South Asia Growth Fund III Holdings, L.P

(i) Support the creation of direct manufacturing jobs in a low-carbon sector/green industry; (ii) Support the growth of electric vehicle manufacturing capacity to contribute to greenhouse gas emissions abatement through the increased adoption of electric vehicles, e-trucks and e-tractors and transition from highly emissive status quo.

To improve productivity and efficiency of farmers, particularly smallholder farmers, by providing alternative tractor with lower operating cost, maintenance cost, (no smoke, no noise) compared to gas/diesel tractors.

India

35 per cent to 40 per cent of all full-time equivalent (FTE) employees including full-time contractors are expected to be low and semi-skilled workers and low income, living on <$6.85/day (2017 PPP). The gender representation in the FTE workforce is projected to increase from the current 8 per cent to approx. 15-20 per cent over the next 3-4 years.

Global

India is the world’s third largest CO2 emitter and home to 22 out of the world's 30 most polluted cities. Transport sectors account for 12.9 per cent of India’s greenhouse gas emissions (IEA, 2021). Tailpipe emissions account for 65-80 per cent of an automobile’s emissions hence transition to electric vehicles is expected to accelerate to a cleaner transport.

India

The company's electric tractor sales target six states (Uttar Pradesh, Madhya Pradesh, Maharashtra, Rajasthan, Gujarat, and Karnataka), where 70-90 per cent of smallholder farmers, or an estimated 80 per cent of the company's prospective e-tractor end-users, cultivate less than five hectares, implying low-income reach by our income proxies. Its e-tractors are stipulated to have a total operating cost that is approximately 20-44 per cent lower than their internal combustion engines counterparts.

The company will employ 4,332 FTEs by 2028 (1500+ jobs likely low income) and manufacture 155,000 vehicles. Growth plans funded by this co-investment are estimated to increase direct employment by 3731 by 2028. This implies 7x new jobs based on current 600 employees.

The company will sell 100,000 electric three-wheelers by 2028, serving 100,000 drivers (including Tier 2 and Tier 3 cities).

The project is expected help to reduce greenhouse gas emissions. The electric three-wheeler segment avoids 12.4 million of CO2e per year. The electric tractor segment avoids 7.8 million CO2e per year. The electric truck segment averts up to 32 million CO2e per year. Lastly, the electric small commercial vehicle could prevent 9 million CO2e per year. Moreover, $100 per month of net savings on tractor costs for farmers using an electric tractor compared to a diesel tractor.

The growth in employment is expected to be on permanent direct production roles at its manufacturing plants and sales operations. Indirect job creation for electric three-wheeler drivers.

Financial additionality: Our financial additionality is limited while we are confident that we are not crowding out commercial capital.

External Risk

Risks relate to battery charging stations/points and ecosystem keeping in pace with electric vehicle sales, and power available for charge. Risks related to policy for manufacturing, sales of electric vehicles, tax and other incentives which might have an impact on uptake and is linked to commercial risks.

Evidence Risk

Risk that the company and fund manager will not be able to accurately estimate greenhouse gas emissions avoided by the investment due to lack of visibility of value chain and specific use of electric vehicles. Considered low risk given strong evidence base that electric vehicles represent a necessary modal shift to decarbonise the global transport sector.

Endurance Risk

Relates to the risk of the company's business expansion plan not materialising and may be unsuccessful in some segments. Partly mitigated by the team's strong manufacturing track record.

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