New Delhi: Providing charging infrastructure for electric vehicles (EVs) in India is like doing social service. As a business model in the Indian context very little money can be made from it at this point of time, says Maxson Lewis, co-founder and MD, Magenta Power at the latest episode of #StartupAdda.
On a normal DC charger one can make money only if it is used for 5 charging sessions a day and continue to use it every day for 5 consecutive years, he said.
Average charging in India is around 1 to 1.5 sessions per charger or even less than that. Thus, the breakeven point for the industry would be 5 charging sessions a day. “Globally also the utilisation rate for the best charging stations is around 26% only,” he said.
The electric vehicle (EV) charging infrastructure is the backbone of electric mobility but given the chicken and egg situation of what should be implemented first, it is often also seen as one of the barriers to EV adoption in India given its limited availability and long charging times.
According to a recent report by JMK Research & Analytics, India is picking up pace in setting up charging infra but not as much as in the European Union (EU), USA or China. High operating cost, Discom load, and the uncertainty related to utilization rates of charging stations are holding back the charge operators from expanding their current reach.
Incorporated in 2017, the Mumbai-based startup Magenta Power was founded by Maxson Lewis and Darryl Dias. The company makes hardware and software solutions and provides various services in the EV value chain such as designed/patented charging hardware, charging software, charging & Installation services and technical consulting.
“We started with an aim to be a complete end-to-end solutions provider in clean energy. Our vision is to generate, dispense and manage clean energy in India and globally,” said Dias.
Revenue streams
Explaining how the startup is making money in such a scenario, Lewis said the company has three revenue streams namely hardware, installation and charging-as-a-service. “The largest demand is not with the individuals. It is the fleet owners and the captive transport systems that are driving the demand. They are the drivers of utilisation now, so this is the large-scale transition where we are focusing on,” Lewis said.
“Mobility service, our second business in EV space, is not asset-heavy. It’s a technology that helps us to generate demand and feed that into the charging network. So that is how we have structured our two businesses to work together and this helps us in driving our revenues,” he said.
“Charging by itself is not a revenue driver but breaking these pillars of the ecosystem is where we make resistance out of it,” he added.
In terms of revenue, the startup said INR 82 crore is their business target for the current financial year. Their long-term target is an Initial Public Offering (IPO) in the next three years. “We believe that an IPO will allow us to go global.”
According to the Society of Manufacturers of Electric Vehicles (SMEV), there are 1,800 charging stations in India as on March 2021 for approximately 16,200 electric cars, including the fleet segment.
India needs about 400,000 charging stations to meet the requirement for two million EVs that could potentially ply on its roads by 2026, says a recent Grant Thornton Bharat-Ficci report.
According to Ashok Bhasin, industry expert and former head of sales & marketing and customer care, Hero MotoCorp, the honey drop called cleantech is going to attract many bees and some of them will be big bees, including the energy companies. So the question is that if those big companies come, in part the companies like Magenta Power are going to remain strategically differentiated and successful or will the startup be a subset of what they do?
In the coming years, the charging infrastructure grid ecosystem will rise to the scale that telecom came and laid the pipeline many years ago, he said.
Since Magenta Power moved into the EV game much earlier in 2017, Bhasin believes it reflects that the startup is fertile in thinking and very bold. “But it seems quite a handful to build, service and then create mobility solutions all at once,” he added.
Bhasin said that with so many aspects of the business, there is a possibility that Magenta Power will find that one of its segments will become the lead horse and others will become the support. “They are still at a go implement, try and learn stage. If that means they have to de-emphasize one of the four parts that they are doing, or get into a joint venture (JV) where someone else is on ground and they are providing the software, it should be okay.”
“I think they will have to look for partnerships,” he said, while adding that many roads will lead to Rome and the likelihood is that sooner or later, they will trade off one for the other in terms of prioritisation.
In 2020, Magenta Power raised its pre-series funding from JAN (JITO Angel Network) and LetsVenture. In May 2021, it raised over USD 15 million (Rs 120 Crores) in Series A funding from Kiran C Patel, an Indian-American philanthropist, cardiologist, and entrepreneur.
The startup was seed-funded by HPCL in 2018 and incubated by Shell in 2019.
The challenges
About the challenges, Lewis said the electric vehicle charging infrastructure in India cannot be copy-pasted from international solutions. Aspects like heat, humidity, harmonics and humans are unique for the Indian ecosystem. “Our USP is that we have designed our own hardware, done R&D in India and made charging solutions specifically for Indian climate conditions and Indian usages. Since our hardware will work with any software and vice versa, we wish more people would copy us.”
He further said that it took them close to one year from the ideation stage to on-ground execution. “Don’t wait for your ideas to become reality, because by that time your ideas will be old. In startups, it is not about final changes, but incremental changes- deploy an idea, allow it to succeed or fail. And if it fails, try again and again,” Lewis said.
“The only regret I have is that we should have started a bit earlier and younger,” he pointed out.
