(Bloomberg) -- Sign up to receive the Green Daily newsletter in your inbox.Since mid-summer I have been noting the wave of early-stage money that has washed into early-stage climate investment. Companies raised more than $16 billion in the first half of the year, not far off the previous full-year record. Equally noteworthy is that the companies making those investments – venture capital and private equity firms – are themselves raising record amounts of money.

A key question always is, what are funds such as TPG Rise Climate and Brookfield Global Transition Fund going to invest in, given their scale and preference for big ticket sizes? We now have a bit of an answer, thanks to an investment this week from TPG Rise Climate and Abu Dhabi state-owned fund ADQ: electric vehicles in India, to start.

The two funds will place a combined $1 billion into a newly-formed subsidiary of Tata Motors Limited devoted specifically to electric vehicle development and production. The new company plans to develop 10 electric vehicle models and work in tandem with Tata Power Ltd to “catalyse the creation of a widespread charging infrastructure to facilitate rapid EV adoption in India,” Tata said in a statement.

While the government wants EVs to be 30% of private car sales in a decade, sales today are really only just starting. India’s electric passenger vehicle sales in 2020 reached all of 4,394, according to BloombergNEF, out of a global market of more than three million. That number will grow, and EVs are expected to be more than four million vehicles a year, and more than half of new passenger vehicle sales, by 2040. India’s EV charging networks are likewise thin on the ground. India had 2,200 operational public chargers suitable for passenger vehicles as of the end of March 2021; the U.S. has 100,000 and China, more than 900,000.

Investing in rapid growth and a major expansion plan is a historically proven play for private equity investors. And, there is certainly much to play for in terms of expected market for vehicles, and a necessary network of charging infrastructure to serve them.

It is worth remembering though that India already has a thriving electric vehicle market – it is just missing a wheel, or two, compared to passenger cars. India’s three-wheeler sales are already 50% electric, with sales of more than a quarter-million electric vehicles last year. India’s two-wheeler market is smaller – about 130,000 last year – but the addressable market is much bigger. More than 14 million two-wheelers were sold in 2020, and that’s a pandemic-deflated sales figure compared to 2019. BloombergNEF expects three-wheeler sales to reach almost 100% sales penetration within 20 years, and two-wheelers to exceed 70% of sales.

The speed and scale at which the electric two-wheeler market could grow is striking. Ola Electric Mobility is planning a factory to assemble 10 million electric two-wheelers annually. When it began selling scooters last month, it moved 60,000 in 24 hours. Hero Electric Vehicles, an Ola competitor, wants to expand its capacity to a mere one-twentieth of Ola’s and says that India could end sales of gasoline-powered two-wheelers in six years.

Writing about this summer’s wave of private equity money entering climate tech, I suggested that investors follow the template of ‘come for the tool, stay for the network.’ In the case of the newly-formed Tata Motors electric vehicle manufacturer, and its alliance with Tata Power to build charging infrastructure, it is quite literally building a network. That could solve the vicious cycle that both vehicle and charging network companies face otherwise: vehicles need chargers to work, and chargers only have value if there are vehicles to use them.

While the private-equity backed interest in India’s electric passenger car fleet plays out, though, the country’s two- and three-wheel electrification is well underway, using an India-focused standard that is ill-suited to charging larger vehicles. Passenger EVs, when they arrive at scale, will not do so in a literal and figurative power vacuum. India’s roads will be heavily electrified in specific ways, with entrepreneurs and established companies building their own value networks, just with fewer wheels.

Nathaniel Bullard is BloombergNEF’s Chief Content Officer.

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