India’s ride-hailing company Ola, which made its international debut last year, is getting more serious about its smart mobility solutions and electric vehicles efforts. The company has secured a $300 million investment from Hyundai and Kia to collaborate on building new fleet solutions and explore mobility solutions for global markets.
As part of the investment, Ola said the companies will also work on improving local infrastructure in India and building electric vehicles for the nation. The companies will also develop solutions to operate and manage fleet vehicles. Today’s investment also marks the foray of Hyundai Motor Group, which currently focuses on automobile manufacturing and their sales, into developing a complete package of fleet solutions.
The deal includes Hyundai and Kia providing Ola’s driver partners with customized vehicles, and financial support to lease vehicles and pay in multiple installments. The carmakers will also provide maintenance and repair services for the vehicles. These would help lower the final cost of ownership of these vehicles, said Ola, which has inked similar tie-ups with other carmakers in recent years.
In a prepared statement, Ola said it aims to create over 2 million jobs through its mobility ecosystem by 2022. Ola already has over 1.3 million driver partners on its platform. “This partnership will also significantly benefit driver-partners on our platform, as we collaborate with Hyundai to build vehicles and solutions that enable sustainable earnings for millions of them, in the time to come,” said Ola CEO Bhavish Aggarwal.
The three companies said they will accumulate data during Ola’s services operations to make improvements to their vehicles and use the insights to make changes to their product roadmap. “Hyundai will proactively respond to market changes and persistently innovate to deliver greater value to our customers,” said Hyundai Motor Group executive vice chairman Euisun Chung.
From cars to mobility solutions
Hyundai has made its intention to transition from a car manufacturer into a smart mobility solutions provider clear in recent quarters. In January, the company joined the Linux Foundation and the nonprofit’s seven-year-old Automotive Grade Linux (AGL) effort to contribute to — and reap benefit from — software developed by over 140 companies. Members of AGL, which include fellow carmakers Toyota, Ford, Honda, and Suzuki, work in tandem to develop open source software for infotainment, telematics, and instrument cluster applications.
Ola, which introduced its own connected vehicle platform Ola Play in 2016, will fit right in. A year later, the company said it would license its connected vehicle platform to carmarkers globally. Ola, which is leading Uber so far in India, has also grown more interested in building electric vehicles. A year ago, it announced Mission Electric, a program as part of which it seeks to launch 10,000 three-wheeled electric vehicles in 12 months and 1 million electric vehicles by 2021.
Earlier this month, Ola spun out its electric vehicle business called Ola Electric, which has raised $56 million in a round led by two of Ola’s investors. Indian newspaper Mint reported last week that Ola was in talks with several carmakers to secure custom-made vehicles and license its connectivity platform.
$3.5 billion and counting
The investment from Hyundai Motor Group is part of Ola’s ongoing J round of financing, a source familiar with the matter said. So far, participants in the J round include Sachin Bansal, founder of Flipkart, which sold majority stake to Walmart last year, who has invested $92 million, and existing investor Steadview Capital, which has invested $75 million. The company is expected to raise $1 billion at a valuation of $6 billion, the person said. An Ola spokesperson declined to comment on the financing round.
Eight-year-old Ola, which has raised about $3.5 billion in funding from a range of investors including SoftBank and Tiger Global, is slowly inching towards profitability. In July last year, Aggarwal said the company was making money on each ride in India. At a conference late last year, he said the company company will “soon” become cash-flow positive, and it hopes to go public in the next three to four years.
And that should only improve in the coming quarters. Ever since Uber raised money from SoftBank, the two companies have cooled down their aggressive price war to lure customers in India. Last year, Ola was in talks to acquire Uber’s India business, according to a person familiar with the matter. During a visit to India, Uber CEO Dara Khosrowshahi said the company was committed to India, but did not rule out a sale.