In a significant step towards redefining electric vehicle (EV) ownership in India, Piaggio Vehicles Private Limited has introduced a groundbreaking ‘Battery Subscription Model’ for its Apé Electrik 3-wheelers. Leading this transformative initiative is Amit Sagar, Executive Vice President, CV Domestic Business (ICE) and Retail Finance at Piaggio.
In this interview, Sagar delves into the vision behind this innovative model, which eliminates the upfront battery cost, making EVs more accessible and affordable. By offering the battery as a subscription service, Piaggio ensures customers benefit from reduced initial investment, flexibility in ownership, and peace of mind regarding battery performance and maintenance. This unique approach is poised to accelerate the adoption of electric 3-wheelers in a post-subsidy market.
Join us as we explore the intricacies of this model, its impact on affordability, customer feedback, and Piaggio’s broader strategy for transforming India’s EV landscape.
Can you give us an overview of the new ‘Battery Subscription Model’ for Apé Electrik 3Ws?
The new ‘Battery Subscription Model’ for our Apé Electrik 3Ws is a groundbreaking initiative aimed at making electric vehicle ownership more affordable and hassle-free. This game-changer tackles affordability by letting you purchase the vehicle itself (chassis) for a starting price of INR 2.59 lakhs (ex-showroom Maharashtra). The battery becomes a separate subscription, with a monthly fee covering its use and maintenance. This eliminates the upfront battery cost and anxieties about battery health or future replacements. You can enjoy the electric vehicle experience with peace of mind, knowing Piaggio ensures optimal battery performance throughout the lease. Plus, the subscription offers flexibility – you can unsubscribe or even sell your vehicle anytime without restrictions. This model is poised to be a major driver for electric 3-wheeler adoption in a post-subsidy environment.
What inspired Piaggio to introduce this innovative subscription model in the electric vehicle market? Can you explain how the monthly subscription model works, including any specific terms and conditions?
The inspiration behind introducing subscription model stems from our commitment to address the challenges that hold back wider electric vehicle adoption. We recognized that the high upfront cost of batteries and concerns about battery maintenance and lifespan were major hurdles for many potential EV owners. By separating the battery cost from the vehicle price and offering it through a subscription model, we aim to alleviate these concerns and make EVs more affordable and attractive.
The monthly subscription model works by allowing customers to purchase the Apé Electrik 3W for INR 2.59 lakhs (ex-showroom Maharashtra) and then subscribe to a Piaggio-approved battery pack for a monthly fee. This model eliminates the need for a large initial investment in the battery and includes comprehensive coverage for battery maintenance and replacements.
The subscription plan is subject to standard terms and conditions which are applied while purchasing any other three-wheeler or availing loan like IFI, field investigation, etc. Customers must have a residence with valid Aadhar cards, KYC, and there should not be any CIBIL default.
How does the battery subscription model simplify the ownership experience for customers? What are the main benefits for customers who opt for this subscription model compared to traditional battery ownership?
Our new battery subscription model for the Apé Electrik revolves around enhancing as well as simplifying the customer experience. The upfront cost is significantly reduced as the customer only purchases the vehicle chassis, bringing down the initial investment. We handle all the battery worries – customers don’t have to sweat about maintenance, lifespan, or future replacements. The subscription fee covers everything and ensures a healthy battery throughout the term. Customers can unsubscribe or even sell their Apé Electrik anytime for ultimate flexibility. Compared to traditional ownership, this model eliminates a big upfront cost, frees customer from battery concerns, and simplifies maintenance. It’s like having a phone or OTT subscription plan for your battery – you pay a monthly fee and enjoy the electric ride with complete peace of mind.
How does eliminating upfront battery costs impact the overall affordability and accessibility of electric 3-wheelers?
Electric 3-wheelers face a major hurdle – high upfront costs due to expensive batteries. Battery packs can comprise 30-40% of an electric 3-wheeler’s price. Eliminating this upfront cost brings the purchase price significantly closer to its ICE and CNG counterpart. This makes electric 3-wheelers a more attractive option, especially in price-sensitive markets where every rupee counts. Additionally, with the battery separated from the purchase, electric 3-wheelers become more attractive for financing. Loans typically cover the entire vehicle cost, including the battery. Eliminating the battery cost from the loan amount makes the remaining vehicle loan smaller and less risky for lenders. This opens doors for potential buyers who might not have the upfront cash for the entire vehicle but can manage monthly loan payments for the vehicle itself. This dual benefit of lower prices and easier financing can significantly boost adoption rates of electric 3-wheelers.
What feedback have you received from customers regarding the financial flexibility provided by the subscription model?
Currently, the feedback that we have been getting is customers liking the simplicity of the model, especially because the down payments are within their reach. The down payment of ₹30,000 to ₹40,000 makes it as low as a CNG vehicle and increases the consumer base. The model is particularly attractive to those who previously struggled with higher down payments. It is important for the customer to analyse the amount they are initially putting in and with a lower down payment, it becomes easier for them to opt for an electric vehicle which has less running cost. This the primary reason for increase in the consumer base.
What is the designated mileage target, and how was it determined? Could you elaborate on the concept of reducing the monthly rent to INR 0 after reaching a designated mileage?
The model has been designed in a way that customers pay the subscription fee for the lease period of three to four years. At the end of the period, they don’t have to pay anything, not even the monthly fee for the battery.
The concept behind this model is to provide customers with financial relief after they have used the vehicle for a substantial period, ensuring long-term affordability. After the lease period ends, the battery goes back to the owner (subscription company). At the end of the lease, customers can either re-lease the same battery at a depreciated cost or purchase a new vehicle. This approach was designed to align with the typical usage patterns and financial capabilities of customers, offering them flexibility and reducing their financial burden over time.
How does this aspect of the model contribute to the long-term cost savings for customers?
Over three to four years, customers will see significant savings as they only pay for the subscription, without the need for battery ownership. Over the span of the subscription, customers benefit from predictable and lower payments, without worrying about the cost of battery maintenance, lifespan, or replacement. This structure makes the total cost of ownership lower in the long run, compared to other options where customers would continue to pay for the battery maintenance or face large upfront costs.
How is battery maintenance handled under the new subscription model, and what responsibilities do customers have in this regard? What measures are in place to ensure the longevity and performance of the batteries?
Piaggio’s new battery subscription model offers a modern take on ownership by removing the burden of battery maintenance from customers. Customers simply enjoy the ride, while Piaggio handles everything – from regular checkups to replacements. This not only simplifies ownership but also ensures optimal battery performance and longevity through preventative maintenance, software updates, and thermal management. Should any issues arise, Piaggio promptly addresses them to ensure uninterrupted operation of the electric 3Ws. By assuming this responsibility, Piaggio India aims to provide customers with peace of mind and confidence in the long-term viability of electric 3W ownership, further promoting the adoption of sustainable transportation solutions.
How does the subscription model affect the resale value of the Apé Electrik 3Ws?
The subscription model has a positive impact on the resale value of the Apé Electrik 3Ws. By separating the ownership of the vehicle chassis from the battery through the subscription model, Piaggio India effectively mitigates concerns regarding battery depreciation and lifespan, which are typically significant factors affecting the resale value of electric vehicles. Since customers do not own the battery outright, they do not bear the burden of its depreciation over time. This assurance of a well-maintained battery, coupled with the convenience and affordability of the subscription model, enhances the overall value proposition of the Apé Electrik 3Ws in the resale market compared to traditional electric vehicles.
What criteria were used to select the initial 30 key cities for the launch of the battery subscription model?
The initial 30 key cities were selected based on the total industry volume (TIV), indicating strong market demand for vehicles, and their advanced EV penetration, reflecting a supportive infrastructure for electric vehicles. This combination ensured that the battery subscription model would be introduced in locations with significant market potential and a readiness for innovative EV solutions.
How do you plan to expand this model to other cities and regions in India?
We plan to expand the battery subscription model to other cities and regions through a phased rollout. Initially, we have introduced the model in 30 key cities, ensuring we have the infrastructure and assistance in place. These cities include Gurgaon, Bangalore, Mumbai, Delhi, and others. We are working closely with our dealership network to provide comprehensive training and support, ensuring a seamless customer experience. Additionally, we will monitor the performance and feedback from these initial cities to make any necessary adjustments before expanding further. Our goal is to gradually cover more regions across India, making electric 3W ownership accessible and attractive nationwide.
What has been the response from urban areas like Gurgaon, Mumbai, Bangalore, and Hyderabad regarding the new subscription model?
The response has been positive in both urban and Tier 2 cities, as the model is suitable for customers in both areas. It is still in early stage and will go through various innovations basis customer needs and fast-changing technology.
How do you see this battery subscription model influencing the broader electric vehicle market in India?
Piaggio’s battery subscription model for electric 3-wheelers pioneers an industry-first approach, eliminating upfront battery costs, simplifying buyer entry, and alleviating range anxiety through Piaggio’s battery management. This innovative ownership approach could pave the way for similar subscriptions across the EV industry, offering a more flexible and potentially more affordable way to own electric vehicles. The model also has the potential to spur growth in charging infrastructure and even battery standardization across manufacturers, further strengthening the EV ecosystem. As Piaggio continues to refine and expand this model, it will be closely observed to gauge its influence on the direction of India’s electric vehicle revolution.
Are there any plans to extend this subscription model to other vehicles in Piaggio’s portfolio?
Yes, Piaggio is considering extending the battery subscription model to other vehicles in our portfolio. Given the positive response and potential for increased EV adoption, we are evaluating its application to a wider range of vehicles, including our cargo electric 3W vehicles and potential future electric offerings. As we gather more insights and feedback from the initial rollout, we will refine and adapt the model to ensure it meets the diverse needs of our customers across various segments.
What other innovations can we expect from Piaggio in the near future in the electric vehicle segment?
Piaggio is anticipated to drive ongoing innovation in the electric vehicle (EV) segment by continually learning from market trends and customer feedback. This approach involves actively monitoring and analysing customer preferences, technological advancements, and emerging industry trends to stay ahead of the curve. By integrating these insights into the product development process, we will adapt the EV offerings to better meet customer needs and expectations.
