The introduction of electric mobility has given rise to a pleasant number of innovations and business models in the industry that has been largely spearheaded by the startup ecosystem. Taking a detour from the ordinary, this EV startup has not only built a business model around being the messiah for companies that desire to shift to electric mobility, but has also figured out a unique way to merge tech and finance together.
In a conversation with ElectronicsForYou’s Rahul Chopra and Siddha Dhar, Akash Gupta, CEO and co-founder of Zypp Electric tells us about the gap Zypp fills in the EV industry, its growth plans and challenges, and why it also calls itself ‘an EV fintech company’.
Q: Why is there such a sharp rise in the adoption of electric mobility in the logistics sector? How would you describe Zypp’s solution in simpler terms?
A: Today, the one problem that we’ve picked to solve is that all the logistics companies want to go electric. Why are they wanting to go electric? Firstly, because there is government pressure, both state or central. That’s the push, but at the same time, there is a very inherent pull. Logistics is a very low margin business and since electric bikes have a lower total cost of ownership (TOC), it effectively makes them a better choice due to three reasons– firstly, to reduce their cost of logistics; secondly, because they have their own sustainability goals or ESG mandates which is pushing them to go electric; and thirdly, due to rising petrol prices, the savings of delivery executives are attriting, and hence the are deliveries are getting affected. These are the clear three reasons why logistics or last-mile delivery partners are working with us.
Now, coming to what our offering is, it is very simple. We are a tech-enabled platform which brings all stakeholders of the EV ecosystem together to give a seamless experience to the consumer, so much so that the consumer does not feel the difference between a petrol-run vehicle or an EV. Whatever experience he was having on a petrol bike for logistics last mile delivery, all of that is given by Zypp at our platform.
We do that by deploying a very robust 120 km mileage bike along with bringing our own charging and swapping infrastructure (for which we have also partnered with a few companies). Alongside, we have all of this running on an app with a very efficient backend which helps us track where the fleet is, how to geofence it, where to target it and how to utilize it. All of that hassle is ours, the customer does not have to worry about it. Then we have trained and quality driver partners who bring thorough experience in working and handling an EV to the table and can deliver shipments whether its food, grocery or ecommerce. At the end of the day, we also provide maintenance and care support to all our bikers who use our bike. Wherever they are, they get call support and human support so that they are unstoppable.
What we have essentially done for these customers is that we’ve taken their capex cost away because we are deploying their EVs and also taken away their operation hassle because we are managing the charging infrastructure. We have given them a scale of about 5,000 bikes which is going to 15,000 over the next 12-18 months, and also the assurance they need not worry about things like spare parts, maintenance.
Q: Is this offering of outsourcing the entire delivery to you the same for all the clients that work with you?
A: Outsourcing the EV for deliveries is what we offer to our B2B partners. We also have a B2C offering which is for all the delivery executives where we manage the driver also because that is the expectation of the client.
But in the cases of B2B clients like Zomato, Swiggy, Uber, what they look for is for the option for their drivers to switch to electric. For this, we have an app where these drivers can see multiple bikes at multiple Zypp micro hubs which we have set up across the cities we operate in, where there are 25-30 bikes available at any point of time. The drivers can go there, scan the QR code, pick a rental plan, either a week/month(s), and then start working with the B2B client and earn the most out of it.
Q: How are you charging these clients?
A: We charge them on the basis of per delivery, which is again, duration-based.
Q: Apart from the policies that require people to shift to EV, are you doing anything on your part to convince businesses?
A: Right now, we don’t have to do any convincing. They understand it quite well that they have to move to EV. We don’t have to reach out to customers and there is already a huge pipeline of customers who want deliveries to be done through EVs so we are scaling up with the current customers who have already made up their mind.
Q: Is there a one standard type of bike or is there a motorcycle/scooter version of it?
A: As of now, there is a one standard scooter version of our bike which is robust and with a 120km mileage. But at the same time when we grow to 15,000-100,000 bikes at steady state, we would look at 2-3 form factors to be there but not more than that.
Q: How do you make sure that the delivery partner doesn’t run away with the bike or take away the most important components of the vehicle?
A: That’s where the tech has been baked in. Before we hand over the bike to anyone, we know who they are by doing a strong KYC which is fully digital.
Secondly, everything is tech-enabled so they don’t get a key from Zypp. They just have to scan the QR code on the bike and then the bike gets connected through the app. There is a geo-fence tracker and IoT on it which is tracking them at any time. And the plan is all prepaid, there is a security deposit that they pay us. We know how they are driving, if they have been hit by someone, if the bike has fallen, all through sensors. Also, when they return the bike then it is again checked through a tech-enabled process that everything is alright with the bike.
Additionally, there is a full collection process which is enabled at the backend in case the bike is not running or their plan gets over. Sometimes there is a little bit of a delay in returning a bike back to a hub but it’s all well protected at least.
Q: This entire technology of the e–bikes is part of Zypp or any of the other startups you invest in the sister ecosystem?
A: We don’t manufacture e-bikes. We have OEM partners who make these e-bikes but all the technology which is on top of these e-bikes, all of that is Zypp’s IP. So we are asset-light in that sense and any OEM can partner with us, provided they meet our criteria of bike requirement. Once we find the right bike, we deploy our IoT and branding on top of it and then it becomes a Zypp bike.
R: You mentioned battery also, but battery management is generally an integral part of the bike itself. So what is the aspect of it that you add on?
A: We have our custom battery management system or BMS which we ask the battery OEMs to put inside the battery. This is because the bike is in Zypp’s custody and we have to run this bike. Since we are in the bike utilisation business, the more I utilise the bike, the more and more I will earn. The tech that we put in helps us in doing just that. We know when to charge the battery. Batteries usually come with a 3-3.5 year warranty but we can actually finish the warranty in a year if we charge the bike twice a day, so we have proper triggers baked onto the app which tells the driver the right time to charge the bike. Otherwise, if they charge it every now and then, then they are finishing the cycles of the battery which is why we customise some of these features so the right data points are set with us and then we play on them through our data and AI/ML algorithms.
Q: Where is the R&D of all this overlying tech that your team has built? How many people would be there in the R&D and tech side?
A: Everything is done at our Gurgaon office’s R&D. In total, we are a young team of close to 100 people out of which 20 people are involved in building the tech. If I add the fleet guys who do the testing on ground and work on the field, then I’d say 25% of our team would involve the tech team.
Q: How do you get the funding to acquire and deploy these bikes?
A: All of the 5,000 bikes that we have or deployed, all of these bikes are invested by HNIs who like to invest in these assets. It is like an alternate asset/investment earning plan similar to how you invest in an FD or a mutual fund or real estate.
This is a separate asset class that we have created where you can invest in an e-bike and earn a 20% pre-tax return from us for three years after which we have a guaranteed buyback. We offer them a 10% buyback value when we buy the bike from them. All the bikes are on the same model.
To understand it better, look at it this way– let’s say you’ve taken a loan of 50 lacs.You pay back that loan every month at an EMI, at the end oh which there is a final principle that you have to pay back and the interest for loan is 6%. Same thing translates to a Zypp investor. This is after adding the FAME incentives. All you need to do is go to our website or app, do the investment and get the returns.
Q: So the investor becomes the owner of that vehicle?
A: Yes, and it is registered in their books in their name.
R: So is Zypp more of an investment firm or a tech firm?
A: From a different lens, I can say that we are an EV fintech company.
You can call us that and it’s not a problem because there is someone who is investing capital and then we are giving our bikes on micro usage to individuals to make more money out of it. But the EV ecosystem has been built in a very different way as compared to the ICE industry because EV has a lot of unknowns– batteries, chargers, infrastructure, infact, the bikes itself are unknown along with the investments, so I think you can call us that SDK which is enabling anyone to go from ICE to EV.
Q: Do you face any issue in getting these e-bikes insured?
A: Not anymore, since we solved these problems during the scale of phase when we started 4 years ago. Now we get insurance quickly on the bikes.
Q: How do you get bikes at cheaper prices? Is it because you buy it in bulk or do you ask them to not put in an extra feature?
A: Most e-bikes are built for high-end use cases with crazy speeds, which we don’t want. We don’t want a bike with 70 kmph, we are happy at 50. We don’t want the bike to be very beautiful, or with fast charging or digital display. A lot of those things reduce the cost for us. These are features that are added to get the consumer’s attention which we don’t really need. We need a robust bike to run for 10-12 hours every day without any jazzy features which actually increases the cost of the bike as well as the maintenance.