BluSmart, an Indian ride-hailing startup, challenges Uber with its fleet of electric cars

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BluSmart, a ride-sharing company in India supported by BP’s venture capital unit, is rapidly expanding its fleet of electric vehicles (EVs) to outpace Uber and Ola in the race to electrify the country’s taxi market.

Established in 2019, BluSmart currently operates around 4,500 electric cars in New Delhi and Bengaluru. Although smaller in comparison to Uber and Ola, which have longer histories in India, it has gained a significant lead in the rapidly growing EV segment.

Uber recently launched its “Uber Green” EV business in India, aiming to reach 10,000 electric two-wheelers by 2024. Ola has also expressed plans to add 10,000 EVs to its ride-sharing fleet, although it has not yet initiated this process.

Punit Goyal, co-founder of BluSmart, stated that the company intends to add 600 to 800 new cars every month to keep up with Uber and Ola’s EV plans. “We are significantly increasing the size of our fleet,” Goyal said during an interview in Gurgaon.

Goyal highlighted the urgent need for EV ride-sharing in cities like New Delhi, notorious for its severe air pollution, to safeguard public health. “It’s a tremendous opportunity for the EV space and ride-hailing companies to transition to EVs,” he emphasized.

BluSmart differentiates itself from competitors by offering superior service, including newer vehicles and a pre-booking model that ensures timely pick-ups.

The company’s fleet consists of EVs from Indian conglomerate Tata, MG Motor India (a subsidiary of Chinese carmaker SAIC Motor), and BYD, a Chinese rival to Tesla that is aggressively expanding internationally.

In contrast, Uber and Ola have faced challenges in maintaining consistent service in India, leading to customer frustration due to frequent cancellations and unreliable service. Uber sold its business in Southeast Asia in 2018.

Unlike other ride-sharing models, BluSmart purchases its own vehicles and hires drivers to operate them. Over the past year, its branded cars have become a common sight on the streets of New Delhi.

However, this business model comes with significant expenses. BluSmart has secured over $120 million in equity and debt funding from investors, including BP Ventures and Bollywood star Deepika Padukone.

While BluSmart’s EV business generates annual revenues of approximately $40 million, it currently operates at a loss. Goyal aims to achieve “ebitda positivity” by the end of 2023.

He also mentioned that the company has already secured financing for 15,000 cars and is in talks with investors, including Macquarie from Australia, to raise additional funding for a fleet expansion to 25,000 cars.

However, some analysts express skepticism regarding BluSmart’s ability to meet its ambitious targets.

Basudeb Banerjee, an analyst at ICICI Securities, observes that all ride-sharing companies struggle to maintain quality as they expand their driver and vehicle networks, resulting in a decline in service standards.

“Delivering consistent high-quality service at scale is a challenge that both Uber and Ola have been unable to overcome,” Banerjee commented. He further added, “The only difference here is that BluSmart is a new company with relatively better EVs and vehicle quality. If BluSmart wants to grow, they might compromise on vehicle quality and driver quality, which could potentially upset end consumers.”

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