Indian electric-car pioneer overtakes Uber

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BlueSmart, an Indian ride-sharing company backed by BP’s venture capital unit, is adding hundreds of new electric vehicles a month as it seeks to beat Uber and Ola in the race to electrify the country’s taxi market. Has been

Established in 2019, BlueSmart now operates around 4,500 electric cars across capital New Delhi and tech hub Bengaluru. Though dwarfed in overall size by Uber and Ola, which have operated in India for a decade or more, it has outpaced existing players in the fast-growing EV segment of the market.

Uber launched its “Uber Green” EV business in India last month, with plans to scale up 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 rolled out.

BlueSmart co-founder Punit Goyal said the company plans to add 600 to 800 new cars per month to keep up with the EV plans of Uber and Ola. “Now we are increasing the size of our fleet substantially,” he said in an interview in New Delhi’s satellite city of Gurgaon.

Goyal argued that chronic pollution in cities like New Delhi, which suffers from some of the worst air quality in the world, has made EV ride-sharing essential for public health. “This is a huge opportunity for the EV sector, for ride hailing companies to switch to EVs,” he said.

BlueSmart has tried to differentiate itself from rivals by providing better service with a pre-booking model designed to help new vehicles and cars arrive on time for pick-up.

The company’s fleet includes EVs manufactured by Indian conglomerate Tata; MG Motor India, a subsidiary of Chinese carmaker SAIC Motor; and BYD, a Chinese rival to Tesla that has launched an aggressive international expansion.

Uber and Ola, a domestic Indian ride-sharing business, have struggled to maintain consistent service in India, with customers frustrated by frequent cancellations and erratic service. Dissatisfied with the low wages, the drivers have also left the platform. Uber sold its business in Southeast Asia in 2018.

Unlike other ride-sharing models, BlueSmart buys its own vehicles and then contracts drivers to drive them. Its branded cars have become ubiquitous on the streets of New Delhi in the last one year.

But this business model is expensive. The company has raised over $120 million in equity and debt from BP Ventures, the investment arm of the oil and gas major, and investors including Bollywood star Deepika Padukone.

BlueSmart’s loss-making EV business generates annual revenue of approximately $40 million per year. Goyal said it aims to be “Ebitda positive” by the end of 2023, referring to earnings before interest, tax, depreciation and amortisation.

He said the company had financed 15,000 cars and was in talks with investors, including Australia’s Macquarie, to raise funds to take it to 25,000 cars. Macquarie declined to comment.

However, some analysts are skeptical that BlueSmart will be able to meet the lofty targets it has set for itself.

Basudeb Banerjee, an analyst at ICICI Securities, said all ride-sharing companies struggled to maintain quality as they hired more drivers and older vehicles, 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 has been able to do,” Banerjee said.

“The only difference is that it is a new company, there are new EVs, the quality of the vehicles is relatively better,” he added. In his view, if BlueSmart wants to move forward, “they will have to compromise on vehicle quality and driver quality which will surely upset the end consumers”.