Esmito, an IIT Madras incubated electric vehicle (EV) startup, has raised ₹100 million (~$1.25 million) in a seed round led by Mumbai-based early-stage investor Unicorn India Ventures.

The funds raised will be used to expand swapping solutions and strengthen the technology team with a focus on creating world-class products. It will enable Esmito to continue executing its growth strategy and strengthen its position as the largest swapping infra solutions provider.

“The booming battery swapping market coupled with Esmito’s strength of in-house technology capability can enable Esmito to lead the Energy/ Battery as a Service market,” said Hasan Ali, Co-founder of Estimo.

The Chennai-based startup has developed multiple EV technologies with the Centre for Battery Engineering and Electric Vehicles (C-BEEV) and has been instrumental in shaping standardization and policy alignments for the larger adoption of swapping in the country. The company has also launched smart battery swap solutions for mobility service providers.

It aims to create multiple use cases in key segments like logistics & MAAS (Mobility as a Service) and build and scale their swapping solutions further for India’s two- and three-wheeler market.

NITI Aayog has proposed a policy to promote battery swapping using advanced chemistry cell batteries to decouple battery costs from the upfront costs of buying electric vehicles. The policy also sets technical standards for components’ interoperability within a battery-swapping ecosystem. The policy would use regulatory levers to de-risk the battery swapping ecosystem and unlock access to competitive financing.

“The EV industry, according to various estimates, is projected to see anywhere between 30-90% CAGR (compound annual growth rate), sustained through this decade and possibly even beyond. This roughly translates into EV sales overtaking ICE (Internal Combustion Engine) vehicle sales by the mid-to-late 2030s, with India becoming the third largest EV market. Combined with the fact that this adoption will be much faster in the commercial 2W and 3W categories which Esmito aims to serve, we think that there is a lot of potential for rapid value creation in this space,” said Sparsh Kumar, Vice President, Unicorn India Ventures.

This month, the states of Chhattisgarh, Rajasthan, and Punjab issued their EV policies outlining the EV targets, incentives for battery swapping stations, and the building of charging infrastructure in their respective states.

According to Mercom’s 1H and Q2 2022 Funding and M&A Report for Storage, Grid and Efficiency, corporate funding for battery storage companies in 1H 2022 globally was up 64% year-over-year to $17 billion.