Zypp Electric: Driving Profitability and Sustainable Growth in India's EV Fleet Market

Zypp Electric, an electric vehicle (EV) fleet platform, reported impressive financial results for FY23, with revenues exceeding Rs 125 crore, a remarkable fivefold increase. This substantial growth can be attributed to key partnerships with leading logistics companies like Blue Dart, DTDC, and Ecom Express, as well as prominent delivery giants such as Zomato, Swiggy, and Zepto. Zypp's founder, Akash Gupta, revealed that the startup achieved an average gross margin of 35% during FY23, signifying strong financial performance. Furthermore, the contribution margin, which represents earnings after subtracting variable costs from the selling price per unit, turned positive, indicating profitability on each unit sold or leased.

While Zypp anticipated achieving net profitability from October 2023, Gupta now expects breakeven by March 2024 and overall profitability by FY25. He noted that the startup achieved profitability in the Delhi-NCR region during the year but adjusted its plans due to rapid expansion efforts.

Zypp, based in Gurugram, primarily competes with MoEVing, a major player in the EV fleet market that has secured $10 million in funding from notable investors. Additionally, it faces competition from Yulu, which offers EV bikes and scooters for personal and commercial use. Yulu recently signed a deal to provide up to 35,000 bikes to its delivery partners.

Founded in 2017 as a bicycle rental platform, Zypp expanded into e-scooter rentals in 2018, targeting the last-mile delivery sector. The startup's unique approach involves providing electric two-wheelers along with trained delivery personnel to address the high turnover rates in the delivery partner segment, which can leave companies understaffed. Zypp's investment in training its drivers to handle EVs enhances rider safety and bike reliability.

Currently, Zypp operates 12,000 e-bikes, primarily in the Delhi-NCR region, its largest market. The company plans to significantly expand its presence in Bengaluru and has allocated Rs 100 crore for this purpose, with Rs 20 crore to Rs 25 crore already invested. Zypp aims to introduce 2,000 e-bikes in Bengaluru over the next few months, partnering with delivery companies such as Zomato and Swiggy to drive growth in the city.

Zypp's business model revolves around leasing e-bikes from financing companies and then renting them out to drivers, creating a bridge between driver partners and electric two-wheelers. This asset-light model enables Zypp to update its fleet regularly and scale rapidly. Drivers pay a daily rental fee of Rs 200 to the company, with customized financial arrangements available to accommodate varying needs. Drivers typically earn between Rs 16,000 and Rs 18,000 per month.

In addition to its domestic growth plans, Zypp has partnered with Taiwan's Gogoro Inc to pilot its B2B offering and plans to leverage Gogoro's swapping network for its energy requirements. The startup has raised a total of $37.5 million from investors such as Gogoro, Wells Fargo, LetsVenture, 9Unicorns, and We Founder Circle. While there are no immediate plans for another funding round, Zypp is engaging with multiple investors to assess future funding opportunities.