Electric Rickshaw Startup Oye! Rickshaw Charges Ahead In India

Delhi-based Oye! Rickshaw is electrifying the most popular form of transit in India: Auto-rickshaws.

In India’s cutthroat ride-hailing market, companies like Uber and homegrown rival Ola have been going head-to-head to be the go-to provider of cheap and convenient rides. Their apps offer a variety of vehicle options in India, including auto-rickshaws—the backbone of the country’s urban transportation.

Auto-rickshaws are one of the most popular and easily accessible modes of transit, usually for short trips (under 5 km) to offices, markets and schools. It’s also the cheapest way of getting around India, with the three-wheeler costing half the price of a taxi.

In recent years, an electrified version of auto-rickshaws have been gaining steam in India, the world’s third-largest emitter of greenhouse gases, fueled by a global push to lower carbon emissions. The world’s biggest democracy is especially keen to reduce carbon pollution as it is home to some of the world’s most polluted cities.

In January, the Indian government approved a 120 billion rupee (about $1.5 billion) infrastructure plan to boost green energy in the country, aiming to meet a net carbon zero target Prime Minister Narendra Modi made at the UN COP26 summit in November last year. A few months later, in April, the Indian government announced battery-swap plans for e-rickshaws and scooters in congested cities, where charging stations are scarce due to limited space.

Riding on this trend is Delhi-headquartered startup Oye! Rickshaw, which is making inroads in India’s ride-hailing market with its affordable and subscription-based services. Oye operates a fleet of e-rickshaws run on swappable batteries, emitting nothing but sound. With 120 battery-swapping stations across four cities in India, Oye provides quick services due to zero charging time. “It was a matter of building the technology, and now we have it,” says Mohit Sharma, cofounder and CEO of Oye, in a video interview from his office in Delhi.

Sharma cofounded Oye with Akashdeep Singh, who serves as COO, in 2017 and has since completed over 11 million rides and boasts a subscriber base of 200,000. Last year, the startup made the inaugural Forbes Asia 100 to Watch list, which highlights notable small companies and startups on the rise across the Asia-Pacific region.

MORE FROM FORBESForbes Asia 100 To WatchBy Forbes Asia Team

To be sure, Oye faces an uphill battle. Though Ola and Uber do not break down their users by vehicle type, their numbers dwarf those of Oye. Ola has more than 200 million users in India, while Uber says it has more than 95 million riders and drivers combined.

But Oye is building a war chest to bankroll the battle. The startup is preparing to raise a Series B round of about $15 million to $25 million over the course of the next few months. Oye is already backed by leading companies such as Chinese tech giant Xiaomi, as well as top investors like Bengaluru-based Chiratae Ventures, an early backer of Indian online retailer Flipkart, and Matrix Partners in San Francisco, best known for its early investments in Apple and FedEx. Indian billionaire Pawan Munjal, chairman and CEO of motorcycle maker Hero MotoCorp, where Sharma worked for two years, is also an investor in Oye.

Oye Origin

Sharma and Singh have known each other since their school days in the eighth grade. They both earned degrees in mechanical engineering—Sharma from Indian Institute of Technology and Singh from National Institute of Technology. Now both 32 years old, they took the decision to turn their entrepreneurial dreams as teenagers into reality.

Sharma, together with his uncle, started an e-rickshaw startup prior to Oye called Jangid Motors in 2015; Singh joined Sharma as chief strategy officer. Jangid Motors focused on the production of India’s first locally developed e-rickshaws. “We manufactured the e-rickshaws but we didn’t have any services once we sold the vehicles off the shelves,” Sharma says.

With just 120 million daily commuters in India, the duo saw huge potential for an economical and eco-friendly ride subscription service in the fast-developing country. “With huge market opportunity, plus our know-how of how to build that vehicle and how to build that tech layer, is something that ultimately triggered us to start Oye Rickshaw,” says Sharma.

In India, new EV passenger car registrations, which refer to any electric or hybrid vehicles, excluding motorcycles and mopeds, are expected to reach 65.4% in 2040 from its current low level of 0.2%, according to Fransua-Vytautas Razvadauskas, a senior consultant focused on cities and mobility at market research firm Euromonitor International.

“In the future, there’s going to be more electric vehicles on the roads,” says Razvadauskas. “If supply doesn’t change, then you’re going to have an increase in the price,” pointing to it being a possible challenge for startups such as Oye.

Another challenge is safety. Videos of battery-powered two-wheelers catching fire in India emerged on social media, which resulted in casualties and skepticism regarding the safety of battery vehicles.

Some are turning to R&D to improve safety. Warren Buffett-backed Chinese automaker BYD, for example, launched its Blade battery in 2020, which it claims is a safer option compared to conventional lithium-ion batteries due to its lower surface temperature. Solid-state technology is another promising area. Solid-state batteries use solid electrolytes rather than flammable liquid ones in conventional lithium-ion cells.

However, research has shown that solid-state batteries could react violently under certain conditions, which give consumers a false sense of security, notes Razvadauskas. Still in its developing stages, a lot of research continues to go into rectifying the industry’s weak points, such as battery safety.

Even with the challenges, the e-rickshaw market still has a lot going for it. Growing sustainability awareness and climate consciousness, especially amongst younger generations such as Gen Z, would be some of the other reasons consumers choose to ride e-rickshaws over fossil-fuel-powered vehicles, says Razvadauskas. “It’s a bit more of a useful and practical mode of transport in a country where congestion can be an issue,” he adds.

Oye has adapted more to local consumer preferences for urban travel than bigger players who entered markets with passenger cars that don’t appeal to local consumer needs in India. This trend can be seen in Southeast Asia as a whole, where Uber was ousted from Indonesia, Singapore and Thailand over keen local competition.

“This gave rivals such as Grab and Gojek a bit more leverage to actually fight off Uber and essentially ended with Uber leaving the markets in those industries,” says Razvadauskas.

At the height of the pandemic two years ago, Oye saw a decrease in their ride-hailing service, so they decided to start Oye! Delivery, partnering with Indian grocery giants such as billionaire Mukesh Ambani’s JioMart and Ninjacart for delivery services to customers’ doorsteps.

Other ride-hailing service apps in the Asian region, such as Grab and Gojek, have pivoted towards adding delivery services to their apps as the pandemic fueled a need for at-home delivery. Oye says they are currently in talks with Indian food tech giant companies such as Swiggy and Zomato to venture out into the food delivery service market.

Unlike Oye’s competitors such as Ola and Uber, which take a cut from trips made by drivers, their revenue flows in from their customer’s subscriptions. They charge subscribers based on how many rides they want to take per month, which come in three tiers: 5, 15 and 50 rides.

Oye is looking to develop an AI-based algorithm that would help them look at each customer’s history and orders and develop a tailor-made pass for them to subscribe to. “Every ride they charge 25% to 30% commission and that’s what we don’t do,” says Sharma.

The startup has also developed a customized map for drivers on their app which uses an algorithm based on a driver’s trip history and guides them on routes that allows them to receive more orders while completing rides.

Their mapping solution aims to bridge the supply and demand gap and has the potential of allowing drivers to earn 1200 to 1300 rupees (about $15-$17) a day, as opposed to regular auto-rickshaw drivers who earn 700 to 800 rupees (about $9-$10) per day, according to Oye.

“Most of the [EV] growth that’s going to happen between now and 2040 is being projected to occur in emerging and developing countries like India,” says Razvadauskas. “There’s going to be a large growth in the middle class, more consumer purchasing power, and a lot more opportunities to develop such sorts of ride hailing mobility opportunities in those markets.”