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BluSmart, an Indian ride-sharing company backed by BP’s venture capital unit, is adding hundreds of new electric vehicles a month as it tries to beat Uber and Ola in the race to electrify the country’s taxi market.
Founded in 2019, BluSmart now operates about 4,500 electric cars in the capital New Delhi and tech hub Bengaluru. While dwarfed in total size by Uber and Ola, which have each operated in India for a decade or longer, it has shot ahead of the incumbents in the fast-growing EV segment of the market.
Uber last month launched its “Uber Green” EV business in India, with a plan to grow to 10,000 electric two-wheelers by 2024. Ola has previously said it plans to add 10,000 EVs to its ride-sharing fleet, though it has not started.
BluSmart’s co-founder Punit Goyal said the company planned to add 600 to 800 new cars a month in order to keep up with Uber and Ola’s EV plans. “We’re now increasing our fleet size substantially,” he said in an interview in Gurgaon, a satellite city of New Delhi.
Goyal argued chronic pollution in cities such as New Delhi, which suffers from some of the worst air quality in the world, made EV ride sharing necessary for public health. “It’s a huge, huge opportunity for the EV space, for ride hailing companies to switch to EVs,” he said.
BluSmart has tried to set itself apart from rivals by offering better service, with newer vehicles and a pre-booking model designed to help cars arrive for pick-ups on time.
The company’s fleet consists of EVs made by Indian conglomerate Tata; MG Motor India, a subsidiary of Chinese carmaker SAIC Motor; and BYD, a Chinese rival to Tesla that has embarked on an aggressive international expansion.
Uber and Ola, a homegrown Indian ride-sharing business, have struggled to maintain consistent service in India, with customers frustrated by frequent cancellations and erratic service. Drivers have also dropped off the platform, dissatisfied with low pay. Uber sold its business in south-east Asia in 2018.
Unlike other ride-sharing models, BluSmart buys its own vehicles and then contracts drivers to drive them. Its branded cars have become ubiquitous on the streets of New Delhi over the past year.
But this business model is expensive. The company has raised more than $120mn in equity and debt from investors including BP Ventures, the oil and gas major’s investment arm, and Bollywood star Deepika Padukone.
BluSmart’s lossmaking EV business earns annual revenues of about $40mn a year. Goyal said it aimed to be “ebitda positive” — referring to earnings before interest, tax, depreciation and amortisation — by the end of 2023.
He added that the company had financing for 15,000 cars and was in talks with investors including Australia’s Macquarie to raise funding to take this to 25,000 cars. Macquarie declined to comment.
Some analysts, however, are sceptical that BluSmart will be able to hit the lofty targets it is setting for itself.
Basudeb Banerjee, an analyst at ICICI Securities, said all ride-sharing companies struggled to maintain quality as they hired more drivers and vehicles aged, leading to a drop in service standards.
“This is a business where you need to deliver quality with consistency at scale, which neither Uber or Ola have been able to do,” Banerjee said.
“The only difference is that this is a new company, new EVs are there, the quality of vehicles are relatively better off,” he added. In his view, if BluSmart wants to scale up, “they have to compromise on the vehicle quality and driver quality which is surely going to antagonise end consumers”.
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