Bike taxi startup Rapido’s recent entry into cab services, is to overcome the limitations two-wheeler and three-wheeler public transportation medium suffer from. They are mostly preferred for limited distance travel. Further, it’s natural for a bike taxi firm to get into other forms of cab services.
“We have launched cab-hailing services as we see that two-wheeler, and three-wheeler commuting are for limited use cases. We want to be able to offer all possible ride-hailing options, for more than 1,2, or 3 passengers on our platform,” Kunal Khattar, founder, AvantEdge Founders, who is one of the earliest investors in Rapido, told Fe.
“Our core category will continue to be led by bikes. However, we believe there is humongous potential to penetrate into multiple into the corners of the country and to become the default last mile connectivity option for users,” said Pavan Guntapalli, co-founder, Rapido. “All online platforms put together has only been able to penetrate about 16-20% of the four wheeler taxi fleet”, he added.
Khattar said that Rapido has been working on shifting to EVs, however, this is something that isn’t entirely in its control, as riders on its model mostly sign up with their own vehicles, and EV adoption rate in general is still picking up. “Such a transition cannot happen overnight, and will instead take 3-5 years, by when we’ll be seeing more EVs than ICE vehicles on road,” he added.
As is known, Rapido has recently launched pilot for its cab services in Hyderabad, and has also applied for taxi-aggregator licences in Chennai, and Bengaluru, where pilot tests are underway.
The Bengaluru-based startup which rose to popularity for providing cost-effective ride-hailing on motorcycles, and three-wheeled auto rickshaws, currently operates in 100 cities across 24 states.
Motorcycles or bike-taxis has been its largest focus, with it claiming to have a 60% market share. The bike fleet is also utilised to provide delivery servicing capabilities to its investor Swiggy, during peak order volume hours.
According to analysts, another reason for Rapido getting into cab services could be the regulatory challenges its bike taxi services has been facing in several states. For instance, it has not been given a licence to operate bike taxis in Bengaluru and is allowed to operate with only an EV fleet in cities like Delhi. In states like Goa, where bike taxis are legal, it has faced complete rejection from taxi and cab drivers’ unions.
In the 100 cities that it is operational in, it does so through a fleet that is still largely made up of non-EV motorcycles, something which the state governments do not encourage.
Further, Ola’s recent re-launch of its electric bike services is offering a tough competition.
Analysts say that while making an entry into the cab services for Rapido makes sense, it won’t find the going easy here. One of the reasons for the same is that the company’s relationship with drivers and auto riders associations have been strained in the past. To succeed in this competitive market it may have to spend hugely on marketing and forego commissions totally to attract and retain drivers.
Meanwhile, Rapido’s losses have been mounting. While its revenue rose to Rs 145 crore in FY22 from Rs 75 crore in FY21, losses jumped to Rs 439 crore from Rs 166 crore in the same period. By comparison, Uber India reduced its losses to Rs 216 crore in FY22 from Rs 334 crore the previous fiscal. In the same period, Ola posted a consolidated loss of Rs 1,522 crore up from Rs 1,116 crore.
Rapido has raised about $310 million so far from investors like Swiggy, WestBridge Capital and Shell Ventures, among others, and according to analysts will need more funding to survive in this competitive market.
Pavan said that though FY23 numbers have still not been filed with the Registrar of Companies, the company has achieved operational profitability, and is well set to be fully in the green in a few quarters.
