Ola scales back electric fleet plans – becomes the first casualty in India’s EV plans uncertainty

Sunny Sen March 7, 2018 4 min

Cab-hailing company Ola is scaling back its aggressive plans for a battery-powered vehicle fleet, according to two sources, just weeks after the India government signalled that it was easing up on its ambitious electric vehicles (EVs) plan.

Nitin Gadkari, minister of road transport and highways said at a press conference on February 15 that India “doesn’t need an electric vehicle policy”. Niti Aayog CEO Amitabh Kant said the government think tank is working on an EV “action plan” that will be given to all the ministries and will be monitored. Gadkari had said in January that the EV policy was before the cabinet.

Ola “wanted to play an important role in developing India as an EV nation, however, the government’s latest announcements have left plans in disarray,” said one source.

Gadkari and cabinet colleague Piyush Goyal had repeatedly talked about India’s ambition to become an all-EVs nation by 2030. This would have necessitated massive new investments in EV technology, production lines, and charging infrastructure besides sun-setting petrol and diesel automobile production capacity in the world’s fourth-largest car market by volumes.

“If EVs don’t become the vehicle of choice in a country, and if large number of people continue to use petrol or diesel cars and taxis, the economics of investing in EVs don’t favour Ola,” the source added.

Ola did not reply to a list of questions emailed by FactorDaily on Monday.

Ola had big plans to invest in EVs. According to internal estimates, the company had plans to invest $100-200 million and build a fleet of 10,000 electric vehicles by 2020, the second source said.

Masayoshi Son, founder of SoftBank, Ola’s largest investor, had said in December 2016 that he wished to give away a million cars to Ola drivers free of cost. SoftBank also had ambitions of pivoting Ola as an EV maker in collaboration with Toyota, the world’s No. 2 carmaker.

Separately, Ola had launched an EV pilot in Nagpur to deploy electric cars and build 50 charging points committing Rs 50 crore for the project. The company had billed it “India’s electric mobility revolution powered by Ola & Mahindra” then. The company had also partnered with Coimbatore’s Jayem Auto to build electric versions of Tata micro car Nano and supply it to Ola.

Ola had hired former Bajaj Auto executive Chinam Netaji Patro to shape its EV strategy, including designing and developing EVs – both cars and e-rickshaws.

“Ola wanted to be a front-runner in shaping India’s EV roadmap… There are multiple projects running inside the company on EVs. At least some of them will see the light of the day,” said the second source, emphasising that the cab-hailing company was not shelving its EV plans.

Experts feel that without a focussed policy and incentives aimed at supporting EV, it will be difficult to force a shift from petrol- and diesel-fired vehicles. “Taxis will be a first mover in EVs, and if they don’t have a clear directive they won’t put in huge amount of money. Ola and Uber are investor driven companies, and they look for RoIs and that needs clear directive to figure out returns,” said Amit Kaushik, country head of Urban Science, a Detroit-based automotive consultancy.

“If you want to have a substantial amount of traffic from conventional to electric vehicles it can’t happen without a policy,” added Kaushik.

Ola’s decision to scale back on its EV plans may also be influenced by its focus on its foreign foray. “Rather, it would concentrate on spending the money on expanding international operations,” said the first source.

In February, Ola launched operations in Australia. The company said in a statement that it has done a soft launch in Perth and the first two rides of up to $10 will be free. Other Australian cities will follow and New Zealand is next. “Ola is offering affordable fares for customers and higher commissions for driver-partners to create a high-quality travel experience for Australia and is excited to start with the Perth community. Ola will build on these values as it launches across other cities in early 2018,” the company said in a statement.

India’s cab-hailing market – revenues forecast at $371 million in 2018 – is dwarfed by the $29.75 billion revenues projected for China’s ride-hailing market for this year by Hamburg-headquartered market researcher Statista.


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