EVs make a strong case for people looking for short-term mobility access: Interview

We got in touch with Greg Moran, CEO & Co-Founder, Zoomcar to understand the viability of electric vehicles in the rental industry and what the future holds for this segment.

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Back in 2020, when the world was recovering from Covid-19's first wave, there was a growing demand to use personal mobility for travelling, more specifically four-wheelers. This gave a boost to car rental and leasing companies as most of the travellers were waiting for the correct time to buy a vehicle, or in some cases, chose not to buy a vehicle due to uncertainty and settled for leasing options only to realize its benefits.

Zoomcar, a car rental and leasing company grew tremendously during the last couple of years and is now looking to expand by inducting EVs in the fleet. We got in touch with Greg Moran, CEO & Co-Founder, Zoomcar; India's leading vehicle rental and leasing company to understand the viability of electric vehicles in the rental industry and what the future holds for this segment. Here's our conversation -  

Tell us about the pros and cons of using EVs for rental fleet

Electric Vehicles (EVs) have become sought after for a variety of reasons, including their environment-friendly nature and long-term cost savings offered to users. In fact, India’s EV market, despite being at a nascent stage overall, has been witnessing steady growth in recent years, with an increasing number of consumers taking the EV route and the government introducing policies to facilitate an EV-conducive environment. However, one cannot disagree with the fact EVs come with their fair share of pros and cons.

One of the biggest pros is the fact that these vehicles do not consume fuel as their traditional counterparts. Hence, an organisation can tick a significant amount of expense from the income statement. As compared to combustion fuel-based vehicles, annual maintenance charges are also significantly low. Oil changes do not exist and brake maintenance is also negligible as against traditional vehicles. Needless to mention, the usage of EVs shall have a positive impact on the environment.

The Government of India intends to promote EVs and hence there are several tax benefits including a lower GST rate of 5% which is almost 8 times lesser than the traditional vehicles. Furthermore, income tax benefits up to Rs. 1,50,000 are also available on the first purchase of EV along with subsidy offers differing in various states. Hence, as a corporate decision, the introduction of EVs brings along a variety of financial incentives.

However, as we discuss the pros, it’s important to analyze the cons, too. Even though the automobile companies are making efforts to bring down total production costs so that the benefits can be transferred to the end-consumers, the total capital expenditure needed to procure an EV is still too high, especially with the traditional options available. The total time taken to charge the battery of an EV depends on its capacity and miles offered.

High-end vehicles will undoubtedly take a longer time for getting fully charged Even though governments are trying to improve the availability of charging stations and further increase electricity generation, the presence of merely 1800 charging stations in a geographically large country such as India is not enough to present a strong case for EVs as part of the rental fleet. Hence, there is a need for a stellar public-private partnership to knock down this significant issue in the universal acceptance of EVs in India.

How can automobile usage be made affordable and sustainable in India?

People are now looking for shorter-term mobility access as opposed to a long-term investment. We have seen a rise in demand for cars for personal work and emergency use cases. Rentals for intercity travel are up. The notion of owning a car amidst such an intensifying emphasis on social distance may have taken the backseat. Still, the necessity of a mobility service remains as relevant as before. As people would avoid public transport to keep themselves safe from contracting the virus, the need for rental cars will only go up.

The industry is looking at various car subscription models to serve the needs of the customers. We also see more demand for in-city trips compared to outstation ones and a strong focus on shorter-term subscriptions. One of our focus areas has been increasing this exponentially by adding more and more vehicle models which will be offered on a subscription basis.

As car subscriptions continue to evolve into flexible plans with longer lease durations such as 12, 24, or 36 months, people feel more inclined towards it. Even in the post-pandemic world, the rental car industry will leverage its advantage of hassle-free  unlike the case of car ownership that demands maintenance expenses. There is always a running expenditure with self-owned cars, besides the problem of inadequate parking space, volatile fuel prices and rising insurance premium.

How tech will be a game changer for the automotive industry?

Technological innovations have become an integral part of the automotive industry. Besides hardware and software, business models are evolving at a rapid pace as there is also a huge shift in preference toward usage, particularly subscription-based usage, over vehicle ownership. Today’s customers are much more interested in mobility-on-demand, cost-effectiveness, and convenience and the sooner industry players can adapt to the changing requirements, the better. 

Armed with more data-driven capabilities, the data science team of Zoomcar started building new models to upgrade its mobility-as-a-service portfolio. Zoomcar uses an intelligent assistant called Cadabra. It leverages Bluetooth and 4G connectivity to track distance travelled, fuel usage, engine, and clutch performance, and connects with emergency services in case of on-road accidents. This also positively affects the automobile industry as it eliminates the economic barrier to entry of various socioeconomic groups. 

The automotive industry is moving towards the concept of ‘connected vehicles’ where vehicles become connected to each other, to different technologies, and to people.  More and more will come with built-in applications based on automotive telematics, telecommunication, and informatics. Zoomcar has launched India’s first vehicle model agnostic Driver Score Tech Stack for the passenger car segment. The AI-Powered algorithm with machine learning capabilities tracks the mechanical specs of the car being driven, driving style of the customer, and identifies critical events of driving and rates it on a scale of 0-100. 

How is the rental business impacted by COVID-19?               

Each industry needs to adapt itself to the new normal. The car rental industry, to that end, is well-equipped and prepared to serve its customers. Covid-19 has changed the dynamics of our economy indeed. What used to be the norm till last year may well become obsolete in the coming weeks. The scope for personal mobility is substantially high in India due to low penetration compared with other developing countries.

This led to a high crunch situation in the Indian households during the pandemic, as there was the looming scare of catching the virus through shared vehicles. Although these shared mobility services have picked up post-pandemic, the need for personal mobility is still felt. This could be gauged from the demand for cars in 2021, bypassing the pre-pandemic levels. With safety being the top priority right now, you need to make choices that keep you and your loved ones secure.

People are now looking for shorter term mobility options as opposed to a long-term expense of owning a car. Personal mobility has come across as the safest way to travel because it allows for social distancing, and thereby minimizes transmission risk. You can rent a self-drive car to fulfil all your travel requirements – be it for your daily commute to the office, your personal errands, or for helping a friend or family out.

Especially during the COVID-19 crisis, if buying a car does not seem to be a feasible option, you can easily avail a self-drive car rental service. It offers you with the same benefits you achieve with a personal vehicle of your own. The notion of owning a car amidst such an intensifying emphasis on social distance may have taken the backseat. Still, the necessity of a mobility service remains as relevant as before. As people would avoid public transport to keep themselves safe from contracting the virus, the need for rental cars will only go up.