrics to work, right? And, uh-

Nikhil Kamath 1:16:23 Seriously?

Chetan Maini 1:16:24 Yeah.

Nikhil Kamath 1:16:24 I always thought that was just bureaucracy not getting it.

Chetan Maini 1:16:27 No.

Nikhil Kamath 1:16:27 They were already anti-electric at that point?

Chetan Maini 1:16:30 Well, think about it, one month before all of this done, uh, all of that disappeared. Subsidies that were there, you built the business on the fact that this was given and confirmed.

Nikhil Kamath 1:16:39 So who got the subsidy? If they, if-

Chetan Maini 1:16:41 They-

Nikhil Kamath 1:16:41 -if you guys weren't live in the market, who really got the subsidy?

Chetan Maini 1:16:43 Nobody got it. They just killed the whole subsidy.

Nikhil Kamath 1:16:46 Without giving it to anybody?

Chetan Maini 1:16:47 Without giving to anyone. And they also increased-

Nikhil Kamath 1:16:49 Wow

Chetan Maini 1:16:49 ... taxes.

Nikhil Kamath 1:16:50 This is 2000?

Chetan Maini 1:16:52 2001.

Nikhil Kamath 1:16:52 Mm.

Chetan Maini 1:16:55 Right? So-

Nikhil Kamath 1:16:55 Global financial crisis.

Chetan Maini 1:16:56 It was a, it was a, it was a big issue. And so I think the, the only way to survive was actually looking at global markets. So we actually went to 24 countries. UK was my largest market. So in 2005, 2006, um, Tesla had raised money from, uh, Draper, uh, others did. So, you know, Draper Fisher invested in us, amongst others. So there was a bit of clean tech capital coming out in 2005, 2006. The first signs of clean tech, right?

Nikhil Kamath 1:17:23 Mm.

Chetan Maini 1:17:23 If you remember that, you know, the VC industry was changing a bit. So we got some VC money, and then in 2010, we were at the Frankfurt Motor Show. We were showcasing our new products, only Indian company, and everyone was talking billion-dollar investments, right? Tesla had already got a billion. Nissan was talking 1.5, GM was talking 2 billion. And I said, "This needs a different level of investments." It was still hard to come by in India, and I found ourselves very good in tech, so I licensed our entire technology to General Motors.

Nikhil Kamath 1:17:55 Mm.

Chetan Maini 1:17:55 So we showcased this electric Spark platform in 2010 at the auto show. Um, [lips smack] but a few, three months later, GM got bought by, uh, SAIC in China, and so, you know, they changed their strategy. And that's the time I spoke with, with

Chetan Maini 1:18:10 Anand and, and initially what started as a technology licensing went to, um, you know, getting a majority of the company in 2010. And to me, the vision was more important. You know, can we build electric mobility-

Nikhil Kamath 1:18:24 Mm-hmm

Chetan Maini 1:18:24 ... at scale? And, uh, you know, ran that till 2015. Um, built up a bunch of products, around seven products for Mahindra on their platform. Got them into also racing, so you see the Mahindra Electric Racing. I started that business, too. Um, and then, um, uh, you know, stepped down to kind of think, rethink, because it was a long time. And that's when idea of SUN Mobility came up, to, um, to start looking at kind of the questions we've been talking about, right? Range anxiety, cost, refueling time. So I said, "If you could actually solve these problems, um, there is going to be a huge opportunity," right? And the second part was: Where is the opportunity? Is it going to be at the OEM level? I felt that the business system of the future was going to be in energy, right? Can you democratize energy in a way that's quite different?

Nikhil Kamath 1:19:20 Mm-hmm.

Chetan Maini 1:19:21 And then where do you focus on that front, right? And two and three-wheelers were 80% almost of India, so can you give one solution for all of that? So, right. And the second was buses and trucks, which is 2% of India, but 50% of the emissions and energy, right? So in a way, it was departure from personal cars to saying: Where is the biggest impact in society? Where is the largest business in energy? And in those businesses, um-... as an energy player, the economics made sense. If you gave a customer something that was twenty percent cheaper to buy and, and twenty percent cheaper to operate, right? Then there's a fundamental shift in them adopting, and then there's a fundamental shift in sustainability, right? Eventually, it's dri- it came from that, and so SUN Mobility was started trying to look at the fact that we can make costs-- we can make it cheaper.

Nikhil Kamath 1:20:14 Mm-hmm.

Chetan Maini 1:20:14 That was the hypothesis. I spent a year going around the world, which is a great time to take a time off, and understood why swapping worked and why it didn't work, right? And, and trying to see the tech that needed to it. Um, I spent three months understanding what to do in Bangalore for the buses, for BMTC, and try to see what solutions would work, and did fast charging, did slow charging, did swapping, and realized that the economics in swapping would work much better, so... and to rickshaws and Delhis. So it was a real insight, and then the tech was very critical. So spent a year, filed my first patents, and then started a company with, uh, my partner, Uday Khemka, um, who's very passionate on climate change. So what brought us together was that he was into renewables, uh, I'm into mobility. SUN Mobility is where I started racing solar cars, so, so his family side of it. So everything came together with the name and what we want to do, is how do we run the world with this? So SUN Mobility started with that ethos of really addressing these, these aspects then.

Nikhil Kamath 1:21:22 Can you tell us a bit more about that? What are you guys doing at SUN Mobility?

Chetan Maini 1:21:25 So what we do is that, um, um, we've taken two parts.

Chetan Maini 1:21:30 Let's start with the micro mobility.

Nikhil Kamath 1:21:31 Mm-hmm.

Chetan Maini 1:21:32 And, um, if you sell a vehicle s- sans the battery, without the battery, the cost of the vehicle can be cheaper than internal combustion engine vehicle, right?

Nikhil Kamath 1:21:40 Mm-hmm.

Chetan Maini 1:21:41 So we heard that the cost of batteries are thirty percent. In some form factors, it could be fifty percent. In buses and trucks, it could be even sixty percent, right? So depending on where you are, between thirty to sixty percent, so it would be the cost of battery. So if you remove the battery, battery management system, even the charging system, then the cost that any IC vehicle, any electric vehicle, can be cheaper than an ICE vehicle.

Nikhil Kamath 1:22:01 Mm-hmm.

Chetan Maini 1:22:01 Any form factor today.

Nikhil Kamath 1:22:03 Mm-hmm.

Chetan Maini 1:22:03 And if you look at the amortized cost of energy, a battery, and the cost of energy is cheaper than fuel.

Nikhil Kamath 1:22:10 Mm-hmm.

Chetan Maini 1:22:11 And then if you think of, "I can swap it in a minute"-

Nikhil Kamath 1:22:13 Mm-hmm

Chetan Maini 1:22:13 ... then you've addressed both the range anxiety and the refueling time. So the concept is to create battery as a service, right? But then create it across a common solution across all platforms. So we took two-wheelers use one battery, smaller rickshaws use two, larger loaders use three, and something like a Tata Ace would use four batteries. So anything from a scooter up to two tons, which is eighty percent of India, could use one battery and one infrastructure solutioning, right? And, and work across this format. So that was the idea around the micro mobility. Then we have solutions for trucks and buses that go from five tons to fifty-five tons, and we use modular batteries, um, that can allow you to have one or two batteries to get you different range formats.

Nikhil Kamath 1:23:02 Mm-hmm.

Chetan Maini 1:23:03 Right? Again, you can today have a truck or a bus that's cheaper than a regular electric truck or bus, cheaper, and you can address range anxiety. So if you think of in a city, you're doing your routes, right? Uh, in a city like Bangalore, um, ninety-two percent of your routes are under forty kilometers, right? But you do average two hundred kilometers a day.

Nikhil Kamath 1:23:25 Mm-hmm.

Chetan Maini 1:23:25 So actually, why do you carry a three-ton battery when you can carry a six-hundred-kilogram battery, so it's two point five tons lighter, right? And which means your energy efficiency is ten to fifteen percent better, and you can use a much smaller battery, and the battery is the most expensive thing, so you cut down the cost of the battery and, and to a third or so, and you cast down-- cut down the cost of the station because of the high utilization, and so the economics work out much better. Mm. These are also very long life batteries, so in, uh, scooters and trucks, we... Uh, scooters, they last probably around, uh, three thousand plus cycles.

Nikhil Kamath 1:24:02 So you're making the battery, or?

Chetan Maini 1:24:03 Yes.

Nikhil Kamath 1:24:05 And also, what is battery swapping when my battery is out of charge? Do they come to your-

Chetan Maini 1:24:10 Yes

Nikhil Kamath 1:24:10 ... service point?

Chetan Maini 1:24:11 No. So today we have, uh, we have around six hundred touch points.

Nikhil Kamath 1:24:15 Mm-hmm.

Chetan Maini 1:24:16 Uh, in Delhi, we have a little over four hundred. We have a station every two kilometers, right? We- By the next couple of months, we'll have more s- touch points than all petrol stations put together. So it's really accessible. Within two kilometers, you can go to any network, right? Um, IOCL is our partner, so we are at Indian Oil petrol stations here, and this is easy to access, but they're at metro stations, they're independent sites, they're at franchisee partners. Uh-

Nikhil Kamath 1:24:43 So can someone like BluSmart use this tech?

Chetan Maini 1:24:46 Uh, yes, they can, but that's for cars. We haven't done it. I think in cars, uh, for, for services like what they're using of shared mobility and taxis, swapping makes a lot of sense.

Nikhil Kamath 1:24:56 And it...

Chetan Maini 1:24:57 Uh, definitely good. But there's a, there's, you know... We've today started the business-

Nikhil Kamath 1:25:04 Mm-hmm

Chetan Maini 1:25:04 ... in the two and three-wheelers around shared mobility.

Nikhil Kamath 1:25:06 Mm-hmm.

Chetan Maini 1:25:07 'Cause these people are driving a lot, so it makes a lot of sense because our earnings are higher.

Nikhil Kamath 1:25:11 Mm-hmm.

Chetan Maini 1:25:12 Personal mobility, people drive less, so the models have to change slightly, but there's no technology issue. For example, if you look at a country like Taiwan, uh, in ninety-two percent of all electric two-wheelers are with swappable solutions, right? Just by one company, but it gives a solution to multiple companies. So the solution is working at scale. Um, this year, fifty percent of all electric trucks in China were with swappable batteries, right? That target was supposed to be achieved in twenty seven. So you're seeing now, at scale, this happening from small form factors-

Nikhil Kamath 1:25:47 Mm-hmm

Chetan Maini 1:25:47 ... to large form factors. So you, you have two models: You have battery as a service and mobility as a service. Battery as service, we've partnered with over fifteen OEMs.

Nikhil Kamath 1:25:57 Mm-hmm.

Chetan Maini 1:25:57 So you can walk into an OEM showroom, say, in this case, you wanna buy a three-wheeler, you walk into your Piaggio showroom.

Nikhil Kamath 1:26:03 Mm-hmm.

Chetan Maini 1:26:03 You buy the vehicle-

Nikhil Kamath 1:26:04 Mm-hmm

Chetan Maini 1:26:04 ... right, without the battery.... and l- like you buy a smartphone without your SIM card, right?

Nikhil Kamath 1:26:10 Mm-hmm.

Chetan Maini 1:26:10 And then you sign up for, on our platform.

Nikhil Kamath 1:26:12 Mm-hmm.

Chetan Maini 1:26:12 The dealer himself sets you up. Um, you have an RFID card, you have a wallet. You go to any station-

Nikhil Kamath 1:26:18 Mm-hmm.

Chetan Maini 1:26:18 -you can then just swap your batteries.

Nikhil Kamath 1:26:19 Mm-hmm.

Chetan Maini 1:26:20 And you only charge for the energy you use. So you use half the battery, you get charged only for half the energy that you use. We have both pay-as-you-go models and subscription models, right? And these are, these work out cheaper than even CNG as a fuel, right?

Nikhil Kamath 1:26:33 Mm-hmm.

Chetan Maini 1:26:33 And the cost of the three-wheeler today, when you walk into a showroom, is cheaper than a CNG vehicle.

Nikhil Kamath 1:26:37 Mm-hmm.

Chetan Maini 1:26:38 So... And we do this without subsidies, right? Sustainable-

Nikhil Kamath 1:26:42 Are there subsidies for this?

Chetan Maini 1:26:43 If you buy it and m- as a mobility as service, which I'll come to, but as battery as service-

Nikhil Kamath 1:26:47 I found that 10,000 crore subsidy, 1,000 is for charging.

Chetan Maini 1:26:50 Yeah, so there's, so there's, there's supposed to be this, right?

Nikhil Kamath 1:26:54 Mm-hmm.

Chetan Maini 1:26:54 But again, policy lacunas come one... And this is one another big-

Nikhil Kamath 1:26:58 Mm-hmm

Chetan Maini 1:26:58 ... policy gap the government has, right?

Nikhil Kamath 1:27:00 Mm-hmm.

Chetan Maini 1:27:01 On this front. The second is mobility as service, where we found a lot of fleets want to go electric, and they don't want to deal with the infra. They just want to go. And when they cross 50 vehicles, they found it very challenging to run their fleets. So we give them the vehicle, the energy, data, and the whole service associated with it, uh, for on a cost per month basis, right? So today, we maybe have only on mobility as service, we have a little over 15,000 vehicles, um, with fleet providers, who in turn are using them to deliver to Amazons and Flipkarts and everyone else, right? We also have infrastructure at Amazon sites.

Nikhil Kamath 1:27:35 And who's the biggest client in terms of...

Chetan Maini 1:27:37 [lips smack] Um, it would be partners for Amazon, so they'd be like a Zip or Zingo, and a bunch of other, all these, uh... So we are on 55 fleet customers today. They may have fleets from 50 to maybe 3,000 vehicles on our, of our vehicles on their platform, right? Um, and they can go to market very quickly, right? We, we, in some time, some months, can put 1,500 vehicles on a fleet in a month, which is very difficult for them to go on, right? And now their routes change. They have no issue on range anxiety, right? Swapping any time they want, and, and it's all inclusive, right? So there's both battery as service and mobility as service business here, and then, um, you know, and trucks and buses on that front.

Nikhil Kamath 1:28:21 Is that a viable solution for you guys to collaborate with?

Tarun Mehta 1:28:25 Swapping?

Nikhil Kamath 1:28:25 Mm-hmm.

Tarun Mehta 1:28:27 There are very few things [clears throat] we would ever disagree on. [chuckles] We haven't been able to agree on swapping yet. Uh, we've been chatting for a few years.

Nikhil Kamath 1:28:36 Why?

Tarun Mehta 1:28:37 Uh, [sighs] funnily, we were actually originally big believers of swapping.

Nikhil Kamath 1:28:42 Mm-hmm.

Tarun Mehta 1:28:42 The first patent we filed at Ather was a swappable battery pack.

Nikhil Kamath 1:28:45 Mm-hmm.

Tarun Mehta 1:28:45 So... And a lot of the first early hires at Ather were all hired to build swapping stations and swappable battery packs.

Nikhil Kamath 1:28:51 Mm-hmm.

Tarun Mehta 1:28:54 What we figured eventually is, um, for a lot of practical reasons, our customers weren't willing to swap a battery. What was happening is, and it's like, we can talk about cost, we can talk about tech, product, all that later.

Nikhil Kamath 1:29:08 Isn't the battery inside? How do you open it up to swap?

Tarun Mehta 1:29:10 Yeah. So, so especially building a more premium vehicle, what I kind of realized is... And, um, I remember having this conversation back at home with my family. Because the idea initially was very, like, like, very powerful. It, it totally is. It's very hard to not, not fall in love with it. Um, in fact, I think I raised my Series A funding by saying it's swappable battery pack, uh-

Chetan Maini 1:29:32 We'll get you there. You're going to all turn around.

Tarun Mehta 1:29:34 [chuckles]

Chetan Maini 1:29:35 Let me hear you out first. [laughs]

Tarun Mehta 1:29:37 I, I'm, I'm acknowledging that I have believed in it for a lot of- for a long time. The early designs were actually all with swappable battery pack. Um, we thought of robotic stations and everything. What happened is, I had this chat at home, and, um, everybody liked it until I asked them... until they asked me, "How will the swapping happen?" And I said, "You will take the battery out, and you will put it on station and put another one out and put it in." "Oh, yeah, makes sense. And how heavy is the battery?" And then we ran into issues. So I said, "Obviously, we'll break the battery into two parts."

Nikhil Kamath 1:30:11 How heavy is the battery?

Tarun Mehta 1:30:13 20 kgs. "So we'll break the battery into two parts-"

Nikhil Kamath 1:30:15 Mm.

Tarun Mehta 1:30:15 " -right? Uh, so you'll only have to lift, like, 10 kgs at a time, max. Maybe eight also." And I realized nobody was very excited about it.

Nikhil Kamath 1:30:24 Hmm.

Tarun Mehta 1:30:25 And very quickly it was like, "''Oh, yes, okay. Papa swap,'' I can't. Mother can't. My dad has a back issue, so maybe sister swap, but she's not in Ahmedabad right now. ''So when you go, you swap.'' And I very quickly realized the only way to actually solve this problem, because most Indian consumers were not willing to do a manual swap. See, the example that Chetan talked about, very powerful. Uh, Taiwan. The Taiwanese customer is willing to do a manual swap. They're willing to lift up that eight, 10 kg battery, one half, eight kgs, pull it up, slide it in a rack, pull another eight kg cylinder out, slide it in without breaking anything. Do this twice every couple of days. But I realized that the Indian customer, personal consumer, like, absolutely, fleet consumers will do it in a heartbeat. Like, it's, it's a no-brainer. Personal con- personal users were not super excited about doing it, and the only way to run the entire solution for them was to have an attendant at the station who would do the manual swap for them. But the minute you introduce an attendant cost, as a company in this entire infrastructure, yep, [whistles] everything just stops making sense. That's what happened to us. Then we ran into a second issue, again, not cost related. So we ran this very small experiment. Like, I was just... Basically, I would do these, a lot of these, uh, like, these mock protos, right? Like, uh, like, have the consumer just walk through the experience and see at what point do their eyes break contact. Like, you know, when do they switch off? And, uh, I was walking through somebody, this experience, and I realized the person was, "I just bought this scooter, brand-new scooter on Sunday. Monday, I go to a swap station.... and I'm going to change my battery, when do I get my battery back? I'm like, "Never." Right? Like, your battery is a commodity. Like, just think of it as petrol, right? We'll give you a battery, it's fully charged. Full range? Well, s- not full range, because listen, obviously life will deplete. You will not always have 100% battery. After three years, it'll be at 80%, but you will get 80, 85% generally. Then that's not fair, no? I just bought a brand-new scooter, you sold, you told me 100 kilometer of range on Sunday. On Monday, you give me something at 85 kilometers of range, a three-year-old battery, and I was just playing. There was, I can't solve this problem. Like, it is possibly solvable-

Chetan Maini 1:32:49 Mm.

Tarun Mehta 1:32:50 -right? But I can't solve this. The Indian... Like, I have to fight so many other battles with the Indian consumer today about electric car, Mm. And you will have to do a manual swap.

Chetan Maini 1:33:09 Mm-hmm.

Tarun Mehta 1:33:09 I realized, like, I'm just guaranteeing this, our business will fail, the way we are set up. [lips smack] So we pulled out of it.

Chetan Maini 1:33:16 Mm.

Tarun Mehta 1:33:17 Which is why we haven't agreed yet, yet.

Chetan Maini 1:33:19 So counterpoint to that.

Tarun Mehta 1:33:20 Yes.

Chetan Maini 1:33:20 It's all, all, all valid stuff. So we started with, we started with shared mobility-

Tarun Mehta 1:33:26 Mm-hmm

Chetan Maini 1:33:27 ... where, uh, where, um, [lips smack] you know, uh-

Tarun Mehta 1:33:29 Where the problem

Tarun Mehta 1:33:30 is lesser. We can manage there.

Chetan Maini 1:33:31 Where there's not an issue at all, right? And when you start with personal mobility, you know, and you're selling your first 100 scooters, you can't put infra all around the city, because the guy-

Tarun Mehta 1:33:41 Yeah

Chetan Maini 1:33:41 ... is going to say, "Where do I have it?"

Tarun Mehta 1:33:42 Mm-hmm.

Chetan Maini 1:33:43 But once infra is in place, 500 stations in Delhi, right? We have 100 in Bangalore.

Tarun Mehta 1:33:49 Mm-hmm.

Chetan Maini 1:33:49 There's 85 LPG stations in Bangalore. We have 100, which cater to 200,000.

Tarun Mehta 1:33:53 Mm-hmm.

Chetan Maini 1:33:53 We have 100 ca- stations here. Suddenly, you're saying, "Hey, I see the one out of my office. I see one outside my work. I see one outside my kid's school." Now, I'm thinking differently. So for us, it's a journey. You start with shared mobility.

Tarun Mehta 1:34:06 Mm-hmm.

Chetan Maini 1:34:07 You in- because there you're putting 500 vehicles somewhere, and you put the infrastructure up. Once you have enough infrastructure, then there's an option to look at personal mobility. There are several other things that we have learned also around the way, right? One is that the... We're doing a million swaps a month, so there is enough consumer experience. I probably agree with him that for personal mobility, you immediately need slightly lighter batteries.

Tarun Mehta 1:34:29 Mm-hmm.

Chetan Maini 1:34:29 You have, you know, different segments of the population, and shared mobility is more willing to do it, but that's okay. It's not about... It's not a technology issue, it's just what you would, uh, adapt to for that application.

Tarun Mehta 1:34:42 Mm-hmm.

Chetan Maini 1:34:42 So that's not, not an issue at all, right? Um, the second thing is that if you walked into a showroom, right? And the customer, you had a scooter that was 1.5 lakhs or so, um, it'd probably be 75 to 80K if you remove the battery, a four-kilowatt-hour battery, if there was that, and a charger and everything else, right? Now, you could tell the person, "Do you want to buy something at 75, 80K or 1.5?" Right? So the, but the p- performance is identical, the speed is identical, the acceleration is identical, the connectivity is identical. You can't even tell the difference between these two scooters-

Tarun Mehta 1:35:21 Mm-hmm

Chetan Maini 1:35:21 ... right? What would you buy? Now, let the consumer make that decision, right? So what we've found with a lot of OEMs is they have a petrol, they have a diesel, they have a CNG, they have an LPG, they have an electric, it's swappable, and they have electric and fixed. And in some markets, 70% of the sales are electric with swappable, right? Which just means consumers are walking into a showroom, have options, and decide, right? Now, 80% of India doesn't have infra at home, right? Today, when you start in the premium market, you're capturing the 10%, then the 15, then the 20. But once you go... If I ask, you know, our staff in here, and, you know, "Where, where do you go, where do you park?" You know, my maid, she said, "I bought a new sc- scooter, but I park 200 meters away from where I have to go, and I don't have infra, so I not bought electric." Right? So as you start to go to scale, infra becomes an issue, right? And that's when the swapping really adds it, because it's one minute to do it, right? So it solves that problem for you. The third reason in my, in my, you know, 15, 20 years is, everyone was concerned what happened to battery life. I bought the scooter, I bought a vehicle, it's giving me a three-year warranty, maybe an extended warranty of five. I have to pay a lot more against it. But if it goes bad, I have a huge expense towards it, right? And, and unfortunately, because of the taxation and everything else in India, a battery replacement cost could be 30% more than an OEM cost structure, right? So that really adds a huge cost, right? So this battery could be 80,000-plus for a replacement battery. When someone hears that, they say, "Oh, are you telling me I have to spend that much money, that period of time?" So that's another deterrent why they do that.

Tarun Mehta 1:37:10 But on the other side-

Chetan Maini 1:37:11 So-

Tarun Mehta 1:37:11 Can I ask you a question? Like, if you have the inventory of batteries that you're swapping now, and let's say the life cycle of a battery is eight years, 10 years, whatever the number might be.

Chetan Maini 1:37:21 It's much less for us. The re- I mean, um, the reason is-

Tarun Mehta 1:37:24 Actually, that was, I was going to call you-

Chetan Maini 1:37:26 The reason is we swap-

Tarun Mehta 1:37:27 Much more now

Chetan Maini 1:37:27 ... we swap a lot more, right?

Tarun Mehta 1:37:28 Right.

Chetan Maini 1:37:28 So our batteries are swapping, say, twice a day.

Tarun Mehta 1:37:31 Right.

Chetan Maini 1:37:31 So, uh, you know, our batteries are 3,000 cycles, they last us five years, but we're using it a lot more every day, right?

Tarun Mehta 1:37:37 Right.

Chetan Maini 1:37:37 So it's a long-life battery.

Tarun Mehta 1:37:38 So what do you do with the inventory as a business?

Chetan Maini 1:37:41 No, we have around 1.2.

Tarun Mehta 1:37:43 Mm-hmm.

Chetan Maini 1:37:43 So for every battery in the field, you have around 20% in our stations.

Tarun Mehta 1:37:46 And beyond three years, will everything be running at X percent of the efficiency today?

Chetan Maini 1:37:51 Yeah. So, so our c- customer promise is that it's 80%, you'd always get that much, right?

Tarun Mehta 1:37:57 Mm.

Chetan Maini 1:37:57 But there's a very another inter- interesting insight, right?

Tarun Mehta 1:38:00 Mm.

Chetan Maini 1:38:00 You've... We've, um, uh, we, you know, six months ago introduced a battery that's 45% more capacity.

Tarun Mehta 1:38:07 Mm.

Chetan Maini 1:38:07 Okay?... a customer that's loving it, because they, over the last two years, had range, and now they have 40% more range, 45% more range. They're paying on the same amount per kilowatt hour. So for energy, they're paying the same, but they have performance.

Nikhil Kamath 1:38:22 How do you monetize this? Who is paying for it? So you're doing B2B-

Chetan Maini 1:38:26 Yeah, so-

Nikhil Kamath 1:38:26 Essentially.

Chetan Maini 1:38:27 As B2B-

Nikhil Kamath 1:38:27 Mm-hmm.

Chetan Maini 1:38:28 -and B2C.

Nikhil Kamath 1:38:29 Mm.

Chetan Maini 1:38:29 In B2C, you're going in, you're using a certain amount of energy, you pay per kilowatt hour of energy you've used, right? If you're B2B, I've included that-

Nikhil Kamath 1:38:38 So you're not paying per swap?

Chetan Maini 1:38:39 You're paying per swap, but-

Nikhil Kamath 1:38:40 Or are you paying per kilometer driven?

Chetan Maini 1:38:43 You're paying per energy use. So think about it, kilometer driven, I'm giving you one liter of petrol. You may drive it 15 kilometers per liter, someone may drive it 10, someone may drive it 20.

Nikhil Kamath 1:38:52 Mm-hmm.

Chetan Maini 1:38:52 So I can't give you on a kilometer per liter. I can give you as a unit of energy. So like rupees per kilometer-- rupees per liter, I'm giving you rupees per kilowatt hour consumed.

Nikhil Kamath 1:39:01 Mm-hmm.

Chetan Maini 1:39:03 We're digital, and it's to the third digit, because it's all electronic, so exactly how much they've used comes on their screen, comes on their app, comes on their SMS when they get their invoice, and that's how much they've used, and they only charge for that much.

Nikhil Kamath 1:39:15 Mm-hmm.

Chetan Maini 1:39:15 So that's, that's, that's part of it. But what's very interesting is, we've had customers who've done, you know, one point five lac of kilometers on their three-wheelers. And their friend bought one with a fixed battery, and after three years, they had to spend a lac of rupees in replacement, right? And the battery capacity started at a hundred, and, in three years, dropped around sixty-five percent. Because in u- you know, fleet usage, you're, you use a lot more than probably personal. In this case, this customer, after three years, has got a battery that's forty percent better.

Nikhil Kamath 1:39:45 Mm.

Chetan Maini 1:39:46 Right? Now, in two years, or a year from today, he's going to get another ten percent. So in the ten-year life cycle of their vehicle, their, their vehicle has gotten better every year, right? Well, as you're buying something, a dep- depreciating asset that goes bad. So when you start to think of all of this, right... But it's not w- a silver bullet. Every solution is going to coexist, right? We're slow charging, fast charging, swapping, are all going to coexist, right? It depends on the customer and their choice of what they'd like to do. Would they like to... They have infrastructure at home, they don't mind paying more, they don't like to go somewhere else, they like to charge at home, that would make sense. So each one, depending on the customer's requirement. But finally, the cost structures are far more, uh, you know, beneficial, right? And also the benefit of never having to worry the battery. When someone picks up a scooter or any vehicle, my big insight has been that they buy the vehicle-- When they buy the vehicle, they always think of 1% of their usage, not ninety-nine percent. Ninety-nine percent of the time, they're doing less than forty kilometers a day. But that 1% of the time, they've got extra trip for school, with their spouse, an extra call, and they may have done a hundred.

Nikhil Kamath 1:41:05 Mm-hmm.

Chetan Maini 1:41:06 And when they do hundred, right, they're looking at least having hundred and twenty kilometers. And then they derate whatever the OEM says, unless it's Ather, where you actually, it's the other way around, where Ather gives you a very good... I mean, they're very transparent, which is very good. They're building that up, right? But that's an exception to the norm in the industry here today, right? So now suddenly, if you want that much range, you probably need a four kilowatt hour pack per scooter, right? And even at $120 a battery pack, that's four hundred and eighty, five hundred dollars with charger and everything. It may be, you know, it's more than fifty percent of bill of materials. So wherever it goes, it's going to be a very large chunk on this front. And then the other challenge in scooters and three-wheelers in India is that you can't cool them. Very difficult. You can't have air conditioning and-

Nikhil Kamath 1:41:54 Is it the batteries that heat up?

Chetan Maini 1:41:55 You can't air condition... Well, the battery life, you know, at forty-five degrees, the battery life could be maybe a third or half of-

Nikhil Kamath 1:42:01 And these batteries, are they imported or are they made in India?

Chetan Maini 1:42:05 So today-

Nikhil Kamath 1:42:05 The cells are imported, the batteries-

Chetan Maini 1:42:07 Yeah, so today, the most companies-

Nikhil Kamath 1:42:09 Mm.

Chetan Maini 1:42:09 -would import the cell and make the packs.

Nikhil Kamath 1:42:11 Mm-hmm.

Chetan Maini 1:42:11 Ather does that, we do that, right?

Nikhil Kamath 1:42:13 Mm-hmm.

Chetan Maini 1:42:13 Uh, I think in the next twenty-four months, cells will start being produced in India, right?

Nikhil Kamath 1:42:17 Mm-hmm.

Chetan Maini 1:42:18 And, uh, and maybe in forty-eight months, we'll have a very smooth chunk. But still, uh, a lot on the cell side, like, like what, what-

Nikhil Kamath 1:42:26 Solar

Chetan Maini 1:42:26 ... we talked about, you know, the panels-

Nikhil Kamath 1:42:28 Yeah, correct.

Chetan Maini 1:42:28 -and, and the, and, and the cells, right?

Nikhil Kamath 1:42:30 Different cell panel.

Chetan Maini 1:42:30 And different panels. Um, but that value is pretty high for a two-wheeler-

Nikhil Kamath 1:42:35 Right

Chetan Maini 1:42:35 ... because the packs are smaller. So that added value could be forty percent or so, to thirty to forty percent.

Nikhil Kamath 1:42:41 Oh, it's lesser now. Much lesser.

Chetan Maini 1:42:43 Right.

Nikhil Kamath 1:42:43 It's approaching what, uh, cars were at Model S. Actually, I should have framed that question to you and not to you-

Speaker 1:42:49 Yeah

Nikhil Kamath 1:42:49 ... because you're more seeing.

Speaker 1:42:50 Actually, swapping-

Nikhil Kamath 1:42:50 He's more B2B, right?

Speaker 1:42:51 Yes, the swapping in our case wouldn't work. I mean, from... I, I'll tell you my thought.

Speaker 1:42:55 Cars are premium products. People who buy cars, they, they want-- They, they're not the ones going to pull out a forty kilowatt hour battery or sixty kilowatt hour battery of the car, right? They want ease, they want comfort. That's not a two-wheeler. Nobody, whether a fleet operator like BluSmart or individual person, wants the discomfort of swapping a battery, because you bought, you bought a car for a reason, right?

Nikhil Kamath 1:43:14 And your cars don't have utility for twenty-four hours.

Speaker 1:43:16 Yeah, I'm just-

Nikhil Kamath 1:43:16 You're not flying at night.

Speaker 1:43:17 I'm just setting the context coming there. As more and more global OEMs I speak to in the US or in Europe or in India-

Nikhil Kamath 1:43:24 Mm-hmm

Speaker 1:43:24 ... they all have this thought process that, uh, and like even Tarun mentioned, that nobody wants to probably replace a new battery with an old one. They were not so attracted towards building a car with swapping, where you take the battery out and change. The good part about, the good news for us is that the range of the car is going up.

Nikhil Kamath 1:43:44 Right.

Speaker 1:43:44 Right? The range of the battery is going up. You don't need, today, I mean, for intracity purposes, you don't need, uh, batteries which are more than, like, eighty kilowatt hour-

Nikhil Kamath 1:43:55 Right

Speaker 1:43:55 ... or, or, or sixty kilowatt hour storage. I mean, that will give you nearly five hundred, seven hundred kilometers. I mean, we have-

Nikhil Kamath 1:44:00 Yeah

Speaker 1:44:00 ... um, companies which are today, or large brands, which are promising seven hundred kilometers-

Nikhil Kamath 1:44:05 Yeah

Speaker 1:44:05 ... or six hundred kilometers on a single charge. But you take the consumption doesn't happen personal mobility. Even if you look at fleet operators like BluSmart-... for intracity purposes, within the city, even if NCR, you see, I mean, you can't exhaust more than three hundred kilometers.

Chetan Maini 1:44:19 Mm.

Speaker 1:44:19 So swapping doesn't make sense for us.

Chetan Maini 1:44:21 No.

Speaker 1:44:21 I mean, I mean, that's what our thought is globally. I mean, just, I'm just telling our thought process of other fleet operators that we've speak to Revel in the US, who's also using, uh, Tesla Model Y cars for running a fleet like BluSmart. They are equivalent to BluSmart in the US. Best part about it is now the cost.

Chetan Maini 1:44:37 Mm.

Speaker 1:44:37 So if I were to now go back to unit economics and say, "Look, look, you know, apple to apple, if I bought a Swift Dzire-

Chetan Maini 1:44:44 Mm-hmm

Speaker 1:44:45 ... for seven, eight lakh rupees," I mean, now the new Swift Dzire apparently costs anywhere from six and a half lakhs to eight lakh rupees. Today, you, you can't get a Swift Dzire below eight lakh rupees, a good, loaded one with BS6 norms. A Tata car, I will have to shell out four lakh rupees more, three and a half lakh rupees more on the CapEx. So, so you are saying that, look, my CapEx is high here. It comes with a battery. My CapEx is low here. It doesn't, it doesn't have a battery here right now. But look at the utilization. If I were to use one lakh kilometers-

Chetan Maini 1:45:11 Mm-hmm

Speaker 1:45:12 ... and pay on an average between CNG and petrol and diesel, a mix of about s- six rupees per, per kilometer, I'm shelling out six lakh rupees on fuel for running the car, uh, four lakh kilometers, which is the consumption is about fourteen months or about fifteen months.

Chetan Maini 1:45:29 Mm.

Speaker 1:45:30 The same consumption on electric, I will have to pay a footer bill of eighty thousand to one lakh rupees. So the additional amount I paid for the car, I, I got back in fourteen months, just in the fuel cost. So the additional amount I paid for buying that electric vehicle, with that additional battery, I recovered that in just fourteen months because my operating cost was low. So, so I'm happy to pay for that battery up front and utilize that over fourteen months, and then I'm on par in fourteen months' time. And then, then I can continue to run my car, charge my car at ease, as per utilization. But swapping for four-wheelers, for cars, I think-

Chetan Maini 1:46:05 It's all technology.

Nikhil Kamath 1:46:06 Can I, can I ask a question?

Speaker 1:46:07 Besides... Yeah.

Nikhil Kamath 1:46:08 Without, without battery swapping, if you want to transport something from Bangalore to Goa, which is a thousand kilometers, how do you do it?

Speaker 1:46:15 I mean, you need to-

Chetan Maini 1:46:16 You'll stop once

Speaker 1:46:16 ... you have chargers in between.

Chetan Maini 1:46:17 So-

Speaker 1:46:18 And stop, for example.

Nikhil Kamath 1:46:19 And how long will it take to charge a truck?

Chetan Maini 1:46:21 Truck, a truck will likely have five hundred kilometers of range. You will stop once-

Nikhil Kamath 1:46:25 And for how-

Chetan Maini 1:46:25 ... for about three hours. You will do not a full fast charge. You will do basically a hybrid fast charge. Typically, when these buses, trucks charge, they're using three hours to charge the battery. And, and what you're doing is you're, by swapping over s- over sixteen hours, you're using an energy over sixteen hours, but each truck would use it over three hours. So any way you think about it, the grid power that you'd need, peak power, is almost three X more. And we found this when we did a, a pilot in Ahmedabad with eighteen buses, with fixed charging and swapping. The buses with fixed charging would charge over four hours at night, and they would swap the charges out of four as for the other buses. And the same buses were taken care of at one station, and we need to run a megawatt of power, and they needed two point five megawatts of power. As you go to this scale, a megawatt of power, a megawatt of transformer cost will cost you a crore rupees. So you have to think holistically. Then you need parking for all of these buses. So I mean, when you have a, when you have a huge place today to scale, and you have five thousand vehicles tomorrow, fifty thousand vehicles, you've got to park fifty thousand vehicles. What is the real estate cost of fifty thousand vehicles versus you come in, you swap in? Each of our stations for the two-wheelers today do, do two hundred swaps a day. So we have six hundred stations. So on a daily basis, I can cater to one hundred and twenty thousand scooters. Right? That's the kind of throughput we have. So the scale you're able to do to add a million vehicles in a country and five million vehicles, your infrastructure, the energy costs, the pa- the real estate cost, the solutioning around, the whole thing has to come together.

Nikhil Kamath 1:48:05 Also, it kills a bit of range anxiety, doesn't it?

Chetan Maini 1:48:09 We find that tremendously. We find that, at least, that when someone knows that two kilometers away, there's something, they use more of the battery, you know? They also gun it.

Nikhil Kamath 1:48:19 And you said eventually the differentiation is going to be brand, like it is for ICs.

Chetan Maini 1:48:25 Every business, ever.

Nikhil Kamath 1:48:27 It's not range, it's not this, it's not that.

Speaker 1:48:29 It's all commoditized.

Chetan Maini 1:48:30 So, I mean-

Speaker 1:48:30 All style commoditized.

Nikhil Kamath 1:48:31 So what, what-

1:48:32 I just have a quick question. A- are you saying tier one, tier two, tier three, everywhere in India, the same rules apply? Range anxiety, charging-

Speaker 1:48:40 Actually, we haven't seen a difference. So I'll give you usage data.

Nikhil Kamath 1:48:42 Right.

Speaker 1:48:43 We ha- we, we now sell across a hundred cities, so it's reasonably tier one, tier two, tier three distribution. Uh, our users are [chuckles] across all three towns, equal numbers. I think tier one, uh, daily usage is thirty-one kilometers. Tier two is, like, thirty-two. Tier three is, like, twenty-nine. There is no meaningful difference of usage, daily usage. There is no meaningful difference of buying patterns, tier one, tier two, tier three.

Nikhil Kamath 1:49:08 That's surprising. You're saying people in tier three are buying-

Speaker 1:49:11 It is mind-blowing. It is very confusing

Nikhil Kamath 1:49:11 ... the same percentage as tier one?

Speaker 1:49:13 It is very confusing.

Nikhil Kamath 1:49:14 Why is that?

Speaker 1:49:14 Everybody's buying in the same proportion of the premium and the entry level.

Nikhil Kamath 1:49:18 Why? Why is that?

Speaker 1:49:20 I think because everybody's generally misjudged our economy. India has always been supply constrained, not demand constrained. Like, in two-wheelers also, my biggest belief has been, since we started Ather, that everybody's misjudging the market by trying to build a, like, the... Make, trying to build a cheaper and cheaper and cheaper and cheaper two-wheeler-

Nikhil Kamath 1:49:38 Mm

Speaker 1:49:38 ... for a long time. I bought a, or rather, uh, my friend bought a Honda Activa when I was in tenth standard, when it just came about.

Nikhil Kamath 1:49:45 Mm.

Speaker 1:49:45 First Activas came about in the country. It was, I think, about forty-five thousand rupees back then.

Nikhil Kamath 1:49:51 Mm.

Speaker 1:49:52 That's 2005.

Nikhil Kamath 1:49:53 Mm.

Speaker 1:49:54 To 2015, when we had started Ather, or actually, heck, forget it, 2020, fifteen years later, the damn product was still only seventy-five thousand.

Nikhil Kamath 1:50:03 Mm.

Speaker 1:50:04 It didn't grow with inflation at all.

Nikhil Kamath 1:50:06 Mm. Mm.

Speaker 1:50:06 Purchasing power-

Nikhil Kamath 1:50:06 Now it is ninety

Speaker 1:50:07 ... grew only four times. Now ninety thousand.

Nikhil Kamath 1:50:09 Mm.

Speaker 1:50:09 ... " COVID. But, uh-

Tarun Mehta 1:50:14 ... the consumer has moved, like, a lot of steps ahead in life.

Nikhil Kamath 1:50:18 Hmm.

Tarun Mehta 1:50:19 That same customer, when he goes to the market, he's like, "If I'm buying a bike, huh, I'll spend 1.6 lakhs." If I'm buying a scooter, he's only spending 90K. Why? It's not like ""Paisa khatam ho gaya scooter kharidte hi"".-

Nikhil Kamath 1:50:28 Hmm.

Tarun Mehta 1:50:28 "90K upar koi banda scooter nahi bana raha, theek hai?" I've, I've, I'd always believed this.

Nikhil Kamath 1:50:33 Hmm.

Tarun Mehta 1:50:34 We kind of hedged our bet launching multiple variants, but every damn time we've been surprised.

Nikhil Kamath 1:50:39 Before I finish with Chetan-

Tarun Mehta 1:50:41 Yeah.

Nikhil Kamath 1:50:41 ... for our crowd, for an entrepreneur, young, starting off,

Nikhil Kamath 1:50:45 what is the opportunity in battery, like battery swapping? What can somebody build?

Chetan Maini 1:50:51 So, um, [lips smack] the-- see, the market is very large-

Nikhil Kamath 1:50:56 Hmm.

Chetan Maini 1:50:56 ... right? And, uh, there's also an existing market of e-rickshaws.

Nikhil Kamath 1:51:01 Mm-hmm.

Chetan Maini 1:51:02 There's around, uh, two million e-rickshaws, which in battery swapping and energy business is around a billion dollars a year, right? They're all in smaller cities. And, uh, um, so you've had a lot of, uh, smaller startups creating solutions for retrofit kits-

Nikhil Kamath 1:51:20 Hmm

Chetan Maini 1:51:20 ... for these, uh, for these e-rickshaws, because they use lead-acid batteries, and after nine months, these batteries die, and they have to replace it, which costs around 35,000 to 40,000 rupees. So you could, at that point, get into a subscription model, and they're able to then also use it in... You know, they do it during the day, they'll give it to their nephew or someone in the evening for three hours, so they can use it by instead of char- and lead-acids take five, six hours to charge, unlike lithium-ions, right? Because they don't have that. So clearly, that's-- and there are opportunity. And because, um, it's going to be different, India is such a big market, it's going to be difficult to be in every market and every place.

Nikhil Kamath 1:51:57 Mm-hmm.

Chetan Maini 1:51:58 There are going to be opportunities for micro entrepreneurs, um, to look at such options, uh, in this area.

Nikhil Kamath 1:52:03 So you would suggest set up charging stations or battery swapping stations?

Chetan Maini 1:52:06 This is so they can be there in the business of battery swapping, right? In the battery side of it, I think there's also... You know, we are doing franchisees, so-

Nikhil Kamath 1:52:15 Hmm

Chetan Maini 1:52:15 ... and so there could be a franchisee who takes the station, and they get a certain return.

Nikhil Kamath 1:52:19 How would that work financially? How much money would I need to put up to be a franchisee?

Chetan Maini 1:52:23 Um-

Nikhil Kamath 1:52:23 What is it called, your battery swapping company?

Chetan Maini 1:52:26 Uh, we have the SUN Mobility, right?

Nikhil Kamath 1:52:28 So-

Chetan Maini 1:52:28 So i- if you're looking at a smaller station, that's, that'll be around, uh... Well, that'll be launched in a couple of months. It'll be a lakh and a half as a franchisee fee.

Nikhil Kamath 1:52:36 And CapEx?

Chetan Maini 1:52:37 Uh, that would be a franchise. So that's what you'd give as, as a deposit, and then you get a certain revenue share, and then, um, uh, you know, tomorrow-

Nikhil Kamath 1:52:45 What do you have to spend to set it up, this, the store or the space?

Chetan Maini 1:52:48 The smaller one, they can set it up. We just send you on wheels, and it gets all online, right? The larger stations need a little bit more. Uh, the investment is around five lakhs for that area. Again, it's-

Nikhil Kamath 1:52:57 This is not including real estate and all of that?

Chetan Maini 1:52:59 No. So someone already has a shop next to that, they put this, and then they have extra business, right? And then they also have secondary businesses. He may be a tire shop, and he does this. Um, or he may be having other goods to sell. So not only he has the revenue from this, but he also creates that. So almost all our dealers have that, right? So if you think about, uh, OEMs dealers have this. If you think about it, five years from today, they're not going to have revenue on service as much, because the service of electric vehicles is much less. There are no oil changes and all this stuff.

Nikhil Kamath 1:53:28 Hmm.

Chetan Maini 1:53:28 How will they make revenue on an ongoing basis? So by giving them a franchisee model, they are able to make revenue. Not only that, typically, a station may see 50 customers a day. So those 50 customers that are coming, you can cross-sell them. You can say, "Hey, oh, your vehicle needs a service."

Nikhil Kamath 1:53:44 And how much do you mark up the electricity, your cost to the recharging thing as a franchisee?

Chetan Maini 1:53:49 I don't, I don't think it's to think of it as a markup.

Nikhil Kamath 1:53:52 Hmm.

Chetan Maini 1:53:52 What you're doing is you're doing-- you're taking a battery, and you're amortizing it, right? And then you're adding the charging infrastructure and amortizing it, and then the energy and amortizing it. But let's take a scooter. A petrol scooter would probably cost you around two rupees, two rupees, 20 paise per kilometer, right? A swap scooter may cost you between one rupee to one rupee, 20 paise per kilometer, right? And the cost of scooter would be cheaper than a petrol scooter. I'm just giving you an idea of what that would mean on this front here.

Nikhil Kamath 1:54:23 So if I were to put up one lakh rupee and set up SUN Mobility battery swapping next to my store-

Chetan Maini 1:54:30 Probably get an, between an 18 to 22% return minimum.

Nikhil Kamath 1:54:33 Even today?

Chetan Maini 1:54:34 Even today, yes.

Nikhil Kamath 1:54:35 At the frequency of people-

Chetan Maini 1:54:38 Yes

Nikhil Kamath 1:54:38 ... using battery swapping today?

Chetan Maini 1:54:39 Yeah, yeah. Right, and they could be higher-

Nikhil Kamath 1:54:42 Hmm

Chetan Maini 1:54:42 ... in the years to come, as you start to look at it.

Nikhil Kamath 1:54:44 So lastly, Tarun. [lips smack] So Tarun is a bro, and we hang out. We recently spent-

Tarun Mehta 1:54:53 I've been dragged into the hanging out. [laughing]

Nikhil Kamath 1:54:55 [laughing] Yeah. So I know his personal life a bit more than others.

Nikhil Kamath 1:55:01 Also, I have researched Tarun's company, Ather, a fair amount. Uh, maybe Tarun can start telling us a bit about himself from the beginning-

Tarun Mehta 1:55:10 Thank you

Nikhil Kamath 1:55:11 ... for everyone else listening.

Tarun Mehta 1:55:13 I'm a Marwari. Can't speak, though. Uh, but born and brought up in Ahmedabad, but can't speak Gujarati either. Uh, one of those guys who had to go to science because marks aa gaye, so science se lenge. And, uh, did science. Somebody suggested, "You should write JEE." So went for coaching, cleared JEE, luckily. Uh, got a seat in IIT Madras, so went there. Did a five-year course there. Graduated in 2012, and we started Ather a year later, in 2013. [lips smack] Uh, our love, I was trying to say even in the start at some point, was actually, uh... Our love actually was the energy industry from, like, a very long time. Me and my co-founder, Swapnil, have been calling ourselves Ather Energy since many, many years. Uh, so we really always wanted to start an energy company, [mouse clicking] uh, which is why we called ourselves Ather Energy and not Ather Motors, thanks. And to this date, we keep hoping that this becomes an energy company before we die. Uh-

Nikhil Kamath 1:56:15 Explain how, energy company?

Tarun Mehta 1:56:17 ... it's not, मतलब, it's not technically an energy company.

Nikhil Kamath 1:56:19 How become?

Tarun Mehta 1:56:20 How? I don't know.

Nikhil Kamath 1:56:22 Mm.

Tarun Mehta 1:56:22 Itna nahi socha hai. But life is, uh, in some ways very short, in some ways long enough.

Nikhil Kamath 1:56:26 Mm.

Tarun Mehta 1:56:27 So I kind of think, uh, ten to 20 years to build the two-wheeler business, and then another 20, 30 years to build the other stuff.

Nikhil Kamath 1:56:33 Do you think at some point with scale, it would make sense for you guys, if you own the charging infrastructure, to also generate your own electricity, maybe using solar?

Tarun Mehta 1:56:44 So actually, that's the plan. The energy cycle is basically generation, distribution, storage, and then application. In college, we spent many years trying to work on generation. We tried to build engines, uh, very, very high-efficiency engines. Uh, we succeeded technically, not commercially, though. So... And later on, the idea that we had was to build battery packs, which is storage, and we wanted to build a swapping network, which is distribution. So we justified to ourselves by saying, "Yaar, energy, this generation pe kaam nahi kar rahe hai, but distribution or storage pe kaam kar rahe hai. This is Ather Energy, the distribution and storage company." And later, we built-- we, we were building a scooter on the side to put that battery pack on, and we fell in love with the scooter, [chuckles] so we became a vehicle company. But I kind of still think, like, we do run a fairly large fast-charging network. Actually, in two-wheelers, it's the largest fast-charging network in the country. We-

Nikhil Kamath 1:57:38 How is that? Because your competition has incumbent distribution through service centers, right? Like, if you take-

Tarun Mehta 1:57:45 Yeah, but they don't have s- s- charging there, no.

Nikhil Kamath 1:57:48 But I would assume it's easy for a TVS or a Bajaj or a Hero to add a charging infra to existing distribution.

Tarun Mehta 1:57:58 So the problem is not technology, the problem is, what business are you in? Um, and it just, uh, it's just how you-- the lens that you apply. If you believe that you are a vehicle company, as defined by the definition of, [lip smack] we put together a vehicle and we sell the vehicle, then getting into the business of charging, unless forced to, seems kind of odd. Matlab, it's like, "Arre gari banate hai toh chalo petrol bhi bech lete hai saath mein. Kitna hi mushkil hai? Our customers, captive customers." But you don't, right? Because you kind of understand that that's not our business. So itna samajh mein aata hai company usko, so they don't get into charging unless they will really be forced to. We just think differently. We actually see this, like, as, as Punit was saying, thought synergistically. Listen, like, gari banayenge, battery bhi khud ki banayenge, charging bhi khud hi karenge. Agar enough charging station lagayenge, and if you fast charge there, then we'll need storage there th- that will supply the power to fast charge these batteries eventually. You set up, like, 20 stations ka charging, that becomes like a micro grid. Then you've got decentralized power generation, distribution, storage. Sab mein bahut hai, so it's-

Nikhil Kamath 1:58:57 You know, classical economic theory-

Tarun Mehta 1:58:59 Yes

Nikhil Kamath 1:58:59 ... like Adam Smith or the Austrian theory of economics. Take the example of a needle. When somebody tries to make a needle from start to scratch, is likely less efficient than somebody who's mining the metal required for the needle, somebody else having another expertise. So why is-- why are both of you, in particular, when it comes to your particular companies, trying to do everything from start to finish?

Tarun Mehta 1:59:29 No, not everything. There is a business.

Nikhil Kamath 1:59:32 I'll answer, but, yeah.

Tarun Mehta 1:59:33 Yeah, yeah.

Nikhil Kamath 1:59:33 Yeah.

Tarun Mehta 1:59:33 Okay. So there is a business. So, uh, uh, uh, it would be weird if I said we should build our own tires. You're not in the business of building tires, right? So if I said my business is building vehicles, then thinking charging, thinking batteries is kind of not sensible, unless you're forced to. But if I think I'm in the business of selling you energy, as, uh, as he- it really is, then the, the, the lens changes, and then, and then a few things start making sense.

Nikhil Kamath 2:00:03 But if you're not in the business of selling energy today-

Tarun Mehta 2:00:06 Uh.

Nikhil Kamath 2:00:06 -why are you thinking on these lines?

Tarun Mehta 2:00:07 So that's a dream. I think some of the things that... Most of the stuff that we do today, including setting up charging stations, is really in the service of the vehicle that we have to sell.

Nikhil Kamath 2:00:16 Mm.

Tarun Mehta 2:00:17 Right?

Nikhil Kamath 2:00:17 Are these brand agnostic? Can anybody go to your charging station?

Tarun Mehta 2:00:19 Yeah, our charging stations, a lot of people can now go, because our stat- our stat- our charging standard has become the national standard.

Nikhil Kamath 2:00:26 So if I have a Ola scooter, I can go to Ather-

Tarun Mehta 2:00:28 Because Ola hasn't adopted our standard yet, right? But Hero Vida has, Matter has. Uh, actually, a bunch of e-two-wheeler companies, and startups, and charging point operators have.

Nikhil Kamath 2:00:37 Also, also because Hero is your investor as well.

Tarun Mehta 2:00:38 Is investor, right? So that gives us an advantage there-

Nikhil Kamath 2:00:41 Mm

Tarun Mehta 2:00:41 ... right? But also being the largest two-wheeler guy on a, on the standard platform.

Nikhil Kamath 2:00:44 Mm.

Tarun Mehta 2:00:44 So the company starts thinking this way, "Hey, how can we get more people to adopt a standard?"

Nikhil Kamath 2:00:49 Mm.

Tarun Mehta 2:00:50 You won't think like that if you are a two-wheeler company-

Nikhil Kamath 2:00:52 Mm

Tarun Mehta 2:00:52 ... if I think like a two-wheeler company. But if I think like, "Hey, I'm ultimately, like, 50 years out-

Nikhil Kamath 2:00:55 Mm

Tarun Mehta 2:00:55 ... I'm in the business of getting you low-cost energy-

Nikhil Kamath 2:00:58 Mm

Tarun Mehta 2:00:58 ... then I'm thinking a little differently long term.

Nikhil Kamath 2:01:00 Mm.

Tarun Mehta 2:01:00 My decisions are a little different.

Nikhil Kamath 2:01:02 So market shares today is, say, 30 Ola, 20 TVS, 15 Ather.

Tarun Mehta 2:01:08 12.

Nikhil Kamath 2:01:09 12 Ather?

Tarun Mehta 2:01:09 Yeah.

Nikhil Kamath 2:01:10 Seven, eight Bajaj?

Tarun Mehta 2:01:12 Bajaj is also at 12, 13 now, basically.

Nikhil Kamath 2:01:14 Bajaj has picked up awfully.

Tarun Mehta 2:01:15 Yeah, they've got enough distribution today, right? So they can turn on the distribution. Sab jagah dukan open kar sakta hai.

Nikhil Kamath 2:01:21 So with distribution, these guys are able to achieve scale faster than a Ola or Ather might be?

Tarun Mehta 2:01:28 Short term, absolutely.

Nikhil Kamath 2:01:31 But why not long term?

Tarun Mehta 2:01:33 Long-term distribution is not really a moat in India-

Nikhil Kamath 2:01:37 Mm

Tarun Mehta 2:01:37 ... is not really a distribute- kyunki that was the '80s ka India, when MSME was a difficult thing.

Nikhil Kamath 2:01:42 Mm.

Tarun Mehta 2:01:43 So if you could get enough entrepreneurs to sell your vehicle-

Nikhil Kamath 2:01:45 Mm

Tarun Mehta 2:01:46 ... you have a, actually a moat.

Nikhil Kamath 2:01:48 Mm.

Tarun Mehta 2:01:48 But today, MSME interest in setting up e-two-wheeler distribution is crazy.

Nikhil Kamath 2:01:53 Mm.

Tarun Mehta 2:01:53 Like, we have, I think this is six months la- six months ago, we had, I think, 20,000 or 30,000 dealer applications.

Nikhil Kamath 2:02:00 Mm.

Tarun Mehta 2:02:00 For a business case that requires you to put 2 crores upfront.

Nikhil Kamath 2:02:03 Mm.

Tarun Mehta 2:02:03 Now, there are a lot of people who can do this. There are, like, 10,000 companies who run automotive dealerships in India, all scared to hell, "Ki bhai, electric seekhna hai."

Nikhil Kamath 2:02:12 Mm.

Tarun Mehta 2:02:12 "Otherwise, we have no future." Right? So what are the best two-wheeler companies or e- electric car companies? Unka distribution le lo. You are already coming with an investment mindset. "I want to invest and learn this for the next five years."

Nikhil Kamath 2:02:22 Mm.

Tarun Mehta 2:02:23 So you can scale up. So for example, we will go from-... uh, we've gone from, like, zero to one fifty, zero to two hundred touchpoints in, like, two and a half years.

Nikhil Kamath 2:02:32 Mm.

Tarun Mehta 2:02:32 We'll go from two hundred touchpoints to a thousand touchpoints in the next two and a half years.

Nikhil Kamath 2:02:35 Mm.

Tarun Mehta 2:02:35 At which point you've crossed oil and field scale already-

Nikhil Kamath 2:02:37 Mm.

Tarun Mehta 2:02:38 -what took them possibly thirty years?

Nikhil Kamath 2:02:39 Mm.

Tarun Mehta 2:02:40 So distribution is a very weak moat now in India.

Nikhil Kamath 2:02:42 Mm.

Tarun Mehta 2:02:42 So it's a low-hanging advantage-

Nikhil Kamath 2:02:44 Mm

Tarun Mehta 2:02:44 ... for incumbents, because they can turn on the tap faster-

Nikhil Kamath 2:02:46 Mm

Tarun Mehta 2:02:46 ... maybe a year ahead of us, but it's that much.

Nikhil Kamath 2:02:49 Mm.

Tarun Mehta 2:02:50 After that, it's a lot of other things.

Nikhil Kamath 2:02:51 I think I keep coming back. See, here I have, like, a personal interest, right? Especially in your space, more so than yours, 'cause it's, uh, more compet- more competitive in the public domain, what is happening to Ather, what is happening to Ola, because there are two very similar companies trying

Nikhil Kamath 2:03:10 to build a similar product. What do you think Ather is doing well where Ola isn't? And what do you think Ola is doing well where Ather isn't?

Tarun Mehta 2:03:20 What Ola's doing well, and what we are not, is, uh, getting the message out.

Nikhil Kamath 2:03:25 Marketing?

Tarun Mehta 2:03:26 Their marketing is damn good compared to us. Um, they've been able to crack... They've been able to ensure that a lot of people have heard about them and the fact that they have a two-wheeler. Uh, every brand track, every marketing research that we do, the biggest problem that we discover is that people don't even know what is Ather.

Nikhil Kamath 2:03:43 Mm.

Tarun Mehta 2:03:43 Like up north, the biggest feedback that I get is that most people think that if they have heard of Ather, ""Ye koi European, Norwe- Norwegian company hogi"-

Nikhil Kamath 2:03:52 Mm.

Tarun Mehta 2:03:53 "Pata nahi India mein kab tak rahegi?"

Nikhil Kamath 2:03:54 What does Ather mean?

Tarun Mehta 2:03:55 It's a Greek word.

Nikhil Kamath 2:03:57 Meaning?

Tarun Mehta 2:03:57 It's, uh, cleanest form of air.

Nikhil Kamath 2:04:01 Mm.

Tarun Mehta 2:04:01 So Ather energy was meant to be cleanest form of energy.

Nikhil Kamath 2:04:03 What is the difference between a cell and a battery? And when we said batteries all of these times, and in the Indian context,

Nikhil Kamath 2:04:10 what does it actually mean? Do you wanna take that?

Chetan Maini 2:04:13 Sure. So, um, we see battery as a battery pack, which is looking at cells. Then you integrate thermal management, the mechanical, you put all the sensors, the electronics, and then you're, you know, closing it up and making it a pack, right? Um, there's a lot of hardware and software and other stuff that goes. It's customized for the application it's designed for.

Nikhil Kamath 2:04:36 And the temperature as well.

Chetan Maini 2:04:37 And the temperature, and then the thermal management's very important. The new regulation coming in, um, there are a lot of new safety, uh, regulations that have come in that are quite stringent, um, that require a, a lot of, uh, innovative designs-

Nikhil Kamath 2:04:50 Mm

Chetan Maini 2:04:50 ... uh, to manage thermal on-

Nikhil Kamath 2:04:52 Mm

Chetan Maini 2:04:52 ... the side, for safety, as well as to enhance your life on this front.

Nikhil Kamath 2:04:56 Is anybody making cells in India? Are we able to compete with China?

Tarun Mehta 2:05:01 Making cells is a commodity. It's not a technology business, it's a, [clears throat] it's setting up any, any commodity manufacturing today. The, the challenge of setting up cell manufacturing in India for a while now has been demand in here, and the minimum investment required is pretty high. Like, if you're not putting-- if you're not bringing four, five thousand crores to the table, practically, it'll be very difficult for your plant to have the size and your purchasing to have the size to really make this make any sense. Forget competing with the LGs and Samsungs of the world.

Nikhil Kamath 2:05:33 Mm.

Tarun Mehta 2:05:34 Um, but the other problem has been demand, isn't it? Like, even if you set up a five thousand crore plant, the, the production out of it has to be sold to somebody. That's only happened now.

Nikhil Kamath 2:05:42 Is Ola attempting?

Tarun Mehta 2:05:43 Ola is attempting building the cells.

Nikhil Kamath 2:05:45 Why is that?

Tarun Mehta 2:05:46 The logic there is that vertical integration will help reduce cost further.

Nikhil Kamath 2:05:52 But will that take their cost below Chinese import?

Tarun Mehta 2:05:54 I'll give you one data point.

Nikhil Kamath 2:05:55 Mm.

Tarun Mehta 2:05:57 Most cell manufacturing companies, the really enormous ones-

Nikhil Kamath 2:06:00 Mm

Tarun Mehta 2:06:00 ... like LG Chem, Panasonic, all these guys, even in the best times that they made cells and sold cells at, like, crazy ability to sell price at any point, ""koi bhi price pe bech sakte hai vo log"-

Nikhil Kamath 2:06:11 Mm.

Tarun Mehta 2:06:11 Right? Like last year, basically. Their pads have generally not crossed into double digits.

Nikhil Kamath 2:06:17 Yes.

Tarun Mehta 2:06:17 They've been generally, like, four, five percent, six percent called pad businesses.

Nikhil Kamath 2:06:20 Mm.

Tarun Mehta 2:06:21 Um, and they're very high technology businesses. So I've generally considered cell manufacturing as this really complexly bad combo, very high tech with commodity margins. So it only makes strategic sense, it generally doesn't make cost sense.

Nikhil Kamath 2:06:35 I'm trying to understand as a layman-

Chetan Maini 2:06:37 Correct

Nikhil Kamath 2:06:37 ... the chemistry of a cell. But maybe we start from the very simple fact of cell, battery, what is it? What is involved? I don't know who wants to take it.

Chetan Maini 2:06:50 Go ahead.

Tarun Mehta 2:06:51 See, uh-

Nikhil Kamath 2:06:51 Very simple, layman. Like, think I'm an, I am an idiot, but look at me and explain it to me, not to you guys.

Tarun Mehta 2:06:58 You, then you should take a stab at it. [laughing] You'll explain, you'll explain better than-

Chetan Maini 2:07:02 No, no, no

Tarun Mehta 2:07:02 ... most of us on the table. Any of us on the table. [laughing]

Chetan Maini 2:07:04 [laughing] Um, so, uh, a cell has an anode-

Nikhil Kamath 2:07:09 Mm

Chetan Maini 2:07:09 ... right, and a cathode-

Nikhil Kamath 2:07:10 Mm

Chetan Maini 2:07:10 ... right? And, like, a separator that separates the two, so they don't short. And then you put an electrolyte in it, and then you put that into a, in a container, and then put the electrolyte in it, and that's what forms... Think of your, your typical double A cell-

Nikhil Kamath 2:07:24 Mm

Chetan Maini 2:07:24 ... or anything that you have, right? And cylindrical cells are very common. They're still a larger size, something closer to probably, uh, something between a C-size battery, approximately that. It's called a twenty-

Nikhil Kamath 2:07:35 Mm

Chetan Maini 2:07:35 ... twenty-six, um, uh, size diameter, and, uh, you know, a seven fifty in length.

Nikhil Kamath 2:07:40 Mm.

Chetan Maini 2:07:41 So this would be, uh, probably a standard way of how you look at a cell, right? And-

Tarun Mehta 2:07:45 It's literally filled with... It's called a jelly can, jelly roll. It's literally filled with jelly.

Chetan Maini 2:07:50 Mm.

Nikhil Kamath 2:07:50 Right.

Tarun Mehta 2:07:50 That's the electrolyte layer.

Chetan Maini 2:07:51 As-

Nikhil Kamath 2:07:51 So lithium and cobalt does not come in at the cell level, it comes in when you're packaging?

Chetan Maini 2:07:55 No, no, no, it's at the cell, right?

Nikhil Kamath 2:07:57 Mm.

Chetan Maini 2:07:57 So your, your, um, your cathode has your, has your-- it has an NMC-

Nikhil Kamath 2:08:02 Mm

Chetan Maini 2:08:02 ... which is nickel, manganese, cobalt.

Nikhil Kamath 2:08:05 Mm.

Chetan Maini 2:08:05 It could be NCA-

Nikhil Kamath 2:08:07 Mm

Chetan Maini 2:08:07 ... right, uh, on this front, which is what, say, some companies do. And then the, the, and then you have LFP, which is lithium manganese phosphate. So there are different chemistries, and even in this-

Nikhil Kamath 2:08:18 So when I hear lithium-ion battery, what, what does it mean?

Chetan Maini 2:08:21 So it could be all of them.

Nikhil Kamath 2:08:22 Mm.

Chetan Maini 2:08:22 So lithium-ion would be anything that is a lithium battery.

Nikhil Kamath 2:08:26 So what is the role of lithium in a cell?

Chetan Maini 2:08:28 ... it is one of the materials, as you, I mean, if you-

Nikhil Kamath 2:08:31 Storage.

Chetan Maini 2:08:31 If you think of-

Nikhil Kamath 2:08:32 Easy storage.

Chetan Maini 2:08:32 If you think of a cell to create a potential difference, right? You try and get two materials, and if you remember the periodic table, at an end where you can get a big difference. Lithium happens to be an area where the potential difference between that, and the energy it can keep is very high-

Nikhil Kamath 2:08:50 Mm

Chetan Maini 2:08:50 ... compared to, say, lead.

Nikhil Kamath 2:08:51 Storage.

Chetan Maini 2:08:51 Or so lead, aluminum, aluminum air, lead-acid batteries-

Nikhil Kamath 2:08:55 Mm

Chetan Maini 2:08:55 ... right? Your standard batteries, they all have different nickel zinc. Each one has its... You're taking two materials that have a differential in the periodic table, and you're using that to look at it, right? So that's the more- you store more energy in a battery if it can, it can, like lithium, because the difference in the periodic table is much higher.

Nikhil Kamath 2:09:13 I'm sorry, I, I know nothing about science, but when you say differential, what do you mean?

Chetan Maini 2:09:18 Well, think of it that if you, if you, uh, had water-

Nikhil Kamath 2:09:22 Mm-hmm

Chetan Maini 2:09:22 ... and you try to put water from one feet or three feet, right? So think of it from three feet, you'd get a lot more-

Nikhil Kamath 2:09:28 Mm

Chetan Maini 2:09:28 ... versus from one foot, right? So that would be the potential difference you could have.

Nikhil Kamath 2:09:32 In?

Chetan Maini 2:09:33 In, that would be the equivalent of saying, "I have two materials," right? "And if the potential is higher," right, then the-

Nikhil Kamath 2:09:41 When you're saying potential, I'm not... My mind is not able to picture potential of what?

Chetan Maini 2:09:46 So the, the potential would be, in this case, let's simplify, it would be voltage, right? So if I have a bigger difference between two points-

Nikhil Kamath 2:09:55 Mm-hmm

Chetan Maini 2:09:56 ... the voltage would be bigger, and that's equivalent for me, you know, pouring water from a foot or three feet, right? So if I'm pouring it from three feet, as oppo-

Nikhil Kamath 2:10:04 Are you talking about the material's ability to pass voltage through it?

Tarun Mehta 2:10:09 No, that's resistance.

Nikhil Kamath 2:10:11 Uh.

Tarun Mehta 2:10:12 So-

Nikhil Kamath 2:10:12 So when you're saying potential, potential of storing electrons, or what?

Tarun Mehta 2:10:17 No, it is a- potential is basically the difference between the cathode and anode, right?

Nikhil Kamath 2:10:22 Mm.

Tarun Mehta 2:10:23 So if you've got a bigger difference-

Nikhil Kamath 2:10:24 Mm

Tarun Mehta 2:10:24 ... electrical difference between them-

Nikhil Kamath 2:10:27 Mm

Tarun Mehta 2:10:27 ... then you can generate, with all things being equal, a higher amount of current. Okay?

Nikhil Kamath 2:10:33 Mm.

Tarun Mehta 2:10:33 So current, think of that as the speed of the water.

Nikhil Kamath 2:10:35 Mm.

Tarun Mehta 2:10:35 Right? That's it.

Nikhil Kamath 2:10:36 Mm.

Tarun Mehta 2:10:36 So the higher up you go in the building, the faster the water will drop, right-

Nikhil Kamath 2:10:42 Mm

Tarun Mehta 2:10:42 ... when it comes to the ground.

Nikhil Kamath 2:10:43 Mm.

Tarun Mehta 2:10:43 If you drop it from, as he said, like stable height, it is-

Nikhil Kamath 2:10:46 So you're saying if the battery is bigger-

Tarun Mehta 2:10:48 No, it's not the length.

Nikhil Kamath 2:10:49 Mm.

Tarun Mehta 2:10:49 It is, it is the, uh, electrical difference. It is basically the periodic table, what he's talking about-

Nikhil Kamath 2:10:54 Mm

Tarun Mehta 2:10:55 ... uh, which the difference comes in. So lead will generate lesser potential, and lithium will, I think, generate b- higher potential.

Chetan Maini 2:11:01 So if you take the standard cell that you get for your-

Nikhil Kamath 2:11:04 Mm

Chetan Maini 2:11:04 ... remote control-

Nikhil Kamath 2:11:04 Mm-hmm

Chetan Maini 2:11:05 ... it has a 1.5 volts.

Tarun Mehta 2:11:07 That's zinc, right?

Chetan Maini 2:11:07 Right, right.

Nikhil Kamath 2:11:08 Zinc.

Chetan Maini 2:11:09 So, so zinc-carbon or whatever, right. Then you look at, uh, lead acid, right? It will be around two volts.

Nikhil Kamath 2:11:15 Mm.

Chetan Maini 2:11:15 Then you look at lithium iron phosphate-

Nikhil Kamath 2:11:17 Mm

Chetan Maini 2:11:17 ... it'll be around 3.2 volts. And you look at lithium iron or NMC chemistry, it'll be around 3.6 volts. So now if you think that I can have three times or 2.5 times the-

Nikhil Kamath 2:11:29 Mm

Chetan Maini 2:11:29 ... potential voltage, which means the amount of energy I can get is much more, because energy is cur- current times the voltage. So if I have two times more voltage or two and a half times more voltage, then I can give you a lot more energy.

Nikhil Kamath 2:11:42 So is this where lithium and cobalt is used?

Tarun Mehta 2:11:45 Cobalt is, um... See, basically, you, you dope these things. The, the voltage difference is no- it's not because of cobalt. You can have cobalt or low-cobalt chemistries, and the voltage will be very similar. Uh, cobalt determines the energy content, uh, and the res- I think the resistance is different because of the cobalt that you use.

Suruchi Rao 2:12:04 What are the ions actually going across the anode?

Tarun Mehta 2:12:07 Wait, the resistance basically changes.

Suruchi Rao 2:12:08 Is it actually the lithium? Is it lithium ions which are moving?

Tarun Mehta 2:12:12 Yeah, yeah.

Suruchi Rao 2:12:12 So it's, it... So surprisingly, I, somehow I feel like I should know this, but I don't. So does lit-

Chetan Maini 2:12:17 You're the one who's the, the PhD in [laughing] ...

Suruchi Rao 2:12:20 And yet, I'm... So is, is lithium like a consumable?

Chetan Maini 2:12:24 Well, it-

Suruchi Rao 2:12:24 So what happens at the end of a battery's life?

Chetan Maini 2:12:25 Well, when you charge it back, it goes back, right, so at this point. So over time, you get-

Tarun Mehta 2:12:29 The lithium is not, the lithium is not consumed.

Suruchi Rao 2:12:31 Ah.

Tarun Mehta 2:12:31 A cell loses life because its resistance-

Suruchi Rao 2:12:34 Okay

Tarun Mehta 2:12:34 ... keeps increasing.

Chetan Maini 2:12:34 So-

Tarun Mehta 2:12:35 So what happens is the-

Suruchi Rao 2:12:36 So its ability to-

Tarun Mehta 2:12:36 The, the medium through which-

Suruchi Rao 2:12:37 The door is getting-

Tarun Mehta 2:12:38 The medium through which electrons are traveling, no?

Suruchi Rao 2:12:40 Right.

Tarun Mehta 2:12:41 That just keeps getting, uh, for lack of a better, better word, just worse and worse. Just more, more, uh, the resistance is increasing.

Chetan Maini 2:12:48 So, so over time-

Suruchi Rao 2:12:49 Uh-huh

Chetan Maini 2:12:50 ... there's deterioration.

Tarun Mehta 2:12:50 Electrons don't flow well.

Chetan Maini 2:12:52 There's deterioration with what's called lithium plating.

Suruchi Rao 2:12:54 Right.

Chetan Maini 2:12:54 So as if it goes, the voltage goes very low, that the lithium is actually deposited.

Suruchi Rao 2:12:59 Uh-huh.

Chetan Maini 2:13:00 And that prevents electrons from going through, right?

Suruchi Rao 2:13:02 Right.

Chetan Maini 2:13:02 Because now it's become a layer.

Suruchi Rao 2:13:04 Right.

Chetan Maini 2:13:04 So that's how the cells would... One of the ways the cells would deteriorate-

Suruchi Rao 2:13:07 Right

Chetan Maini 2:13:07 ... is that they actually, uh, the, it starts over, over time, a little bit of it, from the aqueous solution in the-

Suruchi Rao 2:13:14 Right

Chetan Maini 2:13:14 ... in the electrolyte will actually start to get deposited, right? And that starts to, over time, deteriorate.

Suruchi Rao 2:13:18 So why is it called lithium-ion battery?

Tarun Mehta 2:13:21 Because the lithium ions are sort of-

Chetan Maini 2:13:22 Lithium ions-

Tarun Mehta 2:13:23 Flow between

Suruchi Rao 2:13:23 So they are still the ones-

Tarun Mehta 2:13:24 Yeah, but they're not getting consumed, right? Like, they're staying inside the cell.

Suruchi Rao 2:13:27 Right. So because you're able to reverse the charges.

Tarun Mehta 2:13:29 Yeah.

Chetan Maini 2:13:29 Correct.

Tarun Mehta 2:13:29 Yeah, obviously.

Nikhil Kamath 2:13:30 Okay, so we understood broadly what a cell is. Now, when people say, like I was talking to that Log9, a bunch of battery companies, which I realized later are not making cells, predominantly packaging cells into making them batteries.

Tarun Mehta 2:13:45 Right.

Nikhil Kamath 2:13:45 How does one battery company compare to another? Why is one better, another worse? What it- what goes into the process of packaging cells into a battery?

Chetan Maini 2:13:56 You mean in battery manufacturing?

Nikhil Kamath 2:13:58 Battery... Would you call it manufacturing?

Tarun Mehta 2:13:59 Pack manufacturing.

Chetan Maini 2:14:00 Pack manufacturing. Pack-

Tarun Mehta 2:14:01 The right description would be pack manufacturing.

Nikhil Kamath 2:14:01 Or packing, right?

Tarun Mehta 2:14:04 [sighs] Nee, packing can mean something else.

Nikhil Kamath 2:14:06 Uh.

Tarun Mehta 2:14:06 Packing could happen with a built battery pack also, technically.

Nikhil Kamath 2:14:09 Yeah.

Tarun Mehta 2:14:09 So battery

Tarun Mehta 2:14:10 pack assembly-

Nikhil Kamath 2:14:11 Assembly

Tarun Mehta 2:14:11 ... is the right description for that.

Nikhil Kamath 2:14:13 Yeah.

Tarun Mehta 2:14:13 You can have an ridiculously high amount of difference between companies building battery packs using the same cells.

Nikhil Kamath 2:14:21 Who all are doing it in India, and what are they doing differently?

Tarun Mehta 2:14:23 Mostly, it's OEMs doing for their own internal purposes.

Nikhil Kamath 2:14:26 Explain OEMs, because-

Tarun Mehta 2:14:27 OEMs are basically vehicle manufacturing companies, right?

Chetan Maini 2:14:29 Original equipment manufacturers.

Tarun Mehta 2:14:31 Um, yeah. So all of us build our own battery packs, typically.

Nikhil Kamath 2:14:33 Mm.

Tarun Mehta 2:14:33 Like, all the key OEMs in India now build their own battery packs.

Nikhil Kamath 2:14:35 Assembly.

Tarun Mehta 2:14:37 ... we build our battery packs. We don't build batteries, we build our battery packs, and we definitely don't build cells today.

Nikhil Kamath 2:14:44 Mm.

Tarun Mehta 2:14:44 Uh, obviously, there are companies like Chetan's, who are building battery packs because it's, it's a, it's a slightly different business.

Nikhil Kamath 2:14:49 Mm.

Tarun Mehta 2:14:49 Um, but the differences come from three possible layers, and I think we did talk about it. One is basically the thermal management. Thermal management is actually, in my opinion, possibly the biggest single dif- differentiation between all quality companies. There is actually a level below that, just the quality of assembly. [laughing] You can just assemble-- you can just weld the cells wrongly.

Nikhil Kamath 2:15:12 Mm. Is that only because we are more tropical in nature than China?

Tarun Mehta 2:15:15 No, no, no, no, no.

Nikhil Kamath 2:15:16 What, what is thermal management? Is it because we are hotter?

Tarun Mehta 2:15:18 Before we get to thermal management-

Nikhil Kamath 2:15:19 Yeah

Tarun Mehta 2:15:19 ... let me just describe how actually painfully complex cell battery pack manufacturing is, assembly is.

Nikhil Kamath 2:15:24 Mm.

Tarun Mehta 2:15:25 In a typical-- forget the cars, cars are too many. Like even in a scooter, right? In our typical scooter, you will have about, let's say, two hundred cells.

Nikhil Kamath 2:15:33 Mm.

Tarun Mehta 2:15:34 You will have roughly about eight hundred welds.

Nikhil Kamath 2:15:37 Mm.

Tarun Mehta 2:15:37 Eight hundred welds that will happen for these two hundred cells-

Nikhil Kamath 2:15:40 Mm.

Tarun Mehta 2:15:40 - two welds on each sides.

Nikhil Kamath 2:15:41 Mm.

Tarun Mehta 2:15:43 If any of those welds is, is wrong, that mean that's, that cell, that particular cell will lose life very quickly. Like, literally, it could lose life within a few weeks-

Nikhil Kamath 2:15:55 Mm

Tarun Mehta 2:15:55 ... right? Uh, maybe sometimes months, but usually within a few weeks, the pack can go off.

Nikhil Kamath 2:16:00 Mm.

Tarun Mehta 2:16:00 So you've got to get all your eight hundred welds correctly.

Nikhil Kamath 2:16:03 Mm.

Tarun Mehta 2:16:03 Okay? Getting eight hundred welds correctly, for most companies, implies a higher level of manufacturing excellence-

Nikhil Kamath 2:16:12 Mm

Tarun Mehta 2:16:12 ... than the famous Six Sigma. Six Sigma is three failures per million. Here, if you do three failures per million welds, that means, I think one in a thousand or one in two thousand battery packs are guaranteed to fail-

Nikhil Kamath 2:16:25 Mm

Tarun Mehta 2:16:25 ... which is a pretty crazy number for a pack manufacturing for, for like a, uh, OEM.

Nikhil Kamath 2:16:30 Mm.

Tarun Mehta 2:16:30 Because the risk of a pack failing in the field is just crazy high.

Nikhil Kamath 2:16:32 Mm.

Tarun Mehta 2:16:33 So it is a damn hard job-

Nikhil Kamath 2:16:35 Mm

Tarun Mehta 2:16:35 ... just to get the welding right.

Nikhil Kamath 2:16:36 How much of your resources are going into building battery packs out of cells?

Tarun Mehta 2:16:42 Between [exhaling] battery team, battery, BMS, and manufacturing engineering, uh, my guess is that somewhere in the range of sixty to a hundred people, about a hundred people, possibly.

Nikhil Kamath 2:16:53 And who all-

Tarun Mehta 2:16:54 Less than that.

Nikhil Kamath 2:16:54 Who all are doing it well in India, battery pack assembly, building?

Tarun Mehta 2:16:58 I think most OEMs, like, let's say, us, TVS, Bajaj, Ola, uh, Tata, uh-

Nikhil Kamath 2:17:07 Is that the big differentiation that everybody's fighting over?

Tarun Mehta 2:17:09 So I think all, all famous, uh, auto companies that you know of right now-

Nikhil Kamath 2:17:14 Mm

Tarun Mehta 2:17:14 ... they're all building reasonable, okay packs. But between us also, you will see significant battery life differences that are not going to be understood yet.

Nikhil Kamath 2:17:23 Mm.

Tarun Mehta 2:17:23 So, for example, our oldest battery packs are now five years in the field, uh, and we have-- they are still at ninety percent plus health, which means we are now internally starting to project eight to ten-year battery life. We know in the industry that I think most of our competitors will also get to four, five-year battery life.

Nikhil Kamath 2:17:41 Mm.

Tarun Mehta 2:17:42 But eight to ten is going to be very difficult for most OEMs.

Nikhil Kamath 2:17:45 Mm.

Tarun Mehta 2:17:46 It's a difference that will emerge over the course of a decade.

Nikhil Kamath 2:17:49 Mm.

Tarun Mehta 2:17:49 Consumer go understand name, okay, acha, Ather battery pack, like how Honda engine became famous over a ten, twenty-year period.

Nikhil Kamath 2:17:55 Mm.

Tarun Mehta 2:17:55 Oh, perfect rhythm, like-

Nikhil Kamath 2:17:57 Mm

Tarun Mehta 2:17:57 ... no sound, amazing quality, but not visible in the first year or two, right?

Nikhil Kamath 2:18:01 Mm.

Tarun Mehta 2:18:01 So, but it's a refined difference that will not be understood today. Most OEMs are building enough sensible battery packs, key, agni lag jayegi, teen, cha, panch sal tak jyada farak nahi padna chahiye.

Nikhil Kamath 2:18:09 So range is dependent on how many cells are in the battery pack?

Tarun Mehta 2:18:14 Yeah. Yeah.

Nikhil Kamath 2:18:15 That determines range of the vehicle.

Tarun Mehta 2:18:17 So now coming to the thermal valley-

Nikhil Kamath 2:18:18 And does it also... Like, let's say, how, how much does a Ather scooter weigh?

Tarun Mehta 2:18:23 About hundred and two to hundred and six kgs, I think.

Nikhil Kamath 2:18:27 And this may battery cover weight kya hai?

Tarun Mehta 2:18:29 About eighteen to twenty kgs.

Nikhil Kamath 2:18:30 So if you add fifty percent more cells to your battery-

Tarun Mehta 2:18:34 Ah

Nikhil Kamath 2:18:34 ... pack, your range will go up fifty percent?

Tarun Mehta 2:18:36 Yeah, yeah. Possibly even more-

Nikhil Kamath 2:18:38 Mm

Tarun Mehta 2:18:38 ... for some efficiency reasons, minor.

Nikhil Kamath 2:18:42 So range is not really-

Tarun Mehta 2:18:44 It's not technology.

Nikhil Kamath 2:18:45 It's cost.

Tarun Mehta 2:18:45 Range is, range is just cost.

Nikhil Kamath 2:18:47 Right.

Tarun Mehta 2:18:47 Range is a product spec decision.

Nikhil Kamath 2:18:49 Mm.

Tarun Mehta 2:18:50 How kita range chahie hai? Obviously, it's, it gets mis-sold as like, you know, somebody's cracked this amazing battery that will do thousand kilometers in a car. So do battery lagati hai. [chuckles] Amazing technology nahi crack kari hai.

Nikhil Kamath 2:19:00 Mm.

Tarun Mehta 2:19:01 Yeah. So range is, uh, generally not a technology problem. Uh, where technology comes in, are basically thermal management bol raha tha.

Nikhil Kamath 2:19:07 Mm.

Tarun Mehta 2:19:07 Where is thermal-- thermal management mein, what is the difference? For example, right now, we are the only player where we don't put any restriction on fast charging.

Nikhil Kamath 2:19:16 Mm.

Tarun Mehta 2:19:17 So we tell our customers, "If you want to fast charge practically every day, be my guest."

Nikhil Kamath 2:19:20 Mm.

Tarun Mehta 2:19:20 Right? Kar lo. Because-

Nikhil Kamath 2:19:22 Otherwise, what is the problem with fast charging?

Tarun Mehta 2:19:23 Most companies, like, for example, I have a Hyundai, they recommend, I think, one in ten charges to be a fast charge, I think.

Nikhil Kamath 2:19:31 Mm.

Tarun Mehta 2:19:31 And I think most companies recommend, "Don't fast charge if it's a very hot day. Don't fully-"

Nikhil Kamath 2:19:35 Because it reduces the potential in the cells?

Tarun Mehta 2:19:38 [exhaling] Because your cells heat up. Every time you pass current through your battery pack-

Nikhil Kamath 2:19:42 Mm

Tarun Mehta 2:19:42 ... current flows through your cells-

Nikhil Kamath 2:19:44 Mm

Tarun Mehta 2:19:44 ... and the cells heat up in the process. Okay. Now, when you turn on the vehicle and the current has to flow through the cells again to go to your motor, the cell again heats up. In both processes, it heats up. It's like, think of a pipe.

Nikhil Kamath 2:19:56 Mm.

Tarun Mehta 2:19:56 If you're, like, just basically rubbing the pipe really fast or rubbing the table really fast,

Tarun Mehta 2:20:00 it'll heat up.

Nikhil Kamath 2:20:00 Mm.

Tarun Mehta 2:20:00 That's exactly what's happening inside the cell.

Nikhil Kamath 2:20:02 And then how do you cool down the bike once it heats up?

Tarun Mehta 2:20:04 That's thermal management. So you can do it multiple ways.

Nikhil Kamath 2:20:07 Mm.

Tarun Mehta 2:20:07 Cars may typically it's active, which means pankha lagaya hoga, or there will be a li- liquid-

Nikhil Kamath 2:20:11 Mm

Tarun Mehta 2:20:11 ... which will pass through the battery pack and will cool the-

Nikhil Kamath 2:20:13 In bikes, you have liquid cooled, air cooled, like that.

Tarun Mehta 2:20:15 Ha, but none of, none of us in India does liquid cooling for two-wheeler.

Nikhil Kamath 2:20:18 Mm.

Tarun Mehta 2:20:18 Crazy cost structure ho jayega. Doesn't make sense today.

Nikhil Kamath 2:20:20 Mm.

Tarun Mehta 2:20:20 So all of us do different kind of passive cooling, which means we'll route air, like vehicle jab move ho raha hai, so we'll route air through around the battery pack. Uh, we will put very interesting materials-

Nikhil Kamath 2:20:31 Mm

Tarun Mehta 2:20:31 ... inside the battery pack-

Nikhil Kamath 2:20:33 For example?

Tarun Mehta 2:20:33 ... that will take the heat out. There are these materials called phase change materials.

Nikhil Kamath 2:20:37 Mm.

Tarun Mehta 2:20:37 Unme kya hoga, basically, uh, if the cell heats, let's say, fifty degree Celsius-

Nikhil Kamath 2:20:41 Mm

Tarun Mehta 2:20:42 ... any temperature, any heat above fifty degrees, ye material khich lega.

Nikhil Kamath 2:20:45 Mm.

Tarun Mehta 2:20:46 And this material will basically become a jelly-

Nikhil Kamath 2:20:48 Mm

Tarun Mehta 2:20:48 ... as it takes the heat out.

Nikhil Kamath 2:20:49 Mm.

Tarun Mehta 2:20:49 So fifty to a fair degree of temperature, it'll just keep changing its-

Nikhil Kamath 2:20:53 Mm.

Tarun Mehta 2:20:54 It literally phase change ho jayega uska.

Nikhil Kamath 2:20:55 Mm.

Tarun Mehta 2:20:56 And then as it gets time to cool down, it'll again be harden up.

Nikhil Kamath 2:20:59 Mm.

Tarun Mehta 2:21:00 Right? So you've got these materials, you've got a lot of epoxy.

Nikhil Kamath 2:21:02 Mm.

Tarun Mehta 2:21:03 We use a lot of aluminum everywhere, like bhar bhar ke.

Nikhil Kamath 2:21:06 I might sound really stupid asking this, but I read somewhere ki when you stop at a traffic light-

Tarun Mehta 2:21:12 Yeah

Nikhil Kamath 2:21:14 ... that braking kinetic energy is also converted into electrical.

Tarun Mehta 2:21:20 Most-

Nikhil Kamath 2:21:20 Does it happen in a-

Tarun Mehta 2:21:21 Yeah, mostly.

Chetan Maini 2:21:21 Yes, regenerative braking, yes.

Nikhil Kamath 2:21:22 How does that-- That's very interesting. How does that work?

Chetan Maini 2:21:25 So the motor just becomes a generator.

Nikhil Kamath 2:21:28 Uh.

Chetan Maini 2:21:28 Right? So a motor, you know, um, uh, r- run the other way actually generates energy back. So as you press the brake pedal or you put it in neutral, you can get it back, right? Um, in cars, driving, you get probably eighteen to twenty percent, um-

Nikhil Kamath 2:21:46 That's very high.

Chetan Maini 2:21:47 Yeah, eighteen, twenty.

Nikhil Kamath 2:21:49 That's very high.

Chetan Maini 2:21:49 Yeah. I mean, I'm telling you, after millions of kilometers of data from our ve- from the vehicles we have done-

Nikhil Kamath 2:21:55 In bikes?

Chetan Maini 2:21:55 Eighteen to twenty percent. Bikes, um-

Tarun Mehta 2:21:57 Oh, definitely.

Chetan Maini 2:21:58 Most, most bikes, um-

Nikhil Kamath 2:22:00 Is that a factor of the mass? The more mass-

Chetan Maini 2:22:01 Well, it's also the way you've set the region up, but most bikes in India give you six to ten percent.

Tarun Mehta 2:22:06 Actually, I talk about what we do.

Chetan Maini 2:22:08 And, and when we've optimized, we've gone up to eighteen percent. So it again depends on the controller, the algorithm, how you integrate it. Um, there's a lot of work that goes behind it and, you know, we... Over fifteen years of doing that, we've optimized a lot more-

Nikhil Kamath 2:22:26 Mm

Chetan Maini 2:22:26 ... on that front. It's an important piece of it, right? But then also, of course, you think about it, when you put a lot of energy, it's charging the battery back, so therefore, the batteries heat up.

Nikhil Kamath 2:22:36 Right.

Chetan Maini 2:22:37 The challenge in scooters in cities like Delhi, when it's forty-five ambient, even the air going around it is going to be forty-five, right? So, um, the batteries is harder to cool down in a midday if you're trying to fast charge it or this, right? So that's one of the concerns. In the winter, it's okay, or in climates like Bangalore, it may be okay. But, um, with-- That's where active cooling becomes more important. So if we take the battery and put it in a station, for example, the station's air-conditioned, so the battery's come down to twenty-five degrees. So even if the ambient is forty-five-

Nikhil Kamath 2:23:10 Mm

Chetan Maini 2:23:11 ... the battery comes down to twenty-five.

Nikhil Kamath 2:23:12 So how does that e-affect, say, Ather in Delhi versus Ather in Bangalore, on, on ground?

Chetan Maini 2:23:18 Well, cells in generally at forty-five to twenty-five degrees, you could have almost half the life.

Nikhil Kamath 2:23:25 Yeah.

Chetan Maini 2:23:25 That means if batteries are at forty-

Tarun Mehta 2:23:26 That's correct.

Chetan Maini 2:23:27 Right. So, so it's very important-

Nikhil Kamath 2:23:29 Mm

Chetan Maini 2:23:29 ... um, that, that it is. So cells don't like hot-

Nikhil Kamath 2:23:34 Mm.

Chetan Maini 2:23:34 -and they don't like hot and fully charged.

Nikhil Kamath 2:23:35 And what happens in a cell when it's hot?

Chetan Maini 2:23:38 So when it's hot, the chemicals-

Nikhil Kamath 2:23:39 What material is-

Chetan Maini 2:23:40 ... the chemicals start to disintegrate a little bit, right? So at a higher temperature, like most chemicals, where as you increase the temperature, the deterioration is higher, right? So a high charge rate and high temperature has a multiplying effect, because when there's so much energy there, then there's a lot more corrosion happening internally, right?

Nikhil Kamath 2:23:59 So if I'm buying a five-year-old electric scooter from Delhi versus Bangalore, I should pay half the price for the Delhi one versus- [laughing]

Tarun Mehta 2:24:05 Half the price. [laughing] So, so I'll tell you what, what... While, while all of that is correct-

Nikhil Kamath 2:24:10 Mm

Tarun Mehta 2:24:10 ... um, and obviously cells degrade. Like, there are literally these cracks that kind of-- I, I forget the, the technical term, stereokite ya kuch naam tha unka. Literally cracks that form, that increase the resistance. More the resistance, harder it is for current to travel, and your energy drops. N-But what ha- what is happening right now is, for the last five, six years-

Nikhil Kamath 2:24:31 Mm

Tarun Mehta 2:24:32 ... um, and cell manufacturers don't like to claim this because they don't like the liability-

Nikhil Kamath 2:24:36 Mm

Tarun Mehta 2:24:36 ... that may potentially come with it.

Nikhil Kamath 2:24:38 Mm.

Tarun Mehta 2:24:38 But most good cell manufacturers have actually pushed the life pretty high, but they don't want to basically claim it, right? Because they will be then held responsible agar utna life bolunge toh. So what we are realizing is, in-- even in a place like Delhi-

Nikhil Kamath 2:24:53 Mm

Tarun Mehta 2:24:53 ... at the end of five years-

Nikhil Kamath 2:24:54 Mm

Tarun Mehta 2:24:55 ... cells are still probably good at eighty-five, eighty-seven percent.

Nikhil Kamath 2:24:59 Mm.

Tarun Mehta 2:24:59 Uh, battery packs, sorry, not cells, battery packs. In Bangalore, that number might be ninety.

Nikhil Kamath 2:25:03 Mm.

Tarun Mehta 2:25:03 Right? Now, the difference would be if you run the vehicle a lot, right?

Nikhil Kamath 2:25:07 Mm.

Tarun Mehta 2:25:07 Like in a commercial-- Like, ye log jo use kar rahe hai, I'm sure they will notice there will be a battery, uh... Well, active cooling might make a difference, but if you-

Nikhil Kamath 2:25:14 What is active cooling?

Tarun Mehta 2:25:15 Basically, pass the liquid, vagairah, vagairah.

Nikhil Kamath 2:25:17 Ah.

Tarun Mehta 2:25:17 Keep the temperature-

Nikhil Kamath 2:25:18 The thing which converts into a gel

Tarun Mehta 2:25:19 ... keep the temperature low. If you don't do that, and you run-- let's say, if you run even our scooter, a hundred kilometers or one fifty kilometers every day-

Nikhil Kamath 2:25:25 Mm

Tarun Mehta 2:25:26 ... let's say, thirty thousand kilometers, thirty-five thousand kilometers in a year, which is-

Nikhil Kamath 2:25:29 Mm

Tarun Mehta 2:25:29 ... pretty crazy. No personal consumer ever will do it.

Nikhil Kamath 2:25:31 Mm.

Tarun Mehta 2:25:31 You will notice that the scooter in Bangalore is lasting longer than the scooter in Delhi, except that you will likely hit cale- like, basic uski life, you will hit. Okay? Right now, what's happening is, most, ninety-nine percent of our consumers-

Nikhil Kamath 2:25:45 Mm

Tarun Mehta 2:25:45 ... the batteries will literally expire.

Nikhil Kamath 2:25:48 Mm.

Tarun Mehta 2:25:48 Woh jo calendar aging hoti hai na.

Nikhil Kamath 2:25:50 Mm.

Tarun Mehta 2:25:50 They will just literally expire.

Nikhil Kamath 2:25:51 Mm.

Tarun Mehta 2:25:51 Then they will hit usage-

Nikhil Kamath 2:25:53 Mm

Tarun Mehta 2:25:53 ... ke karan expiry. So in some sense, if you do enough of a good work with thermal management-

Nikhil Kamath 2:26:00 Mm

Tarun Mehta 2:26:01 ... whether you are in Bangalore, whether you are in Delhi, whether you fast charge every day or you fast charge once in a week, you ride with three people, you ride with a single person, you ride at ninety, you ride at thirty very patiently-

Nikhil Kamath 2:26:12 Mm

Tarun Mehta 2:26:12 ... you charge sensibly, you never take, take it to hundred percent, or you always take it to hundred percent, all of it is making a limited delta.

Nikhil Kamath 2:26:19 Mm.

Tarun Mehta 2:26:20 Sab similarly, sabka battery aath sal chal jayega roughly.

Nikhil Kamath 2:26:23 Mm.

Tarun Mehta 2:26:23 Kisika saat, kisika aath. So it's not making enough of a difference now. It's cool-

Nikhil Kamath 2:26:27 And what is the story? You often see, like, these viral,

Nikhil Kamath 2:26:31 uh-

Tarun Mehta 2:26:32 Viral

Nikhil Kamath 2:26:32 ... dramatic memes of lithium is in Chile, and cobalt is in Congo-

Tarun Mehta 2:26:38 For that

Nikhil Kamath 2:26:39 ... and China controls both the mines?... ऐसे बहुत आते हैं। [laughing] Don't you see them? So many memes about Congo and Chile, and talk about how China controls all refining capacity, and we'll be dependent on them forever.

Punit Goyal 2:26:54 I think something has been discovered in India also now.

Nikhil Kamath 2:26:56 In Kashmir, but they say-

Punit Goyal 2:26:57 Australia has a-

Nikhil Kamath 2:26:57 ... there's no refining capacity, so even that has to go to China.

Punit Goyal 2:27:00 That, that-

Tarun Mehta 2:27:00 Deposits are there.

Punit Goyal 2:27:01 It won't take more than two years to set up.

Tarun Mehta 2:27:01 So I mean, I mean, just like, just like, you know-

Punit Goyal 2:27:03 ... Afghanistan has

Tarun Mehta 2:27:03 ... there, there, there's an area where, you know, lithium, in a way, is the next oil, right? So I think the government's also thinking, what are the strategic partnerships you create? Like, this is created from an oil energy point of view, right? So there's already conversations with South American countries, Australia, and stuff to say, "Okay, let's have these partnerships to do it." And that has to be done if, uh, certain raw materials have scarcity, right? But also, what will happen to nickel in 10 years, right? Um, recycling will play a very large role in a market like India.

Nikhil Kamath 2:27:34 Mm.

Tarun Mehta 2:27:35 'Cause these batteries, once they're c- off... You know, today, your cell phone batteries and everything were very small, and they were very different formats. But, you know, um, as one of these car batteries may be equivalent to 5,000 cell phone batteries.

Nikhil Kamath 2:27:50 Mm.

Tarun Mehta 2:27:50 So any recycling is there. And today, recycling costs are actually... Earlier, you used to pay to recycle, now you can make money out of it. If anything can make money in, in, in a market like India where you sell paper and recycle it-

Nikhil Kamath 2:28:04 Extrapolate. Make money out of it, how?

Tarun Mehta 2:28:05 It means when you recycle it, you can sell back the-

Nikhil Kamath 2:28:09 More than the cost of recycling.

Punit Goyal 2:28:11 Oh, damn!

Nikhil Kamath 2:28:12 Oh.

Punit Goyal 2:28:12 Oh, yeah.

Tarun Mehta 2:28:12 So let me give you the number for. For example, just the cost of material-

Nikhil Kamath 2:28:16 Mm

Tarun Mehta 2:28:17 ... just the material alone-

Nikhil Kamath 2:28:18 Mm

Tarun Mehta 2:28:18 ... in a typical four kilowatt-hour battery pack-

Nikhil Kamath 2:28:20 Mm

Tarun Mehta 2:28:21 ... is about $240 today, right? About $60 a kilowatt hour.

Nikhil Kamath 2:28:25 Just the-

Tarun Mehta 2:28:25 This is the raw material inside.

Nikhil Kamath 2:28:27 Mm.

Tarun Mehta 2:28:27 Like, literally the cost of material, not like the assembled, processed stuff.

Nikhil Kamath 2:28:30 Cost of recycling the material to get it back?

Tarun Mehta 2:28:32 Possibly 1,000, 2,000 rupees. $10, $15, $20.

Nikhil Kamath 2:28:37 Yeah.

Tarun Mehta 2:28:37 So if you, like, uh, like, one of the places where people should go after-

Nikhil Kamath 2:28:42 Mm

Tarun Mehta 2:28:42 ... in India-

Nikhil Kamath 2:28:43 Mm

Tarun Mehta 2:28:43 ... guaranteed-

Nikhil Kamath 2:28:44 Mm

Tarun Mehta 2:28:44 ... is recycling.

Nikhil Kamath 2:28:45 Mm.

Tarun Mehta 2:28:45 Granted, you will not get that entire $240 yourselves-

Nikhil Kamath 2:28:48 Mm

Tarun Mehta 2:28:48 ... because enough people in the chain who will take that mon- money away from you. But the delta is so large-

Nikhil Kamath 2:28:54 Mm

Tarun Mehta 2:28:54 ... that even if you were to make, like, 2, 3,000 rupees-

Nikhil Kamath 2:28:57 Mm

Tarun Mehta 2:28:57 ... in a pack, it's huge.

Nikhil Kamath 2:28:58 Mm.

Tarun Mehta 2:28:59 And the national policy is very- is almost going in the direction of lithium, once in the country, should never exit the country.

Punit Goyal 2:29:07 Mm.

Tarun Mehta 2:29:07 Right? एक बार अगर इम्पोर्ट कर लिया ना लिथियम, इतना पेन लेके फॉरेक्स देके, तो bloody make sure it never [chuckles] like... Please make sure you never have- it never leaves the country accidentally.

Nikhil Kamath 2:29:15 Who, uh, who- Is that a viable business? I was gonna come to this question. From all that you spoke about, you started this business in 2013, '14 with a friend of yours-

Tarun Mehta 2:29:25 Yes

Nikhil Kamath 2:29:25 ... with less capital. If I'm a young entrepreneur today, wanting to start something here, where do you see the opportunity? Is it in cell recycling? Is it in trying to build... I'm gonna come back to the bike itself. You said 20 kilos out of 104 is the battery, then we'll go to the chassis and the other parts. But where do you see the opportunity?

Tarun Mehta 2:29:48 So I think recycling of cells is a very big opportunity. Uh, I think they're captive requirements. Like, for example, if you came to us today and you said, "Hey, I will run basically a contract shop for you. You give us all your reject battery packs, I will strip them down, I'll convert into raw materials, which you can sell to your cell supplier back," right? It essentially fixes my pricing, right? अभी आजकल अगर लिथियम का प्राइस बड़ा, so I have to pay more for a production for a month, right? [sniffs] If I have enough cells coming back, then I can just basically remove that fluctuation out. Steady state.

Nikhil Kamath 2:30:22 So what do I need to start this business?

Tarun Mehta 2:30:24 There is enough tech available. You- today, we'll probably need a JV immediately, if you want to fast-track.

Nikhil Kamath 2:30:31 With?

Tarun Mehta 2:30:31 [exhales] With some company in Europe or probably in, uh, China or, uh, Korea-

Nikhil Kamath 2:30:36 Mm

Tarun Mehta 2:30:36 ... who will have recycling tech. Or you can spend a couple of years and just figure shit out yourself.

Nikhil Kamath 2:30:39 But there are companies in India who-

Tarun Mehta 2:30:41 And there are good companies in India also, sure

Nikhil Kamath 2:30:42 ... who are doing recycling and are setting up shop even outside India.

Tarun Mehta 2:30:45 Yeah. Yeah, yeah. So you set up s- uh, recycling. I think it is, it is, it is such a stable business.

Nikhil Kamath 2:30:52 Mm.

Tarun Mehta 2:30:53 इतना बैटरी इंडिया में बनने वाला है-

Nikhil Kamath 2:30:54 Mm

Tarun Mehta 2:30:55 ... 250 million vehicles, going to go to 350 million vehicles.

Nikhil Kamath 2:30:58 Mm.

Tarun Mehta 2:30:59 And annually, out of that, three- 30 million is gonna come back.

Nikhil Kamath 2:31:01 Mm.

Tarun Mehta 2:31:02 And 10, 15 years later, a very large chunk of that will be electric.

Nikhil Kamath 2:31:05 Mm.

Tarun Mehta 2:31:05 You've got almost a guaranteed business-

Nikhil Kamath 2:31:07 Mm

Tarun Mehta 2:31:07 ... right? [sniffs] Sure, you may not make like... It, it's not gonna be like a 50% margin business-

Nikhil Kamath 2:31:12 Mm

Tarun Mehta 2:31:12 ... but you don't have to worry about demand at all, right?

Nikhil Kamath 2:31:14 What if I want to start an electric scooter?

Tarun Mehta 2:31:17 Then you will need something disruptive, as-

Nikhil Kamath 2:31:19 Like, what do you think the next disruptive thing there is?

Tarun Mehta 2:31:24 [chuckles] Give away my roadmap. [chuckles] Uh, see, so I think the market's changed from the time we started, right?

Nikhil Kamath 2:31:31 Mm.

Tarun Mehta 2:31:31 When we started, the disruption was the spec.

Nikhil Kamath 2:31:33 Mm.

Tarun Mehta 2:31:34 Us saying, कि हमने जब स्टार्ट किया था, the best electric scooter in the market did 25, maybe 30, 35 kilometers per hour, top speed. वो 800 watts, really, मिक्सी का मोटर था.

Nikhil Kamath 2:31:45 Hey, this also you didn't answer. We said double the number of cells, double the number of amount of range.

Tarun Mehta 2:31:50 Correct.

Nikhil Kamath 2:31:51 What determines the speed of the scooter?

Tarun Mehta 2:31:53 Motor. Motor power.

Nikhil Kamath 2:31:56 Mm.

Tarun Mehta 2:31:56 And the motor power is determined by the battery size in some cases, okay? So bigger the battery, it can supply more current.

Nikhil Kamath 2:32:03 Mm.

Tarun Mehta 2:32:04 And if you want more speed, you need a bigger motor.

Nikhil Kamath 2:32:06 Mm.

Tarun Mehta 2:32:07 A rule of thumb, you want to go from, let's say, [exhales] e- e- every 10% speed increase-

Nikhil Kamath 2:32:14 Mm

Tarun Mehta 2:32:14 ... increases the motor power by roughly about 30%.

Nikhil Kamath 2:32:16 Mm.

Tarun Mehta 2:32:16 Something like that, roughly.

Nikhil Kamath 2:32:17 Mm.

Tarun Mehta 2:32:18 So, बड़ा मोटर लगाओ, you will go faster.

Nikhil Kamath 2:32:20 So are these the main parts? There's a motor, there's a battery pack, there's a chassis, there's tires, whatever, like body, and then what else?

Tarun Mehta 2:32:26 There's a charger. There is a motor controller, another piece of electronics.

Nikhil Kamath 2:32:30 Is that what determines how much current goes into the motors?

Tarun Mehta 2:32:32 Yeah. Motor controller is quite important.

Nikhil Kamath 2:32:34 And that determines the top speed.

Tarun Mehta 2:32:35 Actually, a lot of the IP today for companies sits inside the motor controller. Motor itself has limited

Tarun Mehta 2:32:40 IP these days.

Nikhil Kamath 2:32:40 Can you break that down a little bit? Explain how a motor controller works.

Tarun Mehta 2:32:45 ... to run a motor-

Nikhil Kamath 2:32:46 Hmm

Tarun Mehta 2:32:46 ... you need some- somebody to control, somebody to send signals and control the power that it gets.

Nikhil Kamath 2:32:52 Hmm.

Tarun Mehta 2:32:53 See, motor may, if you just supply-

Nikhil Kamath 2:32:54 In my mind, I'm thinking IC vehicle. I'm thinking there is a spark plug-

Tarun Mehta 2:32:58 I'll see if I can take that-

Nikhil Kamath 2:32:59 Expanding pistons.

Chetan Maini 2:33:01 Yeah, but think of it very simply.

Nikhil Kamath 2:33:02 Uh.

Chetan Maini 2:33:02 You have a regulator for your fan in your house, right? For your fan, you kind of do a one speed-

Nikhil Kamath 2:33:08 Yeah, yeah, yeah

Chetan Maini 2:33:08 ... two speed, three speed, four speed.

Nikhil Kamath 2:33:09 Yeah.

Chetan Maini 2:33:10 The motor controller does that in a very sophisticated manner.

Tarun Mehta 2:33:13 Hmm. In a very sophisticated way. [laughing]

Nikhil Kamath 2:33:14 What is the uniqueness in this? [laughing] So what is the big unique-- like, what is the differentiation between your motor controller and Ola's motor controller? I'm just taking you guys