Three Wheels United (TWU) has an interesting history that dates to 2010 when it was founded by Ramesh Prabhu as an NGO focusing on creating a more sustainable auto-rickshaw ecosystem. Having identified a lack of adequate financing as one of the main challenges in the market, TWU began to act as a service company for banks to help drivers receive a loan. 

However, the operating model at that time was not scalable due to high operating costs, paper-based processing, and heavy reliance on third-party banks who worked at a slower pace than required. Hence, Cedrick Tandong, now the CEO and Co-Founder at TWU made a transition into the tech-enhanced finance company that TWU is today. Cedrick was later joined by Kevin Wervenbos (Current CFO) and Apurv Mehra (CTO) in 2018.  

We got in touch with Cedrick to understand how the startup is helping drivers switch from conventional engines to EV three-wheelers while helping them generate more income and positively impact the environment.

The need 

Over 6 million auto-rickshaws operate in India, emitting 21 million tons of CO2 per year (as of 2020). The Centre has been pushing hard to replace auto-rickshaws, which are an essential aspect of urban transportation, with electric three-wheelers. However, it is not easy as it seems. 

Even though electric 3-wheelers are attractive for a driver due to a lower total cost of ownership and higher profitability, the current financing options available for auto-rickshaw drivers are unviable due to high down payment and interest rates. Also, in India, traditional banks cannot finance auto rickshaw drivers, the drivers are dependent on NBFCs and alternative financiers who are very expensive compared to traditional banks. 

“This is the problem we are addressing. We provide loans that cover up to 100% of the vehicle cost at affordable interest rates better than what most other NBFCs are providing,” said Cedrick Tandong. 

 AI/ML at play 

TWU built a platform ‘Prayana’ in partnership with Microsoft Research. The foundational principle behind the platform is to leverage data to support decision-making for all stakeholders by providing relevant contextual information as opposed to automating it. The company focuses on data-driven lending, take for instance, 

• For their portfolio managers, the startup has an allocation system that helps them come up with optimal allocation which minimizes fines a typical driver would be subject to if for some unforeseen reason he underpays. 
• For field staff, the company leverage collected data to help prioritise which drivers need most attention by providing visual cues and suggestions based on past repayment behaviour, pending amount, trust rating and several external factors like time of the year, vehicle status etc. This helps them focus their attention on the drivers which need the most support and handholding.  

To further accelerate their success story, the company started capturing basic trust ratings which portfolio collection agents assign to their drivers and vice-versa. Over time they were able to use this information along with several other behavioural and usage data to improve the understanding of a portfolio at any given point.  

Data collection and privacy concerns 

The company claims to collect a good amount of demographic, KYC, behavioural and driving experience data from borrowers. All of these data points are utilised to correctly match the borrower with the right type of product for them. Typically, in a certain geography and depending on the type of driving history of the borrower, the company is able to showcase the best performing asset and product that will help the borrower generate the best possible income for themself. This matching in turn causes the effect of on-time repayments which leads to better portfolio performance for the company.

Talking about the privacy concerns, Cedrick said, “Currently we utilise cloud storage and deployment with the latest security frameworks to ensure the connections are authorised and secure. All of our data is stored in encrypted format at rest. All access is protected via Multi-Factor Authentication along with secure connection protocols.” 

What’s next  

The company feels that the current infrastructure in T1 cities of India is mature enough to begin the EV three-wheeler financing. However, it will still take some time for it to be ready for robust financing like the likes of 4 wheelers that we see today. In order to further accelerate its growth trajectory, the company claims to be working on several fronts including: 

• Working with manufacturers to offer extended warranties, downtime guarantees, and charging access across the cities – removing the hesitations around operating an EV. 
• Working with large fleet operators to provide an income guarantee – ensuring drivers take home enough money to pay their loans and to take home to their families.  
• Working with the manufacturers along with foundations to buy back pollutive vehicles which are then scrapped and recycled – removing the pollutive vehicles from the road to replace them with an EV.

To date, Three Wheels United claims to have worked with over 50,000 drivers, financed over 4,000 auto-rickshaws resulting in the reduction of 1,72,000+ tonnes of CO2 emissions, and the generation of an extra $71M in income for the drivers. 

Further to this, “TWU plans to add 500 new vehicles in the next quarter. We plan to finance 10k vehicles in the next 1 year and 100,000 vehicles in the next 4 years. We also plan to begin financing electric 2-wheelers this year,” concluded Cedrick.