India’s Lithium Urban shows the way in running a profitable all-electric taxi fleet

Ride the current.
Ride the current.
Image: AP Photo/Aijaz Rahi
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Founded in 2014, Bengaluru-based Lithium Urban Technologies launched a 100% electric taxi fleet, much before electric vehicles (EVs) began to dominate conversations in India.

A pure B2B player, Lithium has been providing corporates like Credit Suisse, Barclays, Google, and McKinsey with cab services while helping them meet sustainability targets without crippling their budgets.

“There’s a lot of pressure from shareholders (at these companies) to go green and focus on sustainability,” Vikash Mishra, head of external relations at Lithium, told Quartz. “At the same time, there’s pressure in terms of costs as well. Ultimately, cost becomes the main driver to make the switch to sustainability.”

Over five years, Lithium has expanded its fleet, currently comprising over 1,000 EVs, across Bengaluru, Pune, Hyderabad, the National Capital Region (NCR), Manipal, and now, Jaipur and Mumbai too. In an interview with Quartz, Mishra discussed his experience in establishing a fully-electric cab service in India with minimal regulatory support and how players like Lithium can help car manufacturers drive EV adoption in India.

Edited excerpts:

Lithium Urban has been providing shared electric mobility services to Indian businesses for over five years. Why have you chosen the B2B segment over a cab service targeted at consumers?

In the case of B2C journeys, it’s difficult to know where you’ll get the bookings from and where a rider chooses to go. Therefore, you cannot plan your trip or when the vehicle is charged. In B2B journeys office locations are fixed and we also know the employees’ drop locations in advance. So we could plan the number of trips an EV can run per day and when it can be charged.

EVs are expensive, but their operating costs are low. To make the most of low operating costs, you need to maximise its use over a 24-hour period. We realised we had to target companies where employees work throughout the day across multiple shifts. We use two drivers per vehicle to provide our services and cover seven to eight trips a day.

Unlike cab aggregators, such as Ola, for instance, Lithium launched as a 100% electric commercial cab service. What are the unique challenges of building a commercial EV fleet from the ground up?

The high upfront cost of EVs, the limited choice of models, range anxiety, and inadequate charging infrastructure were the challenges we faced.

We realised that the operating costs of an EV were between one-fourth and one-third the cost of running diesel or CNG vehicles. If you run (an EV for) around 300 km a day, you will save enough money (to make up for the upfront costs). Therefore, we ran the vehicle throughout the day and ensured that the transportation costs for the client were less by 10-15%. We were able to turn a profit on each contract.

We also decided to make do with whatever EV models were available in the market. We bought the (Mahindra) e2o and were able to complete trips within the 30-40 km range. At the same time, we built trust in the OEMs by assuring them that if they roll out more units, we would be happy to buy their cars in bulk. We’ve already bought more than 1,000 EVs from Mahindra. We also have orders from Tata Motors and MG Motor now.

We also developed a routing mechanism, a fleet management system, and a vehicle scheduler that informed us of the battery charge-levels in our cars. This helped us tackle range anxiety.

Finally, we set up our own charging stations at client offices. We manage about 1,500 charging points, of which 300 are fast chargers.

How are you tackling the problem of charging your EV fleet?

Lithium has three types of charging stations. Besides the ones located on client premises, we have pan-India partnerships with commercial real estate developers such as Brookfield Properties and RMZ to set up charging stations on their properties.

The third group of charging stations is what we call a “charging hub.” The first charging hub in the country is already running in Gurugram. It’s completely powered by solar energy that is run by Lithium and Fourth Partner Energy, a 100% rooftop solar company based in Hyderabad, as a joint venture. They are responsible for delivering clean and cheap power to us and Lithium ensures that our Gurugram fleet will be charged at the hub. We have 25-30 charging stations at the hub where 30 cars can be charged simultaneously. In the next few months, we will also open a charging hub in Pune and we hope to have 20-25 such hubs across the country in the near future.

Encouraging EV adoption in India will be a major challenge in the coming years. Is partnering with manufacturers like Mahindra a way to overcome this hurdle?

When you have a product in the market that is twice as expensive as the equivalent petrol or diesel car, adoption becomes tricky. Additionally, there’s the lack of charging infrastructure. A fleet operator like Lithium that can manage the charging on its own is the perfect way to increase EV deployment. Currently, there are 30,000 people using our vehicles every day. OEMs see us as a medium to deploy more vehicles on the ground. Take Mahindra’s case: they’ve completed about 170-180 million electric kilometres so far and of that, 100 million electric kilometres have come from us.

What is Lithium’s business model? What does a typical contract with a business look like?

We have a fixed monthly revenue per vehicle, but there are certain clients who pay on a per-trip basis. In the case of traditional cab services, there’s always a limit on the distance a cab travels every month. However, clients can run our vehicles over 24 hours over any distance they like. We are also not susceptible to crude oil price fluctuations. We can give clients a fixed price for the entire three-year contract, which means that companies can easily incorporate it into their budgets.

Unlike other shared-mobility services like Ola and Uber, Lithium claims to be profitable. How important is profitability for the expansion of an all-electric shared mobility service?

That’s the advantage of a B2B service: the revenue per kilometre and revenue per trip is much higher than what it is for B2C players. We keep profitability at the heart of our business and for every contract that we sign. However, the creation of renewable charging hubs or pan-India partnerships with real estate developers requires a lot of upfront investment and we’ll recover our costs only over time. We also need to build manpower in advance to take on the next wave of growth. That’s where the cash burn is mainly happening. Hence, we need to be profitable.

Do you have any plans of expanding into B2C?

In the near future, no.

Imagine having 500,000 charging stations across India, a charging station every kilometre, and fast charging capabilities that can charge a vehicle in less than ten minutes. If that is possible, then why not move into B2C? But right now, that future is still far away.