Electric vehicle financing is slowing; Cloud kitchens are making a comeback

Funding for India’s electric vehicle sector almost halved between 2022 and 2024. This and more in today’s ETtech Top 5.

Also in the letter:
■ Funding from Tata Digital may be delayed
■ PayU’s Vijay Agicha quits
■ India’s Startup Milestones in 2024

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Year in review: Electric vehicles lose funding race as investors negotiate hard

India’s electric vehicle (EV) sector witnessed a sharp decline in funding, plunging by nearly 50% between 2022 and 2024, as investors demanded improved profitability and unit economics.

Driving News:

• According to Venture Intelligence data, funding for the entire electric vehicle industry fell from $808 million last year to $586 million in 2024.
• The number of deals concluded was 44, similar to a year ago.
• The majority of the funds went into the area of ​​original equipment manufacturing (OEM).
• One of the largest funding rounds this year was Ather Energy’s $71 million round.

Slowing growth: Electric vehicle sales rose 24.5% to 1.9 million units this year, although growth slowed from last year’s 50% rise, data from government portal Vahan shows.

In the electric two-wheeler segment, total sales reached 1.13 million vehicles in 2024, up from 860,000 in 2023.

Global image: Globally, electric vehicle sales growth is slowing due to high prices, limited charging infrastructure and regulatory uncertainty, although volumes continue to rise.

Way ahead: Investors and stakeholders told us they are optimistic about the electric vehicle industry, buoyed by the government’s target of 30% electric vehicle share in new registrations by 2030.

Also read: PM E-DRIVE program: New plan to subsidize charging stations for two and three wheelers

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Cloud kitchen companies are cutting their losses to achieve healthy numbers

India’s cloud kitchen startups saw a turnaround in FY2024, with most recording significant revenue growth and narrowing their losses.

Come back:

But how? These companies have curbed their spending this fiscal year, including on marketing and employees.

• Rebel Foods, which operates brands such as Faasos and Behrouz Biryani, cut its employee benefit expenses to Rs394 billion from Rs405 billion. In January 2023, the company had laid off 2% of its workforce.
• Curefoods almost halved its marketing expenses to Rs 53 crore in FY24 compared to Rs 107 crore in FY23.

Large image: Industry executives said inflation was a problem for the sector this year. Prices for raw materials such as cooking oil, wheat and vegetables were hit the hardest. “Cloud kitchens have still been able to grow because the scale is comparatively smaller and they meet the demand for more consumer choice,” one executive told us.

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Tata Sons could only inject new funds into the e-commerce sector in mid-2025

Tata Sons could only inject the next round of capital into its e-commerce business Tata Digital in mid-2025. Until then, the new trading company will rely on internal financing and debt financing to drive growth.

What happens: CEO Naveen Tahilyani has urged all business leaders to focus on growth after forcing tighter spending, emphasizing better execution, accountability and return on capital (ROC).

Tata New: Tata Neu uses a data-driven approach to unlock every consumer access point within the system, including partnerships with external entities. Under this strategy, new funding for BigBasket and 1mg will be provided through debt rather than a fresh injection of equity. Tata Sons has invested over $2 billion in Tata Digital to date.

Performance: Tahilyani drives performance by offering Esops to top performers and building a culture of accountability.

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PayU Chief Investment Officer Vijay Agicha resigns

Vijay Agicha

According to sources, Vijay Agicha, chief investment and transformation officer of Naspers-backed PayU, has resigned from his position.

Driving News: Agicha’s departure comes just months after Suresh Rajagopalan, former CEO of Wibmo, a subsidiary of PayU, a provider of authentication services for online digital payments, left the company.

Sources added that Agicha may join an investment firm to focus on fintech investments.

Change of leadership: PayU experienced a wave of leadership changes after selling its global operations to Israel-based fintech company Rapyd in August 2023. Key departures include:

Expansion plans: PayU, which is gearing up for a listing on Indian stock exchanges in 2025, has increased its focus on the consumer segment with its mobile application LazyPay. While merchant payments remain at the core of its operations, PayU wants to leverage LazyPay to build a comprehensive consumer payments and lending business, PayU CEO Anirban Mukherjee said.

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Year in Review: India’s Startup Milestones in Numbers

India’s startup ecosystem has created over 1.6 million jobs with the Department of Industrial Promotion and Internal Trade (DPIIT) recognizing 1.57 lakh startups as of December 25, 2024.

Tell me more: The role of women in Indian startups has increased significantly: 73,000 companies have at least one female CEO. India has emerged as the third largest startup hub in the world with over 100 unicorns, with Rapido, Ather Energy, Moneyview, Perfios and Krutrim added to the list this year.

Also read: Year in review: These startups will close in 2024

Today’s ETtech Top 5 newsletter was curated by Vaibhavi Khanwalkar and Blessy Reji in Bengaluru.