‘India is definitely a hub to source brain power’: Michael Perschke
Michael Perschke, CEO of Quantron AG is impressed with the technical pool India has and he discussed with Autocar Professional how the country can become a global tech development hub specialist.
Quantron AG’s latest partnership with Goldstone Technologies (GTL) is part of the larger India strategy for the German e-mobility major. Michael Perschke, CEO of Quantron AG spoke about why it chose India over Germany to build its Mobility As a Service platform.
Having had multiple stints in India with European auto majors Mercedes Benz and Audi, Perschke understands the Indian market well and what can it offer, as the market transitions to a net zero carbon future.
The company has chosen to forge technology alliances and create an ecosystem to participate at almost every node of zero emission mobility space including hydrogen – by being a service provider - rather than join the tough truck-making market.
In this conversation with Autocar Professional, Perschke spoke about the company’s strategic direction and partnerships in India and how they are leveraging India’s talent pool.
Tell us a little bit about how your business evolved to what it is today.
Quantron AG is a family-run business active in the transportation sector. Their core business, since 2019, was in retrofitting diesel vehicles to zero-emission vehicles. When I came on board in 2021, I realised that the potential was limited and there is a vast opportunity to grow in the hydrogen space. We decided to adopt a platform approach and we launched our two vehicles run on hydrogen in Germany. Having worked in the Volkswagen Group for over a decade, I understand very well how the platform strategy can be leveraged.
We decided that we will be early adopters of hydrogen. Hydrogen has an edge in commercial vehicles but not cars. The infrastructure is slowly developing but there's a challenge if you want to transport heavy goods over long distances and uptime is very crucial. Unstable electric grids can also prove to be a problem. In these cases, a hydrogen truck is an interesting alternative.
While the focus is on hydrogen, the ecosystem is yet to come up. Hence, we decided to go in for an ecosystem approach. We cater to different facets — energy with Quantron Energy, Quantron Inside for the supply of aggregates and Quantron Services as software and a technology platform.
How did India figure in your game plan?
In one of my visits to India, I interacted with ETO Motors and Goldstone Technologies (GTL) and we realised very quickly that we had similar ambitions. So, we signed an agreement at the Internationale Automobil-Ausstellung (International Automobile Exhibition), Hanover to work together.
The initial focus was on hardware, but with time, strategies evolved, and we decided we don't want to be another truck maker in India. It is a very tough and ruthless market to make money in India.
For India, our strategy is Quantron Inside. We are open to partnerships with OEMs, if they want to deploy hydrogen technology in commercial vehicles. But where we see the edge now is the platform that we have created with Goldstone. This is a global transaction and enablement platform for zero-emission transformation.
If you are a diesel truck owner and you want to reduce your emission, we are there to support you. We can calculate and manage your carbon credits or Greenhouse gas trading, give insurance as a service, track your vehicles and help you manage your fleet. There are so many possibilities that can bring in efficiencies for the user.
We want to be a Salesforce or SAP in the Energy Transformation Space, offering our platform as a service. It is OEM agnostic, and it is meant for the entire value chain. It can be used by anyone who wants to transition to the zero-emission space — be it a vehicle maker, an energy company, an insurance and finance provider, or a fleet operator. We want it to be open source.
So, there are three different pillars – supply trucks, be an aggregate supplier and offer a platform as a service. Will this call for a significant investment?
It is a joint venture (JV). Both parties have invested some sweat equity; some is cash. But our ambition is to invest a significant amount into the platform by the end of 2025. We may also bring in new partners who could invest because if you want to grow, you have to invest.
Quantron has adopted a platform approach for the two vehicles that are running on hydrogen in Germany.
In Germany, we will do the product management, the customer application and serve our clients in Europe. In India, we will do the entire product development. We will create the platform itself, hosting the data security and of course, GTL, and the platform will acquire its own Indian clients. The next step is Asia and of course, parallelly, Europe and the USA.
How much have you invested in Germany?
We have so far invested around Euro 50 million, now we are looking at raising another round of funds. We're looking at strategic investors from the energy sector and even OEM suppliers. We have deployed this in all our three pillars, but this is just the tip of the iceberg. We are looking at raising up to Euro 200 million.
Where will this money be deployed?
I think 25 to 40 percent will go into products — hardware and software. Second, in accessing the markets. The biggest strategic market right now for us is the USA. Because of the Inflation Reduction Act and everything the Biden Administration is doing and his open approach to hydrogen, we see that as a very interesting opportunity for us. We already have a facility in Detroit and the former CTO of Mahindra & Mahindra in North America, Rick Haas is now our Chief Technology Officer.
Any ambition of having a base in India as well as a manufacturing plant?
We indirectly have a base because of the JV. But I think the next step is to establish Quantron India. We are going to start from Hyderabad so that we have maximum synergy. There are a lot of opportunities in Delhi, as some key decision-making around the hydrogen economy happens in there. We could help the government and a few companies to become a solution provider in the hydrogen ecosystem.
Whatever we do, the business ends up feeding the transaction platform – it is more than an advisory service – it is brainpower converted into business models.
We want to be a stakeholder in this business model. Will we produce Electrolysers in India? Probably not. Will we know what the right Electrolysers are to be brought to India? Probably yes.
We have investments in solar concentrators, which produces hydrogen very effectively. We also have agreements to convert waste to hydrogen. And, as you might admit, there's a lot of waste in India. Before you put that into a landfill, there is an opportunity to burn the waste, and use that energy from plasma burning and use it to produce very cost-effective hydrogen.
Any plans of getting into hydrogen truck manufacturing?
Right now, we are keen on getting the services part of the business kicked off.
India is a complex market. It is a very cost-competitive market. We have seen many multinationals in the market for over a decade and they are still struggling to make money.
With my two stints, I have learnt that it is better to use the talent pool, capitalise on the infrastructure opportunity around hydrogen and become a partner rather than trying to build an industrial model for the hardware side.
Maybe we can join hands with somebody, who already has an EV vehicle and is looking to build a hydrogen derivative, where we can help. We know the best hydrogen fuel cells, we know the best tanks, and we know how to put them together.
We just delivered the first European light truck up to 4.25 tonnes as a hydrogen vehicle to IKEA, it is the first in Europe.
We want to be capex light; it allows me to stay focused and it allows me to remain open to talk to anybody. In India, you can also get it wrong with the wrong partner. We want to be open and deal with multiple companies.
We want to use India as a base, if we define a product with one company, we can take it globally.
We already have a very strong partnership in Saudi Arabia. We're currently discussing partnerships in Morocco, Tunisia and Egypt. So, we can also take a product and develop it for these countries through some solid partnerships.
So, will India be a base for you?
It could potentially become a sourcing base, but not for batteries.
I see interesting developments on the drive train side, in motors. We have some very credible engineering companies, that have manufacturing bases. So, I think you need to find the right partners. For us and our partner in India, Goldstone Technologies, it works very well because we are of a similar size, similar ambition, and similar speed.
What is your vision for India?
Raising funds in India could make sense if we get into the infrastructure play. India can be a tech development hub and take it to the middle east, where the climatic condition and cultural conditions are quite similar.
Our medium to long-term target is for an IPO around the second half of 2025. By that time, we want to make 40 to 50 percent of our turnover in North America. We see India with lots of opportunities, but we have not yet signed on any concrete numbers, because we first want to get traction. Once we have traction, we can put a number on it.
On the platform side, India is going to be a very important market because here we have a local flavour approach. There are many transformative opportunities. So, I think 20 to 30 percent of the turnover of a platform could be generated here from India.
India gives us the number of units in operation, so it gives us a lot of data that can be extrapolated to other markets around the world.
India is definitely a hub to source brain power – with global ideas – you still have three to four million engineers graduating every year. An experiment to build a software platform in Hanover didn’t work. India is a better place for this. With speed and frugality, India can be disruptive. All the bright minds in Silicon Valley have come from here. You have to go where the competence is.
If Microsoft and Oracle and Salesforce or even Accenture have a development hub in India, we should not think that we can do a better job in Germany, we don't have the DNA of being a software development nation. We are very good mechanical engineers but not software engineers.
What could be the potential business that you could do out of India?
In India, the ticket price is going to be smaller, but the number of units is going to be huge. So, if we find the right partners, we are even open to inviting investors into the platform.
The more open we are, the better it is. The more proprietary we are, the smaller we will be. We want to be an open platform for energy transformation and the logistics supply chain. If we are open, we will naturally attract stakeholders.
This interview was first published in Autocar Professional's June 15, 2023 issue.
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