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E-scooter maker Vegh has raised $5 million from an undisclosed investor as part of its ongoing $50-million pre-Series A round.

The startup plans to use the fresh capital to create a sales and distribution network. It also aims to expand its manufacturing capabilities for electric vehicle (EV) parts and invest in research and development.

Currently, the electric two-wheeler manufacturer has a plant in Bathinda, Punjab with a capacity of producing 60,000 units annually.

The company said it will use some of the proceeds to expand its manufacturing operation to produce 3X more vehicles.

“In the first phase of expansion strategy, we aim to penetrate to 12 states with a robust sales and service network,” said Pragya Goyal, Co-founder and CEO of Vegh.

Goyal founded the company in 2021 along with Sumeet Gupta, Kamalchand Bothra, Ashkaran Bothra, and Namrata Gupta.

The company’s funding announcement comes as EV sales plummeted in the month of June due to a reduction in subsidies for electric two-wheelers. Electric two-wheeler sales in June 2023 fell 57% from the previous month to hit their lowest level in the last 12 months, according to e-governance platform Vahan.

In May, the Ministry of Heavy Industries reduced the maximum subsidy cap from 40% of a vehicle’s ex-factory price to 15%.