Turno, the India-based commercial electric vehicle platform, today announced that it has raised $13.8 million in Series A funding just one year after its launch. The company has gained 20% market share since it started trading in five states of India in January 2022, and now has plans to expand rapidly.
Launched by founders Hemanth Aluru and Sudhindra Reddy, who met while working at car-sharing company Zoomcar, Turno aims to make it much easier for small and medium-sized businesses in India to secure commercial electric vehicles (EVs). As these SMEs account for approximately 90% of the country’s logistics sector, the project has the potential to significantly accelerate the adoption of commercial electric vehicles in the country, leading to significant sustainability benefits.
“We’re seeing an inflection point around electric cars,” Aluru says of buyers’ willingness to move away from vehicles that rely on a conventional internal combustion engine (ICE) for power. “But the key is getting the financing right, and doing it over the life of the vehicle.”
The high initial cost of all commercial vehicles means that most buyers need credit when buying new vehicles – especially SMEs with leaner balance sheets. But in the EV market, that has proven problematic. Lenders want to borrow against the value of the asset, rather than based on the borrower’s creditworthiness, but they don’t yet have a clear picture of how EVs depreciate over time – and they’re concerned that EV batteries could become a have a short shelf life, especially when compared to ICE-powered vehicles. As a result, buyers often have to make substantial down payments and pay high interest rates, making EVs unaffordable.
Turno’s solution is based on an innovative technological solution that makes it possible to collaborate much more competitively with SMEs. The company’s platform primarily connects SMEs to EV manufacturers, extending credit to finance a new purchase and guaranteeing the buyer a minimum resale value in the future.
That value proposition is made possible by Turno’s knowledge of the electric battery market. It has identified a significant resale market for EV batteries – while these may no longer be suitable for use in vehicles after, say, five years, they can be redeployed as stationary assets in locations such as data centers and infrastructure installations.
This allows Turno to borrow with greater confidence – financing is provided in conjunction with lenders – and also to provide guaranteed resale value. In addition, SMEs that purchase a company EV on the platform agree that Turno will receive data on the use of the vehicle. Using analytics, Turno can then get a much clearer picture of the battery’s health, and therefore its likely future value; it may even incentivize buyers to drive in a way that minimizes usage.
Aluru believes this innovative model can accelerate EV adoption by commercial customers, which are responsible for far greater mileage and CO2 emissions than motorists. By borrowing at lower rates and guaranteeing a resale value, the company estimates it can reduce the total cost of ownership of a commercial electric car by 30% compared to other financing solutions.
“Today, 80 to 85% of the fuel consumption of cars in India is driven by commercial vehicles with internal combustion engines, but there is a strong desire to move to a green economy and the adoption of commercial EVs is therefore promising,” says Aluru. “Turno was founded with the mission to convert these petrol kilometers into electric kilometers, with a significant positive impact on the environment.”
SMBs seem excited, with Turno now accounting for 20% of all commercial EV sales in India. The company grows at a rate of 30% per month and generates revenue that translates to $20 million per year.
Investors have taken note. Today’s Series A round is led by global venture capital firms B Capital and Quona Capital, and has also generated interest from new investors, including Alteria Capital and InnoVen Capital, and existing investors Stellaris Venture Partners and Avaana Capital.
“Commercial EV sales are highly dependent on the availability of attractive financing options and today the Indian market is plagued by a lack of truly customer-facing options,” said Karan Mohla, General Partner at B Capital. “Turno has identified an important missing element in the ecosystem that solves the problem of financing as well as distribution and maintenance.”