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Welcome to the Core Reports Weekend Edition. I'm joined by Anirudh Bhuwalka of Blue Energy Motors. Anirudh, thank you so much for joining me.

Okay, so Blue Energy is a company that is manufacturing LNG and now electric trucks and is also connected, obviously, with the whole carbon transition. But before I come to that, tell us about, you've been in the trucking space in a way and manufacturing in it for many years now. You used to run a company called AMW earlier, and then you transitioned to this.

So tell us about that world at least a little bit, and what you're doing now.

Yeah, sure. So I founded AMW way back in 2008, when diesel was the fuel of choice, and obviously alternate fuels like electric and LNG weren't even on our horizon at the time. There, we saw an opportunity, the trucks were fairly dated, and there was a need to usher in modern trucks that would make the driver more comfortable and look after the wellness of the driver, and by definition, improve productivity in terms of the overall day-to-day running of the trucks.

And that in itself improves the TCO of the truck. That was the main thesis behind it. In a short period of five years, we sold more than 40,000 tippers and trucks, bringing in a modern era of trucking at the time.

But they were all predominantly diesel-dominated. And the go-to-market strategy at the time was to just make the trucks incrementally better, so that the productivity of the trucks improved. The trucks used to come with air conditioning, AM-FM radio, bogie suspension, a 9-speed gearbox — these were all novelties at the time.

Even AM-FM radio was a novelty.

Yeah, all of these were kind of a novelty, because at the time, most of the trucks were built on hand-built cabs. A fully built cabin was really just starting out. We kind of led the pace on that, and I'm happy to say that we dented the market in that sense.

Fast forward to today, most mines have mandated air conditioning as a standard feature for trucks. So I think in my last decade or two of running AMW, we became very familiar with the ecosystem in India what really moves the needle forward, and what trucking is all about in that market.

Okay, I know AMW went through some difficult times and was eventually sold, and it's now with another owner. But my question, which applies to both AMW and Blue Energy in a way, is that you're up against giants, whether domestic giants like Tata Motors or Ashok Leyland, or global giants in India like Volvo.

So what made you take on a project or a challenge like this?

So, as we were coming out of AMW, I remember me and Anshuman Ria of the SR Group, my brother as well, we were having a chat during COVID, and we were saying, "Okay, look, what is the next big opportunity that one can pursue?" We came up with the idea that heavy-duty trucking and decarbonisation would be the next big theme to target.

While people talk about two-wheelers going electric, three-wheelers going electric, cars going electric, even buses for that matter, nobody was really talking about trucks. And as you know, trucks account for almost 65% of automotive pollution.

We said this is an opportunity. So we came up with the idea of Blue Energy Motors, with the single aim of decarbonising heavy-duty trucks. That was the opportunity.

And my question really is that you have big players with big brands. I know some time has passed since you started, and you've sold a few thousand trucks, I'll come to that in a moment. But do you feel intimidated, or have you felt intimidated?

Or do you feel that the proposition is more important than the brand?

Well, I personally think that this is a sunrise opportunity, because electric basically levels the playing field. It's a pioneering effort for everyone. There's no cookie-cutter rule for how the new age of trucking is going to play out.

So fundamentally, that represents an opportunity. Younger companies like us have the advantage of moving fast and creating a new ecosystem. For sure, the legacy players are going to catch up, and they'll come up with equally competitive products over time.

But if you take a look at the energy transition opportunity, today, India sells about 4 million medium- to heavy-duty trucks. If we grow at the rate of 7% over the next 10 years, this market is going to double.

That's roughly 8 million medium- to heavy-duty trucks.

So you said 4 million on the road, about 400,000 every year?

No, 4 million is the total population on the road. 250,000 trucks are sold every year. That's the math.

But this market is going to grow. If India continues to grow at the rate of 7 to 8%, this market is going to grow substantially over the next 10 years. The whole market is going to transition from fossil fuel to alternate fuel.

That represents almost a trillion-dollar opportunity over the next 10 years in manufacturing alone, let alone logistics, and let alone the cascading effect on the ecosystem. No single player is going to be able to dominate this sector.

There will be room for many more to come in and participate as this industry unfolds. So frankly speaking, we're at the start of the hockey stick on this journey. We've created our own unique position.

And now we'll see how this market expands.

Correct. Let me spend some time on manufacturing and then on operations. But let me start with operations.

You've sold about 1,200-plus trucks so far. What are the key lessons from running these trucks on the road, across the country, in different climates?

So when we started the LNG journey, the first issue was clearly that there was only one LNG fuel station, and the ecosystem didn't understand what LNG was. It's a liquid natural gas, right? It needs to be stored at minus 125 to minus 130 degrees in a cryogenic tank.

So we had to go through the journey of creating the entire ecosystem from going to PESO and explaining to them the kind of automotive application we needed, to educating the driver on how to use LNG trucks, to educating the station on how the gas needs to be put into the tank. Because if you don't maintain an adequate temperature, LNG trucks have an issue.

And last but not least, creating the product and understanding this new technology, how it would adapt to Indian roads. So it was a very steep learning curve to build the complete LNG ecosystem.

After almost 100 million kilometres over the last three years, I can say we're about 75% there in understanding how LNG and its whole ecosystem operates. What is that 75%? What were the surprises, the shocks?

I think the first big win was very clear: we achieved a 40% CO2 reduction. That was the biggest takeaway, because when we started, we weren't banking on a 40% delta.

The hypothesis was simple. There was an arbitrage in fuel price between LNG and diesel, and we knew historically that there's a 10-15% fuel efficiency advantage over diesel. So there was about a 20-25 rupee delta on fuel, and a 15% delta on fuel efficiency.

If you combine the two, it was roughly about 40%. We thought it would be a black swan moment, and that we'd see a 15-20% delta on CO2. It made logical sense. But when we launched our trucks, we had a very different experience, the trucks demonstrated a 40% fuel efficiency advantage over diesel.

We obviously went through the whole Ukraine-Russia crisis, so gas prices went up and down, but they've now finally settled. There's an arbitrage on LNG versus diesel, and a 40% fuel efficiency advantage. Combine the two, and that's almost 50%. So on operating cost, it's more competitive than diesel today, and on CO2 reduction, it moves the needle.

So after 100 million kilometres, we checked the box that the product works. We checked the box that the fleet operator wins. We checked the box that the customer wins.

And the conclusion was that LNG as a fuel works and is here to stay.

Did you have any disruptions because of the war?

We didn't have much disruption from LNG supply, because the volume we were taking was quite low, so that didn't really affect us much. Prices spiked in the short term, so that dented customer confidence a little and derailed the process somewhat. But I think it's settling down now.

A lot of the industry was in wait-and-watch mode, and now customers are starting to come on board slowly and steadily. A truck is a flywheel — it takes a long time to move, but once it starts moving, it moves.

And how many filling stations are there across the country now?

We started with one. Today, there are 41,not all are operating, but 41 stations are physically up and running. As demand rolls in, I think more of these stations will come online.

If you take the industrial corridor from Delhi to Chennai, you can comfortably travel on an LNG truck from Delhi to Chennai today. And to be honest, to solve the range problem, with one tank of LNG we can now do 1,200 kilometres — that's almost Mumbai to Delhi. We've also come up with a double-tank version, which gives you 2,400 kilometres.

So this is basically to complement the evolving network as it comes on board. In the meantime, you can continue to run LNG trucks without worrying, because you can literally go from Delhi halfway to Chennai on a single fill. You'd only need two stations between Mumbai and Chennai to cover that long haul.

Okay, I'm going to come back to operations and operational costs in a moment. But tell us about the process of manufacturing a truck. What were your design inputs?

What were you trying to emulate, if anything?

Fundamentally, we've historically designed, engineered, and built all our trucks, made in India, for India, by Indians. The philosophy was the same when we started on the LNG truck.

For our engine, we partnered with FPT, part of the IVECO group. They're the pioneers of LNG worldwide, and they had very good LNG engine technology, which they adapted for our Indian environment.

What was the adaptation?

The engines were ideally suited for European conditions and needed to be adapted for Indian conditions.

You mean, when you say Indian conditions, you mean heat, dust, and so on?

Yes, correct. So the cooling system and so on needed to undergo modification. We partnered with them to do that for us.

In parallel, we built the truck from the ground up. We wanted the truck to be at the forefront of technology, and I could confidently say that when we launched the truck — back in September 2022 — it was the first LNG truck in India. It was also the first fully connected truck.

We were capturing 120 data points, at one-hundredth of a second, on a real-time basis, 24/7. These were technologies that were just coming into play, but we launched it. Our trucks, with LNG, were the first of their kind, and they were built on a modular platform so they could be adapted to different technologies as they emerged.

And if I were to compare it to a diesel truck, would everything roughly look the same, the location of the engine, the way the powertrain works, and so on?

Yes, between a diesel engine and an LNG engine, in terms of visibility, the only real difference you'll see is the LNG tank, because it's larger, a cryogenic tank, a 1,000-litre tank, positioned behind the cab. Normally, diesel trucks have tanks on the side.

And is that a global design?

Well, that's our design, but you can also do a side-tank version. We did a rear-tank version because we used a 1,000-litre tank — if you take a smaller tank, you can probably do a side version. We also have a double-tank version, with one more tank on top. But I think the most visible difference is that the engine is 30-40% quieter than diesel, and cleaner than diesel. So for the driver, it's a markedly different experience compared to driving a diesel truck.

So as I understand it, the torque and load-carrying capability are roughly the same as diesel?

Yes, yes.

Okay, so it's not higher or lower?

No, it's the same.

Okay, so now, in the last few years that it's been running, has there been anything, not incidents in a negative sense, but what has driving on Indian roads with LNG taught you?

One thing is very clear: between diesel and LNG in terms of how the trucks run on the road, there isn't much difference in application — whether you're carrying steel, cement, or oil and gas, the applications and the running remain pretty much the same. I think the experience for the driver is a notch higher, because the engines are quieter and cleaner, so the environment he drives in is better. And LNG, being a liquid natural gas, can't be siphoned off, so it removes some of the shadier practices in the business and makes it a cleaner, easier operation to run these trucks.

And if you look at who's buying, the big HCV companies, fleet operators, maybe some individual operators, trucking companies increasingly buying it, what is your customer profile?

Pretty much the same fleet operators. The challenge that LNG, or for that matter, electric, poses is that India's trucking market has historically been very cost-sensitive; margins are thin, the diesel ecosystem is mature, and the freight ecosystem is highly competitive. So coming in with a new-technology product where upfront capital costs are higher becomes a challenge.

Obviously, the larger fleet operators are the first to experiment. A lot of the demand now is being driven by end customers, steel companies, for example, are demanding a move to alternate fuel to reduce their Scope 3 emissions. We're seeing more and more of this across every industry, and the momentum now is for industries to move to alternate fuel quickly.

I think the confluence of new technology, market dynamics, and the West Asia crisis — where people want fuel with less volatility — is driving end customers to demand it, and as a result, larger fleet operators are coming on board to adopt it.

And for those who bought the trucks in the first year or so, and obviously paid a premium over diesel trucks, would they have broken even by now?

Oh, absolutely. Like I said, after 100 million kilometres, the first thing we checked was whether the ecosystem wins. The manufacturer has to win by making a margin on the product and selling it. The fleet operator, who pays a higher upfront capital cost, has to win because the operating cost is much lower, so it has to pay off over time. And last but not least, the customer has to win, because they're able to transition from diesel to an alternate fuel. We've checked off all three of these boxes over the last three years of running.

So you're saying that someone who bought a truck three years ago would have broken even and recovered the premium they paid compared to buying a diesel truck at the same time?

They would, in three years, they'd have broken even for sure. Starting in the fourth year, they'd start making money.

So is three years the rough timeframe it takes?

Yes, I'd say so, assuming LNG prices remain stable, three years is a reasonable time to recover your money.

Right. And as you go ahead, could prices of LNG trucks come down if you make more of them, or if other input costs come down?

Yes. Today, a lot of the components for LNG are imported, and the local ecosystem is starting to develop. But with any new technology, economies of scale drive cost reduction. So as this market deepens and volume builds, you'll naturally see costs come down across the board.

Right. And you also launched electric, and you talked about LNG for long distance and electric for short distance. Tell us about your experience there.

In our dual strategy, LNG for long haul was very clear. As for electric, it has five key challenges. It's a foregone conclusion that electric makes sense, because if you look at diesel prices over the last 10 years compared to electricity prices, especially solar and battery prices, they're on opposite trajectories. Battery and solar prices have been constantly coming down, while diesel prices haven't adjusted for inflation year on year.

That inflection point happened quietly last year, in October 2025, when electric hit diesel parity. So we've already reached diesel parity, and now the gap is only going to widen as electricity prices continue to be stable or trend downward. Battery prices could go up or down a little, but if diesel inflation continues, you'll keep seeing the benefits of electric become more economical.

Having said that, the challenge is adoption, and there are five main challenges there. The first is range, cars have range issues with electric, and trucks have it even more so. Second is charging time, trucks take one and a half to two hours to charge. Third is charging infrastructure, trucks need massive infrastructure for charging. And fourth is capital cost, even today, all in, it's two and a half to three times diesel. So you're asking a fleet operator to invest in that technology and then make money out of it. It's not an easy decision. While it's starting to move, mass adoption requires these challenges to be resolved.

At Blue Energy Motors, we've come up with an innovation that we believe points in the right direction: battery swapping. For example, we're electrifying the Mumbai-Pune corridor as we speak. In September, the full corridor gets electrified, with a swap station in Mumbai and one in Pune. A truck rolls up, swaps its battery in five minutes, goes all the way to Pune, unloads the cargo, swaps again in five minutes, and comes back.

How heavy is the battery?

About 2.7 tonnes. So we have the technology that swaps, you're welcome to come see it. For the customer, this means range is effectively unlimited, because every 150 kilometres, which takes a truck roughly six to seven hours to cover, it has to stop for just five minutes, which is neither here nor there. So range becomes unlimited, and charging time comes down to under five minutes.

These swap stations don't take up much space, they're plug and play. All you need is an electricity connection. So three of these five problems are solved by battery swapping. The elephant in the room, however, is capital cost, because even though it's operationally economical, capital is an issue upfront.

So we launched a concept called Energy as a Service, where we separate the truck from the battery. The battery is the lion's share of the truck's cost, and once you separate it from the truck, you can sell the truck at a price more competitive with diesel. The battery is essentially treated as a fuel and sold as a service.

Like others are doing as well?

Yes, everybody is experimenting with that model. For two-wheelers and three-wheelers, it's already successful. For heavy-duty trucks, I think we're among the first to try it. Like I said, it's early days, the Mumbai-Pune corridor will be the first pilot showcase for this model. But we believe this fundamentally solves the five key challenges of electric adoption, and once it's proven, it can simply be scaled across the board.

Right, so we're seeing electric adoption in commercial vehicles, particularly at the inner-city level with three-wheelers and small trucks. But you're focusing on the heavy end of the spectrum. Why is that?

I think the barriers to entry in heavy-duty trucking are higher. Also, I understand heavy-duty trucks very well, it's in my DNA, something I've been passionate about for a long time. I understand the technology and the ecosystem, so it was a natural starting point for me. And last but not least, I think the largest opportunity really lies in that space.

And we're seeing a lot of innovation in China, with battery prices going down and capacity going up. What's happening in that world right now that's encouraging?

China has a fascinating story, but people don't realise the structural difference in opportunity between China and India — you can't just copy and paste. In China, penetration is already almost 50%, in a market that sells 1.2 million trucks annually, versus India's 250,000. And they achieved that 50% penetration only recently.

The reason adoption has been so fast is simply that the base capital cost of trucks in China was already much higher than in India. India's base is around 250-280 horsepower, while China's was already 400-450 horsepower. So the capital cost of the base vehicle in China was already very high, and when electric came in, the premium for electrification was only 20-30%, making the transition easy.

In India, the base is much lower — around 250 horsepower — so the capital cost is much cheaper, while battery prices are common to both China and India. So the cost difference is two and a half times in India, versus just 20% in China — which is why the transition was practically a non-issue for them. Electricity prices in China are pretty similar to India, and the markets are similar too. So the reason adoption happened so fast is simply that the premium of diesel over electric was very marginal there. Of course, government policy helped catalyse adoption, but the real driver is operating economics, and that works heavily in favour of electric in China.

Got it. Let's come back to LNG — between LNG and electric, what are the pros and cons, cost aside?

LNG, while cleaner, is still a fossil fuel, we ultimately have methane as a residue, so it's not the cleanest fuel. Of course, biogas is a different matter. But LNG in its pure form today is not the cleanest fuel; it's a transition fuel. That's why I call it a transition fuel — instead of waiting for electric to become mainstream, which it eventually will, LNG at least moves the needle today. So LNG helps you get both the operating economics and a CO2 reduction in the short-to-medium term, but ultimately everything leads to electric — and maybe hydrogen, I don't know.

Yeah, you mentioned that earlier too. What about hybrids? Isn't that sort of an intermediate step as well, or doesn't it work so well?

I'm not a believer in hybrids, but that's just me.

In the context of trucks?

In the context of trucks, simply because it's like a chemical plant, a hybrid means putting in an engine and an electric powertrain and marrying the two to produce an outcome. I just think it's far too complicated and not cost-effective. It's easier to go with one technology or the other. Frankly, I'm not convinced that hybrids are going to work in trucks.

Okay. And you touched on biogas — if biogas were much more easily available, since there's a lot of effort going into that space, would it be easy for your engines to be recalibrated for it?

Yes, these are gas engines. So once biogas becomes mainstream and you can convert it to bio-LNG, you fundamentally have an absolutely clean fuel, because it's made out of waste, as clean as it gets. At that point, it directly competes with electric. So bio-LNG, or bio-CNG for that matter, is definitely going to be one of the cleaner options available.

No question. And hydrogen, I know it's somewhere between experimentation and real-world use. Where is it right now, from your vantage point?

I'll tell you, in my view, all technologies ultimately lead to the most efficient technology available. With electric propulsion, you're fundamentally using electricity to convert it to kinetic energy. But with hydrogen, you need electricity to make hydrogen, and then you need a fuel cell or an engine to convert that into kinetic energy. So on an efficiency scale, if electric is 95% fuel-to-motion, hydrogen is around 65%, and diesel is probably 45%. On an efficiency scale, hydrogen doesn't quite add up.

Second, the question of hydrogen infrastructure and the ability to produce hydrogen cost-effectively — the jury is still out on that. Meanwhile, battery technology is being innovated very rapidly. If you compare battery density three years ago to today, it's taken a big jump, and over the next two to three years, battery technology will continue to evolve.

If electricity prices are already coming down, solar is now at three to three-and-a-half rupees per unit, and one electric truck uses about 1.5 units per kilometre, meaning your cost per kilometre is down to around six rupees (theoretically, that's another matter, since you don't actually get it at three-and-a-half today) — but even at six rupees a unit, it's very hard for any other technology to compete. And if battery technology evolves further, that six rupees will come down even more. So you're really looking at a technology that will be very difficult for others to match on cost.

Got it. Okay, so a few last questions. You talked about the connected truck, and I've seen you write about it elsewhere too. Tell us what the connected truck is giving you in terms of data and insights that you're able to use to make the journey more efficient, or the powertrain more efficient.

Let me give you some context. Historically, when trucks drove from point A to point B, fleet operators would incentivise drivers to achieve a certain fuel efficiency or performance by the end of the trip. If they achieved it, they'd be rewarded; if not, they'd be penalised. That was the structure but nobody really knew why performance varied.

With the connected truck, we're able to capture everything about that journey. When I say 120 data points, we can capture everything that happens on a trip, driving behaviour, truck performance, engine performance, everything. So instead of having a speculative idea of why a truck didn't deliver on its expected performance, I can now tell you precisely why, whether it was a traffic issue, a driving issue, an idling issue, or an engine issue. What went wrong?

Because we can be that precise, that data can be rolled back to the fleet operator through a dashboard, and he can use it to tweak operations for maximum results. For example, we know that driving within a certain RPM range gives you maximum fuel efficiency. Now we can track that, convert it into a driver score, and give it back to the driver, saying, "This is your score achieve a higher score, and you get incentivised." Now the driver has a mirror that shows him exactly what he needs to do, and he earns more money for achieving it. As a result, the fleet operator gets better productivity out of his asset.

Similarly, we've got cameras in our trucks. In India, when there's an accident, the driver is usually blamed first. But with cameras in the trucks, we can instantly determine who was at fault and resolve the issue and in many cases, we've found it wasn't the driver's fault. So it moves the needle on safety, and it moves the needle on productivity, giving you eyes on the truck 24/7.

Last but not least is predictive maintenance. Now that we have 100 million kilometres of data, we use artificial intelligence and machine learning to predict what can go wrong before the truck fails. We now have that data lake to do it, so we can predict, with a high degree of accuracy, that a truck is going to go down in the next 7, 10, or 15 days, so it can be brought in ahead of time. This is really optimising the whole powertrain system and the trucking operation.

We've also just recently launched India's first automatic transmission on these LNG trucks. With an automatic transmission, we're trying to reduce how much the driver is the mainstay of the whole operation, and instead build all the other pieces around him, including the AMT, so his fatigue is reduced. He knows exactly what needs to be done, he's incentivised, there's a score, there's a camera. So you're moving to a far more intelligent level of operation than you've ever had access to before.

And does an automatic transmission cost even more than a regular one?

Marginally, but the payback is significantly higher. For example, there's been a general practice, when trucks are coming down a hill, of putting them in neutral and letting them coast. That may be okay for cars, maybe not even okay for cars, but for trucks carrying loads, it's a serious safety issue. You can do that in a manual transmission, but in an automatic, you can't, because it's always engaged. That's a massive safety benefit, and we've proposed in various ways that this should be mandated, since it's clearly a safety-related issue.

Second, given India's traffic and road conditions, an AMT reduces driver fatigue, and reduced fatigue means higher productivity. So each of these pieces is moving the needle forward. Electric fast-tracks this, since electric trucks are already automatic, but even on fossil-fuel trucks, I think this is going to make a huge difference.

Right. How do you build the brand? We've talked about the product, but is the brand more B2B-focused, or how do you approach it?

I'm a firm believer that a product builds a brand. You can spend as many marketing dollars as you want, but ultimately, if your product works, the brand gets built around it. We're obsessively focused on the product, like they say, I'm the "chief know officer" of the company. We're very obsessive about what we do.

We don't launch too many products, we focus on one product at a time, but by the time we're done with it, it's genuinely a best-in-class product. As that product makes its way into the market, and a truck's journey is a bit longer, over a lifecycle of three to four years, the customer starts to realise the benefit of the product. That's how a brand gets built in trucking, at least in my experience.

Got it. You're still a young company and you've been raising capital. What does the runway look like on the top line, bottom line, and breakeven?

Yes, we're a zero-debt company, and we're profitable. We've raised about $50 million so far, and we're doing a small capital raise right now. Most of our capacity has been built out, our manufacturing facilities are in place. We're now raising a bit more capital for the network and so on, but from a capital standpoint, we're in good shape.

Now the focus is on building volume as we move forward. And we're very mindful that we don't want to play the value/discounting game, that's not our focus. We're old-school in that sense.

When you say profitable, do you mean on an operating basis?

Yes. And we'll continue to grow deliberately and mindfully as we move forward.

That's a good note to end on, Anirudh. Thank you so much for joining me.

Thanks. Thank you.