TCO analysis for e-3W has been positive for a while now. According to WRI estimates, at an average driving utilization of 100 km, EVs are more economical even without subsidies
High upfront costs, the bugbear of this segment, have decreased significantly. Today, the difference between 3W ICE and EV in many cases (with some variation in models) is as low as 10% – for instance, check out the 2 models from Mahindra 3W – 1. EV and 2. ICE. With price no longer a major factor, the question is what will spur greater adoption of EVs in this segment.
Our investment in Exponent Energy over a year ago was based on the core thesis that fast charging was the key to solving range anxiety – the biggest challenge hindering EV adoption in this segment. Exponent Energy fit our view perfectly with its e^packs, e^pumps, and offboard cooling system that can charge an e^pack from 0 to 100% in just 15 minutes!
Since our investment, Exponent Energy has made significant progress, with its vehicles now zipping across Bangalore and its chargers spotted at various locations. As Exponent Energy has commercialized and its OEM partners have deployed Exponent-powered 3Ws, emerging data is providing interesting answers to downstream effects that fast charging creates. Below are our learnings based on this data for both DCOs and fleets.
DCO (Driver cum operators) behavior with an exponent-powered vehicle
DCOs and small fleet operators (SFOs) dominate the ICE cargo vehicle market, but organized larger fleets are driving the adoption of e-3Ws. Of all the exponent-powered vehicles on the road today, ~10%+ are owned by DCOs and SFOs, which gives us an insight into their behavior.
- Rapid charging is crucial for DCO adoption of EVs.
DCOs, on average, drive more than fleets. While the top 30% of Exponent-powered vehicles, by utilization, run ~100 km/day, the average DCO with an Exponent-powered vehicle drives over 125 km.
DCOs’ utilization, driven by spot demand and informal relationships (unlike fleets that operate on contracts), results in unique and varying requirements. For example, in November, an Exponent-powered vehicle used by a DCO covered over 320 km in a day. This variability requires a vehicle that can adapt to their driving pattern.
Conventional non-exponent EVs, even from major OEMs, typically run for 80 km and take ~4 hours to charge, making them unsuitable for DCO adoption. An Exponent-powered vehicle reduces charging time to a mere chai break for drivers while covering similar distances on a single charge.
- Given their driving patterns, DCOs require a spread-out charging network like Exponent’s.
A corollary to how DCOs operate is that their driving routes are unplanned. Fleets, especially those that use EVs, plan their routes and set up charging hubs relying on scheduled charging times (often overnight).
Home charging remains a challenge even for the affluent in India; DCOs who often park on streets simply do not have this option. Hence, they need easy availability of this network. This turns up in Exponent’s data. While an Exponent-powered vehicle overall uses 8 unique charging stations in a month, the same vehicle owned by DCO charges at nearly 2x the number of unique stations on average. This shows that their routes follow a more ‘random’ pattern daily, and a distributed charging network is needed to meet their needs. We believe that a distributed fast charging network can take away one of the major blockers of EV adoption – ‘charging anxiety’ (more on that below).
Fleet behavior with an exponent-powered vehicle
- Fast charging boosts efficiency.
As mentioned above, an EV, even from a major OEM, runs for 80 km before needing a 4-hour charge. That’s a big limitation. In contrast, ~75% of Exponent-powered vehicles travel over 100 km per day for ~7 days each month.
This is made possible by Exponent’s distributed charging network, enabling on-the-go charging and minimizing the downtime spent searching for charging stations. Enhanced vehicle utilization allows for double shifts (one vehicle serving two shifts for the same client) and cross-utilization (utilizing the same vehicle for another client after completing the initial run).
For instance – consider a fleet serving Amazon Fresh, which structures its deliveries in 2-hour slots. Per our estimation, a vehicle drives ~15 km per slot with 5-7 deliveries in that 2-hour window. In this instance, an average vehicle would be able to cover 2-3 slots (accounting for dead km) before it needs to be charged for 2-4 hours. An exponent-powered vehicle, on the other hand, can theoretically serve as many slots as needed since charging downtime is not a constraint. Given that the payment structure is per order (plus some fixed amount), the vehicle will lead to higher earnings, thus improving fleet economics.
- The term ‘range anxiety’ should be replaced with ‘charging anxiety.’
Exponent-powered vehicles thrive on e^pumps for lightning-fast charges. However, they can also be slow-charged via a standard connector if needed. One would expect these vehicles to be slow charged overnight before the morning run. This is especially true for fleets who typically have ‘hubs’, i.e., locations where their vehicles are parked and charged.
Surprisingly, we find the opposite true. In the past 6 months since hitting the roads, every Exponent vehicle has exclusively juiced up on Exponent’s network alone. Not a single driver or fleet operator, not once, has opted for a slow charge despite the capability. This is significant because vehicle downtime would lead to a loss in daily income. Drivers and fleet partners put their faith in Exponent’s system day in, and day out, trusting it to deliver without fail. This, to us, implies deep trust in Exponent’s network reliability. This reliability is backed by data. The network currently operates at 98% uptime vs the industry average of 70-80%. High uptime breeds trust, showing that a reliable network can remove users’ ‘charging anxiety.’
Taking a step back, these behaviors are to be expected. Rapid charging flips a user’s behavior. Think about our own mobile phone habits. As fast charging became the norm, we stopped fretting over our mobile’s battery life, knowing that a quick 15-minute boost could suffice for the day. Similar shifts are happening for DCOs and fleet operators as they dive into the world of rapid charging with Exponent
Here’s a gem many overlook about fast charging—fast charging is cost-effective. Our market estimates suggest slow charging runs at an average of INR 20-24/unit, while a swap hits around INR 30/unit. Let’s take an example of slow chargers. They have lower throughput because each vehicles takes time (ranging from an hour to a few hours) to be topped up. An Exponent-like fast-charging network? It can fully charge 4 vehicles in an hour—96 vehicles/day. Higher throughput means more energy being dispensed per charging gun daily, making the economics work even at a lower network price.
Rapid charging, supported by a widespread and accessible network, holds the key to achieving greater EV adoption. Here’s to its success!
-Co-authored by Harsha Kumar & Romit Mehta