Uber recently announced that riders will be able to select electric cars for their transportation needs, driving up the role of EVs in India’s shared mobility space.
The move may be a response to increasing competition from EV-based platforms and in anticipation of regulatory changes as the country looks for ways to reduce carbon emissions.
After Covid-19 exposed the shortcomings of major ride-hailing platforms as reflected in the cancellations, new-age companies such as BluSmart emerged with the promise of a better experience for riders.
At the heart of the business models of both old and new ride-hailing companies are the cab drivers, who experienced financial strain due to the rise in CNG prices following the pandemic. Additionally, major ride-hailing companies refused to reduce their commissions. This prompted drivers to adopt tactics such as requesting passengers to cancel the ride through the app and opt for direct payment instead to avoid the commissions.
While the emerging smaller platforms claim that drivers are frustrated with the high commissions and punitive treatment by the ride-hailing giants, Ola and Uber remain confident about their network and the platform’s dependability as a steady source of income for them.
With Uber already betting on EVs and Ola’s plans to follow soon, the success of EV-based shared mobility may again depend on whether these new vehicles can result in improved earnings for the drivers.
Electric ride won't be at a premium to the current offerings on the platform, Prabhjeet Singh, president of Uber India and South Asia, said. “It could be a cheaper product than the existing product at scale.”
Assuming that the driver is at the centre of this ecosystem, a cheaper product at scale may allow for better earning opportunities for the driver.
Prabhjeet Singh, President of India and South Asia region at Uber, speaking at Uber Green launch.
Prabhjeet Singh, President of India and South Asia region at Uber, speaking at Uber Green launch.
Scaling It Up
But what’s this scale? The number of cars to ensure that EVs on the platform will be cheaper than their CNG-powered alternatives. That number may be around 5,000 for a region as big as Delhi-NCR, according to Anmol Jaggi, co-founder and chief executive officer of all-electric ride-hailing platform BluSmart Mobility. It's all about the optimum utilisation of the charging infrastructure and the concentration of EVs in a region, he said.
BluSmart claims that on an average its pricing in the premium segment is 15% cheaper than their rivals. But for the benefit to reach the masses, the higher price of EVs needs to come down.
According to Jaggi, the induction of smaller cars can reduce the price to Rs 14-15 per km, from Rs 23-24 per km with the current fleet of cars like XPRES-T EVs. Size of the market at this lower price will be 10 times bigger than the premium cars, he said.
“The cost of acquisition (for EVs) is nearly double of what you get in the alternatives. The entry barrier itself is a challenge as of now,” Nimish Trivedi, chief executive officer and co-founder at EV ride-hailing platform Evera, told BQ Prime. But if you really see over a period of time or on total cost of ownership level, he said, EVs are cheaper option compared to other cabs in a fleet.
The total cost of ownership refers to cost of owning and operating a vehicle over a period. It includes fuelling or charging, maintenance, and financing costs.
With the launch of Tiago EV and the French carmaker Citroen’s e-C3, the space may be ripe for disruption. But the top executives at the start-ups feel these new models need to be tested in all weather conditions before deploying on the platforms.
The number of EVs on Uber’s India platform has increased to 6,500 in 2023 from less than a thousand in 2020. In February, the company signed an agreement with Tata Motors Ltd. to onboard 25,000 electric vehicles onto the platform in next few years. Uber has committed to achieve 100% rides in zero-emission vehicles globally by 2040.
Lessons From Global Markets
Uber offers its low-emission rides in over 100 major cities across the world.
In London, the company has doubled the number of fully electric vehicles since the launch of Uber Green in March 2021. “90% of all drivers who join Uber with a new vehicle are now opting for a fully electric car,” an Uber spokesperson said in a written response.
In Paris, more than 30% of all kilometers on the platform are now in EVs or petrol hybrids. The number stands at over 12% in Lisbon for completely electric vehicles.
India has always posed unique challenges stumping businesses that have flourished in other markets. But Uber is no stranger to the country’s peculiar problems, and it will hope to reach greener pastures as it hops on a new ride.
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