BluSmart, the electric ride-hailing startup, is undergoing a significant shift in its business strategy, as it plans to return to its roots by supplying its electric vehicle (EV) fleet to Uber. This change marks a full circle for the company, which initially operated electric vehicles on Uber's platform nearly six years ago. BluSmart, which had developed its own app-based ride service, is now preparing to wind down its operations and provide cars to Uber once again.
According to reports, BluSmart's shareholders have agreed to a plan that will see the company transition its EV fleet to Uber over the coming weeks, beginning with around 700–800 cars. The fleet transfer will be carried out in phases, with the expectation that BluSmart will eventually stop running its own ride service once the entire fleet has been moved to Uber. The timeline for this transition is still being finalized.
In a statement, BluSmart sought to quell speculation, emphasizing that the company continues to operate as usual, with vehicles and drivers actively serving customers across various cities. The statement further reassured stakeholders that BluSmart would share an official update at the appropriate time.
Why BluSmart is Making This Move
The decision to scale back its operations and transition to becoming a fleet supplier to Uber comes after BluSmart has faced significant financial struggles. The company has been burning through more than Rs 20 crore per month to keep its business running. BluSmart's founders, Anmol Singh Jaggi and Puneet Singh Jaggi, who together hold over 25% of the company, have been investing their own money in addition to funds raised from investors.
The financial strain has been compounded by challenges faced by Gensol Engineering, another company owned by BluSmart's founders, which operates in the solar engineering sector and is also dealing with a debt crisis. With funding becoming increasingly difficult to secure, BluSmart found it challenging to maintain the high costs associated with running a ride-hailing platform. Shifting focus to supplying vehicles to Uber appears to be a way for BluSmart to remain operational without taking on the significant costs and risks involved in managing its own ride-hailing service.
Uber had launched its electric car service, Uber Green, in 2023, with the aim of bringing 25,000 EVs to its platform through partnerships with fleet providers. BluSmart's existing EV fleet, which includes around 8,000 vehicles, makes it a potential partner for Uber in this initiative. BluSmart's transition to supplying Uber with electric vehicles aligns with Uber's broader goal of promoting environmentally friendly transportation options.
Potential Deal and Investment
Reports also indicate that BluSmart hopes to secure investment from Uber as part of the fleet transition. The company is reportedly looking to raise $15-20 million, although the details of this investment are yet to be confirmed. The success of the fleet transition will likely play a role in determining whether this investment materializes, with BluSmart potentially having to meet certain performance goals in order to secure the funding.
Once BluSmart's vehicles start operating on Uber's platform, the company will receive a portion of the earnings from the rides, while Uber will continue to take its usual commission. BluSmart’s fleet consists of both owned and leased vehicles, with over 5,000 of them owned by Gensol Engineering, while the remaining vehicles are owned by BluSmart or leased from third-party owners.
BluSmart’s Struggles and Setbacks
BluSmart has faced several challenges in recent months. Its financial difficulties at Gensol have had a direct impact on BluSmart's operations, leading to a sharp decline in the number of daily rides. At its peak in 2023, BluSmart was offering between 25,000 and 30,000 rides per day, but this number has now fallen to less than half. Additionally, BluSmart has seen a significant loss of key executives, including the CEO of BluSmart Fleet, Anirudh Arun, and the Chief Technology Officer, Rishabh Sood. Tushar Garg, a former Uber India executive, also left the company, where he was working as the Chief Business Officer.
In addition to its internal challenges, BluSmart has scaled back its global expansion plans. The company has closed its operations in Dubai, reflecting a shift away from its earlier ambition to expand beyond India.
BluSmart was founded in 2019 and has received backing from BP Ventures. The company has raised over $150 million through a mix of equity and debt funding, according to data from Tracxn. However, with increasing competition in the Indian ride-hailing market, BluSmart has found it difficult to maintain its position.
Changing Landscape of the Ride-Hailing Market
The Indian ride-hailing industry has seen significant changes over the past year. Ride-hailing company Rapido, backed by WestBridge Capital, has made notable gains in the four-wheeler segment, now commanding around 20% of the market based on the number of rides. Uber, however, remains the dominant player with a 50% market share, while Ola, once the leader in the segment, has seen its share decline to around 30%.
There were reports earlier this year suggesting that Uber and BluSmart were in discussions for a possible acquisition. While no final deal has been reached, it is clear that BluSmart’s future may be closely tied to Uber as it transitions to becoming a fleet supplier.
In conclusion, BluSmart's decision to shift from running its own ride-hailing service to providing electric vehicles to Uber represents a significant pivot for the company. This transition highlights the financial difficulties the company has faced in recent months, as well as the changing dynamics of the Indian ride-hailing market. The potential investment from Uber could provide BluSmart with the resources it needs to stay afloat, but much will depend on the success of the fleet transition and the company's ability to meet its performance goals.
