With the government pulling out all the stops to accelerate the country towards its all-electric vision by 2030, self-drive car rental companies have now taken up the mantle. In a no holds barred conversation with BusinessToday.In, Greg Moran, the CEO and co-founder of India's largest self-drive car rental platform Zoomcar talks about partnership with Mahindra, and why the government had to water down its 2030 vision for electric vehicles.
How did you stumble upon the idea of starting a car-rental company in India?
We started five years back, but for me personally it went back even further. When I was in college, I was studying about India, and even the thought and idea about India being potentially an opportunity probably dawned on me back then. Of course, we had no clue about what we wanted to do. It was always from the growth story, from the rapid development and the incredible pace of evolution of the country. It was always super fascinating for me as an American because you know US has obviously hit a certain threshold, and its growth will not be the kind of growth India will see in the next 20 to 30 years. Coming out of school, my focus was within finance but I was actually always obsessed with the environment and sustainable development. So I was working in a clean-tech investment bank based in New York, focused globally but around solar, wind energy storage etc. and we actually had an office in India in Hyderabad and this is like 2008 to 2010.
We were thinking about mobility and transportation solutions. We started looking at the market more carefully and realized that car ownership levels were incredibly low at 2 or 3 per cent. So we saw the notion of car sharing as really a great opportunity because ownership levels were jut not going to support.
We looked at car sharing as a great entry point with self-drive. When we started to look at it more closely in 2011-2012, I spent three months on the ground here roaming around India in 25 cities, 12 states, and realized that it was a total white space. No one was doing anything in the market, everything was offline, all un-organized, all unstructured, no websites, no apps, forget it. So, we wanted to bring order to that chaos through a common technology platform and a brand which people could identify across the country. We ended up raising a bit of capital in late 2012. I dropped out of business school and moved to Bangalore from there the rest was history.
You recently raised money from a clutch of investors including Mahindra. What can we expect from this partnership?
Mahindra has been a tremendous partner. I think if you look at them they have certainly been visionaries in mobility in India and Anand Mahindra, hat's off to him, especially because he was able to see out into the future way back when they started to partner more deeply with REVA, which they acquired way back in 2010. Mahindra was always a cornerstone. Electric mobility was something they always wanted to push out and continue to develop over the next decades. This is a long game they are playing, and in that way their long term interests are very much aligned with ours.
We have deployed 300+ electric cars with Mahindra in the last couple of months, and that's all in our marketplace, which is the ZAP subscriber programme. They have been very supportive and helpful in terms of financing solutions for our marketplace partners, as well as working hard to ensure that infrastructure is available at localized level at people's home and offices.
What do you think of governments all-electric vision by 2030? Do you see any limitations?
When we are talking about electric vehicles, we also have to take a broader horizon view. It's not just cars. India is definitely not a car country. We only sell 3 million cars a year. So India first and foremost is a two and three wheeler country, not a four wheeler country. So when you look at electric mobility and electric vehicles, you will first see it adopt in scale with two and three wheelers. That's already happening.
But having said that, the government already has watered down the vision. The 100% is certainly not going to happen. I think if you as an entrepreneur is building a business in India, and looking at the government for the validation or guidance or thought process, you are looking in the wrong place. It's not to take a jab at the government, but that's the way the government functions here. It's not going to be as pro-active, given the nature of Indian democracy is so complex, it has to be more reactive. That's just the way how Indian democracy will always be, because you have so many different constituents and expectations.
Zoomcar had turned profitable in December last year. Revenues grew over 40% in 2017. What do you expect this year?
We have already grown over 50% in this year alone. We expect at least 150% growth in 2018. Let's see where the numbers end up. But I think our demand levels are record high. So, for us its only about adding supply, where we focus as much as we can on inducting more and more cars in our marketplace ZAP subscriber programme. We already have over 1000 cars on the road under the marketplace model. We have over 4000 cars now, but that number is set to more than double over the span of this year.
Will the induction of third party cars offer the same ride quality that comes with brand new cars?
I think it's going to be better because two things, one the IOT is very strong. We are remote monitoring from our hardware and software system 24x7 anywhere in the country. If there is any issue in any part or component of the car, we can do preventative maintenance, so that way we can ensure absolute optimal health. We also have a rotational area team of executives that can be dispatched for remote access cleaning and other monitoring.
You had earlier said that ride hailing companies like Ola and Uber will never make profits because there's a driver involved. Why do you think so?
Just a caveat there. What I actually said is they will never make money at a net profit level if they only do ride-hailing. If they do something else, they might be profitable. But the actual ride-hailing model, especially in emerging markets, is not profitable. If you look at China, South East Asia - Didi and Grab both - the scale at they operate is huge. And even in a market where you have more scale and you have higher GDP per capita, you still don't have anywhere close to profitability for ride-sharing. If that's the case there, then by definition you can't be profitable in India. I mean there's nothing wrong with that, it's a conscious call. Look at arguably six of the most successfully companies in the world, Tesla hasn't been profitable in the last 15 years, they have never been profitable. So, I think people sometimes take it out of context. It's just how the state of the economy is, there's nothing against Ola or Uber.
How are you using IOT to make the driving experience better?
IOT is super critical. When it comes to actual in-car IOT experience, we have all sorts of geo-zones, geo-alerts. So, when you are crossing state borders for instance, we can send an alert, or we can track your speed and time. If you are going in an unhealthy speed, we can notify and warn you. There are also certain behaviours in terms of the clutch and the break being used in a certain way, we can also alert you in real time to keep you safe.