Why Ola’s Path To Green Mobility Is Full Of Twists And Turns

Despite being an early bird in the Indian mobility space, Ola Cabs has been a laggard in the emobility race. What went wrong, and why has this ride-hailing juggernaut’s green mobility dreams been full of twists and turns? Well, to understand this, let’s start from the very beginning. 

The founder and CEO of Ola Cabs, Bhavish Aggarwal, first unveiled his plans to introduce electric vehicles (EVs) to his fleet of taxis in May 2017. For this, the company infused INR 50 Cr to deploy 200 EVs in Nagpur and set up four charging stations for the new fleet. Seven years on, the company has yet to make any major headway in this direction.

While Aggarwal incorporated Ola Electric, which is pushing for a nearly billion-dollar 2024 listing, in 2017, the entire project of getting an electric fleet for its ride-hailing business has turned out to be a drag, at least from the very look of it, as there is no trace of crossing any milestone so far.  

In late January 2024, the company yet again decided to flip the script and announced the deployment of 10,000 electric two-wheelers in Bengaluru, Delhi, and Hyderabad in the next two months. The company purchased 8,000 E2Ws from Ola Electric for the pilot, which kicked off in Bengaluru in September 2023. 

However, beyond this push, there is little to no clarity on Ola Cabs’ emobility ambitions, even though its competitors in the green mobility realm are seen making significant strides across the country.

Take Uber India for example. The company forayed into the EV space only in 2019. From there it made strategic alliances with many EV fleet providers to deploy EVs across top cities. Not just this, Uber India also has a collaboration with Zypp Electric for the deployment of 10,000 E2Ws by 2024.

At a time when Ola Cabs has yet to ply its EV fleet, newer players like BluSmart, Evera Cabs, and Snap-E Cabs already have a fleet of 7K, 2K and 1K, respectively, green vehicles running in various Indian cities.  

Ola’s Failed ‘Mission Electric’ 

A year after announcing its first ambitious stride towards the green mobility market, Ola launched “Mission: Electric” on April 16, 2018. This time, the ride-hailing major proclaimed to deploy 10K E3Ws in the next 12 months and ply a million EVs on Indian roads by 2021.

At the time, the company also pledged to collaborate with driver-partners, cities, vehicle manufacturers, and battery companies to make sustainable technologies cost-effective and viable for daily mobility.

Well, the ‘mission’ never saw the light of day, and the Ola Mission Electric’s web URL (https://mission-electric.in/) has been redirecting everyone to the Ola Electric website since 2022.

In January 2023, Ola Cabs again announced the deployment of 10,000 EVs on its ride-booking platform. It was said to be in the final stages of rolling out another pilot, but the company failed to walk the talk yet again.

Cut to January 2024, with Hemant Bakshi at the helm as the CEO, Ola is back with its emobility ambitions. However, the spark seems to be missing.

Well, Ola has yet to come up with a deadline to go all-electric. Responding to a press query related to the green mobility timeline, Bakshi said, “I hope very, very soon. What that means is we are not in a position to, you know, yet work it out.”

While the failures of the past are likely to have changed some of the optimism, the uncertainty in Bakshi’s tone could as well be due to the growing competition in the green mobility space.  

Rivals Seize Ola’s Lost Opportunity

While Uber and Ola dominated the ride-hailing market, the slower pace of Ola’s transition to electric mobility could also be attributed to increased competition in that particular segment — apart from this one instance when an early bird (Ola) failed to get any worms.

Many of these platforms emerged after Ola’s failed electric mobility punt in 2018 and decided to double down on becoming electric-first to differentiate themselves from Uber and Ola. 

For instance, BluSmart, founded in 2019, has been able to grow its fleet of E4Ws in a short span. “We have grown from 2,000 cars in Q3 FY23 to close to 6,000 in Q3 FY24,” the company’s cofounder Anmol Singh Jaggi told Inc42 in January this year. The Delhi NCR-based company aims to have 10,000 electric vehicles by the end of this year. 

Besides BluSmart, several other rivals in the EV ride-hailing space have cropped up in the last few years. Everyone realises that Uber and Ola will go through some transition pains as they move to EVs and many are seeing it as a whitespace. 

The growing competition is not about to ease up. Even Ola’s long-time rival Uber realises this. 

While Uber plans to transition to all-electric fleets in the US, Canada, and its other primary markets by 2030, it has set a more relaxed deadline of 2040 for the rest of the world, including India. Despite this, Uber has been quick in introducing Uber Green in India.

Without naming anyone in particular, Ola Cabs CEO Bakshi at a press conference in January said, “Someone mentioned to me that one of our competitors has a category called Green, featuring small green cars. However, we don’t want to limit ourselves to a single category. Our entire system should be green, as we aim to electrify across all segments.”

Notably, Uber has been addressing various challenges in India’s EV charging infrastructure since 2019. 

Starting in partnership with Lithium Urban Technologies, Uber India has partnered with Tata to acquire 25,000 electric four-wheelers by 2025 and collaborated with Zypp Electric to deploy 10,000 electric two-wheelers. 

For E3Ws, Uber has joined hands with Mahindra and Sun Mobility for battery-swapping infrastructure. Additionally, the company has an agreement with SIDBI to provide INR 1,000 Cr financial support to fleet partners for purchasing EVs and CNG vehicles.

In June 2023, Uber led a $20 Mn funding round for Mumbai-based fleet-management company Everest Fleet, which claimed it would look to accelerate the transition from a CNG-dominated fleet to electric vehicles in the next five years. Everest Fleet aims to have 10,000 electric vehicles by 2026 as part of its overall fleet, and the startup is a key channel partner for Uber in terms of acquiring EVs for Uber Green.

More recently, reports claim the Adani Group is seeking a strategic partnership with ride-hailing major Uber to roll out its electric passenger cars. Under the proposed partnership, Uber’s services will be brought under Adani One, which offers cab bookings with Uber integration.

What’s The Plan, Ola? 

Responding to queries about Ola’s green mobility initiatives, cofounder Aggarwal in his January press meet stated, “Whatever we do, we do it big.”

And Ola Electric appears to have come in handy while powering the ride-hailing major’s “big” ambitions.

“From Ola Mobility’s perspective, I think we are in a privileged position because we are closely connected to the largest EV manufacturer in the country. We can help design vehicles that suit our needs,” Bakshi said.

Buoyed by the acquisition of E2Ws from the EV major, Ola Cabs has been able to rapidly electrify a part of its fleet. When the company launched ebikes in Bengaluru in September 2023, it offered services at nearly 30% cheaper rates than its peers. What helped even further was Ola Electric’s products, which offer a better range than the prevailing market average and that too at a lower price point.

“This resulted in a significant 40% market expansion in the category within three months… Additionally, we’ve established 200 charging stations in Bangalore to serve our fleet,” Aggarwal had said in January 2024.

Despite having the Ola Electric-edge, the cab aggregator is still “open to partnering with other OEMs as well if they offer a better deal.”

With an eye on the horizon, the company also plans to move beyond two-wheelers, adding electric three-wheelers (autorickshaws) and cars to its fleet. There are even plans to launch ebuses.

And, there are solid reasons to this approach. For one, Ola Cabs believes ride-hailing opportunities in E2Ws and E3Ws segments are 8X and 3X more in comparison to E4Ws. In addition, the initial cost for E2Ws and E3Ws is lower than the E4Ws. Thus, the idea is to capture a big chunk of the ride-hailing market at a lower cost.

“Despite the higher initial cost in comparison to ICE vehicles, the RoI will be much faster as the uses will be much more,” Dr Allabaksh Naikodi, former head of EV, Royal Enfield told Inc42.

“However, the E2Ws need to be equipped with better cooling systems like GrafX (Graphite + PCM) to enable faster charging to be served for commercial purposes.” In commercial applications, even for E4Ws, RoI could be recovered within 2-3 years, Dr Naikodi added.

While Ola Cabs’ green mobility ambitions may not align with Ola Electric’s timelines for new products, what we know is that the latter has been developing electric auto-rickshaws for the past two years, which the EV major plans to launch later this year. Once launched, Ola Cabs is likely to integrate these three-wheelers into its ride-hailing fleet.

Meanwhile, Ola Electric may still take a few years to finally start manufacturing electric cars. We’ve written about the various challenges in Ola Electric’s way as it looks to enter the four-wheeler market. 

In the interim, Ola may have no choice but to join hands with fleet operators and other OEMs. 

Everything said and done, Ola’s current ambition is to significantly scale up its electric two-wheeler ride-hailing vertical. This is because Ola knows that the state governments are more likely to favour two-wheelers over traditional internal combustion engines, sometimes even discouraging or penalising the latter.

However, the fact is that electric bikes largely cater to the micro-mobility space, which makes it harder for the business to grow into profitability without a massive scale. Once again, Ola Cabs is faced with the unit economics challenge that has so far stumbled the company. 

As we saw in Ola’s FY23 numbers, the company’s net loss touched INR 1,082.5 Cr during the fiscal year, although the 64.8% reduction from FY22’s net loss of INR 3,082.4 Cr is a positive. 

Plus, Ola is not a lone figure in the electric two-wheeler space. Players such as Yulu or Rapido have established strong networks and brand recall in the two-wheeler ride-hailing space. Uber cannot be overlooked either, given its big focus on Uber Moto in recent times. 

In the case of Bengaluru-based Yulu, it currently runs 30,000 EVs across several key cities. Even if Ola Electric manages to touch the 10,000 vehicle mark sometime in 2024, it would need to accelerate its scale to catch up with existing rivals. 

Despite waking up early to the electric vehicle opportunity, Ola is still in the sleepy phase, even as the competition is off to the races.