S2 E49: Revolutionizing EV Motors: The Chara Technologies Approach

Dustin Olsen (00:40)
Welcome everyone to the Rare Earth Exchanges podcast. I'm Dustin, joined by my co-host Daniel. And today we have a special guest, Bhaktha the CEO of Chara Technologies, joining us talking about EV motors and everything that goes in there. Bhaktha, welcome to the show. How are you?

Bhaktha Keshavachar (Guest) (00:57)
A good Dustin and Daniel. Thanks for having me here. Much appreciated.

Dustin Olsen (01:02)
Perfect. Bhaktha could you, for those who are unfamiliar with Chara Technologies, what's the core problem you're trying to solve with EV motors in the manufacturing space?

Bhaktha Keshavachar (Guest) (01:11)
Yeah, so as of today.

pretty much all the motors that are used in electric vehicles from the smallest e-bikes to two-wheelers to three-wheelers and the large four-wheelers. They all have this motor usually called a PMSM motor and they work quite well but they have these magnets in these motors which are the neodymium ferrous boron magnets and these need four rare earths that make them magnetic and NDPR and TRDY and the problems of

are fairly well known now. They are expensive.

they are difficult to mine and extract economically and environmentally and one country has a 90 % control over the supply chain which happens to be our neighbor and so this leads into a lot of supply chain issues and strategic issues and so what we are doing at CHARA which stands for by the way motion in Sanskrit we are building rare earth free motors and matching controllers

for electric vehicles and a bunch of other applications.

Dustin Olsen (02:10)
That's awesome. And how did you get started with this company? What's some of your background?

Bhaktha Keshavachar (Guest) (02:15)
So I was born and brought up in Bangalore in South India after finishing my graduation. I came to US, did my masters at Arizona State, worked in Intel for about a decade, then moved back to my hometown and became an entrepreneur in my middle age.

By the way, my background is hardware and embedded firmware engineering wise. I like to build things. And I did a startup called EasyTap, which was in the fintech space. I was in the hardware group. We ran that company for about 10 years, sold it off. then during COVID around that time, this was climate and sustainability was on the top of my problems we should solve. think the largest,

problem this planet has is the change in climate I believe and we need to solve the problem and there is a big energy transition that is happening in this world today. We are moving away from hydrocarbons to electrons for lot of our energy needs and so extending this whole situation we saw that

There is a lot of opportunity in generation, distribution, consumption of this electricity. And that's where we hit upon this idea of building an efficient and a sustainable motor. That was the kind of the whole thought process. about six months to nine months to figure out what we want to do. And that's how we ended up building a rare earth free motor and a matching controller.

Daniel O'Connor (03:45)
it's extremely important area. And again, you know, the impetus behind rare earth exchanges is to help accelerate the re industrialization, supply chain changes that need to happen per your point. Part of that whole process is going to be technological disruption.

and moving in some cases towards motors, for example, that may not need rare earth elements as an example. Now that being said, we typically can either start sort of at the micro level and work our way out. I think it's important to step back and look at the market today. Like if we look at the EV space today, or even hybrid space if it's relevant.

I would imagine the vast majority, if not all motors today, are rare earth magnet based. Is that a correct assumption or is there a change happening? And if so, how extensive is that change?

Bhaktha Keshavachar (Guest) (04:41)
As of today to the best of our knowledge all the motors that are used in mobility are rare earth magnet based motors. I think there is one exception we are aware of in the Tesla 2 motor model.

I think the front motor, the auxiliary motor is an induction motor, but the main motor is still a rear earth based motor. So pretty much there are no exceptions. As I said, from the smallest e-bike to a two wheeler, three wheelers in India and cars and trucks, they all have the same motor, the NDFEB based PMSM motors.

Daniel O'Connor (05:16)
And so if we look at that space, and again, just focus on EV, because I believe you all are targeting EVs, What's the ballpark market size? I guess you would be a tier one vendor in the supply chain, tier one or tier two. What would be the size of that market as you look at it? if there is a

transition to a non-rare earth element ⁓ type of product.

Bhaktha Keshavachar (Guest) (05:39)
Yeah.

Correct. So, at a broader level the total market size for all kinds of motors on this planet is about like 160 billion dollars this year. Out of that the traction motors as we call them mobility motors is about 35 billion dollars worldwide. And in India it is about and India is kind of at the beginning of the transition still.

Daniel O'Connor (05:57)
Brilliant. Okay.

Bhaktha Keshavachar (Guest) (06:04)
And in India it's about a billion dollars and of course given our size of the market it expected to grow fairly big and all of it all of this again even at the risk of repetition is are rare earth magnet based motors.

Daniel O'Connor (06:10)
Right.

Understood, understood. So now let's drill in. Let's look at your standard rare earth base motor versus what you all are building, okay? Charac technologies. How does it work? How is it different at a high level without giving away any secrets?

Bhaktha Keshavachar (Guest) (06:36)
Yeah, no. So, the way the rare magnet based motors work is that there is a stator you know which has a coil which where you pass the current and it generates a field typically a rotating magnetic field and on the rotors we have this powerful magnets the NdFUB magnets. By the way these magnets are the most powerful magnets that are available on this planet.

And so this field will either attract or repel the magnets and generate the torque. Very simple. That's why it works beautifully except for the little problem of errors. So that's usually called the lens force in electromagnetics, the field interacting with a magnet. But what happens in a reluctance motor, which is what the technology we are pursuing, is that reluctance is the property wherein

flux or any liquid always takes the least resistance path going from a higher potential to a lower potential and reluctance is the resistance to that flow.

to that magnetic flux and so what we do is that we still have the same stator just like a PMSM motor with coils around it generates typically generates a rotating magnetic field but our rotor is different it does not have any magnets it has this funny cross section or a very sophisticated cross section of the rotor which creates these paths for this flux created by the stator to flow and we position the rotor such that

the resistance to this flux flow is higher or

Daniel O'Connor (08:05)
So,

Bhaktha Keshavachar (Guest) (08:06)
in electromagnetic speed the reluctance is high. So, when we excite the stator the rotor tries to position itself to the lower reluctance path and that is what generates the torque and we keep moving this and we keep moving the field and the rotor continues to track the lower reluctance path. So, the method of torque generation is completely different.

Daniel O'Connor (08:17)
Got it.

Bhaktha Keshavachar (Guest) (08:30)
from a magnet based motor to a reluctance motor.

Daniel O'Connor (08:34)
That's fascinating. That approach that you just described, is that something that's sort of known in this nascent space, or is it something that you all came up with, or is it something you already knew?

Bhaktha Keshavachar (Guest) (08:46)
So just to be clear, be told, reluctance motors is a known technology, a known concept. Apparently, the original paper is about 200 years old, like goes back to like, yeah, 1825. And I believe this is when man, or know, sorry, invented magnetism and electricity. This is during the Maxwell days. Reluctance motors were the first motors that were proposed because they're so simple.

Daniel O'Connor (08:58)
Wow. Wow.

Bhaktha Keshavachar (Guest) (09:11)
the rotor truck because we didn't have magnets then. another thing we have to remember is that NDF-EV magnets or the rare earth magnets were kind of

produced in the US in the 70s and 80s and they became you know very prominent in the 90s and early 2000s. So I think it was I spoke to the that professor sorry forget it's in the state of where is the big air force base I sorry forget if I remember I'll let you know we spoke

Dustin Olsen (09:40)
Ha

Bhaktha Keshavachar (Guest) (09:41)
So, the Raynard magnets were invented by a DARPA grant like lot of things were funded by DARPA and they became prominent in the 80s and 90s. So, reluctance model is a known technology, it's nothing new, it's not that we have invented.

But these reluctance motors had and truth be told these are not seen the light of the day yet. This is still a concept. For the following three reasons. The first is that these motors are highly non-linear. So as I mentioned it all depends on the flux flow and there is something called a BH curve for steel. The thing with the BH curve for steel is that there it's highly non-linear.

and there is also hysteresis that means the behavior of the flux flow also depends on what was the flux that happened just before that so that that's what makes it difficult to control these motors and now with the

abundance of computing power relative to what was available last century or last decade also. We have solved this problem and by the way it's not only us there are many companies all over the world trying to solve this problem basically we solve this non-linearity through more better algorithms. broke algorithms better stock here.

Daniel O'Connor (10:40)
Right. Right.

Sorry, better what?

Bhaktha Keshavachar (Guest) (10:55)
And that's why actually if you look if you search on the internet for reluctance motors there are a bunch of people who call it software controlled motors because it's the software machine. That's what that is the key and with the advent of better power electronics which can switch faster and more computing power we kind of solve this non-linearity problem and make it work.

Daniel O'Connor (11:04)
Got it, got it, okay.

Okay.

Okay. Okay.

Dustin Olsen (11:15)
Thank

Daniel O'Connor (11:21)
Okay.

here's a more critical question that I put together. Can rare earth free motors truly match the torque density and efficiency of the rare earth magnet motors at commercial scale? you know, there's coming up with a prototype, there's, you know, matching or

Bhaktha Keshavachar (Guest) (11:25)
video.

Daniel O'Connor (11:45)
or beating the existing approach. And then there's scale. And it sounds like we're still at phase one. Am I correct on that?

Bhaktha Keshavachar (Guest) (11:53)
You are 100 % correct Daniel. So to answer your question, our motors which we are selling now in small quantities, we just started shipping from this year to customers in India, couple of customers outside India. The efficiency of our motor is as good as a PMSM motor.

and especially the duty what we call as a duty cycle efficiency, know the efficiency at all points is actually very better than a PMSM motor. But we do give up something this we are dealing with physics and our motors are about 15 percent heavier and bigger than a PMSM motor. So, that is the second part of your question which is the torque density or the power density. So, are so

Daniel O'Connor (12:34)
Right.

Bhaktha Keshavachar (Guest) (12:39)
Again there are various kinds of motors, but comparing similar motors the power density of a good PMSM motor is about 2.1 kilowatt per kilogram. We are at about 1.7, 1.8. Now what does this mean?

for us in India right our market is slightly different than the US. So three wheelers are very popular you might have seen pictures I don't know Mr. India right. So a typical PMSM motor is about 15 kilograms the existing motors. So our motors are about 18 kilograms there's 15 percent difference.

Daniel O'Connor (13:05)
Right. Right.

Little heavier.

Bhaktha Keshavachar (Guest) (13:19)
little heavier, but if you consider the gross vehicle weight of a three wheeler in India is about 750 kilograms, the 3 kilogram is a wash. So, there is a mental block that our motors are heavier, bigger which is true, but I believe that for many applications it will not make a difference.

Daniel O'Connor (13:41)
Well, mean, you know, when we step back and extrapolate out, it could make a huge difference if your supply chain is certain. And you could, mean, so that's, there's other considerations. Now, let's talk about IP. We're not going into too many details, but at a high level.

Bhaktha Keshavachar (Guest) (13:49)
Absolutely.

Correct.

Daniel O'Connor (13:58)
How do you ensure your approach is protected from commoditization from large OEMs that could come in potentially at scale and just copy and paste for lack of a word.

Bhaktha Keshavachar (Guest) (14:10)
Yeah.

So once we start selling our motors, which we started this year,

people can look into the motor reverse engineers very easily and there are people who do that for a living. So is the hardware and but the key IP which we have we have IP in the motor design but the key IP which we have which we have not even patented is the algorithms which control the motor and that is inside the controller and that cannot be copied and that is what gives us

Daniel O'Connor (14:38)
That's right.

Bhaktha Keshavachar (Guest) (14:44)
the barrier of entry from other competition.

Daniel O'Connor (14:49)
But you could, correct me if I'm wrong, you could build a business licensing those algorithms to other OEMs or tier one or two supply chain vendors, right? Maybe or no.

Bhaktha Keshavachar (Guest) (15:01)
⁓ Yes, so we are a product company. We have our own manufacturing plant where we manufacture our motors and controllers and start selling to our customers. But having said that, we have a manufacturing and a GTM go-to-market agreement with a very large company called Greaves Cotton. As you can tell by the name, that company has been around for 165 years. It came from the British era, when the British ruled this country. ⁓

So

we have given the license to manufacture our motor so they get all the details of the motor and the hardware so that they can manufacture but our software we give only in object form so that way they can get a copy. So that's what we doing and we could potentially do it with other large companies too.

Daniel O'Connor (15:43)
us.

Yeah, that makes sense because the value of your company, if it's partially in that software and you've got everybody licensing it.

What about economics, total cost of ownership? I I understand you're still at the stage you're at, but in modeling, does this approach equal the status quo? Is it higher, is it lower? Any high level thoughts on that?

Bhaktha Keshavachar (Guest) (16:16)
Yeah, yeah. No, this is the once you started selling these the question we get asked very often. You know, we go sell our motor to our customers, know, we convince them at the end it's always about price, especially in a cost sensitive economy like ours. So today, it's a known fact, verifiable fact that 40 % of the cost of the motor, rare magnet based motor is consumed by the magnets, 40 % at current prices.

So, we remove the magnets, we add a little bit more steel and copper and steel and copper are much cheaper. So, if you look at the price variations that the price differences right. Basically, there three materials that go to the construction of the motor Daniel. There is steel, there is copper and there is magnets. The steel is about a dollar per kilogram today.

⁓ very close to very close to copper as you know sorry I have to speak in kilograms you have to convert mentally to units I should have been next time I speak to somebody I'll prepare myself

Copper is about $12 per kilogram. Raynard based magnets which is the NDE FEB magnets, they are about $80 per kilogram. They are like an order of magnitude. So we removed the magnets, we add a little bit more steel and copper. So our motors as of today we have done, we have done the bomb analysis. The large company where we are licensing too has done the bomb analysis. We are about 15 to 20 percent cheaper in the long run.

Daniel O'Connor (17:27)
Yeah.

Bhaktha Keshavachar (Guest) (17:43)
once we have the volumes. Yeah. So, I think that is it apart from the freedom from dependence on critical materials, critical metals, we also achieve.

Daniel O'Connor (17:43)
Okay.

So from this,

just so viewers understand, from this perspective, at least from the model, at scale, the price is 10 % or 15%, 20 % lower. You have no rare earth element dependency for that motor. Therefore, the security premium that we're seeing going into some of these rare earth elements and magnets

Bhaktha Keshavachar (Guest) (18:03)
Yes.

Correct. Yes.

Daniel O'Connor (18:17)
goes away.

Bhaktha Keshavachar (Guest) (18:18)
Yes. Absolutely.

Daniel O'Connor (18:19)
Okay, now

what other, here's an important more detailed nuance question. There's other pieces, stainless steel, there's different elements that still may come from China that you are using potentially. Are there other components, assemblies, ⁓ elements inside that come from China as part of the motors makeup?

Bhaktha Keshavachar (Guest) (18:39)
So today all the materials that go into the construction of our motor is sourced from India which is aluminum, steel, copper and ferrite magnets. There is this little sensor which senses the position of the rotor that has a small IC that is imported and then there is a controller where our algorithms reside, where our software resides. That controller is basically one

Daniel O'Connor (18:45)
Okay.

Bhaktha Keshavachar (Guest) (19:04)
large microprocessor some driver ICs and MOSFETs or silicon carbide devices. ⁓ The situation in India as you might know is that we still don't have semiconductor fabs in this country. So all the semiconductors the processor the driver ICs the power switching devices like MOSFETs and silicon carbide MOSFETs they're all coming from outside not necessarily from China the there are multiple fabs all over

Daniel O'Connor (19:06)
you

Bhaktha Keshavachar (Guest) (19:31)
the world. think some of the most of the ICs are coming from Taiwan. Taiwan is the powerhouse of semiconductor manufacturing today and as a country India is heavily investing in semiconductor manufacturing. We believe that in about three to five years we should be sourcing a bunch of the components from India.

Daniel O'Connor (19:38)
Yeah.

Bhaktha Keshavachar (Guest) (19:50)
But there is no single country dependency on the semiconductors as you know.

Daniel O'Connor (19:54)
Yeah, no, I mean this is

what it's about. This is what we want to highlight on the Rare Earth Exchanges platform. Although it says Rare Earth Exchanges, again, the goal is to create resilience in supply chains. That's what the whole mission is here. Okay? So now, if we take a step back, look at the company, I think it was founded in 2019. I believe you've raised six or seven million US dollars. that correct?

My question is, you were founded in about 2019, is that correct?

Bhaktha Keshavachar (Guest) (20:21)
Thank

Yes, November of 2019.

Daniel O'Connor (20:27)
Okay, okay. So, and as far as commercialization, what does that look like? What's the timeline for your first product sales and an accounting of your sales and some kind of commercial cadence?

Bhaktha Keshavachar (Guest) (20:41)
Yeah, so we did fundamental R &D in electromagnetics, mechanicals, thermals, hardware and the critical software algorithms. It took about four years to come up with a motor and a controller which is good enough to sell.

Last year is when we started selling. We sold about 200 motors the last calendar year. So we had a little bit of revenue. But this year is when we will kind of record our first large revenue. So this year we are targeting an order book of about

I'm making a mental calculation of about 6 million dollars and a shipped revenue that means the shipped motors of about 2 million dollars. So, I mean in terms of motors and controllers this will be about an order book of about 5000 motors and shipping of about 2000 motors.

Daniel O'Connor (21:45)
So that's really impressive. You're taking off commercially. You can see a pathway to growth.

Bhaktha Keshavachar (Guest) (21:49)
Yes.

We spent six years doing R &D, so it's high time we started shipping. ⁓

Daniel O'Connor (21:55)
Yeah.

are the sales coming from one company or the multiple companies?

Bhaktha Keshavachar (Guest) (21:57)
Sorry.

So, where we are today is that we have about eight customers who are ramping up. Each of them have placed about 500, 700, 1000 motor orders. Most of them are in India. Only one is outside India, which is in Europe.

Daniel O'Connor (22:07)
Okay.

Bhaktha Keshavachar (Guest) (22:17)
And so, we are fairly distributed across customers. But more importantly, Daniel, even though our motors are traction motors for two wheelers, three wheelers and small four wheelers. Interestingly, it has been adopted by agricultural equipment, tractors, small tillers. They also need motor. They're also getting electrified. And this

industrial machinery like forklifts and loaders they are also getting electrified. So our motors are going not only into what we call as on highway vehicles, now vehicles which can drive on the road also which vehicles which you don't drive on the road like agricultural equipment, industrial equipment and the same motor and controller. technically they are also electric vehicles but we call them off highway vehicles.

So, there is significant amount of volume from off highway vehicles also.

Daniel O'Connor (23:10)
It totally makes sense.

Bhaktha Keshavachar (Guest) (23:11)
Bye.

Daniel O'Connor (23:12)
⁓ Bhaktha, this is all very impressive. I think we're getting close to the end, but I just want to say it's extremely impressive what you're doing here. You're executing six years is not that long for such a profound change. So very exciting to see.

Bhaktha Keshavachar (Guest) (23:26)
Peace.

Yeah, there's a lot of interest from the governments too, but we have not received much support yet. The government of India is speaking to us because it is a strategic problem. So incidentally, there is a venture capital firm called Inqtel. Have you guys heard about them? So Inqtel is the venture capital arm of CIA. ⁓

Dustin Olsen (23:30)
Okay.

Daniel O'Connor (23:53)
That's

right, yes.

Bhaktha Keshavachar (Guest) (23:54)
So

we had a conversation with them, they reached out, mean nothing came out of it. Apparently in QTELA they have chartered to invest only in the US, they still not investing outside US. I think they have just started their Singapore arm. But what is interesting is that there is some push by the governments both here and there and all over the world because this is energy is critical right for a society.

and we can't be dependent on one country. So even the governments are looking at it.

Daniel O'Connor (24:22)
So I will say, you we track all of these things pretty closely and the Indian government is taking this all very seriously. They're putting money in. They're going to have to more money in. And what you all are doing has to be part of a portfolio of a strategy to diversify. So I would say, you know, and we have people from the Indian government coming to rare exchanges.

on a daily basis, I believe. you know, it's important that this class of activity is part of a strategic portfolio. It's not everything, but it's important. It's something. It's important.

Bhaktha Keshavachar (Guest) (24:49)
Yeah.

Yeah, I just like to point out that, you know, we were struggling to sell our motors and controllers last year and even beginning of this year because new technology, small startup, you know, and there is no long term history of reliability and safety of our product. But after the geopolitics that happened in April, May, I think people are looking at it.

Daniel O'Connor (25:19)
Yeah.

Bhaktha Keshavachar (Guest) (25:21)
little bit more kindly and huge tailwind. Yeah the embargo by China has created a huge tailwind.

Daniel O'Connor (25:23)
Yeah.

Yeah, yeah, there's no question that Dustin.

Dustin Olsen (25:34)
Absolutely.

So just kind of wrap up here. We kind of like to ask a lot of our guests like, what does it look like five years down the road? What do you hope to see from your company in terms of progress and what success look like?

Bhaktha Keshavachar (Guest) (25:50)
So for us there three things. Number one is that we want to be recognized in this country and maybe globally as the center of excellence for motor design, newer technologies and design and manufacturing. The second one is something close at our hearts. We want to build a product made in India for India and export it to the world. And the last one commercially, know, the public markets were not mature.

in India even when we started this company the only way to exit a startup to exit was an M&A that's what happened to my previous startup. Now the public markets have matured and lot of companies are doing IPO in India and we would like to do that at the end of the decade five years from now when we have about 200 to 300 million dollars revenue. A huge opportunity I think sustainability

geopolitics are creating tailwinds for us. We just have to raise capital and execute well.

Dustin Olsen (26:47)
Absolutely. And for those who are interested in the work that you guys are doing, how can they connect with you best? Visit your website, find you on LinkedIn. Where should they go?

Bhaktha Keshavachar (Guest) (26:56)
⁓ Both of them will work website works cherra.co.in and we watch it very closely. By the way we have got lot of customers through our website including that European customer.

So the website is the best way to reach us. LinkedIn also works for either you can go to our company LinkedIn page or my LinkedIn page will always respond quickly.

Dustin Olsen (27:23)
Absolutely. That's great. That's great to hear your website is getting you customers. Awesome. Bhaktha thank you so much for being on the show with us and sharing about your company and the work that you guys are doing. As Daniel said, it is very important what you're doing and the success you've seen so far in a short amount of time is nothing short of remarkable. For those who are listening to the show,

Bhaktha Keshavachar (Guest) (27:28)
Yes.

Dustin Olsen (27:46)
If you like this episode and want others to hear it, please like wherever you listen to this show. If you don't want miss a future episode, please subscribe so you get notification when we have a new episode come out every week. Bhaktha again, thank you so much for taking the time to be on the show with us and hopefully we'll have you again in the future to give us an update.

Bhaktha Keshavachar (Guest) (28:04)
Yeah, thanks Dustin, thanks Daniel. Would like to come back on this show five years from now when we go IPO and talk about it. I don't know what will be the state of the world then, but I'm pretty sure it will be more confusing than what it is now.

Dustin Olsen (28:13)
So like.

Absolutely. Thank you again.

Bhaktha Keshavachar (Guest) (28:19)
Thanks, guys have a good day, bye.