Ola Cabs, the biggest Indian ridesharing company, has spun out a separate business unit named Ola Electric Mobility in 2019. This year Ola Electric has acquired an electric scooter start up based in Amsterdam. The Electric Vehicle business, which spun out of the ridesharing and ride hailing giant Ola, is now looking forward to launch its very own line of two-wheelers by the end of this year. It plans to focus on the two-wheeler market with clean energy. Is it a good plan? Will Ola succeed in building its own ecosystem like Tesla?
The coronavirus pandemic has taken a toll on ridesharing and ride hailing companies as most people are confined to their homes due to the lockdown and are preferring personal vehicles over ridesharing or ride hailing vehicles. Cab aggregator Ola saw a 95% decline in its revenue in the last two months due to the pandemic. The company is laying off about 1400 employees and has decided to downsize. Contrary to its decision in downsizing, it has acquired this Amsterdam based firm Etergo with a plan to step forward in smart mobility. Knowing that the world will not go back to the pre-pandemic situation any time soon, it gives us the question of whether the acquisition of Etergo is a good plan or not. Before we jump into the deductions that Ola buying Etergo will prove to be a good plan or not, let’s dig in more about Etergo.
ETERGO- ‘the Tesla of Two Wheelers’
Etergo, called as ‘the Tesla of the scooter world”, is a Dutch firm based in Amsterdam which was founded by co-founders Bart Jacobsz Rosier and Marijn Flipse on 1st July 2014. It is an electric mobility company that aims at elevating the smart vehicle concept, unifying safety, communication, music, etc into a more application dependent interface.
Etergo’s AppScooters, giving a maximum range covering 240 km, can run apps and remotely controls our phones with it. The light weight electric scooter has a seat of capacity 50 L, with a capacity to increase speed from 0-45 km/h in just 3.9 sec. The AppScooters have a facility of safe navigation, meaning we can control our phone Bluetooth, stream music, answer our calls and use other driver friendly apps on the 7-inch touch screen provided in the handlebar.
Ola buying Etergo is a part of their plan to produce Electric Vehicles on a local level. Though the amount of acquisition of Etergo by Ola Electric was not disclosed by the former or the later, but sources familiar with the deal assume it to be 84 M Euros (dollar 92 million), which was the amount Etergo was last valued at. The unicorn separate branch of the Indian Ridesharing company, Ola Electric, plans to launch its electric scooters by 2021.
Ola plans to build smart mobility and circumstances are in favour of it.
It aims at building smart mobility in India and around the world. The company aims at building an electric suite focusing on urban mobility problems. Ola’s step into the Electric Vehicles will be its one big step forward into the future of mobility. The founder and chairman of Ola Electric, Bhavish Aggarwal, hailed the future of mobility is electric and it is the right time to step into the Electric Vehicles market.
The Covid-19 Factor
The post COVID world will see a surge in the use of personal vehicles. A light weight low cost clean energy two wheelers would be an ideal vehicle for the urban populations around the world. And the post COVID world would provide a great opportunity to accelerate the adaptation of Electric mobility worldwide. Electric two wheelers, being a lot more inexpensive, will make up the largest part of new vehicles that are set to hit the road next decade. Now that we have started to “un-lockdown”, as the Indian government is terming it, people are bound to return to their offices. And in highly populated nations like India and China, masses depend on public transport which helps them commute to their workplaces daily and are often overcrowded. Now that the public vehicles have stringent rules on the number of passengers they can take, a lot of people will have to look for a quick alternative way to commute to their workplaces. Given the economy and the paperwork hassle, many would switch to Electric two-wheelers which are cheap and easy to access. Also, for people with no prior knowledge of driving, it would be easier for them to learn to ride a scooter than to learn driving a four wheeler. Though gasoline powered bikes would still make the bulk of two wheeler sales, if companies like Hero Electric Vehicles, Ola Electric, etc can produce reliable electric motorcycles locally and sell them at affordable prices, they can easily aim at becoming the Tesla of two wheelers. This is a great opportunity for Ola Electric to build a new generation of electric vehicle users.
Ola now aims at transforming the whooping 100 million+ market of two wheelers, including India’s share of over 20 million, into digital and clean energy future. Ola Electric’s goal is to build an electric vehicle ecosystem on a real scale in India and around the world. They are presently running several pilots to establish charging stations and launch electric vehicles across cities focusing on two and three-wheelers. They are collectively planning to establish an extensive charging and swapping network across the nation. With electric two wheelers becoming the most efficient, viable and cleanest solution for urban mobility in the post COVID world, Ola has the right cards in its hands at the right time to build a suite of smart urban mobility solutions for people in India and for urban population across the globe as a whole.
Will Ola be able to build an EV ecosystem like Tesla did?
Ola has already started taking its steps forward to build its EV ecosystem and working with the top power distribution companies in India to build charging and swapping stations in the nation’s capital New Delhi.
Other than facing the challenge of effectively building a useful charging network, Ola would have to face challenges from other players in the field like Ather Energy, Okiwana, TVS Motors and Bajaj. They have already established contributors in the Electric Motorcycle market. These companies can easily focus on building an EV ecosystem without having to worry about launching a new product. On the other hand, Ola will have to establish a network of charging and swapping stations plus focus on launching, marketing and winning the trust of people on its very first Electric Motorcycle. But Ola has taken a wise step by acquiring Etergo, an established firm in the market, often nicknamed as the ‘Tesla of two wheelers’. Given the upcoming market for EVs in the next decade, and Ola Electric’s initiative in entering the market at the optimum time, it is now a matter of a short period of time to see how successful Ola will be in building its own EV ecosystem like Tesla.