BluSmart, a startup which owns and operates an all-electric vehicle (EV) fleet on its ride-hailing platform, is hopeful of turning profitable by end of CY23, on the back of increasing demand for its services at a time when customer experience on Ola and Uber has largely been unsatisfactory, co-founder Punit Goyal told FE.
Goyal said the strong customer demand has pushed the company to constantly increase its fleet size to 3,000 EVs and will further add more vehicles to boast of around 5,000 electric cars by March-end. This, along with monetisation plans for its charging network, will steer the company towards its profitability goals. The company’s loss stood at Rs 65 crore while it posted a revenue of Rs 29 crore in FY22. In FY21, revenue stood at Rs 9 crore while losses were at Rs 39 crore, according to the company’s financials sourced from Tofler.
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Further, BluSmart’s current running cost was around 1.4 per kilometre, which Goyal said could go even lower to Re 1 as the startup aims to add about 40,000-50,000 EVs over the coming 12-18 months. In comparison, the cost of running compressed natural gas (CNG) cars is about 4-5X higher while it is 8-9X more in the case of petrol/diesel cars, Goyal explained, leaving room for BluSmart to earn more money and pay its drivers more.
BluSmart drivers earn anywhere between Rs 22,000 and Rs 24,000 — about a third higher than `18,000 that driver partners, on an average, earn via Ola or Uber. Unlike traditional players, the Gurugram-based ride-hailing platform owns all the cars.
Asked what gave BluSmart the confidence to turn profitable in a highly competitive ride-hailing market, Goyal said, “We’ll be the first player to turn profitable as early as end of calendar year 2023 because we control every inch of the ride-hailing ecosystem, so wherever money can be squeezed and made, we’re going to do it.”
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“On the other hand, Ola and Uber do not own the vehicles, nor do they own the drivers, there’s nothing under their control. They’re merely an artificial intelligence (AI) platform, like ChatGPT, which brings passengers and cars together, and eventually earn a commission.”
Underscoring the increasing demand, Goyal said that BluSmart was growing 15-20% month-on-month (m-o-m). To help the company go full throttle, Anmol Jaggi, co-founder, BluSmart, had said in July that the company was in the midst of raising $250 million from large global climate-centric fund houses and other pension funds.
The talks of raising additional capital comes at a time when Uber and Ola have been piloting EV cabs in India, but Goyal wasn’t too concerned about the increasing competition as he believes even if the companies figured out the details on vehicle sourcing, putting in place the charging infrastructure was going to be a challenge.
“We expected Ola and Uber to take the (Reliance) Jio route and enter the EV cab space with big-bang announcements, not pilot like smaller startups,” Goyal said. “We’re, however, open and will let anyone leverage BluSmart’s charging network.”
“Separately, Covid was the final nail in the coffin for Ola and Uber after which they have seen their fleet deplete and their driver partners being unhappy with the income earned which have worked well because our business has grown exponentially after that. The key is to provide great driver experience, everything else comes next,” he added.
Currently, BluSmart’s fleet is dominated by Tata’s vehicles but includes cars from MG Motors, China’s BYD and SAIC Motor. Goyal said Tata’s supply was a challenge and said BluSmart was “open to procuring from any/all original equipment manufacturer (OEM) who provided vehicles at good prices, including Mahindra and Hyundai” both of which are expected to unveil several EV models over the coming year.
BluSmart is yet to deepen its reach in cities it is present in — Delhi-NCR and Bengaluru. For instance, BluSmart cabs have to return empty, thereby lowering the total trips a cab can make, after they drop passengers off at the Kempegowda International Airport because they’re yet to receive regulatory approvals to pick travellers up from the airport. That along with being serviceable in all areas of a city, something which still isn’t possible.
While Goyal said the company was working on going deeper in already existing cities, BluSmart is also gearing up to launch services in Hyderabad, Mumbai, Chennai and Kolkata, but did not provide a timeline. About 85% of the business for ride-hailing companies, including his, comes from the top five-six cities, Goyal added.
Tracing back, Uber has largely inspired Goyal to upstart BluSmart along with Jaggi and even helped it kickstart its operations because BluSmart had first listed their electric cars on Uber before it eventually built its own portal. Goyal says his company graduated from “Uber’s class of 2019”.
“We had never imagined we’d be taking on Uber at that point in time,” Goyal reminisces.
Goyal also recalls his outing with Brent Callinicos, former CFO of Uber, where he spotted a BMW i8 being charged at a distance – the first time he had ever seen a car being powered up with an electric cable. “Uber is the AirBnB of mobility,” Callinicos’ words which Goyal said will stick with him forever but a full-stack model to create “an Uber of electric mobility” had to be put in place, which paved the path for BluSmart’s stellar journey.
BluSmart said it has a zero cancellation policy and never imposes surge pricing, something Ola and Uber have been battling with of late. Further, the company was adding 500-1,000 electric cars every month, and has over 2,000 EV charging stations with a utilisation rate of about 20%. Goyal said BluSmart would increase its charging network to about 8,000 by March 2024 which would help increase the utilisation rate to about 35%.
BluSmart has so far raised $75 million while it awaits another $250-million capital infusion and a $100-million credit line to expand its reach. British oil company bp’s investment arm, BP Ventures, holds about 19.7% in BluSmart and is the single largest investor in the company, according to Tracxn data.