Tag: electric

Bangalore-based Vidyut has been simplifying commercial EV ownership. The company uses an asset underwriting algorithm and battery health data analysis to offer EV insurance, repair, maintenance, servicing, and breakdown support.

Recently, Vidyut also launched an EV resale platform, one of the first in the industry for the 3W commercial vehicle segment. This platform manages end-to-end processes, including inspection, valuation, sale, and RTO documentation, to build the resale market for individual owners. The resale operations are based in Delhi NCR, Bangalore, and Hyderabad.

At EVrepoter, we recognise that the reuse and repurposing of previously owned EVs is a pressing issue for the industry and financiers. In this exclusive interaction with Xitij Kothi, Co-founder – Vidyut, we discuss the market for EV resales in India and the start-up’s approach towards solving EV resale.

For EV resale, what are the segments you are currently operating in?

We don’t operate in the L3 or low-speed 2W segments, primarily because they’re unregistered and heavily dominated by lead-acid batteries. Vidyut focuses more on the lithium-ion segment, and for the past 2.5 years, our focus market has been the L5 3-wheelers in the passenger and cargo segments. The used EV market is fragmented and unorganised, with many small, local dealers in this space. The structure for used commercial EVs is still emerging.

For every new electric 3W or small commercial vehicle sold, at least 2 to 3 exchanges happen during its 10-12 year lifespan, i.e., commercial vehicles typically get sold at least twice, if not more.

In terms of volume, one can estimate a 1:2 ratio between new vehicle sales and used vehicle transactions.

That sounds like a sizable market. In addition to connecting buyers and sellers on your platform, do you also take the vehicles onto your books, refurbish them, and resell them?

We provide end-to-end services to the buyer as well. While we facilitate the sale, we ensure that the vehicle delivered to the buyer is in the best possible condition. Currently, we don’t take vehicles onto our books, but we do offer refurbishment services along with managing the RTO and documentation required for transferring the registration from the seller to the buyer.

Here’s how the process works:

If a consumer or fleet owner wants to sell their used 3W, they approach us. Our team visits the customer’s location and conducts a detailed vehicle inspection. This includes a physical inspection, a charging range test, and a driving test. Additionally, with the seller’s consent, we access historical battery data through the OEM to predict the remaining useful life.

We combine the physical inspection results and battery data analysis to generate a valuation report reflecting the vehicle’s residual value. This report is used to attract potential buyers. As buyers show interest, they may request repairs or refurbishments, which we handle and factor into the vehicle’s final price before completing the sale.

We also manage the entire registration transfer process. In collaboration with some OEMs, we’ve started offering extended warranties on used vehicles through our platform. For instance, with Euler, we now provide a recertification process where used vehicles come with an extended OEM warranty of 1 to 3 years. We’re in talks with other OEMs to expand this offering.

Aren’t there significant overhead costs associated with facilitating the resale of used electric 3Ws? Considering the need for inspections, vehicle and battery health evaluation, and logistics, does it make economic sense to enter this business?

That’s a fair question, and it’s a topic that has been analyzed in the past, especially in the car segment, regarding the economic viability of such businesses. When you buy vehicles to hold as inventory before selling them, there’s definitely more risk involved. The price you pay for the vehicle is crucial because your profit margin is determined by the selling price minus the buying price, which must cover all associated costs. If there’s significant competition in the market, this can inflate the buying prices, reducing your margins. That’s why we’ve been cautious about scaling up by buying vehicles for our inventory.

Instead, we focus on facilitating sales. Once the sale price is agreed upon, we begin calculating costs for refurbishments and logistics. Our approach has been to provide sellers with a valuation report based on our inspection, allowing us to align on a price point we can likely sell the vehicle for —typically within a 5% range. If the seller agrees to that price, we collect a small booking amount to initiate the process, which helps build trust while covering some initial costs.

After that, we identify potential buyers for the vehicle. The refurbishment and logistics costs are incurred only after the seller has agreed to the sale and its associated costs. This strategy minimizes risk compared to holding inventory, as we only spend on refurbishment once there’s a committed buyer. While this process may take longer, it’s necessary given the current market dynamics. There’s a scarcity of credible platforms for sellers to trust, and they often struggle to find good values for their EVs.

As the market matures and liquidity improves, we’ll look into potentially holding inventory, but for now, building trust is our core focus.

Could you elaborate on the role of spare parts during vehicle refurbishment?

We want the seller of the used vehicle to realise the maximum resale price, while the buyer should be able to buy it at the lowest possible price. This means that any margin we need to make in between for viability should be minimal.

We want to ensure that refurbishment costs, including any necessary spare parts replacements, are managed effectively. Direct partnerships with these suppliers will definitely help us achieve that at scale. Currently, we’re still in the early stages and have just started operating in a few cities. Right now, we work directly with the OEMs because we want them to be involved in the overall development of the used vehicle market. It’s better for the vehicles to be refurbished at authorized dealers and service centres using OEM-provided parts. As our scale and volume increase, it will make sense to partner more closely and directly reach out to their suppliers for spare parts when needed. Ultimately, we aim to narrow the margin between the selling price and the buying price.

How does financing for used EVs differ from financing for new EVs?

Financing for used electric vehicles is indeed trickier than for new EVs. In new EV financing, the residual value poses significant challenges for financiers, leading to a more conservative approach. For used EVs, an additional factor is the remaining life of the asset—what tenure can financing be provided for? Not all vehicles come with warranties, and sometimes the warranty expires upon resale. Some OEMs do offer warranty transfers, but the duration is often limited. Since this market is still nascent, financiers are cautious about how long the asset will last.

It’s crucial to establish an accurate valuation throughout this process. Many issues still need to be addressed in new EV financing, making used EV financing a lower priority for most financiers. However, some new-age financiers are operating in this space, such as Seed Capital and Perpetuity Capital, which have engaged in used EV financing. We are also in discussions with some lenders to scale up used EV financing, as enhancing liquidity for buyers is essential.

What challenges do you foresee in scaling up a platform like the one you’re building?

I’ll recap the challenges in the used vehicle space:

• Building trust and establishing accurate valuations – Even if we develop a robust method for inspecting and valuing vehicles, the market will need time to verify that our claims hold true. As we gradually begin financing and selling used vehicles, we will gather consumer feedback and performance data to help validate and build confidence in the ecosystem. Right now, the state of used EVs resembles the state of new EVs back in 2021.

• Financial participation in the used vehicle market is crucial – Achieving similar scale and distribution for used EVs will take time, but we are actively investing to expedite this process.

• Need to solve trust issues for consumers

• Access to third-party parts for vehicles

As the ecosystem matures and OEMs develop partnerships, it should become easier for used EVs to thrive. Quick and efficient repairs will be key, even without warranties.

Over the next few years, we plan to expand beyond three-wheelers to multiple vehicle categories and introduce additional service lines throughout the ownership journey. Ultimately, we want to make the entire ownership experience more convenient, stress-free, and affordable for individuals.

Also read: EV ownership solutions provider Vidyut secures USD 10M in Series A