Within the next three to six months, Blue Energy Motors — an emerging leader in LNG truck manufacturing in India — is hoping to raise substantial capital of USD 100 million (approximately Rs 760 crore) to fund its rather bold vision. Riding on its current success — the sale of roughly 400 units in FY23 — the company aims to quadruple its sales within a year and is also working on an electric version of its trucks, to position itself as a leader in sustainable transportation solutions.
In an exclusive interview, the CEO of Blue Energy Motors Anirudh Bhuwalka got candid with Autocar Professional. Edited excerpts.
How’s it been since Blue Energy Motors inaugurated its LNG truck manufacturing plant in Pune in September 2022?
Blue Energy Motors evolved from the idea that green trucking is the way forward. It addresses the lack of focus on decarbonising trucks, which accounts for 65% of automotive pollution. The goal is to compete with diesel and offer a viable alternative. After exploring various technologies, LNG emerged as the best fuel for long-haul trucking, while electric versions could be suitable for short distances.
Despite initial scepticism and challenges, the company successfully introduced India’s first LNG trucks and now has over 400 trucks on the road. These trucks have covered more than 10 million kilometres and have been endorsed by top logistics partners and major companies in India. This initiative has significantly contributed to reducing fuel consumption, carbon emissions and overall performance. Our current manufacturing facility has a capacity of 10,000 trucks per year, which is good enough for the next few years. We are expecting orders in the range of 2,000 to 3,000 trucks in a year.
How would you summarise the company’s current focus and direction?
We currently operate within the 55-ton category, and that’s where our primary focus lies. While a few variations may emerge, we aren’t planning to venture into the medium- or light-duty segments at the moment. We may say “never say never,” but our primary emphasis is on establishing a new technology and a corresponding ecosystem. This requires dedicated time and effort to ensure perfection in every aspect.
The journey has been positive so far, but we are aware that it’s still early days. Our focus remains on serving the cement, steel, FMCG, oil and gas, and container industries, among others. We’ve also begun serving the metals and mining sectors, specifically for long-haul transportation and not for use within the mines or activities such as road construction.
As mentioned, we’re firmly concentrated on the 55-ton category, which is evolving into a consolidated multi-vendor segment. As this grows, we aim to establish our presence before considering expansion into other categories. So this year, this will remain our focus.
What’s new with electric trucks and other powertrains?
Heavy-duty electric trucks have a future. They’ve already started operating along short-haul routes and are starting to become popular. But structurally, we will have to resolve some adoption issues, specifically financing, as it’s a major bottleneck. Adoption will speed up if this can be tackled. We didn’t launch these trucks, but for whoever did, the challenge will be the high capital costs. As you may know, EV heavy duty trucks don’t get easy financing because of the uncertainty around the business and their life cycle. But, electric buses, for one, have started to get
funding. So EV heavy duty trucks will go through the same evolution.
Moreover, the FAME subsidy doesn’t help. To a certain extent, it will help reduce capital costs. The real game changer, however, is that if institutions and the government take the initiative to get public-sector banks to look at every commercial vehicle favourably and get financing for it, there’ll be adoption. So our strategy is simple. If you look at the category we function in, it’s dominated by one product, and that category in itself is growing. This year’s tractor trailer sales will almost hit 75,000 units, and they’re dominated by one product. We have our own standing there. Next, we will bring out the LNG version and then the electric and hydrogen ones.
Any plans to take your trucks to the export market?
Considering India’s substantial market size, with the number of medium and heavy trucks expected to double, it begs the question: Why look elsewhere when there’s such significant potential for scaling in India? I’m firm in my belief that once we establish a presence, the demand grows rapidly, with every sale generating interest. As customers become accustomed to the product, they view it as a lifestyle choice and a means to generate revenue. Furthermore, our business model revolves around seeding each customer, ensuring that they are satisfied and eager to expand their fleet. By incorporating our trucks into their operations, they benefit from reduced emissions and improved branding without incurring additional costs, resulting in a win-win situation for all. So we anticipate rapid proliferation in the near future.
The Niti Aayog report on LNG infrastructure aims to understand the need for 50,000 vehicles in the coming decade. It also highlights that OEMs would need to produce at least 3,000 to 5,000 trucks to make sense of the opex.
Do you think the government’s plan will unfold as intended, or do you see gaps in the strategy?
The transition to LNG is inevitable due to its significant fuel efficiency and lower operating costs. With the potential for tens of thousands of vehicles to transition to LNG, it seems to be only a matter of time. The competitive advantage of LNG over diesel, especially its environmental friendliness, is evident. As LNG stationsproliferate, the volume of vehicles transitioning to it is expected to grow substantially in the next few years.
The key challenge lies in the rapid development of LNG stations to support this transition. With approximately 25 stations nearing completion and an additional 10 stations already operational, the infrastructure is evolving rapidly. Their timely establishment, however, is critical to support the growing demand for LNG as a fuel alternative.
However, the absence of trucks hampers the utilisation of gas stations. Initial gas station operators faced a similar situation, with zero business for the first 12 months. But they eventually reaped the benefits of being the first movers in the market, attracting a significant volume of customers. This exemplifies the advantage of seizing a business opportunity early on, as evidenced by the multitude of potential investors already expressing interest in proven business prospects.
Any further fundraising plans?
We just announced a funding round of about USD 100 million. We are not so particular about the nature of the investor at this stage. Obviously, everybody wants a good investor to be part of the table, and we have some very good names already.
This interview was first published in Autocar Professional’s April 1, 2024 issue.