Turno helped sell 100 L5 commercial EVs in July 2022. The Bangalore-based start-up has been operating in the commercial segment since April 2022 and has launched solutions to help retail customers adopt EVs for their business needs. Recently, we caught up with Hemanth Aluru, CEO and Co-Founder of Turno, to learn more about their business model and approach.
Can you discuss which all stakeholders in the commercial vehicle segment does Turno work with? What pain points are you trying to solve for them?
A commercial vehicle is an input that goes into a certain business. There are clear uniform needs across the majority of commercial vehicle owners, and within that, there are three key components.
- Is the vehicle right for me?
- How much does it cost to buy the vehicle? 95% of the people who buy commercial vehicles buy them through financing. There is a big need for capital to buy commercial vehicles.
- With ICE vehicles, people were always dependent upon a very liquid resale market. When the vehicle served its useful life, they could just sell their vehicle into second-hand markets and move forward, buying a new vehicle. But this ceases to exist in the commercial vehicle EV world.
All of the above problem statements are not addressed for the commercial EV buyer today. How we help:
- Purchase support – There are multiple electric commercial vehicles available at different price points. Through our partnerships with multiple OEMs, we find the right vehicle for the customer to buy at the lowest price possible, and they can buy it through us.
- Financing and end-of-life asset valuation – We also partner with banks and NBFCs to provide loans to customers and help bridge different markets by finding the resale value and passing that on to the customer.
There are large players in the commercial vehicle financing market who have had a clear view of asset valuation over lifetime. But for electric vehicles, what is going to happen to the battery after three or four years, and where will the resale value originate from?
- Batteries can go into multiple other use cases right after they’ve been used in the vehicle. The price can be derived out of those markets and passed onto customers. So, that’s one of the core jobs that we do.
- We take a view on long-term pricing of the battery and pass that on in the form of a loan to the customer first and, eventually, in the form of a resale value.
Where does your revenue come from?
We have three key revenue streams:
- We share profits with banks and NBFCs.
- We share sales commissions with OEMs.
- We also make money on repurposing the battery. There are already a lot of used batteries on the market, so we don’t have to wait for our own batteries to come back. We can already start that business and have some pilots going on with a few players in solar and wind power plants to redeploy batteries.
What is the current scale of operations at Turno and what are your plans for the next one or two years ?
In July 2022, we sold 100 L5 three-wheelers through our platform. Large companies like Mahindra and Piaggio are at a scale of 200-220 unit sales per month. So, we are already at about half of their sales. By September, we should be close to 300 or 350 vehicles. So, this is new demand that we are bringing for our OEM partners.
We do this business only in three key cities right now. In July, the majority of the business came in from two cities in Karnataka and Telangana. We will continue to focus on three-wheelers in the near term, but we know that good four-wheelers are coming into the market. So, we are working with those manufacturers to create supply-side deals. We will continue to expand to more geographies and become a full pan India player in the next six-to-nine months.
We think we can get a thousand vehicle sales per month by Jan or Feb of 2023.
You don’t have any physical stores. How do you provide the purchase guidance?
If you go to our website, you can find which vehicle will suit your needs. About 20% of our business comes through people interacting with our product. When people need to buy a vehicle, that’s where phone support comes in. We work with the dealers of the existing OEMs to fulfil the demand. Our job is to convert the demand and then fulfil the demand.
How important is data collection and analysis in supporting your business?
The big difference between the ICE world and the EV world is that the pricing and value of vehicles or assets just doesn’t exist. Right now, we are in the business of putting forward pricing on assets – the batteries we will buy in the future and deploy in other markets. We need to bring more and more confidence into those price points so that we can pass on more value to our customers.
We leverage a lot of the usage data of the battery, driving patterns, battery performance, vehicle performance, and use case performance across the lifecycle to be able to make that determination. With more data we analyse, the value that we put on these assets will continue to keep increasing. So data is obviously super important, as that’s how we can put the best possible value in customers’ hands, and that’s how we will eventually drive more sales.
How do you collect the data?
OEMs share the battery usage and pattern data with us. We work on top of the infrastructure that the OEMs, banks and NBFCs have, and we bring value to all of those guys in a very direct way through the pricing that we bring on the asset.
How do you help reduce the cost of EV ownership?
The cost of ownership is a simple math equation –
- What is the cost of the vehicle?
- How much interest was paid during the course of the vehicle?
- When I sell, how much money comes back? i.e. the resale value.
Depending on the product, the typical resale value in the ICE world is roughly 40% to 50% of the purchase cost after three to five years. So, that is the biggest component of TCO (total cost of ownership). And that’s exactly what we impact. At the end of the day today, if we don’t exist, some people have to assume much lower resale values, and we impact that value on day one. We put a big number towards the end of the vehicle life cycle, which brings the overall lifetime cost of ownership down by a big factor.
Also, there are other parts like vehicle pricing, low cost of interest and even down payments, for which we bring a much better offering to the customers in our channels than what people are able to get in the market. So effectively, we bring the cost ownership down by about 25% to 30%, on day one for customers.
This article was originally published in Evreporter September 2022 Magazine that can be accessed here.
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