I read closely Nathaniel Bullard’s Sparklines (in Bloomberg Green Daily). Always learn something, including how to reconceptualize solving a problem.
Exhibit A is this piece on current trends in electrifying India’s transportation sector. It begins by pointing out the rush of well-resourced “green” investment funds toward large scale projects, illustrating it with recent $1 billion investment by TPG Rise Climate and Abu Dhabi state-owned fund ADQ in a Tata Motors Limited subsidiary for electric vehicle development and production. The numbers make the business case compelling. Passenger EV sales in India last year totaled 4,394 (no, that is not a typo), but are expected to reach four million+ per year – more than half of new passenger vehicle sales – by 2040. Given that one can’t operate an EV without a charger, development EV charging networks must go hand-in-hand with making the cars themselves. (Think Tesla.) Like the current small number of EVs in India, public charging stations there number around 2,000 as of last quarter (compared to 100,000 in the US and more than 900,000 in China).
OK, good info. Makes sense. Or does it?
It is worth remembering though that India already has a thriving electric vehicle market – it is just missing a wheel, or two, compared to passenger cars. India’s three-wheeler sales are already 50% electric, with sales of more than a quarter-million electric vehicles last year. India’s two-wheeler market is smaller – about 130,000 last year – but the addressable market is much bigger. More than 14 million two-wheelers were sold in 2020, and that’s a pandemic-deflated sales figure compared to 2019. BloombergNEF expects three-wheeler sales to reach almost 100% sales penetration within 20 years, and two-wheelers to exceed 70% of sales.
Boom! One company in the two-wheeler market, Ola Electric Mobility, has a factory in the pipeline that will produce 10 million electric annually. Last month, it sold 60,000 in 24 hours. A competitor, Hero Electric Vehicles, predicts that India could end sales of gasoline-powered two-wheelers by 2027. As Bullard concludes of EV VC in Tata, “Passenger EVs, when they arrive at scale, will not do so in a literal and figurative power vacuum. India’s roads will be heavily electrified in specific ways, with entrepreneurs and established companies building their own value networks, just with fewer wheels.”