Why we invested in Vecmocon Technologies

Aavishkaar Capital’s investment in Vecmocon Technologies represents a strategic bet on India’s electric mobility transformation and the critical need for indigenous, high-quality EV components. As a technology company specializing in intelligent and safe electric vehicle components, Vecmocon addresses fundamental challenges in India’s rapidly growing EV ecosystem while delivering significant environmental and social impact.

Market Opportunity: India’s EV Revolution

India’s electric vehicle market stands at an inflection point, with the sector witnessing 20% year-on-year growth despite global economic headwinds. The total addressable market for EV auto components is valued at $1.8 billion and growing at a 40% CAGR, driven primarily by electrification in two-wheelers and three-wheelers segments.

Despite this explosive growth, a critical gap exists – over 95% of battery cell demand and EV compute components are supplied by Chinese players, creating significant vulnerabilities around customization, safety standards, and supply chain resilience. This presents a compelling white-space opportunity for domestic players who can deliver superior, localized solutions.

The Vecmocon Advantage

Technological Leadership

Vecmocon has developed a comprehensive portfolio of safety-critical EV components including Battery Management Systems (BMS), EV Chargers, Vehicle Intelligence Modules (VIM), Motor Controllers, and Instrument Clusters. The company’s proprietary technology addresses core EV challenges:

  • Extended Battery Life: Components extend battery life by up to 20%, directly addressing range anxiety—the top barrier to EV adoption
  • Enhanced Safety: Minimal failure rates in supplied units to date, with products meeting global safety standards, which demonstrates the power of localized co-development of products with OEMs
  • Superior Performance: Chargers operate in wider voltage conditions with higher power factors, delivering savings of up to 84 kWh per charger annually
  • Stickiness in business model: Such critical components go through an intense co-development process for each vehicle followed by homologation limiting the risk of displacement at the commercialization stage. Further, the sales volumes are linked to OEMs sales volumes once commercialized offering a step-function growth trajectory for such a venture. 

Competitive Positioning

Unlike Chinese competitors who offer generic, non-customizable solutions, Vecmocon provides:

  • High-quality, customizable solutions tailored to Indian market requirements
  • ISO functional safety certifications that Chinese players typically lack
  • Superior technical support and post-sales service
  • Automotive-grade manufacturing standards

The company has successfully displaced Chinese components for multiple customers, demonstrating clear value proposition and market validation.

Business Model and Scalability

Proven Market Traction

  • Products currently power over 70,000 vehicles on Indian roads
  • Strong customer relationships spanning 2W, 3W, and emerging 4W segments with strong tailwinds in the tier-1 accounts

Revenue Diversification Strategy

Vecmocon is currently engaged with over 70 clients for its products including tier-1 accounts in 2W and 3W EV segments at go-live stage. 

Financial Performance

The company maintains healthier gross margins compared to most other component suppliers, demonstrating the premium value of its differentiated offerings in a price-sensitive market. Additionally, it has the advantage of remaining asset-light by focusing on product design while outsourcing the actual manufacturing of components to the mature EMS (Electronics Manufacturing Services) industry in the NCR region. 

Impact Thesis Alignment

Environmental Impact

Vecmocon’s technology directly contributes to India’s sustainability goals:

  • Emissions Reduction: Enhanced power output from chargers reduces carbon emissions by an estimated 880 tCO2e annually (FY2024), projected to grow to 8,388 tCO2e by Year 5
  • Battery Transition: Facilitating the shift from highly polluting lead-acid batteries (~250 cycles) to lithium-ion batteries (~1,500 cycles)
  • Energy Efficiency: Improved power factors and charging rates contribute to grid efficiency

Social Impact

  • Job Creation: Employs 157 skilled professionals with plans to grow to 440 by Year 5
  • Gender Inclusion: 12% women workforce in a traditionally male-dominated sector
  • Import Substitution: Reducing India’s dependency on Chinese components while building domestic technological capabilities

Growth Catalysts

Policy Tailwinds

  • FAME-III scheme with expected budget allocation of ₹10,000-20,000 crore
  • PLI scheme worth ₹40,000 crore for electronics component manufacturing
  • Government push for domestic component sourcing and localization

Technology Trends

  • Shift toward Lithium Iron Phosphate (LFP) batteries playing to cost-sensitive Indian market
  • Increasing demand for customized, safety-certified solutions
  • Evolution toward specialized third-party solutions similar to China’s market development

Expansion Opportunities

  • International market expansion with potential for higher margins
  • Multi-product relationships with OEMs through dedicated R&D
  • Emerging segments like electric buses and commercial vehicles

Investment Rationale

Aavishkaar Capital’s investment in Vecmocon represents:

  1. Strategic Market Position: First-mover advantage in high-quality, customizable EV components for the Indian market
  2. Scalable Business Model: Proven ability to serve diverse customer segments with expanding product portfolio
  3. Impact at Scale: Direct contribution to India’s Net Zero 2070 goals while creating quality employment
  4. Strong Management: Experienced founding team from premier institutions (IIT Kanpur, ISB, IIT Delhi) with deep domain expertise
  5. Growth Trajectory: Clear path to capture increasing market share as EV adoption accelerates



Conclusion

Vecmocon Technologies embodies the intersection of technological innovation, market opportunity, and sustainable impact that defines Aavishkaar Capital’s investment philosophy. As India transitions toward electric mobility, companies like

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