Gagan and Nikhil pitch a startup using composite materials to cut EV weight by 40%, lowering battery needs and costs. Their first product is a 1-ton delivery van with 2,600 pre-orders; they plan production in April 2025 and need $3-4 million for a factory.
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EV opportunity is a $500 billion opportunity annually. Yet we see most vehicles built with structures that are extremely heavy, which means you get much lower payload, much lower range. They cost a lot. What we're doing is 70% structural weight reduction. So that is what you get, like a carbon fiber on a sports car, but with 0% additional cost. The materials used are very similar to what you use in wind turbine blades, Although, is that what Molly does?
I don't know.
I think Molly kind of makes you feel just like really happy and relaxed.
I don't know.
But I guess that could because—
Do any of you know? Okay, so with that, let's bring out our next entrepreneur. But before we do, let's see what's going on behind the scenes.
Back there. So are you a rocket scientist? Used to be.
Okay.
That was your sort of training Training, yes, yes.
I was making really good money, um, and I was stationed here in India, and absolutely there was no need for me to start up, except I couldn't live with myself knowing that this is something I can do easily anytime, and I'm not pushing the boundaries as I used to. We are at that crucial point where petrol diesel is giving way To electric, hydrogen, hybrid, other forms. When you've had a very large calorific value of fuel, you didn't worry about efficiency because there's enough fuel, there's cheap fuel, and you can burn and you don't care. And that's the era that we have seen specifically with American automobiles, right? Big, heavy, muscular. As we transition to EVs, we suddenly found out if you have to maintain the If you want to go on the same path, you need a lot more battery than you had thought of. Well, one thing aerospace engineers don't like is weight. If I can shave off 50 to 60% of the weight, why shouldn't I? If that technology is applied to all automobiles out there, you are looking at a potential 50% reduction in battery across, which means upfront carbon footprint really drops down. to almost 2 to 3 gigatons of carbon dioxide per year. And that's huge in our climate goals. So yeah, keeps us passionate. First and foremost, we're engineers, so we, we just want to tackle the toughest problems. And since the last 5 years, a lot of us have been exposed to the effects of climate change. with El Niño coming in, the hottest years over the last 3 years, understanding how technology can perhaps get us out of this if we develop that in time. All of those push us to actually make that happen.
But of course, being a for-profit startup, we also want to do that in a space Which has a big enough market and returns.
Otherwise, deep tech startups like us mostly don't make it. So we are hoping we make it.
So we are near the Qutub area. This is a fairly happening part of the town, like the best parties. Here, and it is also a place where you will find a lot of historical monuments, one of which we're standing right here. You'd see a lot of business bottom line focus in Delhi, which is not available anywhere else, which means when you're building a business, you're building for cash flow and not just for valuation. You you get the pulse of it whether this is going to work or not. What's very special about this region is it is today the beating heart.
of new India.
The new startups, whether it is on consumer, whether it is bringing application deep tech to the industry, auto or otherwise, the heart beats here.
Tim's personality, of course, is amazing. He comes right at you. So it's sort of storytelling in your mind. Okay, how is it going to be? That's why some butterflies. It's fun.
4-wheeler EV opportunity is a $500 billion opportunity annually. Yet we see most vehicles built with structures that are extremely heavy, which means you get much lower payload, much lower range. They cost a lot. What we are doing is 70% structural weight reduction. So that is what you get, like a carbon fiber on a sports car, but with 0% additional cost. The materials used are very similar to what you use in wind turbine blades, yachts, hulls, etc. And we are bringing for the first time to land mobility These are called composites. We have 3 layers of IP. The main advantage that you get out of this structural mass reduction is that you also get 40% entire vehicle mass reduction, which means you use lower battery, which means you have a lower running cost, and which also means you have a lower carbon footprint.
Very, very critical.
We took the first bet on last-mile deliveries. So the first product is a 1-tonner delivery van. We prototyped it and showcased last—
this July '24.
We have about 2,600 pre-orders. These are customers like delivery and others who understand that they're not able to get EVs that can make them money yet. We intend to customer test with them next year, starting April, and then go into production with partners. We also have—
So are you kind of at the mercy of a few automakers?
Potentially. So 2 business models. One, put the vehicle together, go out to the logistics players yourself. But then again, you can't make millions of vehicles yourself. So ultimately, yes.
They squeeze you down by saying, we have another alternative here and play you off against them. And then your margins go down and it gets to be a tougher business.
It is a tougher business to be a supplier. You're absolutely right. We're talking about 20% margins typically on the supply chain.
You guys have questions?
I think it's a great technology, but what you're doing is extremely high capital cost. Building up the bodies of the trucks or the cars we're talking about.
Yes.
It does not make any sense because you require maybe 10 acres of land to set up the—
Not really. Sorry to interject. With metals, it is all about an exponential curve that flattens at the end, which is why you see at 50,000-unit scale, you get profitability with metal factories. Composites, on the other hand, are repeatable processes. So if I have to put a 4,000-unit factory, which we plan to, the entire CapEx outlay for that is about ₹33 crores.
So that's about $3 to $4 million. We've struck out with many VCs, to be very honest, and everybody is like, you're thinking too big. Think small.
Why you are targeting a courier company like a delivery and all? Or to manufacturing companies, right? I think that would be a good idea.
Absolutely. But when you see the delivery van business, right? You have four players who really dominate. They are such big behemoths that just to have that engineering conversation go to the end line, it takes about two years, and we really don't know whether our IP is going to be protected in that line or not, no matter what NDAs you do. So we have to do something as a startup to get out there.
Gagan, thank you so much for coming to be on Meet the Drapers.
It it went well.
I think many of the questions I've heard before, so. I had many of these answers, very valid questions. We are in a space where we haven't seen this done before. So very realistic apprehensions. But then we also have the answers on how to overcome them.
What did all of you think? What did you think, Tom?
Amazing technology. And definitely like from the tech perspective, it's an amazing solution. But from the adoption and creating multiple SKUs, Would be bit tougher with the amount of money that Nikhil was talking about.
Are two parts of it. One part is a science part, another part is a business part. So if you just focus on the science part, because composites and reduction of the cost to the vehicle, it's a great idea. I think he focused more on science part and licensing. He will have a better success rate than building a huge capex base.
Sure.
Yeah, it does not make any sense. You have invested in Tesla. You know about it. How much money does it take before Tesla has earned even $1 as a profit?
Well, they had a $400 million loan from the government. I mean, probably a billion dollars. What do you think, Paul?
I think your idea is, is the best route for him to take. The other just will put him right in the mix of people who have been getting whatever you just said, million to billion dollars from the government.
Let's bring back our entrepreneurs and let's ask 'em a few more questions. So first, Dubverse. We kind of get that in, in social media, this will be very interesting, but we're also a little concerned about the quality.
