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Anand Mahindra bats for electric kick scooters in India, says happy with Scoot investment

Updated : November 21, 2018 03:14 PM IST

As 14 of world's 15 most polluted cities are India, Anand Mahindra, chairman of Mahindra Group, on Tuesday batted for electric kick scooters on country's congested roads and added that, he is happy with the investment in San Francisco-based shared electric mobility firm Scoot Networks.

Born on 1955 in Mumbai, Mahindra is an incisive business commentator and humanitarian with over 6 million followers on Twitter. A strong votary of arts and culture, Mahindra graduated from Harvard College and secured an MBA from Harvard Business School.

In an exclusive interview to CNBC-TV18, Mahindra said the group wants to be in the mobility business and will be expanding the plant in Bengaluru.

Michael Keating, founder and chief executive officer, Scoot Networks, said electric vehicles are the future of mobility and he thinks that biggest issue with electric kick scooters is theft.

Michael, a strategist, designer and environmentalist, is building 21st century mass transit systems in San Francisco, California, Barcelona, Santiago and other cities globally. He is a graduate of Wesleyan University, the Harvard Graduate School of Design, and Harvard Business School.

Edited excerpts:

Q: Scoot is a US-based company. It's a San Francisco-headquartered company and they have been in the business of providing electric mobility since 2012. Mahindra Partners, which is the private equity arm of the Mahindra Group, has been an investor in Scoot since 2016. You invested in Scoot in 2016 sensibly as you believed in the idea of shared connected emobility specifically. Two years on, how has this partnership worked out for you?

Mahindra: He is still here by my side and we are still smiling at each other. So things are going well. He was a customer first. You are aware that we started manufacturing electric scooters in Detroit, designed in California and it was a punt. We just designed this way before electric two-wheelers were in vogue and we said let us see who is going to buy this.

Interestingly, fleet companies like Scoot, which had already been focusing on shared mobility and this gentleman here is one of the visionaries, he did this in 2012, when Uber was starting up. So, he became a customer and then we got introduced to Scoot and I was intrigued. The Mahindra Partners decided to make an investment and now we are a major investors. We are very happy. He is moving gradually, but very irrevocably into multimodal offerings. So, he started with electric scooters, but he is already into ebikes. I think in some places he offers ecars as well or he will be planning to and then of course what we are going to talk about kick-scooters. So, the most exciting news was three-months ago, he won the franchise along with one other company to provide kick-scooters in San Francisco and he beat out all the big boys in that. So, am I happy that we invested? Yes.

Q: Is this your first opportunity to visit India?

Keating: I have been to India few times in the past mostly for Mahindra.

Q: You had the first opportunity to have conversation with the government, minister for roads and highways Nitin Gadakari and Delhi chief minister Arvind Kejriwal on the idea of shared connected e-mobility. What has been the feedback that you have got so far?

Keating: It has been surprising how positive the feedback has been.

People have been very encouraging of the idea of a vehicle that anyone can ride.

It's electric vehicle that you can pick up at one place and drop off at another. So, we are really happy to be here and hear such a positive reception from such important people in the government of India and in Delhi.

Q: San Francisco is a different story. Let me take Barcelona as an example, where you do operate and you have got a bunch of other service providers operating already. In India, we have just about started on that journey and you have got Yulu Bikes to name a few. What do you believe will be the key challenges that you are going to have to content with if you were to bring your products here?

Keating: There is so much demand for better transportation in cities whether it's faster or more affordable or more convenient and competition is actually something we don’t worry about in Barcelona and San Francisco and I don’t think we would worry about it here also. I think the big challenge is offering a great service, maintaining the vehicles, keeping them recharge, making sure they are there when people needed for ride and to meet just an incredible demand that people have for better mobility.

Q: Let me ask you about the electric ecosystem. I think it has been a sort of stop-start approach that we have seen over the last few years. I do not know if you are disappointed necessarily, but the expectation was that we would have seen a lot more momentum especially on the policy front. Leave the subsidy issue aside. In terms of infrastructure, whether it’s charging infrastructure, it hasn’t played out as per expectation. Would I be correct in saying that?

Mahindra: One forms an expectation when you have a definitive view of what the future is going to look like. I cannot claim I do, I cannot claim anyone in the world knows how the landscape is going to pan out. What I look for, from where I am coming from, is does the leadership in this country have a commitment to moving towards electric mobility. If they do, and let’s face it, all their statements have been in alignment with that goal, whether it’s from Prime Minister Narendra Modi to Piyush Goyal, who made that famous statement about wanting the cars to be electric in 2030. I haven’t seen the waiver on that goal of moving towards electrification and even when oil prices began to fall, they said no.

India needs to get along to new sources of energy.

So, I believe there will be a lot of experimentation, what is the right template, regulatory template and should there be subsidies. Let’s take charging stations. I came from MIT earlier this year and there is a new company which talks about induction charging. So, a car gets into its garage, it sits over a plate and by the next morning, it’s charged. If that’s the kind of world we are going to have or even highway charging while in motion, should there really be an enormous impetus in setting up charging stations. That sounds like heresy coming from me, but all I am saying is do not blame anyone for...

Q: I am not blaming. I will take the EESL example for instance, both you as well as Tata Motors won that bid, but there are concerns on how many of those vehicles are currently on the road. When you talk to EESL, they say, we are procuring as per schedule, but there is just about 1,000 of those vehicles currently on the road?

Mahindra: We will keep goading them to move faster and we will keep goading them to live up to their commitments to take more from us as we have invested. Those to me are the smaller hiccups that will come, but happily they haven’t waiver in their commitment to put electric cars on road.

However, going back to your question about when is the inflection point. I do not even think a futurist will be able to tell you. There is this guy, Tony Seba at Stanford University who says all cars will be electric by 2020. Do I agree with that? No. My view is given where batteries are, even though the cost will come down, there is going to be variation in cost of lithium, in cobalt availability, so one doesn’t know.

Inflection point will come in fleets, they will come in ride sharing as ultimately you break even the more you use. The more kilometers you put on a car, then you get to a break even. So who is using more kilometer? Not personal transport. It's in the fleet and shared transport.

Inflection point will come when people like Scoot and Uber and Ola shift. Scoot is already all electric, but when all the ride sharing move electric, you will get an inflection point.

Q: Let me ask you about affordability and accessibility and I would imagine for a product like the one that we are just going to go see that is going to be a different dynamic altogether. It was $4 per ride at least a couple of years ago. What is it currently?

Keating: For that product, it was $2 a ride in the US and most of that cost is actually our labour. It's the time we put into maintaining the vehicles and recharging them and the cost of the vehicles itself is a pretty small fraction of that. So, when you think about going to other parts of the world where people have a different willingness to pay, for example, India most of the cost of providing our service is going to come with the people that we hire to maintain, recharge these vehicles and the cost is whether the vehicle cost more or less is not going to be most important things. So, we think the service adapts really well to different markets with different willingness to pay.

Q: One of the challenges especially for something like a two-wheeler in the Indian context is a fact that you are used to Ola and Uber, where you have a driver, they look after the car. Here, there has been significant issues with vandalism and all of that. How do you intent to cope with something like that?

Mahindra: San Francisco choose Scoot as they believe Michael had, if not all the answers, had begun to address all these issues about safety, about driving on the pedestrian walkways and pavements when you ought to do that. To talk about vandalism, they are putting the lock in, there is a software lock, there is a GPS tracking capability and there is a code that they are going to put around it. Everyone is working on these solutions real time. I believe all the solutions haven’t emerged, but given how the market is valuing all the players in this area, the market believes this is the right solution and we will find answers to all those thorny issues.

Q: Speaking for those thorny issues, what has been the experience so far?

Keating: Our riders have loved this product and they used it for all kinds of short trips. It gets actually used more often than many of our other types of vehicles.

We offer electric bicycles and electric motorbikes, but theft is an important issue.

This vehicle need to be secured and to be kept good track of with GPS. The technology that we develop at Scoot to manage these fleets is our job to make sure that these vehicles are there when our riders want to ride them. Developing those technologies, practices and locks are the things that are part of our value.

Anand Mahindra bats for electric kick scooters in India, says happy with Scoot investment

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