Nikhil KamathEp# 14 | WTF is Happening with EV? Nikhil ft. Founders of Reva, Ather, Blusmart, and Ossus
EVERY SPOKEN WORD
150 min read · 30,005 words- 0:00 – 0:30
Introduction
- NKNikhil Kamath
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.
- 0:30 – 6:50
Punit's Introduction into Renewable Energy space
- NKNikhil Kamath
And action!
- NKNikhil Kamath
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.
- SPSpeaker
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.
- NKNikhil Kamath
Where is that?
- SPSpeaker
Uh, Sydenham is in Bombay.
- NKNikhil Kamath
Mm-hmm.
- SPSpeaker
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-
- NKNikhil Kamath
So you did two masters in?
- SPSpeaker
Yeah, in the UK. Yeah, one in London, one in Birmingham. Um...
- NKNikhil Kamath
Are you married? Do you have a girlfriend? [laughing]
- SPSpeaker
[chuckles] Okay. I didn't-- I was not focused.
- NKNikhil Kamath
On girls?
- SPSpeaker
Yeah.
- NKNikhil Kamath
What were you focused on?
- SPSpeaker
Maybe just, uh, trying to find my way out, figuring out to start a business or something.
- NKNikhil Kamath
Have things changed at thirty-nine? H-how is this not an interview? [laughing]
- NKNikhil Kamath
[laughing]
- SPSpeaker
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-
- NKNikhil Kamath
Market for?
- SPSpeaker
Uh, for solar panels.
- NKNikhil Kamath
Mm.
- SPSpeaker
Nobody anticipated that, and people were ramping up capacities for supplying panels and cells to Europe-
- NKNikhil Kamath
Mm.
- SPSpeaker
-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-
- NKNikhil Kamath
You ran this with your family?
- SPSpeaker
Just myself. And big lesson learned, I didn't have any co-founder at that time. Uh, just by myself-
- NKNikhil Kamath
Came away from it with some liquidity?
- SPSpeaker
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-
- NKNikhil Kamath
Which year was this?
- SPSpeaker
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.
- 6:50 – 9:50
Inspiration behind Blusmart
- NKNikhil Kamath
For a second, I was like: "Wait, what is going on here?" [laughing]
- TMTarun Mehta
So it's an absolute twist.
- SPSpeaker
Okay. [chuckles]
- NKNikhil Kamath
Okay, then you started BluSmart. What is BluSmart? Tell us.
- SPSpeaker
Yeah, so after my third venture, okay-
- NKNikhil Kamath
Mm.
- SPSpeaker
... that was another small, uh, seventy-odd megawatt plant.
- NKNikhil Kamath
You walked away with sixty-eight million dollars.
- SPSpeaker
Yeah.
- NKNikhil Kamath
You had a lot-
- SPSpeaker
I didn't walk it away. I mean, I had to give some money back to, uh, lenders also.
- NKNikhil Kamath
Okay, you walked away with fifty million dollars.
- SPSpeaker
Some money, some money. Uh, let's keep it at some money.
- NKNikhil Kamath
Did you buy something nice?
- SPSpeaker
Some money. [chuckles] And then, uh, my third venture was another solar project.
- NKNikhil Kamath
Mm.
- SPSpeaker
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-
- NKNikhil Kamath
Mm
- SPSpeaker
... in getting up that power plant also. So three solar ventures, and I was kind of done-
- NKNikhil Kamath
Again, sold it to?
- SPSpeaker
Sorry?
- NKNikhil Kamath
Again, sold that-
- SPSpeaker
Yeah, yeah, sold that to a large-listed entity in India. They're also into renewable space, a very large renewable energy company.
- NKNikhil Kamath
Suzlon?
- SPSpeaker
Suzlon, correct, yeah, absolutely spot on. Um, so, so these are three ventures, and I was kind of done with solar, and, uh, I-
- NKNikhil Kamath
So you've been making money for a long time.
- SPSpeaker
Actually, I lost the money in my first venture, tons of money.
- NKNikhil Kamath
Third one? Third one?
- SPSpeaker
Third one, yeah, third one made money, yeah.
- NKNikhil Kamath
How much did you sell that for?
- 9:50 – 15:30
What is Blusmart?
- NKNikhil Kamath
BluSmart? If you had to define BluSmart in one line.
- SPSpeaker
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-
- NKNikhil Kamath
Mm
- SPSpeaker
... challenge, and that nobody's talking about it.
- NKNikhil Kamath
So are you focused on the charging infra or running a fleet of electric cars?
- SPSpeaker
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-
- NKNikhil Kamath
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?
- SPSpeaker
Well, you need more money for charging infra, because charging infra is a direct investment-
- NKNikhil Kamath
Mm
- SPSpeaker
... in our case, if I can speak so.
- NKNikhil Kamath
And do you charge only your vehicles there, or is it open for others as well?
- SPSpeaker
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-
- NKNikhil Kamath
And why EVs?
- SPSpeaker
The utilization happens, you build more charging infra.
- NKNikhil Kamath
Why EVs instead of ICE right now?
- SPSpeaker
So-
- NKNikhil Kamath
What is the big advantage?
- SPSpeaker
Yeah, I mean, EVs have massive advantages, right? So on the business side, the operating costs are super low.
- NKNikhil Kamath
Because?
- SPSpeaker
Right, so the operating cost of running EVs is low.
- NKNikhil Kamath
Because?
- SPSpeaker
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.
- NKNikhil Kamath
Mm.
- SPSpeaker
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-
- NKNikhil Kamath
Mm
- SPSpeaker
... 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.
- NKNikhil Kamath
So how much does it cost you today to ply one kilometer on your EV? What vehicle do you use?
- SPSpeaker
I personally?
- NKNikhil Kamath
No, BluSmart.
- SPSpeaker
BluSmart, we have, uh, a fleet of, uh, five thousand plus Tata Tigor cars.
- 15:30 – 21:12
Economics behind Blusmart
- SPSpeaker
or a small car.
- NKNikhil Kamath
Wait, do you own your cars?
- SPSpeaker
I- in a way, yeah. So, so we lease all these cars, but we have an obligation to pay for the lease. So-
- NKNikhil Kamath
Lease from?
- SPSpeaker
Leasing, lease from DFIs. So we have secured-
- NKNikhil Kamath
What are DFIs?
- SPSpeaker
Development financial institutions who fund these cars.
- NKNikhil Kamath
Give me an example.
- SPSpeaker
So IRIDA, Indian Renewable Energy Development Agency, Power Finance Corporation.
- NKNikhil Kamath
So they buy it, and you lease it from them?
- SPSpeaker
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.
- NKNikhil Kamath
And what is their contribution in the SPV, and what is yours?
- SPSpeaker
So they give the loan to that SPV.
- NKNikhil Kamath
Mm.
- SPSpeaker
And that SPV, that entity, will lease cars to BluSmart. We give the deposit, say, the margin money for procuring that loan, for example-
- NKNikhil Kamath
Can you, can you break it down for me? How much does this Tata car, car cost?
- SPSpeaker
Say, the car cost, say, for example, say, will be thirteen lakhs. That's an average.
- NKNikhil Kamath
Okay.
- SPSpeaker
I mean, it could be lower for, for us at this scale.
- NKNikhil Kamath
Only for that car in particular?
- SPSpeaker
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.
- NKNikhil Kamath
Okay.
- SPSpeaker
And then the loan is given.
- NKNikhil Kamath
Okay.
- SPSpeaker
And, uh, the money is paid to Tata Motors for the cost of the car.
- NKNikhil Kamath
Right, and they charge you a rate of interest on that?
- SPSpeaker
Yes. So there's a... Yeah, so the DFI will charge the rate of interest-
- NKNikhil Kamath
About?
- SPSpeaker
... for the loan, it's up ten percent. It's about nine, nine percent.
- NKNikhil Kamath
And if anybody who-- any young entrepreneur who wants to start a EV car fleet can create this, an entire model on their own?
- 21:12 – 24:00
Opportunities in Solar Power Plants
- NKNikhil Kamath
uh, setting up solar power plants today?
- SPSpeaker
Yeah, of course. I mean, Anmol continues to, uh, also run and operate Gensol-
- NKNikhil Kamath
Mm
- SPSpeaker
... 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-
- NKNikhil Kamath
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?
- SPSpeaker
Depends on your offtake. I mean, a megawatt plant investment could be in the range of three to three point two five crores. Um-
- NKNikhil Kamath
And that number has come down from ten, twelve, whatever.
- SPSpeaker
It used to be f- eighteen crores a megawatt, uh, back in 2012.
- NKNikhil Kamath
Mm.
- SPSpeaker
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-
- NKNikhil Kamath
And how much do you yield on that?
- SPSpeaker
I mean, it depends what your offtake was. So that doesn't change.
- NKNikhil Kamath
Explain offtake, please.
- SPSpeaker
At the price at which you're selling the power.
- NKNikhil Kamath
Mm.
- SPSpeaker
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.
- NKNikhil Kamath
Who determines what rate you sell power at?
- SPSpeaker
Discom does, the offtaking entity does, the, the-
- NKNikhil Kamath
What is the offtaking entity?
- SPSpeaker
... regulator does. So there are, so, so there are two ways, right? So you can sell power to state.
- NKNikhil Kamath
Mm.
- SPSpeaker
Like, for example, in my case-
- NKNikhil Kamath
Mm
- SPSpeaker
... 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.
- NKNikhil Kamath
Can you do that? Can you sell not to a Discom or the government, but sell individually?
- SPSpeaker
You can also do individual, yeah, yeah, for individual complexes-
- NKNikhil Kamath
But do you have to be near the company that you're selling to? Otherwise, how do you transport it?
- SPSpeaker
No, no. I mean, I mean, it could be near if you have empty land.
- NKNikhil Kamath
Let's say I buy... How much land do you need for one megawatt?
- SPSpeaker
Four acres of megawatt.
- 24:00 – 26:30
How is Blusmart structured?
- NKNikhil Kamath
to today? On the five thousand fleet, what is the top line, bottom line?
- SPSpeaker
[chuckles] So we are, uh, nearly four hundred and, uh, forty crores, uh, around ARR.
- NKNikhil Kamath
Mm-hmm.
- SPSpeaker
Uh, we're doing a revenue of close to one point three to one point four crores per day revenue.
- NKNikhil Kamath
Mm-hmm. Mm-hmm.
- SPSpeaker
Uh, good days, it's a little higher.
- NKNikhil Kamath
Charging-... and the car put together?
- SPSpeaker
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-
- NKNikhil Kamath
Mm-hmm.
- SPSpeaker
-BluSmart Fleet, and BluSmart Tech.
- NKNikhil Kamath
Mm.
- SPSpeaker
Which are three independent subsidiaries, but all reporting to the hold co. BluSmart Charge-
- NKNikhil Kamath
Mm-hmm
- SPSpeaker
... invests in the real estate, uh, and probably leases the land-
- NKNikhil Kamath
Mm-hmm
- SPSpeaker
... builds all the charging infra, operates all the charging infra. The BluSmart Fleet, uh, SPV leases electric cars-
- NKNikhil Kamath
Mm
- SPSpeaker
... pays for the drivers, and runs all the paraphernalia on the ride-hailing business. BluSmart Tech, which owns the IP, the, the BluSmart app-
- NKNikhil Kamath
Right
- SPSpeaker
... for consumers. And they all work together in tandem, where the charging company charges for the charging services-
- NKNikhil Kamath
Mm-hmm
- SPSpeaker
... 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-
- NKNikhil Kamath
And are you able to, at this scale, do it profitably?
- SPSpeaker
Yeah. So the charging infra is today profitable.
- NKNikhil Kamath
Mm-hmm.
- SPSpeaker
Uh, because we had the in-house anchor tenant-
- NKNikhil Kamath
Mm-hmm
- SPSpeaker
... so that was profitable. Ride-hailing is a, you know, network effect game-
- NKNikhil Kamath
Mm
- SPSpeaker
... so we have to really go deep and wide. Um-
- 26:30 – 29:06
Who is Suruchi Rao?
- NKNikhil Kamath
Uh, who'd like to go next? So Ruchi, would you?
- SRSuruchi Rao
Really?
- NKNikhil Kamath
Yeah.
- SRSuruchi Rao
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.
- NKNikhil Kamath
Yeah.
- SRSuruchi Rao
Still talks about what I do-
- NKNikhil Kamath
Yeah
- SRSuruchi Rao
... but, uh-
- NKNikhil Kamath
But give us more.
- SRSuruchi Rao
Right, um-
- NKNikhil Kamath
Start from the beginning.
- SRSuruchi Rao
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.
- NKNikhil Kamath
Mm.
- SRSuruchi Rao
To him, everything is in cycles of centuries.
- NKNikhil Kamath
Mm-hmm.
- SRSuruchi Rao
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.
- NKNikhil Kamath
Mm-hmm.
- SRSuruchi Rao
But I've sort of had a contrarian opinion for exactly that reason, so I've done nothing but energy.
- NKNikhil Kamath
Would you like to, just for context-
- SRSuruchi Rao
Yeah
- NKNikhil Kamath
... like, uh, would you like to explain-
- SRSuruchi Rao
Mm
- NKNikhil Kamath
... climate change in a brief
- 29:06 – 34:10
Experts explain what Climate Change is
- NKNikhil Kamath
minute?
- SRSuruchi Rao
Absolutely.
- NKNikhil Kamath
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?
- SRSuruchi Rao
So what does greenhouse-
- NKNikhil Kamath
Yeah.
- SRSuruchi Rao
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-
- CMChetan Maini
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?
- SRSuruchi Rao
Mm.
- NKNikhil Kamath
Mercury?
- CMChetan Maini
Hmm? No, Venus.... right? And, uh, it's because of the atmosphere.
- NKNikhil Kamath
Mm-hmm.
- CMChetan Maini
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.
- NKNikhil Kamath
So, so climate change is the wrong kind of gases in our atmosphere-
- CMChetan Maini
That's correct. And so-
- NKNikhil Kamath
-make it harder for heat to escape.
- CMChetan Maini
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.
- NKNikhil Kamath
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?
- SPSpeaker
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-
- NKNikhil Kamath
I, I think the question is, why is the heating happening?
- SPSpeaker
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.
- NKNikhil Kamath
And because of that emission, what is happening?
- SPSpeaker
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-
- NKNikhil Kamath
Mm.
- SPSpeaker
Uh, that fifty percent of the global CO2 emission that happened is because of transportation on ground.
- CMChetan Maini
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.
- NKNikhil Kamath
Mm-hmm.
- CMChetan Maini
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?
- NKNikhil Kamath
Mm-hmm.
- CMChetan Maini
So if you reduce the slope, we may hit this point hundred years later.
- NKNikhil Kamath
Mm-hmm.
- 34:10 – 41:10
How Is Power Generated? Renewable Vs Non-renewable
- TMTarun Mehta
we believed always is that, um, a lot of this problem fundamentally boils down to using something that's a finite source.
- NKNikhil Kamath
The electricity you're using today-
- TMTarun Mehta
Yeah
- NKNikhil Kamath
... to run Ather is generated from finite sources.
- TMTarun Mehta
Seventy-five percent is finite, but twenty-five percent is not, right? Uh-
- NKNikhil Kamath
Has India moved to twenty-five percent renewable?
- TMTarun Mehta
Actually, capacity, so I think, is almost thirty.
- NKNikhil Kamath
No, much lower.
- TMTarun Mehta
No, no, no.
- SRSuruchi Rao
No, no.
- TMTarun Mehta
Five percent.
- SRSuruchi Rao
Less than that now.
- TMTarun Mehta
I think either twenty-five or twenty-seven, something.
- SPSpeaker
No, no, so, so, so, so earlier, uh, that number was-
- TMTarun Mehta
Mm.
- SPSpeaker
Uh, so today, renew-- non-coal, I would say, so thermal.
- TMTarun Mehta
Non-thermal, actually.
- SPSpeaker
Yeah, non-thermal. So earlier, that number was ninety-five percent.
- SRSuruchi Rao
Yeah.
- SPSpeaker
So renewable percent was less than one percent. Today, total installed capacity is about one seventy-five gigawatts in India.
- NKNikhil Kamath
How much is the percentage?
- SPSpeaker
One seventy. Uh, I would say-
- TMTarun Mehta
Total is four hundred
- SPSpeaker
... about twenty-six, twenty-seven percent-
- TMTarun Mehta
Yes
- SPSpeaker
... 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.
- SRSuruchi Rao
About four to five percent is the numbers are.
- SPSpeaker
So then you would say, in layman language, that it could be one-fourth of the capacity of today.
- NKNikhil Kamath
So in summary, that would mean right now, electricity generation, five percent renewable, ninety-five percent-
- TMTarun Mehta
No, no, no, no.
- 41:10 – 47:30
What if all vehicles become EV overnight?
- SPSpeaker
for you. Imagine if all vehicles suddenly, boom, overnight become EVs. Aren't you just taking a problem-
- TMTarun Mehta
We have enough electricity, we have enough energy.
- SPSpeaker
No, it's not about how much electricity you have. I'm glad you think we have enough-
- TMTarun Mehta
We are not... I just said, like, it is, it is h- uh, in scooters, at least, our math was, it is-
- SPSpeaker
We don't have enough, you're saying
- TMTarun Mehta
... it is 40%, it is 40%, uh, less emission than a petrol scooter.
- SPSpeaker
So what- all that I'm saying is that-
- TMTarun Mehta
You're at least reducing emissions by 40%.
- SPSpeaker
Are you saying-
- TMTarun Mehta
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-
- SPSpeaker
Yeah, so it remains-
- TMTarun Mehta
... even in that case, you'll still be at least, as you said, 30% more efficient- more, less of emissions.
- SPSpeaker
But is it 50% when it comes to-
- TMTarun Mehta
No, and that's a super bad scenario. It's like the world is going back. We, we, we start producing solar.
- SPSpeaker
We just crossed 1.5 degrees this year.
- TMTarun Mehta
No, no, no, I'm saying it is the world is going back on generation. The world is going forward.
- NKNikhil Kamath
I heard, I heard the Senate hearing of Elon Musk in the US-
- TMTarun Mehta
Mm
- NKNikhil Kamath
... 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."
- TMTarun Mehta
Yes.
- NKNikhil Kamath
So are you saying the way to do this is transition slowly?
- TMTarun Mehta
The Senate math seems wrong.
- CMChetan Maini
No, no.
- TMTarun Mehta
Yeah.
- NKNikhil Kamath
4X or 20X? I can't remember.
- CMChetan Maini
So let's look at India, right? India has around a park size of around 250 million vehicles.
- NKNikhil Kamath
Mm-hmm.
- CMChetan Maini
Scooters, cars, buses, trucks, everything put together. Let's look at-
- TMTarun Mehta
A little bit more, 300.
- CMChetan Maini
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.
- 47:30 – 59:30
How Suruchi started a green hydrogen company
- NKNikhil Kamath
and the fuel source? Everybody-
- CMChetan Maini
Green hydrogen is, is creating hydrogen from a renewable source.
- NKNikhil Kamath
Renewable source.
- CMChetan Maini
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-
- NKNikhil Kamath
Mm
- CMChetan Maini
... depending on how you think about the structure. So green is from renewable.
- NKNikhil Kamath
Mm.
- CMChetan Maini
I take wind energy, I take solar, I take any renewable energy, and create green electrons. So that's green hydrogen.
- NKNikhil Kamath
And Suruchi, you take industrial waste and make hydrogen.
- SRSuruchi Rao
Absolutely. So, so for us, the problem here is exactly what-
- NKNikhil Kamath
Come, come from the back of your story, so people have context as to how you started making hydrogen.
- SRSuruchi Rao
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-
- NKNikhil Kamath
Talk about your education.
- SRSuruchi Rao
Right. Um, I... This table is so intimidating right now. I, I come from a very humble engineering background.
- NKNikhil Kamath
You're not.
- SRSuruchi Rao
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-
- NKNikhil Kamath
Great
- SRSuruchi Rao
... it's just something that happened.
- NKNikhil Kamath
What is your PhD in?
- SRSuruchi Rao
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.
- NKNikhil Kamath
To a stupid person like me, how would you explain what your PhD is in, one line?
- SRSuruchi Rao
... 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.
- NKNikhil Kamath
How did you go from your PhD in this to starting to create hydrogen and also your company?
- SRSuruchi Rao
Oh, my God. Um, I had finished my PhD-
- NKNikhil Kamath
Mm-hmm.
- SRSuruchi Rao
-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-
- NKNikhil Kamath
[chuckles]
- SRSuruchi Rao
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-
- NKNikhil Kamath
I'll, I'll give you some context, okay?
- SRSuruchi Rao
All right.
- 59:30 – 1:06:30
Use cases for Hydrogen today
- SRSuruchi Rao
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-
- SPSpeaker
Mm
- SRSuruchi Rao
... 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?
- SPSpeaker
So who are you selling to today?
- SRSuruchi Rao
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-
- NKNikhil Kamath
That's what Reliance is, right? That's why, like, they're interested in hydrogen. They just need a lot of hydrogen.
- SRSuruchi Rao
They need a lot of hydrogen because they refine. So refineries are obviously-
- NKNikhil Kamath
That's all. Yeah.
- SRSuruchi Rao
But the government would have-
- NKNikhil Kamath
It's not always energy. Sometimes it's a good raw material.
- SRSuruchi Rao
Absolutely.
- SPSpeaker
So how much are you selling now, in terms of sales as a company?
- SRSuruchi Rao
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-
- SPSpeaker
Mm
- SRSuruchi Rao
... 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-
- CMChetan Maini
Mm.
- SRSuruchi Rao
-in the wastewater.
- CMChetan Maini
Mm.
- SRSuruchi Rao
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.
- CMChetan Maini
So, Suruchi, if I were to ask you the question-
- SRSuruchi Rao
Mm.
- CMChetan Maini
Not for two-wheelers or cars-
- SRSuruchi Rao
Mm
- CMChetan Maini
... but for trucks-
- SRSuruchi Rao
Mm.
- CMChetan Maini
-or buses.
- SRSuruchi Rao
Mm.
- CMChetan Maini
Is green hydrogen, tomorrow, going to be a viable source of energy compared to EVs, electric, all of that?
- SPSpeaker
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.
- SRSuruchi Rao
So that we don't see as, as a-
- 1:06:30 – 1:09:50
Are there opportunities in Hydrogen?
- SRSuruchi Rao
um, clean buses, you would definitely see more tenders, whatever be the mindset-
- CMChetan Maini
Yeah
- SRSuruchi Rao
... um, for FCEVs over batteries.
- CMChetan Maini
It-
- SRSuruchi Rao
When it comes to buses, and, and I'm not even sure about distance here, how big is Leh? Um-
- CMChetan Maini
And Suruchi, another question. Young entrepreneur, 20-year-old going to college-
- SRSuruchi Rao
Mm
- CMChetan Maini
... is there an opportunity to work in your industry? And if so, what? Punit gave us two things.
- SRSuruchi Rao
Hmm.
- CMChetan Maini
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?
- SRSuruchi Rao
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.
- NKNikhil Kamath
Thanks.
- SRSuruchi Rao
So I'm not sure-
- NKNikhil Kamath
Super. [metal clanking]
- SRSuruchi Rao
It really answers
- 1:09:50 – 1:15:30
The man behind Reva - India's first Electric Car
- SRSuruchi Rao
your question, but-
- NKNikhil Kamath
But very interesting, no? [metal clanking]
- SRSuruchi Rao
Sure.
- NKNikhil Kamath
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.
- CMChetan Maini
Mm-hmm.
- NKNikhil Kamath
And then I told him you're coming.
- CMChetan Maini
Mm.
- NKNikhil Kamath
And he was like: Chetan is like the godfather of our industry.
- CMChetan Maini
[chuckles]
- NKNikhil Kamath
He started the-
- CMChetan Maini
Yeah.
- NKNikhil Kamath
He started this off before EVs-
- CMChetan Maini
Tesla
- NKNikhil Kamath
... were a thing in India.
- CMChetan Maini
Before Tesla, right?
- NKNikhil Kamath
When did you begin first?
- CMChetan Maini
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.
- NKNikhil Kamath
Wow!
- CMChetan Maini
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-
- NKNikhil Kamath
You raised twenty million bucks?
- CMChetan Maini
One million.
- NKNikhil Kamath
One million.
- CMChetan Maini
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-
- SRSuruchi Rao
Fantastic name.
- CMChetan Maini
Sorry?
- SRSuruchi Rao
It had a fantastic name. I think it's called SunRunner.
- CMChetan Maini
SunRunner, yeah.
- SRSuruchi Rao
Yeah.
- CMChetan Maini
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.
- NKNikhil Kamath
In the US?
- 1:15:30 – 1:18:10
Indian EV space in the 2000s
- CMChetan Maini
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?"
- NKNikhil Kamath
Mm-hmm.
- CMChetan Maini
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-
- NKNikhil Kamath
Why was that?
- CMChetan Maini
-and reduced taxes on petrol vehicles.
- NKNikhil Kamath
Why?
- CMChetan Maini
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-
- NKNikhil Kamath
Seriously?
- CMChetan Maini
Yeah.
- NKNikhil Kamath
I always thought that was just bureaucracy not getting it.
- CMChetan Maini
No.
- NKNikhil Kamath
They were already anti-electric at that point?
- CMChetan Maini
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.
- NKNikhil Kamath
So who got the subsidy? If they, if-
- CMChetan Maini
They-
- NKNikhil Kamath
-if you guys weren't live in the market, who really got the subsidy?
- CMChetan Maini
Nobody got it. They just killed the whole subsidy.
- NKNikhil Kamath
Without giving it to anybody?
- CMChetan Maini
Without giving to anyone. And they also increased-
- NKNikhil Kamath
Wow
- CMChetan Maini
... taxes.
- NKNikhil Kamath
This is 2000?
- CMChetan Maini
2001.
- NKNikhil Kamath
Mm.
- CMChetan Maini
Right? So-
- NKNikhil Kamath
Global financial crisis.
- CMChetan Maini
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?
- NKNikhil Kamath
Mm.
- CMChetan Maini
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.
- NKNikhil Kamath
Mm.
- 1:18:10 – 1:21:30
How Sun Mobility was born
- CMChetan Maini
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-
- NKNikhil Kamath
Mm-hmm
- CMChetan Maini
... 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?
- NKNikhil Kamath
Mm-hmm.
- CMChetan Maini
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.
- NKNikhil Kamath
Mm-hmm.
- CMChetan Maini
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.
- NKNikhil Kamath
Can you tell us a bit more about that? What are you guys doing at SUN Mobility?
- CMChetan Maini
So what we do is that, um, um, we've taken two parts.
- 1:21:30 – 1:33:30
Economics of battery swapping
- CMChetan Maini
Let's start with the micro mobility.
- NKNikhil Kamath
Mm-hmm.
- CMChetan Maini
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?
- NKNikhil Kamath
Mm-hmm.
- CMChetan Maini
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.
- NKNikhil Kamath
Mm-hmm.
- CMChetan Maini
Any form factor today.
- NKNikhil Kamath
Mm-hmm.
- CMChetan Maini
And if you look at the amortized cost of energy, a battery, and the cost of energy is cheaper than fuel.
- NKNikhil Kamath
Mm-hmm.
- CMChetan Maini
And then if you think of, "I can swap it in a minute"-
- NKNikhil Kamath
Mm-hmm
- CMChetan Maini
... 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.
- NKNikhil Kamath
Mm-hmm.
- CMChetan Maini
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.
- NKNikhil Kamath
Mm-hmm.
- CMChetan Maini
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.
- NKNikhil Kamath
So you're making the battery, or?
- CMChetan Maini
Yes.
- NKNikhil Kamath
And also, what is battery swapping when my battery is out of charge? Do they come to your-
- CMChetan Maini
Yes
- NKNikhil Kamath
... service point?
- CMChetan Maini
No. So today we have, uh, we have around six hundred touch points.
- NKNikhil Kamath
Mm-hmm.
- CMChetan Maini
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-
- NKNikhil Kamath
So can someone like BluSmart use this tech?
- CMChetan Maini
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.
- NKNikhil Kamath
And it...
- CMChetan Maini
Uh, definitely good. But there's a, there's, you know... We've today started the business-
- NKNikhil Kamath
Mm-hmm
- 1:33:30 – 1:42:55
3 reasons why battery swapping is the future
- TMTarun Mehta
is lesser. We can manage there.
- CMChetan Maini
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-
- TMTarun Mehta
Yeah
- CMChetan Maini
... is going to say, "Where do I have it?"
- TMTarun Mehta
Mm-hmm.
- CMChetan Maini
But once infra is in place, 500 stations in Delhi, right? We have 100 in Bangalore.
- TMTarun Mehta
Mm-hmm.
- CMChetan Maini
There's 85 LPG stations in Bangalore. We have 100, which cater to 200,000.
- TMTarun Mehta
Mm-hmm.
- CMChetan Maini
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.
- TMTarun Mehta
Mm-hmm.
- CMChetan Maini
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.
- TMTarun Mehta
Mm-hmm.
- CMChetan Maini
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.
- TMTarun Mehta
Mm-hmm.
- CMChetan Maini
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-
- TMTarun Mehta
Mm-hmm
- CMChetan Maini
... 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.
- TMTarun Mehta
But on the other side-
- CMChetan Maini
So-
- TMTarun Mehta
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.
- CMChetan Maini
It's much less for us. The re- I mean, um, the reason is-
- TMTarun Mehta
Actually, that was, I was going to call you-
- CMChetan Maini
The reason is we swap-
- TMTarun Mehta
Much more now
- CMChetan Maini
... we swap a lot more, right?
- TMTarun Mehta
Right.
- CMChetan Maini
So our batteries are swapping, say, twice a day.
- TMTarun Mehta
Right.
- CMChetan Maini
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?
- 1:42:55 – 1:48:30
Blusmart’s view on battery swapping
- SPSpeaker
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?
- NKNikhil Kamath
And your cars don't have utility for twenty-four hours.
- SPSpeaker
Yeah, I'm just-
- NKNikhil Kamath
You're not flying at night.
- SPSpeaker
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-
- NKNikhil Kamath
Mm-hmm
- SPSpeaker
... 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.
- NKNikhil Kamath
Right.
- SPSpeaker
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-
- NKNikhil Kamath
Right
- SPSpeaker
... or, or, or sixty kilowatt hour storage. I mean, that will give you nearly five hundred, seven hundred kilometers. I mean, we have-
- NKNikhil Kamath
Yeah
- SPSpeaker
... um, companies which are today, or large brands, which are promising seven hundred kilometers-
- NKNikhil Kamath
Yeah
- SPSpeaker
... 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.
- CMChetan Maini
Mm.
- SPSpeaker
So swapping doesn't make sense for us.
- CMChetan Maini
No.
- SPSpeaker
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.
- CMChetan Maini
Mm.
- SPSpeaker
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-
- CMChetan Maini
Mm-hmm
- SPSpeaker
... 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-
- CMChetan Maini
Mm-hmm
- SPSpeaker
... 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.
- CMChetan Maini
Mm.
- SPSpeaker
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-
- CMChetan Maini
It's all technology.
- NKNikhil Kamath
Can I, can I ask a question?
- SPSpeaker
Besides... Yeah.
- 1:48:30 – 1:50:45
Pricing in Two-wheeler : Activa vs. EV
- CMChetan Maini
So, I mean-
- SPSpeaker
All style commoditized.
- NKNikhil Kamath
So what, what-
- NKNikhil Kamath
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-
- SPSpeaker
Actually, we haven't seen a difference. So I'll give you usage data.
- NKNikhil Kamath
Right.
- SPSpeaker
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.
- NKNikhil Kamath
That's surprising. You're saying people in tier three are buying-
- SPSpeaker
It is mind-blowing. It is very confusing
- NKNikhil Kamath
... the same percentage as tier one?
- SPSpeaker
It is very confusing.
- NKNikhil Kamath
Why is that?
- SPSpeaker
Everybody's buying in the same proportion of the premium and the entry level.
- NKNikhil Kamath
Why? Why is that?
- SPSpeaker
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-
- NKNikhil Kamath
Mm
- SPSpeaker
... 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.
- NKNikhil Kamath
Mm.
- SPSpeaker
First Activas came about in the country. It was, I think, about forty-five thousand rupees back then.
- NKNikhil Kamath
Mm.
- SPSpeaker
That's 2005.
- NKNikhil Kamath
Mm.
- SPSpeaker
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.
- NKNikhil Kamath
Mm.
- SPSpeaker
It didn't grow with inflation at all.
- NKNikhil Kamath
Mm. Mm.
- SPSpeaker
Purchasing power-
- NKNikhil Kamath
Now it is ninety
- SPSpeaker
... grew only four times. Now ninety thousand.
- NKNikhil Kamath
Mm.
- 1:50:45 – 1:55:00
Opportunities in Battery swapping
- NKNikhil Kamath
what is the opportunity in battery, like battery swapping? What can somebody build?
- CMChetan Maini
So, um, [lips smack] the-- see, the market is very large-
- NKNikhil Kamath
Hmm.
- CMChetan Maini
... right? And, uh, there's also an existing market of e-rickshaws.
- NKNikhil Kamath
Mm-hmm.
- CMChetan Maini
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-
- NKNikhil Kamath
Hmm
- CMChetan Maini
... 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.
- NKNikhil Kamath
Mm-hmm.
- CMChetan Maini
There are going to be opportunities for micro entrepreneurs, um, to look at such options, uh, in this area.
- NKNikhil Kamath
So you would suggest set up charging stations or battery swapping stations?
- CMChetan Maini
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-
- NKNikhil Kamath
Hmm
- CMChetan Maini
... and so there could be a franchisee who takes the station, and they get a certain return.
- NKNikhil Kamath
How would that work financially? How much money would I need to put up to be a franchisee?
- CMChetan Maini
Um-
- NKNikhil Kamath
What is it called, your battery swapping company?
- CMChetan Maini
Uh, we have the SUN Mobility, right?
- NKNikhil Kamath
So-
- CMChetan Maini
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.
- NKNikhil Kamath
And CapEx?
- CMChetan Maini
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-
- NKNikhil Kamath
What do you have to spend to set it up, this, the store or the space?
- CMChetan Maini
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-
- NKNikhil Kamath
This is not including real estate and all of that?
- CMChetan Maini
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.
- NKNikhil Kamath
Hmm.
- CMChetan Maini
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."
- NKNikhil Kamath
And how much do you mark up the electricity, your cost to the recharging thing as a franchisee?
- CMChetan Maini
I don't, I don't think it's to think of it as a markup.
- 1:55:00 – 2:03:10
Vision behind Ather energy
- NKNikhil Kamath
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-
- TMTarun Mehta
Thank you
- NKNikhil Kamath
... for everyone else listening.
- TMTarun Mehta
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-
- NKNikhil Kamath
Explain how, energy company?
- TMTarun Mehta
... it's not, मतलब, it's not technically an energy company.
- NKNikhil Kamath
How become?
- TMTarun Mehta
How? I don't know.
- NKNikhil Kamath
Mm.
- TMTarun Mehta
Itna nahi socha hai. But life is, uh, in some ways very short, in some ways long enough.
- NKNikhil Kamath
Mm.
- TMTarun Mehta
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.
- NKNikhil Kamath
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?
- TMTarun Mehta
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-
- NKNikhil Kamath
How is that? Because your competition has incumbent distribution through service centers, right? Like, if you take-
- TMTarun Mehta
Yeah, but they don't have s- s- charging there, no.
- NKNikhil Kamath
But I would assume it's easy for a TVS or a Bajaj or a Hero to add a charging infra to existing distribution.
- TMTarun Mehta
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-
- NKNikhil Kamath
You know, classical economic theory-
- TMTarun Mehta
Yes
- NKNikhil Kamath
... 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?
- TMTarun Mehta
No, not everything. There is a business.
- NKNikhil Kamath
I'll answer, but, yeah.
- TMTarun Mehta
Yeah, yeah.
- NKNikhil Kamath
Yeah.
- TMTarun Mehta
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.
- NKNikhil Kamath
But if you're not in the business of selling energy today-
- TMTarun Mehta
Uh.
- NKNikhil Kamath
-why are you thinking on these lines?
- TMTarun Mehta
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.
- 2:03:10 – 2:04:10
Ola Vs Ather : Which is better?
- NKNikhil Kamath
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?
- TMTarun Mehta
What Ola's doing well, and what we are not, is, uh, getting the message out.
- NKNikhil Kamath
Marketing?
- TMTarun Mehta
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.
- NKNikhil Kamath
Mm.
- TMTarun Mehta
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"-
- NKNikhil Kamath
Mm.
- TMTarun Mehta
"Pata nahi India mein kab tak rahegi?"
- NKNikhil Kamath
What does Ather mean?
- TMTarun Mehta
It's a Greek word.
- NKNikhil Kamath
Meaning?
- TMTarun Mehta
It's, uh, cleanest form of air.
- NKNikhil Kamath
Mm.
- TMTarun Mehta
So Ather energy was meant to be cleanest form of energy.
- NKNikhil Kamath
What is the difference between a cell and a battery? And when we said batteries all of these times, and in the Indian context,
- 2:04:10 – 2:14:10
All about Batteries that EVs use
- NKNikhil Kamath
what does it actually mean? Do you wanna take that?
- CMChetan Maini
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.
- NKNikhil Kamath
And the temperature as well.
- CMChetan Maini
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-
- NKNikhil Kamath
Mm
- CMChetan Maini
... uh, to manage thermal on-
- NKNikhil Kamath
Mm
- CMChetan Maini
... the side, for safety, as well as to enhance your life on this front.
- NKNikhil Kamath
Is anybody making cells in India? Are we able to compete with China?
- TMTarun Mehta
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.
- NKNikhil Kamath
Mm.
- TMTarun Mehta
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.
- NKNikhil Kamath
Is Ola attempting?
- TMTarun Mehta
Ola is attempting building the cells.
- NKNikhil Kamath
Why is that?
- TMTarun Mehta
The logic there is that vertical integration will help reduce cost further.
- NKNikhil Kamath
But will that take their cost below Chinese import?
- TMTarun Mehta
I'll give you one data point.
- NKNikhil Kamath
Mm.
- TMTarun Mehta
Most cell manufacturing companies, the really enormous ones-
- NKNikhil Kamath
Mm
- TMTarun Mehta
... 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"-
- NKNikhil Kamath
Mm.
- TMTarun Mehta
Right? Like last year, basically. Their pads have generally not crossed into double digits.
- NKNikhil Kamath
Yes.
- TMTarun Mehta
They've been generally, like, four, five percent, six percent called pad businesses.
- NKNikhil Kamath
Mm.
- TMTarun Mehta
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.
- NKNikhil Kamath
I'm trying to understand as a layman-
- CMChetan Maini
Correct
- 2:14:10 – 2:20:00
Nuances of Battery Pack Assembly
- TMTarun Mehta
pack assembly-
- NKNikhil Kamath
Assembly
- TMTarun Mehta
... is the right description for that.
- NKNikhil Kamath
Yeah.
- TMTarun Mehta
You can have an ridiculously high amount of difference between companies building battery packs using the same cells.
- NKNikhil Kamath
Who all are doing it in India, and what are they doing differently?
- TMTarun Mehta
Mostly, it's OEMs doing for their own internal purposes.
- NKNikhil Kamath
Explain OEMs, because-
- TMTarun Mehta
OEMs are basically vehicle manufacturing companies, right?
- CMChetan Maini
Original equipment manufacturers.
- TMTarun Mehta
Um, yeah. So all of us build our own battery packs, typically.
- NKNikhil Kamath
Mm.
- TMTarun Mehta
Like, all the key OEMs in India now build their own battery packs.
- NKNikhil Kamath
Assembly.
- TMTarun Mehta
... we build our battery packs. We don't build batteries, we build our battery packs, and we definitely don't build cells today.
- NKNikhil Kamath
Mm.
- TMTarun Mehta
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.
- NKNikhil Kamath
Mm.
- TMTarun Mehta
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.
- NKNikhil Kamath
Mm. Is that only because we are more tropical in nature than China?
- TMTarun Mehta
No, no, no, no, no.
- NKNikhil Kamath
What, what is thermal management? Is it because we are hotter?
- TMTarun Mehta
Before we get to thermal management-
- NKNikhil Kamath
Yeah
- TMTarun Mehta
... let me just describe how actually painfully complex cell battery pack manufacturing is, assembly is.
- NKNikhil Kamath
Mm.
- TMTarun Mehta
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.
- NKNikhil Kamath
Mm.
- TMTarun Mehta
You will have roughly about eight hundred welds.
- NKNikhil Kamath
Mm.
- 2:20:00 – 2:26:30
Unique features : Battery life, Regenerative braking and more
- TMTarun Mehta
it'll heat up.
- NKNikhil Kamath
Mm.
- TMTarun Mehta
That's exactly what's happening inside the cell.
- NKNikhil Kamath
And then how do you cool down the bike once it heats up?
- TMTarun Mehta
That's thermal management. So you can do it multiple ways.
- NKNikhil Kamath
Mm.
- TMTarun Mehta
Cars may typically it's active, which means pankha lagaya hoga, or there will be a li- liquid-
- NKNikhil Kamath
Mm
- TMTarun Mehta
... which will pass through the battery pack and will cool the-
- NKNikhil Kamath
In bikes, you have liquid cooled, air cooled, like that.
- TMTarun Mehta
Ha, but none of, none of us in India does liquid cooling for two-wheeler.
- NKNikhil Kamath
Mm.
- TMTarun Mehta
Crazy cost structure ho jayega. Doesn't make sense today.
- NKNikhil Kamath
Mm.
- TMTarun Mehta
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-
- NKNikhil Kamath
Mm
- TMTarun Mehta
... inside the battery pack-
- NKNikhil Kamath
For example?
- TMTarun Mehta
... that will take the heat out. There are these materials called phase change materials.
- NKNikhil Kamath
Mm.
- TMTarun Mehta
Unme kya hoga, basically, uh, if the cell heats, let's say, fifty degree Celsius-
- NKNikhil Kamath
Mm
- TMTarun Mehta
... any temperature, any heat above fifty degrees, ye material khich lega.
- NKNikhil Kamath
Mm.
- TMTarun Mehta
And this material will basically become a jelly-
- NKNikhil Kamath
Mm
- TMTarun Mehta
... as it takes the heat out.
- NKNikhil Kamath
Mm.
- TMTarun Mehta
So fifty to a fair degree of temperature, it'll just keep changing its-
- NKNikhil Kamath
Mm.
- 2:26:30 – 2:32:40
Battery recycling : The future?
- NKNikhil Kamath
uh-
- TMTarun Mehta
Viral
- NKNikhil Kamath
... dramatic memes of lithium is in Chile, and cobalt is in Congo-
- TMTarun Mehta
For that
- NKNikhil Kamath
... 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.
- PGPunit Goyal
I think something has been discovered in India also now.
- NKNikhil Kamath
In Kashmir, but they say-
- PGPunit Goyal
Australia has a-
- NKNikhil Kamath
... there's no refining capacity, so even that has to go to China.
- PGPunit Goyal
That, that-
- TMTarun Mehta
Deposits are there.
- PGPunit Goyal
It won't take more than two years to set up.
- TMTarun Mehta
So I mean, I mean, just like, just like, you know-
- PGPunit Goyal
... Afghanistan has
- TMTarun Mehta
... 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.
- NKNikhil Kamath
Mm.
- TMTarun Mehta
'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.
- NKNikhil Kamath
Mm.
- TMTarun Mehta
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-
- NKNikhil Kamath
Extrapolate. Make money out of it, how?
- TMTarun Mehta
It means when you recycle it, you can sell back the-
- NKNikhil Kamath
More than the cost of recycling.
- PGPunit Goyal
Oh, damn!
- NKNikhil Kamath
Oh.
- PGPunit Goyal
Oh, yeah.
- TMTarun Mehta
So let me give you the number for. For example, just the cost of material-
- NKNikhil Kamath
Mm
- TMTarun Mehta
... just the material alone-
- NKNikhil Kamath
Mm
- TMTarun Mehta
... in a typical four kilowatt-hour battery pack-
- 2:32:40 – 2:36:00
Ola vs Ather: Continued
- TMTarun Mehta
IP these days.
- NKNikhil Kamath
Can you break that down a little bit? Explain how a motor controller works.
- TMTarun Mehta
... to run a motor-
- NKNikhil Kamath
Hmm
- TMTarun Mehta
... you need some- somebody to control, somebody to send signals and control the power that it gets.
- NKNikhil Kamath
Hmm.
- TMTarun Mehta
See, motor may, if you just supply-
- NKNikhil Kamath
In my mind, I'm thinking IC vehicle. I'm thinking there is a spark plug-
- TMTarun Mehta
I'll see if I can take that-
- NKNikhil Kamath
Expanding pistons.
- CMChetan Maini
Yeah, but think of it very simply.
- NKNikhil Kamath
Uh.
- CMChetan Maini
You have a regulator for your fan in your house, right? For your fan, you kind of do a one speed-
- NKNikhil Kamath
Yeah, yeah, yeah
- CMChetan Maini
... two speed, three speed, four speed.
- NKNikhil Kamath
Yeah.
- CMChetan Maini
The motor controller does that in a very sophisticated manner.
- TMTarun Mehta
Hmm. In a very sophisticated way. [laughing]
- NKNikhil Kamath
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 because you're the most popular.
Episode duration: 3:08:47
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