Why We Invested In Vecmocon

We at Blume have been very bullish about the EV sector in India. Our string of investments into companies such as Yulu, Euler Motors, BatterySmart, and ElectricPe has allowed us to witness the growth of the sector very closely and we are convinced about what the future of EVs holds for the entrepreneurs, the investors and the end consumers of the country! 

Our investment into Vecmocon comes from a deep insight about the evolution of the two wheeler EV space in the country. As highlighted in our previous blog  “Winning in the Two-Wheeler EV Market in India” and our EV Primer, taking the ODM route is one of the surest ways to win the 2W market in the country. 

A couple of large OEMs such as Hero, Bajaj, Honda, and others have had the most penetration and share in the traditional ICE vehicle market. This domination of the market came from the high barriers to entry of being an OEM given the complexity and design of the vehicles, the large investments into heavy manufacturing setups and the complex supply chain involved in the 1000s of individual parts involved. In contrast, the EV market allows anyone to assemble a vehicle easily without making heavy investments. Additionally, given the adoption of EVs has just started, most brands are fairly new to the market. This has led to the creation of 200+ EV OEM brands in the country!

For an 2W EV, given the high cost of Li-Ion batteries and the competition in the market, the margins that an ICE OEM enjoyed cannot be translated to an EV OEM. 

India is a price-sensitive market. Since batteries are expensive, OEMs will often not have enough margin to invest into R&D and product development from scratch. As a consequence the products may not always be perceived as high quality or satisfy the tough expectations of Indian consumers. Additionally, given the lack of good component manufacturers – motor, controller, BMS, battery pack, there is a high demand for good quality parts. In the short term, the need is even more acute to satisfy the stringent homologation requirements for FAME-II subsidies. In this scenario, an EV OEM facing a hyper competitive market has the leverage of only price, which leads to poor-quality products. 

Vecmocon has uniquely positioned itself to be a cutting edge deep tech company focussed on providing high-quality components and solutions for an EV. Their solutions – motor controller, BMS, Vehicle Intelligence Module are designed and tested for the Indian roads. These components can be readily used by any EV OEM to set up their brand and offer any number of EV models. The integrated solution which ties up all the components together to work in the best efficiency possible is a true differentiator. This also allows the servicing of the vehicle easy for an OEM. The ability to deliver reliable solutions to an OEM and establish a long term partnership allows Vecmocon to establish itself as an ODM empowering 100s of OEMs. In the team led by Peeyush Asati, Adarshkumar and Shivam, we see the high drive, motivation and deep domain knowledge required to build a large independent business in India. They have the potential to be the Robert Bosch of the EV industry. 

In our view, the 2W EV market will have two separate segments. Once of the likes of Ather or Ola doing full-stack product development leading to high-quality and higher-price products. The other will remain a mishmash of smaller brands playing on their strength to assemble or distribute in various markets, without any of these emerging to be a very large player. Vecmocon wants to serve in the latter and we are very excited to partner  with them on this journey.