To expand its bouquet of transportation solutions, Indian cab aggregator Ola is set to offer self-drive service with a planned investment of $500 million in the next few weeks.
The company shall resort to a mix of debt and equity to fund the new venture, a report appearing in ET said, quoting people aware of the move. Under the plan, Ola is expected to deploy nearly 10,000 vehicles, including luxury sedans and SUVs, in major cities in the coming months.
The scale of the proposed service will make Ola one of the largest self-drive car rental companies in India. At present, the sector is highly fragmented with small regional players and some larger players including Myles, Sequoia Capital-backed Zoomcar and Drivezy.
The Bengaluru based company is currently testing the market for the self-drive offering. On the basis of feedbacks, it shall start the service in various formats such as rentals, subscription and corporate leasing in select cities in the coming weeks.
The plan is to focus on top 5-7 markets initially. It intends to build subscription products for consumers and leasing services for corporate executives through corporate plans.
Talking about the company’s commitment towards mobility services, an Ola spokesperson said, “Basis market feedback, we are piloting our Ola Self-Drive offering in various formats like rentals, subscription and corporate leasing in select cities in the coming weeks. This space is currently underserved and there exists a tremendous opportunity to build a superior experience through an integrated mobility platform like Ola.”
Ola is likely to raise debt via Ola Fleet Technologies to fund the new business. So far, the company has relied on equity capital from some of the world’s largest investors, including Japan’s SoftBank and US investment firm Tiger Global to fund its rapid growth in the country. It has raised $3.67 billion till date and was valued at roughly $6 billion during last funding round in February.
Earlier this month, Ola said it had raised $300 million from Hyundai Motor and Kia Motors, as it looks to collaborate with the South Korean auto majors to build India-specific mobility solutions.
Experts are of the view that market shall evolve with more commuters opting for shared, self-drive rentals or subscription-based mobility options, rather than bothering with car ownership.
However, self-drive car rental services should have flexible hiring options, ranging from hours to days, and be available 24×7 through mobile applications, in order to find favour with commuters.