Interview with Mohal Lalbhai, CEO of Matter

Sirish Chandran: Tell us about your company, Matter

Mohal Lalbhai: Matter was founded in January 2019 and the simple idea was, how do we accelerate the adoption of EVs in India. In the founding team and in the team, we formed in the earlier days, we had collectively over hundred plus years of EV manufacturing experience and people have sold over a lakh EVs in India, two-wheelers particularly. My co-founder Arun, he sold YOBykes for seven years. And the team particularly has seen their fair share of failures and we said we needed to compete with internal-combustion vehicles. The value proposition is quite out there for an average customer, in terms of running costs, but how do we bring down the capital/upfront cost of a vehicle? So, that's where we decided that we'll go down a road which, eventually two years later has us building out the technology side. So, we'd build out our own motor,electronics and everything just from a reliability [stand point] and make in India for the world approach. So, that's where we are currently, a team of 120 people.

Sirish Chandran: Your plans seem to be very ambitious, particularly a one billion topline in 2025. It that achievable?

Mohal Lalbhai: I only have one metric that we use at Matter, which is price to performance and I believe that in most of the two-wheelers, no one is coming on par with the internal combustion in their own respective rights. Hero Electric does not give the performance. Now with the new subsidy conversations, I'm expecting a lot of traction at least for companies like Ather or Bajaj or TVS from their respective scooter models. States like Gujarat which are late to the EV policy game have also started announcing their policies, which is going to help bridge the divide in terms of capital outlay but that is not the only thing which will help bridge it. I mean obviously, economies of scale, efficiency in processes and obviously a keen eye on the development cycle are what we think collectively are going to be what get it to that price point.

Matter is working on two verticals. One is on the battery side with the energy storage application and then we're also working on the EVs. We are planning to launch our energy storage vertical in the next month or two and vehicles for private showcasing and riding we would be ready around December 2021 - January 2022. And, subsequently in 2022, we will be launching our product and towards the middle of 2022 is when the deliveries will begin. It's a motorcycle and it's not entry level. This is the maximum information I can share with you at this moment.

Sirish Chandran: Why a motorcycle?

ML: India has always been a motorcycle country. We have 500 scooter manufacturers and if I look at the larger context, India sold 2.1 crore 2-wheelers in 2019, out of which 1.6 crore were motorcycles. Coming down to the customer's psyche, we would want to accelerate the options. I would personally not even go and market the Matter One which is the first product that we're launching. I'd just say it has the same performance, same price point and it's just cheaper to run. Even from a decision perspective we have to make sure they want one. Going back to motorcycles, that's the segment we think of from an EV perspective.

SC: Similar pricing means what you're targeting the Bajaj Pulsar 200?

ML: It is not entry level. I will hold on to the price bracket for now, but in that regard, whatever is the average price point we will be within 5% of that average price point.

SC: So, basically you will not be at a premium to an ICE

ML: We might be 5% more expensive than an ICE vehicle, but no more than that. That was a very clear intent from the day Matter was founded. We will be very similar, I am giving you an example I've seen the Ather 450X, it’s on road price in Gujarat was Rs1.7-1.8 lakh on road, that's almost twice the price of an Activa and that is where I find that even if there is a long term benefit, the customer in India doesn't like a one-time shelling out of money. If you ask me for Rs 1000 every day I will give it instead of asking me for Rs 30,000 on day one. From that perspective it was very clear that the pricing has to be met in line with internal combustion, only then can we drive the adoption of electrics. I personally think it's impossible to drive EVs without showing true ownership benefits.

SC: What are the localisation levels that you will start with?

ML: Cells are coming from outside; magnets are being imported and some electronics which we can't manufacture are also coming from outside. That's the extent of what we are sourcing internationally. Everything else is somewhere between Maharashtra, Delhi region is the supply chain.

SC: What are you all localising?

ML: I’m going to split it into three major attributes, one is the vehicle hardware - the suspension, brakes and the lights. We are designing them to our specifications and we are working with Tier 1, Tier 2 suppliers to get those parts. As far as the electronics are concerned, every single PCB that goes in the powertrain, but not getting into manufacturing it. And the last thing we are doing major work on is the entire software, everything is built and maintained in house. The design is completely ours; we're using the current techniques and vendors to manufacture the components for us.

SC: What are your manufacturing capabilities like? Are you going to make your own frames, the body work or is this all going to be sourced?

ML: So most large aggregates are going to be outsourced, assembly of everything will happen in house. We would have an annual capacity of 60,000 for the first phase and then expansion on an assembly driven mobility is quite easier than expanding all of the other aspects. That is what our approach is going to be in 2022, till the end of 2023.

SC: The 60,000 units you're talking about, that will be spread over a range of products?

ML: We're starting with one product first, which is going to be the Matter One and Matter One is something that we use internally, we still don't have the right name for the product. Then Matter Two and Matter Three which is to be another motorcycle and a scooter, which we will showcase as concepts, during the launch of Matter One in early 2022. 60,000 will be the capacity of total production in the first phase and from there at the right point in time we ramp up the capacity.

SC: What is your retail strategy going to be?

ML: That is another conversation which I would like to hold on to for sometime in the future because it's neither going to be traditional like what Bajaj are doing nor will it be what Ather is doing. It's going to be somewhere in between, the nuances of which are being finalised.

SC: Your markets are going to be Tier 1 or spread all over?

ML: For Matter One we're going to be primarily focusing on the western region of India. Gujarat, Maharashtra, Rajasthan, Delhi is going to be our first phase and the second phase is going to be tapping into Bangalore, Chennai and other Tier 1 cities in the south and once Tier 1s are stabilised for six months or so, we would then be shifting to Tier 2 in the same states. Then eventually when Tier 2s are stabilised then we'll be rolling out Matter Two, Matter Three, so that's how we'll be pushing in from there.

SC: How are you working around the infrastructure topic?

ML: With two wheelers where the average battery size is 2-5kW, that means a vehicle can be fully charged from a 5 Amp socket in 5-6 hours and the battery packs are small enough for swapping. The 10,15 and 20kW swapping infrastructure becomes very hard. But a 2kW battery pack is essentially two tiffin boxes that you're carrying. So, we'll be focusing on that, we will be talking about swapping battery packs at some point in the future and that is where for us Matter Energy and Matter Motors come together in terms of setting of the entire swapping of batteries and vehicle infrastructure as well.

SC: Your motorcycle will be equipped with swappable batteries?

ML: Not Matter One. Entry level yes, not higher than entry level vehicles, because battery capacity needs to be higher, to kind of allow for that kind of power. Matter Two and Three we'll be getting into battery swapping.

SC: Are you looking at any partnership with Sun Mobility who are working on these swappable batteries?

ML: We haven't initiated primary conversations with any of them because we are working on creating our own setup right now, because on the other side Hero MotoCorp was tied up with Gogoro who also kind of get into the battery swapping thing. So, we are taking somewhat of a wait and watch approach to see how this thing plays out before getting together with somebody.

SC: What do you think is the range that an Indian customer would definitely require from an electric motorcycle?

ML: An average Indian motorcycle user would be using 30-35km of driving range, every day. Somebody like medical representatives might do 70km every day, so that by two is 140-150km every day. So, a 140-150km range is the sweet spot for us.

SC: The motorcycles are you also targeting it be a little sporty to ride?

ML: Yes, it sounds inherent with an electric vehicle. The torque at one rpm is going to be ridiculous as compared to an ICE, so yes, you'll be able to do wheelspin but that's inherent to electrics and how they are configured. I would say it will have a certain sportiness to it, but again, it's quite subjective who's looking at the vehicle and what's sporty and what's not.

SC: Where are you based and what are your current facilities like?

ML: We are currently based in Ahmedabad; our current facility is about 40-45 thousand square feet and from a team perspective we have 120 people. This is a development team; production is another 30-odd people. Out of the 120, about a 100 are engineers.

SC: When does production kick off?

ML: Matter Energy we'll be targeting somewhere around August / September to start off production.

SC: And the Matter One?

ML: Private showcasing will start in December 2021/January 2022 is the launch of the vehicle and production and delivery will be somewhere around mid-2022.