South-Korean automaker Hyundai Motors is reportedly in talks with Bengaluru-based cab hailing giant Ola to invest up to $200 Mn – $300 Mn (INR 1400 Cr- 2100 Cr).
Citing unnamed sources, an Entrackr report said that the talk about the investment deal has reached the second stage and may fructify in the next six weeks.
In order to ramp up its presence in the electric vehicle segment, Ola has set up an independent company named Ola Electric Mobility Pvt Ltd. The electric vehicle company has raised funding of $56 Mn (INR 392 Cr) from Ola’s early investors, Tiger Global and Matrix India among others.
Ola has been taking several initiatives to succeed in the electric vehicle segment. The company had also launched a pilot project in Nagpur in 2017, however, the initiative failed miserably within nine months due to high operating expenses.
The carmaker is looking to invest in the electric vehicle segment in India at a time when the government is bullish on developing the segment.
Last week, the union government approved the second phase of Faster Adoption and Manufacturing of Electric Vehicles in India (FAME II) with an outlay of INR 10,000 Cr ($1.4 Bn) to be invested over a period of three years.
As a part of the central government’s plan, the government has also ruled that only fleet operators will be able to avail the FAME incentives meant for four wheelers. Individual owners of electric four-wheelers will not receive the benefits.
This incentives and support is especially needed at a time when the majority of the Indian fleet operators are reluctant to pay more for electric vehicles, according to a survey by carmaker Maruti Suzuki.
Ola’s Plans To Expand Without SoftBank Help
Ola has been raising funds from new investors in order to keep Japanese conglomerate SoftBank from investing in the company and increasing its current stake of 26%. In 2017, it also amended its Articles of Association to include a clause that prevents SoftBank from buying more shares in Ola without the approval from the company’s founders and board.
Last month, Ola announced that Flipkart cofounder Sachin Bansal had led an investment of $92 Mn (INR 650 Cr.) in the company as a part of its ongoing Series J funding round.
Prior to this, the company had earlier raised $74 Mn (INR 520 Cr) from its existing investor, a Hong Kong-and London-based hedge fund, Steadview Capital, through preference shares at a subscription price of $301 (INR 21,250) per preference share, according to a company filing accessed by Inc42.
Hyundai India has also been keen on developing its electric vehicle offerings. According to reports from January, the union cabinet had approved an investment of INR 7,000 Cr from Hyundai Motor India in order to expand the capacity of its Chennai-based facility.
The South Korean company has bee looking to strengthen its footprint in the South Asian market as it recently invested $250 Mn in Singapore’s ride hailing company Grab.