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Sunday, January 20, 2013

Read : Clean Tech

The Bottom Three Billion: How One Clean Tech Company Serves The Poor

Pachyappa Bala of Ampere with the Angel, a stripped down electric scooter.
In 2007, a married couple with well-paid tech jobs in Singapore saw a prototype of a Japanese electric car and had a revelation. An electric car could be run for a tenth the price of a comparable one fueled by gas. The couple wondered: Could they create an electric motorbike for the masses in their home country of India?
“This hit my mind like anything. This is the future,” Pachyappa Bala, the husband of the couple, remembered thinking at the time.
Shortly after, Bala and his wife, Annamalai Hemalatha, sold their $1.8 million apartment in Singapore and moved with their two school-age daughters to Coimbatore, India, to found Ampere. This was a drastic move. Coimbatore is a second-tier industrial town in the steamy-hot south of India with no cosmopolitan flair. Though Bala is an engineer with a specialty in electric motors, neither he nor Hemalatha had tried to build or sell an electric vehicle.
What they have learned since offers lessons for anyone building a business where the risks are high, the time horizon is long, and the customer makes $2.50 a day or less — a population that is known in some circles as the bottom of the pyramid (BOP). Clean tech businesses are finding that the road to success is long and rocky; so are those serving the BOP. What makes the endeavor worthwhile is that the benefit to society can be great and the potential market is huge. It’s estimated that three billion people worldwide make $2.50 or less, most of them in Asia, Africa and Latin America, and each has the same desires as those who make $100,000 a year. How do you make a product that satisfies their needs on a measly budget?
Hint: It looks nothing like a comfortable IT job in Singapore.
“I practice what I call frugal engineering,” Bala said during a visit to one of his two factories, a converted textile mill next to a coconut grove at the end of a dirt road. Then he corrected himself. “Ultra-frugal engineering.”
Rethink the Conventional. At first, Ampere created a line of electric vehicles that looked and felt like conventional motorbikes. Bala and Hemalatha developed 13 models of electric scooter targeted at the upper-middle-class, ecologically-oriented urbanite. Each had a sleek design in molded plastic — the style of motorbike that has proven to sell well in cities around the world. The marketing plan was also familiar: a $1 million advertising campaign accompanied by new dealerships in the big cities of Bangalore and Chennai.
Total number of vehicles sold: five.
Relaying this information to me, Bala burst out laughing. “The people buying EVs are not the rich, not the educated,” he said. “It is the poor people who are buying our vehicles.”
Here is the profile of Ampere’s new customers: 1) a shopkeeper or deliveryman in one of India’s small outlying cities or villages, or 2) a farmer. The company’s biggest seller is the Angel, a two-wheeler so stripped down and ugly that it has a certain charm. It is a stout Chinese bicycle retrofitted with front shocks and sturdier wheels, and a frame that has been cut apart so a battery fits behind the seat tube. The lead-acid battery gets a full charge in eight hours from a standard Indian 5-amp outlet — the same way people charge a cellphone. The price is about $386, far cheaper than a gas-powered motorbike. It is priced, Bala said, for “people who can afford the vehicle but not the gas.”
Number of vehicles sold within weeks of the Angel’s debut: several hundred.
Since then, Ampere has expanded its product line to fourteen models and sold thousands of vehicles. Business has taken a nosedive recently because a plague of power outages in India are destroying confidence in electric cars. Despite the downturn, though, there is no question that Ampere has found a market.

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