Deal focus: India EV set for mass mobility boom

India, unlike large electric vehicle (EV) markets such as China and the US, can’t afford to use the same playbook as Tesla and Xpeng. But the country’s consequent focus on shared mobility and public transport versus private-use cars could put it in pole position in terms of adoption.

“You hit a breakeven point on unit economics much faster in mass mobility than in personal mobility applications. We think India – as a fairly price-sensitive market with a high focus on value proposition – has already reached that inflection point in EV,” said Dhanpal Jhaveri, vice chairman of India’s Everstone Group and CEO of EverSource Capital, its energy transition joint venture with BP.

EverSource has recently completed perhaps its key investment to date with the acquisition of a majority stake in Lithium Urban Technologies, one of India’s largest EV operators, for about USD 50m. The deal facilitated exits for Lightrock India and the International Finance Corporation.

Lithium had been growing rapidly until the onset of COVID-19, which required an operational scale-down. Forecasting a near-term lift in the EV mass mobility segment and seeing the potential to grow the business faster under consolidated ownership, EverSource invested via its USD 741m Green Growth Equity Fund (GGEF).

“We believe that transportation is going to move toward electric, and the pace of the shift is going to accelerate over the next few years, starting with mass mobility and industrial decarbonisation,” Jhaveri said, flagging parallel opportunities related to changing employee transportation behaviour amid the introduction of hybrid work-from-home policies post-pandemic.

“Lithium fits these themes by helping companies electrify their transportation requirements and reduce carbon footprint. Most leading corporations have now announced plans to reduce their carbon footprint or even become net zero.”

Lithium claims to be the largest EV fleet operator outside of China, with some 2,000 leased vehicles and more than 600 charging stations across 15 cities. The plan is to roll out another 10,000 EVs in the next few years. Longer-term, the company hopes to expand internationally and evolve into a more asset-light platform-as-a-service model.

To this end, the company will be part of a B2B e-mobility services platform involving GreenCell Mobility, a public sector EV mass mobility provider and fellow GGEF portfolio company. The two businesses together will represent India’s largest corporate buyer of EVs across form factors, with Lithium focused on sedans and Greencell specialising in intercity and intracity busses.

“We don’t believe anyone else has been able to do anything significant on electric mobility in India,” Jhaveri said, adding that Lithium’s total addressable market was already a USD 5bn space in terms of annual revenue.

“There are smaller players offering taxi services or other types of mass mobility, but in corporate employee transportation, Lithium is clearly the largest. Electric mobility penetration is so low, the company has an opportunity to grow 10x in the next 3-5 years, and over the long term, there could be an even larger opportunity.”

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• Topics
• South Asia
• Technology
• Buyouts
• Cleantech
• India
• Everstone Capital
• Transportation
• Electric Vehicles