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It’s not about the commute, it’s about the journey
Last week, Lithium announced its partnership with Eversource capital as part of a primary and secondary transaction that allows for a majority stake in the company. This comes with an exit for Lightrock India and other investors. We are excited for Lithium as it embarks on the next big phase of growth. We look forward to being avid supporters and cheer on from the bleacher. As we move on from the game to the viewers box, we reflect on Lithium’s journey, from its early days, our thesis and investment, the journey and evolution in the aftermath of COVID.
Lithium was our first growth stage investment as a fund and in that meant we were pushing our boundaries in more ways than one. We were investing in an asset heavy business focused on the top of the pyramid. It was the point in our journey where we evolved our lens on impact to an ecosystem approach to solve large problems and to champion pioneering solutions that could push the ecosystem and catalyse a transformation. The EV ecosystem was nascent and despite the significant push globally the movement was slow and needed a founder and team who could bring together multiple players in the ecosystem and push all of them to innovate. Sanjay and team not only built a model which was initially deemed infeasible but did so while continuously pushing large OEMs, regulators, and corporate customers to evolve.
In 2014, Sanjay Krishnan along with his co-founders set out with an ambition to power mobility in India using renewable energy – to both reduce the cost and the carbon footprint from transportation. He felt a logical place to start would be to replace the million or so ICE vehicles involved in employee transportation in India with electric cars. Whilst electric cars were seen as a distant solution, the immediate state of technology and charging infrastructure at that time made the vision a far-fetched possibility. There was only one model of electric car in India at the time – the 2-door Mahindra E20. This was designed as a 3rd car for Indian households, had no fast charger port and took 6 hours to charge the battery completely.
A full E20 battery would deliver an 85km range and for the economics of employee transportation to work, the car would have to run 200km in a 24-hour time and, with the 6-hour charge cycle, the math was impossible. Sanjay and team developed a fast charger, bought two E20’s and drove them over a 24-hour period for several months to push the boundaries of the possible. In addition, they also developed a proprietary scheduling and fleet operation technology to optimise productivity and occupancy.
In 2015, Lithium Urban Technologies was set up with four new cars and a pilot for Tesco. After two months of successful run, Tesco moved to replace their entire ICE hatchback fleet with EVs. Lithium needed money to grow into the next phase – there was no financing available for electric vehicles back then and while this had moved from a farfetched dream to a real possibility, it was still a while away from being ready for a formal investment. Over the next three years, Lithium raised c. $2million from a group of angels who, while not sure of the certainty of outcome, sure trusted the founders’ vision. During this period, Lithium worked with OEMs to develop EV telematics, created algorithms to optimise routes and installed the first set of public fast chargers in India. Lithium won contracts with other corporates including Unisys, Accenture, VMWare and Adobe. What Lithium solved was not just a big leap towards sustainability for corporates but also the complexity and cost of logistics of employee transportation.
In 2018, when Lithium came to Lightrock for additional funding, the Company had 400 cars and was looking to expand geographically across India. Whilst an atypical investment for us, we recognised the opportunity to support India’s first private sector EV fleet and we felt that we could add considerable value as the business scaled and proved out the economic and environmental benefits of EV transition. At this point Lithium had contracts with 8 large corporates and had completed over 22 million kms of trips since inception. Our investment thesis envisioned extending Lithium’s services to intercity transport and intracity freight segments and we estimated the Company’s addressable market to be over $30billion over the following 5-year period.
Over the next 6 months, Lightrock along with IFC invested a significant amount of capital to provide Lithium with the firepower it needed to build out the platform and it scaled aggressively. By February 2020, Lithium was operating a fleet of c.1300 cars and was about to take delivery of another 400 – making it the owner of the largest electric transportation fleet outside China. It had also created 600+ charging stations across 15 Cities.
With this accelerated scale, came the growing pains characteristic of the 1-10 journey ranging from maintaining quality of driver training, scaling collection and key account management to hiring and retaining senior talent. This required the founders to move from 101 design to scaling execution while giving up control of key elements of execution. This was not simple and meant an emotional transition. This was the moment that yet again pushed us to not just champion the founder’s vision but hold up the mirror on gaps and subsequently handhold the growth of the founder, team, and business all at the same time. We spent time in the business, spent time being there for the founders and the senior team and working with other shareholders and investors. We didn’t get everything right in the first try and we all made our fair share of mistakes. It was just as much a learning curve and emotional journey for us as well.
Amidst this came the black swan event – COVID, that changed the mobility industry worldwide and affected employee transportation with the new paradigm of remote work taking hold. Like all other mobility startups, we rationalised our fleet and driver base, went through management transitions, and came out the other end bruised but stronger. The stress to the management and a journey that put the founder’s mettle to test was a tumultuous period as the founder became ready for the next phase of Lithium’s journey.
As the world emerged from COVID, and the mobility sector was nursing itself back to normalcy, Sanjay saw a bigger opportunity and his ambition grew. Lithium had already proven that this could work, and the model was financially viable. The entire ecosystem grew alongside supporting Lithium over the last 8 years – OEMs innovated on vehicle design making them more cost effective and efficient, EV financing options developed, and the regulatory and policy environment created incentives to accelerate EV adoption. Sanjay developed a strategy to further EV transition to deliver over a billion km of electric mileage across passenger and freight segments by 2027 and identified the right kind of capital to fund the next part of Lithium’s journey.
We recognised that the next phase of the capital should come from an investor with the capital depth across asset classes, focused vision for EV transition and the ecosystem convening power across OEMs and other stakeholders. Eversource Capital are the manager of India’s largest climate impact fund, with the singular vision of sustainable mobility across various form factors, and a rich portfolio with companies in different parts of the EV ecosystem in the growth stage and access to significant long-term capital. They spent time to understand Sanjay’s vision for the next stage of the business and co-created to improve on it and became natural partners for Lithium’s next chapter.
We have always been focused on the problem and the solution that creates large transformation. We believe Lithium has found the right partners and environment to thrive and realise the next quantum leap of growth.