“If a commercial vehicle needs to be available 24 hours a day, four-hour charging doesn’t work.”
Electric vehicle adoption across India’s mobility sector for bus operators, logistics fleets, and delivery drivers alike hinges on clear commercial value. A vehicle must seamlessly integrate into daily operations, minimize operational downtime, and enhance business profitability. Kunal Khattar views these core operational demands as the primary drivers of the country's electric transition.
As head of AdvantEdge Founders, an early-stage venture firm active in the mobility space, Khattar targets investments in purpose-built electric vehicles, energy infrastructure, and innovative financing models designed to secure commercial viability.
In a conversation with Startup Researcher, Khattar outlined how India’s electrification trajectory diverges from developed economies, where agile startups can effectively challenge incumbent OEMs, and what frameworks venture investors should apply to capital-intensive, patient-capital sectors.
This interview has been edited for clarity and length.
Why commercial electric vehicles come first
Why do you expect commercial vehicles to lead India’s EV transition?
Unlike markets in North America, Europe, or Japan, India’s transportation ecosystem is highly diverse, spanning two-wheelers, three-wheelers, passenger cars, buses, trucks, and tractors. Consequently, its mobility profile aligns much more closely with other emerging economies.
While commercial fleets make up only a fraction of total vehicles on the road, they drive a major portion of overall fuel consumption. Operating continuously to drive business revenue, commercial fleets in ride-hailing, logistics, transit, and last-mile delivery rely heavily on unit economics, specifically revenue and expenditure per kilometer.
This focus creates a key commercial opportunity. Furthermore, solutions engineered specifically for India’s unique operating conditions have strong potential to address similar demands across other markets in the Global South.
What needs to work before an operator will switch?
Successfully transitioning commercial operators to electric mobility depends on three synchronized elements: targeted vehicle design, dedicated energy infrastructure, and tailored financial products.
Standard personal electric vehicles cannot simply be redeployed for commercial use, such as using a basic consumer scooter for a bike taxi service. Commercial applications demand purpose-built hardware tailored directly to their specific operational workflows.
Operational requirements also differ significantly: while private owners can easily tolerate multi-hour charging cycles, commercial fleets demand maximum uptime and near-continuous availability. Fulfilling these operational demands requires practical energy solutions, such as battery swapping for light vehicles or ultra-fast charging for heavy transport like trucks and buses. Additionally, specialized financing models are essential to address assets that mainstream financial institutions are still coming to evaluate.
The impact of aligning these three pillars is already evident in cargo three-wheelers, with passenger three-wheelers quickly following suit. As supporting charging infrastructure and financing frameworks mature, broader adoption across commercial two-wheelers, buses, and heavy trucks will naturally accelerate.
Solving charging and financing
Which charging models fit those commercial needs?
Intercity passenger transport requires constant movement; expecting drivers and passengers to wait hours for a bus to recharge is unfeasible for standard route operations.
To address high-capacity transport, portfolio company Exponent Energy built technology providing a full charge in roughly 15 minutes paired with a 3,000-cycle battery warranty—balancing rapid charging speed with long-term battery health. Since its core revenue comes from energy sales, high-consumption platforms like buses and heavy trucks represent prime market opportunities.
Conversely, smaller vehicles benefit significantly from battery swapping systems. Businesses like Battery Smart convert hefty upfront battery expenditures into manageable operational costs. Other players, including Bounce Infinity, Yulu, and Baaz Bikes, similarly integrate swap networks directly into their service offerings.
These commercial drivers lack home charging access and cannot tolerate extended vehicle downtime, making seamlessly integrated, routine-aligned energy solutions vital for sustaining their livelihoods.
Why is financing still a barrier?
Traditional lenders comfortably navigate legacy combustion vehicles because secondary market valuations and repossession recovery mechanisms are well established. In contrast, evaluating electric vehicles remains a learning curve, particularly regarding battery degradation, long-term asset depreciation, and the relationship between battery lifespan and overall vehicle longevity.
This residual value ambiguity prompts lending institutions to offer stricter terms: reduced loan-to-value ratios, elevated interest rates, and shortened repayment tenures. Compounded by higher initial down payment terms, these restrictive financing conditions create significant cash flow constraints for commercial operators.
Consequently, a clear market opening exists for specialized financing entities with deep asset expertise, particularly niche lenders capable of effectively managing asset redeployment or secondary leasing arrangements when needed.
Policy clarity and the search for capital
What should government policy prioritize, and how should founders approach subsidies?
Public policy support for electrification is grounded in compelling priorities: curbing environmental pollution and decreasing reliance on oil imports. While the existing governmental framework is reasonably balanced, the private sector must take ownership of its own operational challenges rather than relying solely on state interventions.
Long-term policy predictability remains essential for industry progress. Establishing a comprehensive ten-year transition roadmap with clear three-, five-, and ten-year milestones would provide the stability businesses need for capital deployment. Conversely, frequent adjustments to import duties and financial incentives create regulatory uncertainty that hinders strategic planning. Furthermore, tax policy should stay aligned with broader goals, as tax cuts on internal combustion engine vehicles risk eroding the cost competitiveness of electric models.
Entrepreneurs must also acknowledge that public subsidies are inherently finite, bound by budget constraints, qualification criteria, and time limits. Founders are advised to structure financial models around sustainable unit economics that do not depend on state incentives for viability, allowing any eventual government subsidies to serve purely as an added benefit.
How is the focus on AI affecting fundraising for mobility companies?
At the early stage, reduced market noise allows us more bandwidth to thoroughly evaluate founders & opportunities and secure positions at reasonable valuations. Rather than pivoting with every new industry trend, we remain committed to investing in the mobility sector where our core expertise lies.
The primary bottleneck occurs during growth financing. We have portfolio firms demonstrating strong unit economics and healthy expansion that are seeking US$15 million to US$30 million in capital. Because capital allocation is currently heavily tilted toward AI, businesses establishing physical infrastructure and non-AI models often face fundraising hurdles.
While I cannot dictate capital distribution across the broader market, my focus is to connect with aligned investors, including international venture funds, late-stage private equity, family offices, and sovereign wealth entities. The core objective remains articulating a compelling investment case to these partners.
Where mobility startups can win
Where would you invest within an industry that needs so much capital?
Designing, manufacturing, distributing, and establishing consumer brands for personal vehicles inherently demands heavy capital investment, as does building out charging infrastructure through equity or debt funding.
Given our smaller fund size, we favor capital-efficient business models with superior operating leverage. For instance, a venture securing a $300 million valuation on $50 million in raised capital is often far more compelling to us than a business achieving a $1 billion valuation after raising $600 million.
This rationale drives our focus on B2B investments. Backing a component vendor serving dozens of manufacturers is frequently more attractive than financing a single scooter brand, as suppliers can capture healthy margins across a broad client base while individual manufacturers continue to face negative unit economics with suboptimal scale.
Can startups hold their ground once established manufacturers respond?
Early timing and sharp focus are crucial for startups to succeed. When breakthrough technologies first surface, incumbent players often pay minimal attention due to smaller initial market sizes, granting agile challengers a critical window to refine products and establish a market presence.
As the market opportunity expands, established companies inevitably react — whether by developing internal technologies, acquiring emerging businesses, or investing directly in startups. Legacy players hold substantial advantages that young firms struggle to mirror, including entrenched brand recognition, expansive distribution networks, and cash flows generated by mature business units.
For example, a traditional vehicle manufacturer can leverage steady profits from its combustion engine lines to subsidize electric vehicle development. By contrast, an unprofitable EV-focused startup must repeatedly seek capital from investors. While this creates a formidable obstacle, success remains entirely achievable.
The key strategic advantage lies in identifying specific customer needs overlooked by major manufacturers and securing a dominant foothold before those segments become industry priorities.
We actively support manufacturers that target these distinct commercial requirements:
- Zeno: Developing electric motorcycles designed for specialized use cases like bike taxis.
- Baaz Bikes: Engineering low-speed scooters tailored to the operational demands of gig workers for food and quick commerce deliveries.
- Moonrider: Building purpose-designed electric tractors.
Would you back a niche that initially looks too small for venture capital?
Rather than focusing strictly on the initial total addressable market, our priority is identifying strong founder-market fit, deep domain expertise, and the capability to establish a profitable category-leading business with capital efficiency.
Consider the electric ambulance segment: because ambulances are typically adapted from generic ICE vehicle models, a founder designing specifically for this use case can address a niche that may appear too small for a major manufacturer, yet presents a significant opportunity for a dedicated startup.
Once established as a profitable market leader, that core vehicle platform can be extended into adjacent sectors like school buses or refrigerated transport, allowing the market to expand over time.
Because of our fund structure, exits of US$200 million or US$300 million offer meaningful returns in the fund lifecycle; not every portfolio company needs to achieve a billion-dollar valuation.
Defining success beyond valuation
How do you define success for the founders you back?
Rather than pushing startups toward a billion-dollar valuation on an arbitrary five-to-seven-year timeline, our fund’s north star metric is to help create a hundred successful founders.
Prioritizing expansion over business fundamentals creates friction. When companies secure excess funding at unearned valuations prior to PMF & positive unit economics, founders are forced to chase artificial metrics, often sidelining client retention and satisfaction.
Key operational questions should take precedence: Are clients satisfied? Are prices fair? Is service delivery profitable and retention high?
We encourage disciplined capital use alongside strong customer loyalty, securing expansion funding only once the operational playbook is well established.
What is your advice to founders entering mobility?
Focus on your core strengths, and ensure your desire to become an entrepreneur is for the right reasons.
Your drive should stem from a clear problem or genuine customer need you feel driven to address. Pursuing money or status is an unreliable foundation, as the entrepreneurial journey is far more demanding than it appears.
Building a company requires intense commitment. It often involves significant personal sacrifices—affecting relationships, sleep, health, and personal well-being. Anyone taking this path must be fully aware of the sacrifices involved.
The initial stages can feel relentless and unglamorous, and even reaching financial milestones can leave founders feeling burned out. This is why purpose and conviction must extend beyond financial gain.
Ultimately, true fulfillment comes from seeing customers benefit from what you have created and knowing your work made a real difference.
To me, that impact is the most compelling reason to become a founder.