photos: Enviu
Illustration: Dietwee ontwerpers
The Green Auto Rickshaw Company
In large cities in Asia and Africa millions of tuk tuk (auto rickshaw) drivers offer their taxi-services. These little three-wheelers cause severe air-pollution and produce large amounts of CO2. The drivers of these rickshaws generally belong to the lower income groups of society. An average rickshaw driver in urban India earns about €3 to €4 per day. For an indication of the scale of the issue, the Asian Development Bank has estimated the total number of auto rickshaws (2-stroke and 4-stroke) in India to be 3.2 million.
Goals
To start-up a viable and sustainable business which will develop and bring to the market an upgrade kit for existing auto rickshaws so as to improve the quality of life by achieving the following:
- improve the income of auto rickshaw drivers and their families in Asia with at least 35%;
- reduce CO2 emission of the auto rickshaw sector with at least 40%;
- improve air quality in the large cities in Asia;
- it is Enviu’s ambition to have converted one million auto rickshaws in 2020.
Background
Enviu and the Tuk Tuk project
Enviu - innovators in sustainability - is an international network organization for and by young entrepreneurial people. Enviu scouts and generates innovative ideas regarding sustainable entrepreneurship and tries to make them happen.
To realize the goals of the project Enviu organized an innovation battle in the Netherlands and India. This battle challenged students to develop an upgrade kit. Such a kit must meet certain technical specifications and have the potential to actually be marketed on a large scale. The battle ended in India in July 2009. Seven teams participated in the battle all working on different technologies. HAN University and SRM University were winners in their categories: emissions, fuel efficiency and business plan.
| University | Technology |
| Delft University of Technology | Exhaust pipe / Expansion chamber |
| HAN University | Liquid LPG Direct Injection |
| Hanze University Groningen | CNG Direct Injection |
| Eindhoven University of Technology | Start/ stop system |
| SRM University | Cooling system + bigger carburator, exhaust |
| R.V. College of Engineering | Hydrolyser kit |
| M.S. Ramaiah Institute of Technology | Air driven engine |
Business model
The social issue Enviu has identified is the hold of money lenders on the auto rickshaw drivers. This has been found as being one of the main issues of keeping the drivers in a circle of poverty.
The “Green Auto Rickshaw Company” that will be established will sell (1) services to drivers, for a example, lend at a lower interest rate than money lenders so that they can refinance their rickshaws (2) green kits to drivers (3) clean development mechanisms (CDM) support. Also the feasibility of setting up a call centre will be looked into.
This new business model is a service model and is derived from the Indian Taxi Model which has been successful and changed the image of the taxi branch in general and the position of the Indian taxi driver in particular.
Partners
Context India: VROM, Dutch Ministry of Housing, Spatial Planning and Environment
Universities India and Netherlands: The seven participating universities and colleges of the Hybrid Tuktuk Battle are an important technology partner of Enviu.
Sustainability
The business plan will be based on a different business model than we expected when we started supporting the battle. The key factor of the original business model was the development of the technology. The new revised business model will be based on a service model of which the technology (kit) will be one of the offered products. We fully support this change in thinking. As we have learnt in our involvement in other investments, spending a lot of resources in technological development is risky without knowing whether there is a market, with no local embedment. In this model technology is not key anymore; it is part of the solution. The company will aim to be sustainable without being reliant on the successful development of the upgrade kit. The Green Auto Rickshaw company can include any suitable technological product within their product package and address the need for different demand from the market.
Results up to now
The prototypes that have been developed by the Universities need further, more reliable testing. This should result in demonstration models that can be showcased to technology partners and investors. These partners are needed for the development of the production models. Enviu estimates that it will take four to six months for the teams to further develop the demonstration model, the costs hereof have been estimated at €80.000 and Enviu anticipates that it is likely that the universities will bear them and will grant Enviu a right of first refusal for the intellectual property. Enviu has budgeted €26.832 to stay actively involved in the development of the final demonstration model.
Ramesh Prabhu has been found to lead this phase of the project and will further develop the business model. During this next phase Prabhu, based on extensive market research and action research. He will also secure partnerships with investors, suppliers, agents and distributers necessary for the start of the company in March 2010.
Prabhu is a young entrepreneurial Indian. He graduated from the Indian School of Business in Hyderabad. Prabhu successfully set up his own financial services company which he sold in 2007 before doing his MBA. He is now eager to make a move towards social entrepreneurship and to join the development of the Green Auto Rickshaw Company.
The plans
Business plan development
Further develop the business model and package of service products will be ready and agreements with partners (suppliers, agents, distributors) are in place by March 2010. Look for investors.
Technology development
The prototypes that have been developed need further, more reliable testing. This should result in demonstration models that can be showcased to technology partners and investors. These partners are needed for the development of the production models.
Clean Development Mechanism (CDM)
During this phase further feasibility study on CDM will be done, while the registration process to trade carbon credits will already be started. Exploiting the CDM registration license is a separate source of income for the company. ICCO and the Fair Climate Network will finance this.
Proof of market assumptions
This will be undertaken by Context India in coordination with Context International and will aim at clarifying the actual situation in the auto rickshaw ecosystem. In depth interviews will be held with rickshaw drivers to better understand their situation and to verify the assumptions made by Enviu. This should make clear what the drivers' needs are and whether the product assortment, pricing and distribution plans are realistic. In addition it should clarify the impact of Government regulations, especially on the auto rickshaw licensing regime in big cities. This research will be financed by ICCO.
Budget
€ 228.000 for the Hybrid Tuk Tuk battle
€ 200.000 business plan development for the Green Auto Rickshaw Company
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