Spooked start-ups rush to douse buyer anxieties 

2Electric two-wheeler start-ups, fuelled by investor funds, are rushing in to assuage buyer anxieties after multiple incidents of EVs catching fire hit headlines, threatening to derail the consistent run-up in retail demand.

From altering product technology to focussing more on product safety, electric two-wheeler makers are going the whole hog to avoid hurting consumer confidence, especially as EVs are at a nascent stage in India with a penetration level of just 2 per cent.

At least three scooters from Ola Electric, Okinawa and Pure EV have gone up in flames in the last few days, including one claiming two lives. This has drawn the attention of the Centre, which has formed a team of experts to probe the fires.

These incidents have spooked the start-up community that have been chasing high valuations even before their products hit the market.

Investor push

“Investors will push their start-ups to focus more on improving safety because if this trend continues consumers will lose confidence in EVs thereby seriously affecting demand and thereby the ability of the start-up to raise further funds,” a top executive of an EV start-up said.

Also read

‘EV battery fire probe must bring in stringent norms for the sector’

Ola EV fire incident raises questions around EV safety 

Ola Electric says investigating scooter fire incident

Delhi-based EV start-up Crayon Motors, looking to raise funds for expansion in the upcoming quarters, expects some knee-jerk reaction from buyers because of these fires. “There will be some buyer resistance,” said Mayank Jain, Co-founder and Director, Crayon Motors. “Funding companies will take a long-term view of this but we are not expecting much of an impact. However, such (fire) incidents might force many of the investors to ask the manufacturers to focus on safety,” Jain added.

Jain, who is planning to launch 3-4 high-speed models this year, is looking to off-load 15-20 per cent for raising ₹100-150 crore from venture capitalists in FY23.

Battery cells to blame

Industry watchers report that some of these entities operate out of a garage and depend on intellectual property rights (IPR) of Chinese companies and cheap battery cells which also come from China.

“People with a spare parts business have started to assemble electric two-wheelers. People are buying low-quality battery cells from China which are unable to bear the hot temperatures of India,” said Amit Kumar, Executive Director and CEO, Benling India.

According to Kumar, the reason behind the increased cases of fire is because of the NMC (nickel, manganese and cobalt) batteries, which are claimed to be inherently volatile. “NMC has proved to be dangerous. Even in China the government is not promoting NMC. Last year, China had 300,000 cases of fires and all of them had NMC batteries,” Kumar added.

The solution to this is the use of LFP (lithium ferro phosphate) batteries which have gained manufacturer’s confidence because of their safe usage history.