SoftBank willing to fund Ola, but with a rider

Growing the number of electric vehicles on Ola’s platform is part of the terms SoftBank has put forth for the funding

Ola, the country’s largest taxi hailing company, has been mandated to step up its play in the electric mobility segment as part of its latest funding round that would see it raise $2 billion from investors including SoftBank and Tencent.

Ola would soon begin replicating its experiment with electric mobility in Nagpur to other cities, with a focus on smaller towns where it can quickly set up charging infrastructure.

Delhi could become the first large city after Nagpur where Ola would invest in growing its fleet of electric vehicles.

The company already has a small number of e-rickshaws on its platform in the city, but will significantly expand this, according to a person with the knowledge of Ola’s plans.

“Going electric is expensive due to the cost of cars. You need to ensure that it is viable for a driver to run cars on the platform and yet make money for Ola,” said the person.

Ola’s latest funding round has been split into two parts, with the first $1 billion coming from Tencent, two global venture capital firms and the UC-RNT Fund.

The second tranche would come from SoftBank, which has put forth certain conditions on Ola’s business metrics, before the funding is finalised.

SoftBank, which has backed Didi Chuxing in China and Grab Taxi in Southeast Asia, understands the ride hailing space well and has drawn from its learnings to set the mandate for Ola.

This, coupled with SoftBank founder Masayoshi Son’s vision for electric mobility has set the stage for Ola’s expansion in the space.

Son, at an event in India in December last year, had said that he would fund a programme to get one million electric cars on Indian roads over five years through Ola.

He had even called his plan the “biggest initiative for electric vehicles in India”, which could be done in partnership with electric vehicle manufacturers and the government.

It also falls in line with the government’s move to push for an India that will see sales of only electric cars by 2030.

“It makes more sense for fleet operators to bring electric cars to India. The best solution for the country is to have electric cars but to also share cars. Efforts are being made on this front and I’m sure these on-demand players will bring more and more electric cars,” said Abdul Majeed, executive director at Price Waterhouse.

While firms such as Uber and Ola are more suited to bringing electric cars onto India’s roads compared to consumers, the task would still be an arduous one.

The complete lack of infrastructure would be the biggest fork in the road, something that isn’t just a problem in India but across the worlds.

“I don’t think the lack of performance of cars is a problem. No one travels more than 30-40 km within the city anyway. The most critical thing is to put in place the infrastructure and they should be able to do that if they are able to achieve scale,” added Majeed.

Photograph: Reuters