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Ola takes the electric lead

April 16, 2018 | Expert Insights

Indian ride-hailing technologically company, Ola, has announced that it will be introducing 10,000 electric rickshaws to the Indian roads in the span of 12 months.

Background

The first practical electric car was built in the UK in 1884 by Thomas Parker. However, in the 20th century, gasoline vehicles saw a boom in popularity, as they were much cheaper. It was only after 2008, that the market for electric vehicles started growing. This was primarily due to concerns over growing oil prices and the environment. Modern electric cars run on rechargeable batteries and are propelled by electronic motors, not traditional combustible engines.

Electronic vehicles have been lauded as a green and efficient alternative to combustion-engine automobiles. However, how “green” these cars really are depends on the source of electricity. Electricity produced by coal, for example, results in a much larger carbon footprint than electricity produced by wind. Additionally, lithium-ion batteries commonly used by these vehicles are often toxic and difficult to dispose. Critics have also pointed out that public transportation, cycling, or walking are greener options than electric cars.

Ten years ago, the market for electronic cars was close to non-existent. The sales of electric cars rose to 2 million in 2016. According to research released in December 2017, the costs of owning and running electric cars have begun to fall, even as investment in electronic vehicles has increased. According to a report in Reuters, the investment made on electric vehicles by global companies now amounts to $90 billion overall.

Electric rickshaws have become more popular in regions like India in recent years. They are being widely accepted as an alternative to petrol/diesel/CNG auto rickshaws. They are 3 wheelers pulled by an electric motor ranging from 650-1400 Watts. They are mostly manufactured in India and China, only a few other countries manufacture these vehicles. Battery-run rickshaws could be a low-emitter complementary transport for low-income people, who suffer the most from a lack of transport facility, if introduced in a systematic manner say experts.

Ola

Ola, is an Indian online transportation network company. Currently headquartered in Bangalore, it was founded as an online cab aggregator in Mumbai. Named Ola Cabs, it was founded on December 3rd, 2010 by Bhavish Aggarwal and Ankit Bhati. Aggarwal is currently the company’s CEO. As of 2017, the company has expanded to a network of more than 600,000 vehicles across 110 cities. It seen as a direct competitor for international players like Uber.

Analysis

The Indian government has already signaled earlier that one of the key agendas to address pollution will be through electric vehicles. In fact, the government has stated that by 2030, every vehicle will be powered by electricity. Governments across the world have been making similar announcements in recent years. In July 2017, the governments of France and UK announced that by 2040, petrol and diesel cars would be banned. UK, especially, has been grappling with increased levels of pollution.

In April 2018, Ola announced that in the span of the next 12 months, it will be introducing 10,000 e-rickshaws and electric auto-rickshaws in its service. The goal is part of a larger scheme to bring one million electric vehicles to Indian roads by 2021. The company will be partnering with various vendors to achieve this goal. "Three wheelers are a vital means of transportation and a source of livelihood for millions of people every day. It also represents an immediate opportunity to improve outcomes for all stakeholders while reducing pollution across towns and cities," said Bhavish Aggarwal, Co-Founder and CEO of Ola.

Aggarwal added, "Less than a year ago, we launched India's first multi-modal electric pilot in Nagpur. After more than 4 million electric kilometers traveled and many lessons learned, we are significantly expanding our commitment to electrify mobility in India. Ola leads by example, and we look forward to working with state governments and other partners to introduce accessible, affordable, and sustainable mobility solutions at scale."

Assessment

Our assessment is that India’s pollution woes need to be urgently addressed. Recently, the Lancet Commission published a report which stated that pollution results in the deaths of at least 9 million people annually. The study found that India in particular recorded the highest number of deaths across the world due to pollution. Indian cities like Delhi are considered to be amongst the most polluted in the world. Hence, the introduction of more electric vehicles is a move in the right direction.

This is also a business friendly decision made by Ola. As the Indian government has already signaled its intention of having only electric vehicles by 2030, Ola will be ahead of the curve by that deadline. In addition, this will also reflect well on its brand image.