Ola Eyes Self Driving Car Rentals As Part Of Frantic Expansion Drive

Bengaluru-based cab hailing giant Ola is not showing signs of slowing down its furious expansion. Along with foraying into international markets, and research around electric vehicles, the company is now eyeing the self-drive rental market.

The company is planning to invest over $500 Mn (INR 3,448 Cr) to launch its own self drive rental service, ET reported. Inc42 sources close to the development have confirmed the same.

In response to Inc42’s query Ola confirmed the plans of launching the service. However, denied disclosing financials details about the same. “Basis market feedback, we are piloting our Ola Self-Drive offering in various formats like rentals, subscription and corporate leasing in select cities in the coming weeks. This space is currently underserved and there exists a tremendous opportunity to build a superior experience through an integrated mobility platform like Ola,” said Ola spokesperson.

Ola is planning to launch the service in seven cities by deploying over 10,000 vehicles including luxury sedans and SUVs under its ‘Ola Self-Drive’ Category in the coming weeks.

Self drive car rental services let users to rent a car from the company. With this users drive the car themselves and return it after a pre-decided period of time.

The scale proposed by the company will make Ola the largest self-drive player in the country, the sources said.

By launching this service, the cab aggregator is trying to offer subscription products for its users and leasing services for corporate executives through the Ola Corporate offering.

Why Ola Is Bullish About Self Driving Car Rental Space?

The foray into this segment may be the company’s broader strategy of expanding its offering beyond just cabs to include scooters and electric vehicles with a view towards ensuring sustainability and positive unit economics.

A report by Ken Research suggests that the Indian car rental market is expected to touch $12.5 Bn by 2019, growing at a CAGR of 35%. 

With this foray into the self-drive segment, Ola will now be competing with some of the popular players such as Sequoia Capital India-backed  Zoomcar and Y Combinator-backed Drivezy.

In response to Inc42’s query, Drivezy CEO, Ashwarya Singh said, “Ola has a massive customer base which definitely gives it a head start. It’s a positive for the industry as well as self-drive rentals is a relatively new industry in India and with Ola coming in, a good number of new customers will get acquainted with the concept. We believe that Ola’s arrival will definitely benefit a lot of players in the industry”.

Zoomcar refused to comment for the story.

In terms of funds, Bengaluru-based Drivezy has raised $39.45 Mn to date. Recently, it was reported that technology majors SoftBank and Amazon are in talks to lead a $100 Mn (INR 690 Cr) equity financing round in Drivezy. The vehicle sharing marketplace has been on the lookout for fresh funds to expand its fleet across the country and also foray into the foreign markets.

Renting cars to drive temporarily is an idea which is yet to gain prevalence in India. With the growing acceptance of the gig economy in all spheres of urban life, acceptance of self drive car rentals is perhaps not far away. Ola’s entry is a strong pointer to the untapped potential of the market.