Bengaluru-based shared-mobility startup Yulu has found a strong backer in an 80-year old Indian auto manufacturer Bajaj Auto that will help Yulu reduce its reliance on China’s manufacturing prowess.
The two-year-old bike-sharing company set up by Amit Gupta, co-founder of India’s one of the first billion-dollar global technology startups, InMobi, on Tuesday said it has received USD 8 million equity funding from Bajaj Auto, a part of Indian conglomerate Bajaj Group.
In this strategic partnership, Yulu will source vehicles from Bajaj electric two-wheelers which have been co-designed and manufactured exclusively for shared micro-mobility. Bajaj will provide resources for research and development as well as to manufacture the startup’s portfolio of electric vehicles (EVs) in India.
Since the roll out of its electric bicycles called ‘Yulu Miracle’ six months ago, the company has been relying on Chinese manufacturers for their production. Yulu, which originally had a partnership with Bajaj for its bike servicing, found a strong supporter in it, as the latter had just kicked off its EV plans in India.
After 14 years, Bajaj Auto, which had discontinued its Chetak scooters —once a popular name amongst Indian households—re-entered the scooter space by unveiling the electric version of Chetak. Bajaj started the EV production in September at its plant in Chakan in Pune, and the retail sales is scheduled in January 2020.
“We are going to shift our supply chain from China to India with Bajaj. In the future, we will be looking at hardware innovation for Yulu Miracle, enhancing the look and feel of the bike. We will also bring new formats of EVs in the country,” Gupta told KrASIA.
At present, the company has about 8,500 non-electric bicycles and 3,000 electric bikes, across five cities including Bengaluru, New Delhi, Pune, Greater Mumbai, and Bhubaneswar. Gupta claims the company facilitates 35,000 rides per day.
With the fresh funding, Gupta aims to roll out 100,000 EVs by December 2020. On the non-electric bikes front, the plan is not as grand. Yulu will add about 4,000 to 5,000 bikes over the next year, and Gupta agrees that going forward, the mix of bikes will tilt heavily towards EVs.
“The fresh round of investment will be utilized for further strengthening of the mobility platform and deepening of the technology solutions for rapid expansion,” the company said in a statement. “Yulu deploys machine learning and AI to accurately predict the demand and supply of its assets and resources which ensures vehicle availability and operational efficiency.” It plans to increase its fleet size to 100,000 electric two-wheelers by December 2020 with a network of battery-swapping stations across the cities where it operates. There are over 125 charging stations so far.
Currently, EVs can only be assembled in India, given that the majority of components needed aren’t manufactured in the country. Gupta expects it to change over the next four to five years when over 90% component will be available in India. “Then,” Gupta said, “it would be possible to manufacture EVs in India.”
He believes one of the important factors to grow in this space is to carefully choose the city to launch next. For instance, he doesn’t see a viable use-case in New Delhi due to its weather. Out of 3,000 EVs, the company has 2,100 bikes in Bengaluru alone.
Increasing interest in EV
Bengaluru is increasingly becoming a hub for urban mobility startups. For instance, bike-renting platforms Bounce and Vogo, have also been sharpening their focus on EVs. Another vehicle renting startup Drivezy is planning to launch e-bikes on its platform starting with Yamaha Motor Co’s high-end electric scooter—the EC-05, which was launched in Taiwan earlier this year.
These startups are well-funded as well. In June this year, Bounce raised USD 72 million led by B Capital and Falcon Edge Capital to give a push to its aspirations of leading a fleet of electric scooters. The company claimed it has 2,000 electric scooters in Bengaluru and around 1,000 in Hyderabad—another South Indian city. By the end of this year, it said it wants to be in “100 smaller cities and 10 large cities” with its electric scooter rental offering. Currently, it is present in over 30 cities and claims to have clocked 11 million trips in total.
Bounce’s competitor Vogo received USD 100 million from Ola in December 2018, and is now again in talks to raise USD 40 million in an equity funding round led by Lightstone Aspada, along with Korean investor Mirae Asset Management.
Gupta said in the coming year, the company will launch a uniquely designed high speed electric scooters built for shared mobility. According to him, one of the reasons consumer adoption of EVs has been limited in India is due to the range anxiety people have, as they fear they will get stranded. To solve infrastructure problems around charging electric bikes, Yulu has tied up with mom-and-pop retail stores that will station its small refrigerator-sized charging unit to charge the swappable batteries.
While Drivezy is also working on a similar swappable battery ecosystem in Bengaluru, Ola Electric has partnered with Hyundai and Kia Motors that will manufacture India specific electric four-wheelers and charging infrastructure for the company.
“Making a business model to work with petrol vehicles is not possible,” said Gupta. “So everyone is trying different models. The strategies of bike-rental companies will evolve with time.”
“We have a very healthy and strong unit economics. Other than equity, we have raised funds through debt which we are using to buy assets. And since our unit economics is strong, we plan to pay back the money from our revenues,” he said.
According to Gupta, Indians are adopting e-bikes better than electric cars and the trend is further going to pick up.
“We have solved a lot of problems, such as parking spaces, battery charging stations, and specifications for EV batteries,” he said. “We are creating an ecosystem for EV mobility in India with proper products, in-house EV specifications, and charging.”
Rajiv Bajaj, managing director of Bajaj believes that the two factors of congestion reduction and pollution control will drive the segment of shared micro-mobility in the future. “That coupled with the expansion of Mass Rapid Transport System like Metro in large cities will further boost the demand for flexible last-mile connectivity,” he said in a media statement.
With this partnership, Gupta is aiming for the top position in the shared electric micro-mobility space and looking to expand its services to eight mega cities and select smart cities under Smart Cities Mission.
