Jun 2 2014, 12:16pm CDT | by Forbes
A few weeks ago, at the annual conference of the Indus Entrepreneurs in Silicon Valley, I was on hand to watch the global launch of the GenZE, a hip, new two-wheeler brought to you by Mahindra, the Indian conglomerate that makes everything from tractors to cars and also is one of the largest technology companies in the world. The GenZE is one of the latest’s products designed to meet the needs of Millenial’s and those seeking to reduce their environmental foot print. What is most important about its launch from my perspective, is how GenZE is the product of three great ecosystems – that of Mahindra itself, of Silicon Valley, where it is headquartered, and of Michigan, where it is being produced.
The GenZE strives to redefine the two-wheel riding experience in the United States. It has a storage bin behind the seat that can comfortably hold groceries, books or small boxes. Its aluminum exo-skeleton is strong, and trendy enough for today’s college hipsters. And of course, it has a computer touch screen complete with navigation, weather and downloadable apps to help you with your riding experience. The GenZE also made sure to have power ports for your cell phones and laptops. Beyond the technology experience, Mahindra has made the GenZE somewhat hassle-free. Because it can only go up to 30 miles per hour, the rider has no need to purchase vehicle insurance or register it with their state. The GenZE also drives up to 30 miles without requiring a charge – more than enough for the average urban dweller or college student. Finally, the GenZE’s battery is designed to fit into the rider’s urban life – it only weigh’s 18 lbs. and can plug into a standard 110V outlet. All of this for an estimated $3000, which is certainly competitive with the other two-wheeler’s on the market.
I recently had a chance to speak with Vish Palekar, the President and CEO of Mahindra GenZE. Mr. Palekar shared how the GenZE is a great example of Mahindra’s desire to become a globally admired brand, and one that is developing sustainable products in the US market. Mahindra has become more of a household name in the last few years because of the rapid growth of its tractors – which are the fastest-growing brand in the United States and third overall in market share. But Mahindra felt that its new products could not follow the same path as the tractor’s had. In this economy, the products needed to be more disruptive – in their design, innovation, business model and branding.
Thus was born the GenZE. While a product of a large company, it is being developed and run as a Silicon Valley startup. The company focused on developing a product that addressed the challenge of urban mobility in the United States, where congestion problems are bad for the environment and for people’s productivity. But instead of following their historic model of designing and building products in India before selling in the United States, they decided to leverage the two ecosystems in the United States where the expertise already lived – Silicon Valley and Detroit.
Mr. Palekar felt that there were several benefits to being in Silicon Valley. First, it is home to the best talent in the world for innovative products like the GenZE. The IT talent has always been there, but the growth of companies like Tesla and Fisker in the Bay Area has also created a decent-sized community of automotive products engineers. Being in Silicon Valley has forced GenZE to be innovative in several ways. They consider themselves “consumer-in’ business model, rather than “product-out” as most major companies are. The Silicon Valley ecosystem pushed them to question their beliefs about the needs of the consumer and what it really means to have memorable experience riding a two-wheeler. This, in turn, led to market research studies that were able to identify things like storage and modern touch screen’s as desirable innovations for the two-wheeler market.
Next, Mahindra GenZE decided to manufacture in Ann Arbor, Michigan. Just like Silicon Valley was the place to innovate, they determined that Michigan still had the best ecosystem for manufacturing the GenZE. The region’s supplier’s worked in tandem with GenZE to improve the product, design the supply chain, and get going in Michigan. The region continues to have one of the world’s largest pools of automotive professional’s – now being utilized by GenZE. This May, GenZE opened a 37,000 square foot manufacturing facility in Ann Arbor, MI. According to Mr. Palekar, the GenZE is the first electric urban two-wheeler designed and manufactured in the United States.
This experience has been different for Mahindra in many ways. Their experience reflects the changes going on in many industries as a result of innovation and disruption. Mahindra sell’s its tractor’s through dealers across the United States. The GenZE will be sold direct to consumer via the Internet and alternative sales channels. The tractor engines are built in India, while the GenZE is entirely designed and built in the United States. Most automotive products in the United States are serviced by dealers and licensed mechanics. GenZE plans to have “pop up stores”, mobile fleet’s and make house calls to service its owner’s. And the GenZE is following the California model of being “priced to scale”, rather than priced to drive up margins. To Mr. Palekar and GenZE’s leadership, these are all outcomes of their presence in Silicon Valley, and not things that large company like Mahindra would have traditionally considered.
I hope that GenZE succeeds because it can also be a model for manufacturing in the United States. We constantly hear stories about the death of Detroit, often forgetting that it still remains the largest and most advanced automotive ecosystem in the world. If Detroit recognizes that it is no longer home to all innovation in the automotive sector, but that it can welcome innovation from elsewhere to utilize its own ecosystem, I believe there will be more opportunities like GenZE. It may not be the macho-SUV that people associate with Detroit, but it is a product with a growing market that can only benefit from the experience and talent of the people and companies of Michigan. And while the state of Michigan did provide some tax-incentives and benefits to Mahindra GenZE, they were not so much as to drive the decision. GenZE wanted to be in Michigan, and the state welcomed them in any way they could.
GenZE is launching this year in California, with a splashy showroom in Palo Alto, CA across from the Apple store. Before I get there, I hope to visit the loading bay at their facility in Ann Arbor where GenZE’s are rolling off the assembly line. Indian company, designed in Silicon Valley, manufactured in Detroit. All American.
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