Why do people love Bounce?

Naturally, the unit economics for Bounce haven’t worked. “Companies like Bounce are at least three to five years away from workable unit economics,” says Dolan Sekar, founder of fleet maintenance company My Overhaul. Sekar was also a former operations head at Bounce.

Hallekere claims that in Hyderabad—a jewel in Bounce’s otherwise thorny crown—the company has managed to turn the tide in the last four months. Bounce now generates Rs 0.8 ($0.01) cash per kilometer, after all expenses. This number, claims Hallekere is “getting better everyday”. A rough back-of-the-envelope calculation gives a peek at what Bounce’s real revenue, after all expenses might be: roughly Rs 5.6 ($0.07) per ride on a ticket size of Rs 65 ($0.90). Bengaluru’s operations still remain in the red.

Switching to electric scooters will bring in 3X the current “real revenue” per kilometer, Hallekere estimates. The fuel cost, which is Rs 2.20 ($0.03) per kilometer and skews overall costs considerably, will be down to nil.

Vogo, Bounce’s closest rival, is also contemplating the switch to electric mobility. Vogo has run pilots on several scooters, but hasn’t found a good fit yet. “Parts would fall off mid-ride. Others [scooters] had batteries optimised for lower temperatures,” says Ritesh Banglani from Stellaris Venture Partners, an early investor in Vogo. Banglani claims Vogo’s also in talks with scooter manufacturers to build a custom electric scooter.

With fewer parts involved, electric scooters are easier to repair and maintain. But, as Jaiswal points out, there are significant challenges of running an electric fleet.

For starters, sourcing is a huge problem. “Manufacturers were just bringing Chinese scooters,” says Jaiswal. The same model, two batches apart, wouldn’t have the same battery performance, or turning radius. FAE fought this challenge by building what Jaiswal calls a “super speciality team”, which can diagnose and quickly fix problems.

Maintaining electric scooters, while less intense than petrol ones, isn’t painless either. Currently, it costs FAE Rs 150 ($2.09) per month to maintain every scooter. Even changing the tyre requires some expertise, since the wheel hub motor sits in the tyre, explains Jaiswal.

The Manufacture

Hallekere says Bounce has contracted another company to do the manufacturing, but controls the design and IP on the electric scooter. It reduces the uncertainty of performance to some extent. It might even keep maintenance costs low. Hallekere didn’t share which company has been contracted.

But ultimately, Bounce, too, is vulnerable to a supply chain for electric mobility currently dominated by Chinese suppliers, especially for batteries and power electronics.

Electric mobility is a hub-to-hub plan. Or is it?
Hallekere knows that sourcing lithium-ion batteries is going to be the biggest challenge. Bounce’s operations need batteries that last 1200-1400 charge cycles, are thermally tuned to Indian roads, and can withstand use in a large, fast-moving fleet service.

For its pilot, Bounce has sourced from Indian battery manufacturer Exicom, and is in talks with Exide to build a future supply chain.

With its petrol fleet, Bounce could hit the ground running. It had the advantage of picking scooters off-the-shelf, a steady supply of spare parts, and a wide user base familiar with the form-factor.

“With electric scooters, they’re starting from scratch. It’s like saying a wallet company now wants to lend,” says the investor mentioned above.

But Hallekere remains confident. Bounce has tied up with kirana (mom-and-pop) stores and other small businesses to house up to three batteries at their shop. The idea, says former executive Sekar, is to have a fully-charged, swappable battery available every two or three kilometers.

Bounce has signed up over 3,000 small businesses in Bengaluru alone. To join the network, shop owners have to pay a down payment of Rs 1 lakh ($1391) for the batteries. “We want to run an asset-light model. We will always deploy batteries in partnerships,” says Hallekere, adding that they may pay owners Rs 20-25 ($0.28-0.35) per swap.

This battery-as-a-service model allows Bounce to have a fresh stream of revenue, claims Hallekere, because they can sell these batteries to shop-owners as a new business opportunity. “3,000 battery swapping spots is already 5X the number of petrol pumps in Bengaluru. We know exactly where demand is generated. So we have made partnerships accordingly,” says Hallekere.