Features
24 Aug 22

EV Ambitions of a ride-hailer

Announcing an extension of its activities, Indian ride-hailer Ola has unveiled its plans to launch an electric car by 2024. Ultimately, Ola wants to be in the 1000$ to 50.000$ EV market. It also wants to develop its own cells and battery packs and can count on governmental subsidies to get going.

Challenges

Ola already produces e-scooters, one of which caught fire, generating a wave of criticism, but it’s not the only reason people have doubts about the company’s ambitions. In terms of (e-scooter) sales performance, Ola is is a mere mid-size player compared to other companies competing in the same space. Its business is not profitable, but should be soon.

The 4-wheel business will not be easier, as Ola will be competing with experienced automakers such as Tata Motors, Mahindra & Mahindra, in addition to the Japanese and Korean OEMs.

New Business models in startup world

Funding however will be Ola’s main challenge. It is backed by Japanese SoftBank, unfortunately in a new world that is a lot less keen in investing in startups.

Investors are looking for a few things before committing large sums of money in startups or scale-ups, especially now. The time has past to invest in experiments, and a track record of successful – even smaller projects – is essential. Ola unfortunately has ventured in food and grocery deliveries, commerce and used cars; all failed within a year.

Combining this with the difficulties to produce cars on a massive scale, regardless of supply chain difficulties, it’s clear that Ola is in for a ride.

Meanwhile,…

Established companies are not sitting still. Tata and Mahindra have the experience, the infrastructure and the cash. In the EV space, companies such as Exide Industries and Switzerland’s Leclanche are building powerful alliances that can crush a startup.

It’s about a growing industry indeed, but traditional players also want a piece of the $2.3 billion cake and won’t have it taken away from them without a fight. And years of experience also help here.

From India to the globe

Startups do an amazing job in niche markets; they innovate, have the courage to cut corners, are not hindered by extreme compliance and governance requirements. The big players love startup energy, they used to be keen to invest in A and B rounds, allow the startup to grow before absorbing it.

Once the activities of the startup leave the niche, as is now the case of electric vehicles, playtime is over and the big players take over. It’s normal powerplay, but at the same time, the marketing conditions have changed and investor’s interest in tech startups is declining.

Authored by: Yves Helven