While the common opinion today is that the era of electric vehicles has begun but most industry experts still state that passenger cars will be last to be electrified. It is two-wheelers if we are to bring in personal mobility, public transport, and intra-city logistics that will spearhead vehicle electrification in India. The cost to acquire electric vehicles is still unaffordable for many. This is the field where companies like Three Wheels United step in and ease the burden of the initial cost of owning an EV or exchange an old fuel-powered three-wheeler with an all-electric one. We spoke with Cedrick Tandong, CEO, Three Wheels United, to learn more about the flexible finance options and the company’s plans for the near future.
Three Wheels United and its expanse of business
Three Wheels United is a social enterprise that offers holistic financing solutions for drivers to own a light electric vehicle, such as an electric Auto Rickshaw. There are over 12 million auto rickshaw drivers in India operating a fleet of over 6 million vehicles. 50% of these drivers have no choice but to rent their vehicles due to a lack of financing options that work for them. This leaves the drivers with limited income and the inability to choose a less polluting vehicle, thus contributing to over 21 million tonnes of CO2 annually.
Electric auto-rickshaws have a lower total cost of ownership and are more profitable than a fuel operated one, but have an even higher upfront cost, making them even more inaccessible. Three Wheels United was started with an aim to reduce pollution while generating more income for light vehicle operators by helping them switch to electric vehicles.
Three Wheels United (TWU) combines tailored financing solutions with innovative loan management and asset management technologies to offer a competitive loan, removing barriers for uptake, whilst de-risking lending. The result is a triple bottom line impact – pollution and poverty reduction in a highly scalable and profitable business model. TWU uses innovative structured finance and credit enhancers designed for mobility assets, to cover up to 100% of the vehicle cost at a fair interest rate, removing the barrier of high down payment.
TWU, working in close collaboration with Microsoft Research Lab – India, has developed technology that scales proven microfinance principles while still maintaining the critical human elements required for this demographic. Using multiple touchpoints to collect behavioural data they can make informed decisions on loan management, meaning one of their loan managers who used to manage a portfolio of 30 loans can now manage 100 or more without compromising on portfolio performance. In addition, they leverage community support with social games to encourage positive repayment behaviour, digitizing the self-help group model which is familiar to the microfinance world.
To date, we have offered over 30 thousand Drivers various products and services and financed over 2500 auto rickshaws resulting in a reduction of 28 thousand tonnes of CO2 emissions, and the generation of an extra $90M in income for the drivers.
We are currently primarily based in Bangalore, Delhi and Chitradurga, although we have plans to enter into other small cities such as Tumkur and large cities such as Hyderabad and others in the coming months.
What additional benefits can TWU financing solutions provide to electric three-wheeler buyers (in comparison to other finance providers)?
TWU provides loans about 23% interest rates vs NBFCs providing loans over 30% interest rates. Our loan tenure varies from 3-4years vs NBFCs providing loans with a tenure of 2-3years. Our loan to value is up to 100% of the asset cost vs NBFC who fund up to 70% of the asset cost. Traditional banks rarely lend to Auto drivers especially given the risks associated with the nascent stage of the EV market.
We are taking an ecosystem/holistic approach to electrifying light vehicles in India. This means we do not simply finance our clients, but we have built a product and operating model that is tailored to their needs. Everything we have built has been built with our clients, for our clients. Our technology was designed and built with drivers consulting on the entire process. Our financing solutions are designed to remove barriers for lower-income clients in owning and operating an EV. And our operating model is driven by the community, ensuring we never lose touch with our clients and letting the community be the agent for change.
What is the expansion plan TWU is aiming at? Does it plan to expand to other vehicle segments like electric two-wheelers?
We plan to finance 10K vehicles in 1 year and 100k vehicles in the next 4 years. We will expand our portfolio to include other income-generating light vehicles such as electric 2-wheelers. This will result in the avoidance of 6.5M tonnes of CO2 emissions and generate more than 5B of extra income for drivers when drivers shift from renting a pollutive vehicle to owning an electric one.
How does TWU buy-back program work? How is it beneficial for the vehicle owner? How will the recycling of batteries take place?
The buy-back scheme allows auto-rickshaw drivers to scrap their existing pollutive vehicles that are older than ten years and purchase a new electric vehicle. The buy-back amount will be used as a down payment towards an affordable loan for the new electric vehicle. Through this programme, we aim to help auto-rickshaw drivers make the shift from driving old pollutive vehicles to driving their own electric vehicles. This program is a big step towards replacing old pollutive vehicles on our streets, and to accelerate the initiative which most state governments are currently working on.
The old vehicles will be scrapped following the state scrapping policies and wherever applicable, TWU will assist the drivers in applying for government subsidies.
To make the switch to EVs even more accessible for drivers, TWU is working with large manufacturers, such as Mahindra Electric to buy-back and scrap vehicles older than 10 years.
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