BluSmart: The Indian Ride-Sharing Company Electrifying the Market
Introduction
BluSmart, an Indian ride-sharing company, is rapidly expanding its fleet of electric vehicles to gain a competitive edge against ride-hailing giants Uber and Ola. With chronic pollution plaguing cities like New Delhi, BluSmart believes electric vehicle ridesharing is not only a business opportunity but also a necessity for public health. In this article, we will explore how BluSmart is making strides in the Indian taxi market, the challenges it faces, and its unique approach to offering better service than its rivals.
BluSmart’s Expansion
Since its establishment in 2019, BluSmart has grown to operate approximately 4,500 electric cars in New Delhi and Bangalore. Despite being overshadowed by Uber and Ola in terms of total fleet size, BluSmart has managed to outpace its competitors in the rapidly growing electric vehicle market segment. With Uber’s recent launch of its “Uber Green” EV business and Ola’s plans to add 10,000 electric vehicles to its fleet, BluSmart aims to keep up by adding 600 to 800 new cars each month. The company intends to significantly increase the size of its fleet to maintain its market share.
The Need for Electric Vehicle Ridesharing
BluSmart co-founder Punit Goyal argues that the alarming pollution levels in cities like New Delhi, which suffer from some of the worst air quality in the world, make electric vehicle ridesharing crucial for public health. The company sees a huge opportunity for the electric vehicle industry and ride-hailing companies to transition to greener transportation options. By adopting electric vehicles, BluSmart aims to mitigate the negative impact of traditional combustion engine vehicles on the environment and human well-being.
Competition and Challenges
While BluSmart’s growth is impressive, analysts express skepticism about the company’s ability to achieve its ambitious goals. Basudeb Banerjee, an ICICI Securities analyst, highlights the challenges faced by all ride-sharing companies, including maintaining service quality as the number of drivers and aging vehicles increases. Banerjee believes that BluSmart’s focus on vehicle and driver quality may become compromised as the company expands, potentially leading to customer dissatisfaction. BluSmart’s business model, which involves owning its vehicles and hiring drivers, also presents financial challenges. Despite these obstacles, BluSmart aims to achieve positive EBITDA by the end of 2023.
BluSmart’s Differentiators
To differentiate itself from competitors, BluSmart focuses on offering superior service. The company uses newer vehicles and a pre-reservation model to ensure punctuality for collections. By prioritizing customer experience, BluSmart aims to address the frustration that riders often face with other ride-sharing platforms. The company emphasizes the quality of its fleet, consisting of electric vehicles manufactured by Indian conglomerate Tata, MG Motor India (a subsidiary of Chinese automaker SAIC Motor), and BYD (a Chinese rival of Tesla).
Investment and Financial Outlook
Expanding its fleet and business model comes with significant costs for BluSmart. The company has raised over $120 million in equity and debt from investors, including BP Ventures and Bollywood star Deepika Padukone. While BluSmart’s electric vehicle business generates annual revenue of approximately $40 million, its current model is not profitable. However, the company aims to achieve positive EBITDA by the end of 2023. To support its growth plans, BluSmart is in discussions with investors, such as Australia’s Macquarie, to raise additional funds.
One Step at a Time
BluSmart’s journey to electrify the Indian taxi market is a bold endeavor. As the company expands its fleet, challenges will arise, and trade-offs may be necessary. However, BluSmart’s commitment to offering a greener alternative and superior service gives it a unique position in the market. With increasing awareness of environmental concerns and the need for sustainable transportation options, BluSmart has the potential to disrupt the Indian ride-sharing industry and inspire other players to make similar strides towards electrification.
Summary
BluSmart, an Indian ride-sharing company, is making significant progress in electrifying the country’s taxi market. By relying on electric vehicles and prioritizing better service, BluSmart aims to outperform its competitors, Uber and Ola, in the rapidly growing electric vehicle segment. The company’s focus on sustainability and the need for cleaner transportation options in polluted cities like New Delhi sets it apart. While challenges and financial constraints exist, BluSmart’s commitment to the environment and customer satisfaction drives its mission. As BluSmart continues to expand and navigate the complexities of the market, its success will pave the way for a greener and more efficient ride-hailing industry in India.
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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.
Established in 2019, BluSmart now operates around 4,500 electric cars in the capital New Delhi and the tech hub Bangalore. While dwarfed in total size by Uber and Ola, which have each operated in India for a decade or more, it has outpaced incumbents in the rapidly growing sector IV market segment.
Uber last month launched its “Uber Green” EV business. Indiawith a plan to grow to 10,000 electric two-wheelers by 2024. Ola has previously said it plans to add 10,000 electric vehicles to its ride-sharing fleet, though it hasn’t started yet.
BluSmart co-founder Punit Goyal said the company plans to add 600 to 800 new cars a month to keep up with Uber and Ola’s EV plans. “We are now significantly increasing the size of our fleet,” he said in an interview in Gurgaon, a satellite city of New Delhi.
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 ridesharing necessary for public health. “It’s a huge, huge opportunity for the electric vehicle industry, for ride hailing companies to move to electric vehicles,” she said.
BluSmart has sought to distinguish itself from the competition by offering better service, with newer vehicles and a pre-reservation model designed to help cars arrive on time for collections.
The company’s fleet consists of electric vehicles manufactured by Indian conglomerate Tata; MG Motor India, a subsidiary of Chinese automaker SAIC Motor; and BYD, a Chinese rival of Tesla which has embarked on a aggressive international expansion.
Uber and Ola, a local Indian ride-sharing company, have struggled to maintain consistent service in India, with customers frustrated by frequent cancellations and erratic service. Drivers also got off the platform, dissatisfied with the low pay. Uber sold its Southeast Asian business in 2018.
Unlike other ride-sharing models, BluSmart purchases its own vehicles and then hires drivers to drive them. His 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 $120 million in equity and debt from investors including BP Ventures, the investment arm of the oil and gas major, and Bollywood star Deepika Padukone.
BluSmart’s loss-making electric vehicle business earns annual revenue of approximately $40 million annually. Goyal said the goal is to achieve “positive EBITDA” — referring to earnings before interest, taxes, depreciation and amortization — 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 funds to bring it to 25,000 cars. Macquarie declined to comment.
Some analysts, however, are skeptical of BluSmart’s ability to achieve its ambitious goals.
ICICI Securities analyst Basudeb Banerjee said all ride-sharing companies have struggled to maintain quality as they have hired more drivers and aging 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 nor Ola has been able to do,” Banerjee said.
“The only difference is that this is a new company, there are new electric vehicles, the quality of the vehicles is relatively better,” he added. In his view, if BluSmart is to expand, “they have to compromise on vehicle quality and driver quality, which will surely run afoul of end consumers.”
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