Europe is becoming a hub of investments in the automotive industry, with numerous Indian companies joining the fray. The question arises: will Europe follow India’s lead in adopting fleets of electric two-wheelers for logistics and last-mile deliveries? Alok Das, Co-Founder of Qargos, discusses this with EFY’s Mukul Yudhveer Singh.
Q. Can you share the origin story of Qargos F9?
A. Vijay, my co-founder, was experimenting with low-speed vehicles, while I had experience as a test rider for a large automotive company in Pune. We decided to focus on the B2B sector, foreseeing that it would eventually become a volume game for manufacturers. We aimed to create a niche product to avoid the Red Ocean of competition and instead enter a Blue Ocean market with less competition and more opportunities for market share. We identified a gap between two and three-wheelers for transporting large boxes that don’t fit on a two-wheeler but don’t require a three-wheeler.
We built a proof of concept (PoC) in Bangalore, incorporating a generator and an 800-watt motor, which showed promising results and inspired us to develop a new vehicle category. To execute our vision, we brought on board senior experts from the automotive industry to make informed and frugal decisions, avoiding the trend of burning excessive capital on vehicle development. We announced our product in Dallas, Texas, at the Dassaults Systems Conference, marking the culmination of our journey from a PoC to a market-ready innovation.
Q. Can you share insights from the research you carried out in terms of EVs and the logistics industry?
A. Our research began not with the industry’s pain points, but with understanding the market. We observed a problem that was visible yet ignored, much like a routine pain that becomes part of daily life. For example, we noticed the inefficiency of two-wheelers in logistics, a sector where e-commerce represents just a small fraction. Two-wheelers are not designed to carry loads, which slows down the riders and makes the vehicles hard to handle. The chassis and the load operate as separate entities, lacking integration. A well-designed vehicle, like a good handling car, should remain stable regardless of the passenger load.
This concept is absent in two-wheelers, where adding load creates an imbalance. This observation led us to identify the pain point: the disconnect between the load and the vehicle’s chassis. While solutions like the Tata Ace exist, they also have limitations. Our research showed that the inefficiency in handling loads on two-wheelers was impacting operations. This understanding was crucial in developing the F9, addressing the need for a vehicle that could efficiently marry the load with the chassis for better logistics operations.
Q. After this amount of research, do you believe that electric vehicles for deliveries are viable in the West, particularly in Europe and other developed countries?
A. Logistics is all about speed and efficiency, and EVs offer a cheaper way to move goods, especially when considering the total cost of ownership (TCO). This is similar to the old petrol versus diesel debate, where the decision is based on the expected mileage. Two-wheeler EVs are already making inroads in Europe and other parts of the world. For example, I had a customer from Croatia who discussed retrofitting existing two-wheelers with electric kits or purchasing new electric two-wheelers to reduce costs. Three-wheelers, however, face challenges in Western countries due to safety concerns. They lack features like airbags, which makes them less suitable for these markets.
Q. Are there any specific rules or policies in European countries that advocate the use of EVs for logistics?
A. Yes, there have been initiatives in Europe to promote the use of EVs in logistics. One notable project is Freeview, which focused on urban freight in eight cities, including Amsterdam, London, and Barcelona. The study aimed to understand the impact of electric fleet vehicles during congested hours. The findings are leading to mandates that by 2025 to 2028 only EVs will be allowed for fleet applications in certain areas of cities during specific hours, especially where pollution levels are high.
This push towards EVs is partly due to the increasing temperatures and heatwaves observed in Europe, which were previously uncommon. Countries like Norway are leading the way in EV adoption, not just for personal use but also for logistics. The overall goal is to reduce emissions, combat global warming, and make Europe greener, which is why there’s a significant push towards EVs and sustainable technologies.
Q. Considering that Europe’s two-wheeler market is largely performance-oriented, with even 500cc to 600cc motorcycles considered entry-level, how do Indian EVs stand a chance there?
A. The potential of Indian EVs in Europe doesn’t hinge solely on their origin but on whether they address specific needs and maintain high quality. Two factors drive adoption: the product’s ability to solve a problem and its quality. For instance, Ather and Chetak, two leading Indian EVs, were exported to Germany for a startup to study their build quality. Europe’s two-wheeler market is diverse, with countries like France, Italy, the UK, Spain, and Turkey purchasing significant numbers of vehicles.
While the market may be smaller compared to India, the premium pricing in Europe offers higher profit margins. For example, the KTM Duke 390 sells for around 600,000 rupees in Europe, double its price in India, making it more lucrative for companies to target European markets. Additionally, the push for EV adoption due to climate change concerns further opens opportunities for Indian EVs to make their mark in Europe.
Q. Considering the KTM Duke example, where there’s a significant price difference between India and Europe, don’t the varying standards between these markets affect the cost for companies like KTM?
A. Even with a potential 20% increase in the cost of parts, the doubled selling price in Europe still allows for substantial profit. It’s not just about volume; profitability is key. For example, Toyota may sell fewer Innovas compared to Maruti’s Altos, but the profit margin on Innovas can be higher. European customers prioritise environmental sustainability, technology, and road safety.
Q. Apart from environmental consciousness, are there other factors that would encourage Europeans to adopt Indian EVs, especially for logistics and B2B purposes?
A. Innovation is a key driver, regardless of the country of origin. Europe is actively seeking alternatives to reduce dependency on China, adopting a ‘China plus one’ strategy. Price competitiveness and brand building are crucial, as European customers tend to favour local brands. However, if Indian companies can establish manufacturing in Europe, creating employment opportunities, there could be incentives and support for these brands. This approach has worked for companies like KTM and BMW, which manufacture in India but sell successfully in Europe. We have explored this with the Dutch ecosystem, considering setting up a presence and manufacturing centre in the Netherlands. Such initiatives can make Indian EV brands more appealing in the European market.
Q. Do you see a potential market or opportunity in Africa?
A. Yes, there is definitely potential in Africa. For example, we have a patent in Nigeria, one of Africa’s largest markets, primarily to safeguard our inventions. However, the current situation in most African countries is similar to what India experienced in the 60s, 70s, and 80s, with widespread poverty and low vehicle ownership. Chinese manufacturers have made inroads into Africa, filling the gap left by local manufacturers and Japanese brands dominant in other Asian countries.
Indian brands like Bajaj, Hero, and TVS are also making progress in regions where two-wheelers are more common, offering better quality compared to some Chinese products. The African market is likely to mature over the next 10 to 15 years as purchasing power and per capita income increase. We plan to explore these markets more seriously post-2030, but we will continue to file patents to protect our intellectual property.
Q. Are there other regions in the world where you see potential for the use of EVs, especially two-wheelers, in the logistics sector?
A. The ASEAN region, including Thailand, is a prime candidate due to rising fuel costs and the need to reduce logistics expenses. As battery technology improves and costs decrease, EVs will become more viable. Latin America, particularly Brazil, is another market of interest. Despite the higher initial costs, the overall purchasing power in countries like Brazil, Indonesia, and Thailand is greater than in India, making them attractive markets for EV adoption in logistics. Singapore, despite its small size, is also a significant market due to its strategic importance.
Q. As Indian OEMs explore international markets, what challenges might they face, and how can they overcome these to establish a strong global presence?
A. The primary challenge is changing the perception of India as a hub of innovation. Historically, India has been seen more as a follower than a leader in technology. We need to shift from being service-oriented to product-oriented, especially in sectors beyond IT. Countries like Germany, Japan, and Korea have built reputations as innovators by investing in local technologies. China, once considered a copycat, is now emerging as an innovator.
India needs to adopt a similar approach by focusing on ‘Invented in India’ alongside ‘Made in India.’ We must prioritise owning intellectual property and establishing manufacturing facilities abroad, with government incentives supporting these efforts. Brand perception is crucial. Indian companies must invest in building strong brands in their target markets, educating consumers about the superiority or parity of their products compared to existing options. The goal should be to match or exceed the quality of products available in those markets. This approach will help Indian OEMs overcome challenges and make significant strides in their international expansion.
Q. With China dominating the electric vehicle market, how can Indian two-wheeler and three-wheeler manufacturers compete and ensure they aren’t overshadowed by Chinese counterparts?
A. To compete with China, Indian manufacturers need to think beyond just electric vehicles. While electric is a clean mobility solution, there are other alternatives like hydrogen, hybrid, and potentially sodium-ion batteries. India should focus on developing technologies in different directions, much like Japan’s investment in fuel cells and hybrids.
We shouldn’t aim to beat China at their own game but rather offer parallel or superior alternatives. The ‘China plus one’ strategy isn’t about competing directly with China but about providing better options. BYD’s success with their electric sedan shows the importance of advanced battery technology. India’s survival in this space depends on investing in technology and encouraging entrepreneurs to take risks.
There will be failures, but it’s essential to accept them as part of the process. We need to create an environment where innovation is valued and supported, allowing us to develop unique solutions that can stand up to China’s offerings.”
