After years of a virtual duopoly, the Indian app-based ride-hailing market is witnessing a disruption of sorts. So what exactly does last month’s launch of Mahindra & Mahindra’s (M&M) Glyd mean for incumbents Ola and Uber?
Not much really initially, since Glyd is exclusively focusing on electric vehicles (EVs), say experts. “The EV space, first, is tough to crack at this stage when the infrastructure is not mature,” said Ruchi Shukla, a Mumbai-based independent mobility expert.
Indeed, the infrastructural support for EVs in India, be it cost-effective batteries or sufficient charging points, is utterly lacking—something Ola has realised the hard way over the past two years.
Tough road ahead
Ola piloted its EV initiative two years ago in Nagpur, Maharashtra, as part of prime minister Narendra Modi’s ambitious plan to make all new vehicles electric by 2030. With an initial investment of about $8 million (Rs56 crore), Softbank-backed Ola had hoped to deploy over 10,000 EVs over the following years.
However, the programme hit a snag within a year of launch as drivers were left helpless in long queues at the woefully few charging stations in the city. The company subsequently changed track to focus on e-three wheelers that cost five times less than an e-car.
Ola’s Mission Electric programme aims to add 10,000 e-rickshaws to its fleet by April 2019 and a million EVs by 2021.
“M&M will face the same infrastructural challenges. What M&M’s entry into this space will rather do is accelerate adoption of EVs in general,” said Anup Bandivadekar, regional lead at the International Council on Clean Transportation, a nonprofit that provides technical and scientific analysis to environmental regulators.
However, M&M isn’t oblivious to the challenges faced by Ola. After all, it partnered the ride-hailing app in its Nagpur pilot. And it has what Uber and Ola don’t: It is the only supplier of batteries, starter motors, power electronics, and power transmission for EVs, which it sells to other carmakers.
So the fact that both Ola and Uber are also eyeing the EV segment makes Glyd a formidable rival. After all, M&M is India’s largest maker of EVs.
Why M&M may Glyd smoothly
“Having in-house capabilities of batteries et al is in favour of the company (M&M). It will help keep operating expenses low for its drivers and car suppliers,” said Ashish Chandra, a research scholar at the International Organisation of Scientific Research. “Moreover, M&M is not directly operating the cabs, and neither is it buying anything; car, batteries, or infrastructure.”
Indeed, the cars-to-software conglomerate is taking an asset-light approach: Glyd won’t own the cars. Its fleet will consist of M&M vehicles owned by third-party taxi providers and drivers. For instance, its first fleet of 10, launched in Mumbai on Feb. 22 last month, is owned by Meru Cabs.
Apart from its EV expertise, M&M’s deep pockets could help, too.
“Uber and Ola are investor-driven companies and any vertical that isn’t giving viable returns doesn’t make sense for them,” said Amit Kaushik, country head of automotive consultancy Urban Science. “M&M, on the other hand, can re-deploy investments if the initiative fails to take off. The company isn’t putting in a lot of money into it anyway.”