Ola Electric, the electricity-powered automotive spinout of Ola, a ride-hailing giant, has raised a fresh $250 million from the SoftBank Vision Fund according to several reports. The new capital is said to value Ola Electric at $1 billion.
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The startup has now raised over $300 million to date, a huge sum, but one that pales in comparison to the fundraising activity posted by Ola itself. Ola, also an India-based company, has raised $3.8 billion to date. Somewhat ironically, the elder Ola recently raised a $300 million round, though from a different investor set.
SoftBank has now backed both Ola and Ola electric.
The capital for Ola Electric follows a somewhat new trend in the ride-hailing space, namely none-core parts of ride-hailing companies raising capital for themselves. Uber, another ride-hailing leader, recently raised money for its own self-driving efforts, for example.
Uber expects its self-driving efforts will help drive its ride-hailing business, just as Ola likely hopes that its electric car spinout will help speed its own core business over time.
Capital is the lifeblood of ride-hailing companies, a competitive and expensive industry. Given a requisite capital thirst stemming from core operations, competing firms in the ride-hailing industry are looking for alternative ways to finance their non-core efforts. It’s akin to Google no longer incubating the activities that now fall under the Alphabet umbrella, but, instead of paying for it themselves, recruiting an external party to do so.
As TechCrunch notes, the investment into Ola Electric comes at a propitious moment, given changes in India itself:
The infusion comes as New Delhi looks to take a serious step in electrifying the existing fleet of cabs and scooters in the country as it attempts to curtail air pollution and carbon emissions. The country has set an ambitious goal to convert 40% of the fleet to electric by 2026.
If that sounds familiar, it should. China is also working to change the makeup of cars that run inside its own borders, making a push towards electrification that could curtail emissions and also power new domestic business.
But that effort has only gone so smoothly. Since going public, China-based electric car company NIO has struggled, losing most of its public market value. Other firms working on electric cars in China have fallen prey to what the Financial Times calls “intensifying competition and subsidy cuts.”
It’s unclear if the issues electric vehicle firms in China are contending with this year will crop up in India. For now, optimism seems high. Indeed, Ola spun out Ola Electric earlier this year with $56 million in capital. Now with $250 million more, the firm has lots of money to show that it can power itself.
Illustration: Li-Anne Dias.