Ola started with investing hundred million in VOGO for a majority of share and this was a vote of confidence for ola and many other investors who believed in micro-mobility and the era of modern vehicles which were powered by electricity. There were a good amount of celebrations taking place and their version is justified, the insiders in this mobility solution companies say that the operational costs might have been underestimated by the companies
The bike rental is 300 million dollar market in India and this seems working great and point A to B solutions or last Mile mobility is a cash burner for most companies who want to operate the two-wheelers. That is a 5 billion dollar market.
The economics are not going so well because of the rights which are offered at a discounted price of 6 rupees per kilometer are running at a cost which is two times or three times greater than that. Extra costs include maintenance, insurance, rebalancing, manpower as well as some assets amortization and that is the reason this process is tougher when you try to launch it.
A source from the top company says “Most bikes in the inventory are used only once a day and this is where they are burning cash. One is really not going to make money while running gasoline engines for a point A to B solution,”
The numbers prove it, before, there were companies which had to stop this service because the high cash burn was not sustainable enough and the investors could not back them as well as merge them with the competition which was there.
Yes, there will always be some cash burning but this is a bigger problem because the petrol engine market will not be sustainable under the current model of high burn.
Why electric is better than petrol
There are a good amount of issues which are on the ride-sharing platforms, especially the bike sharing platforms where there are a lot of regulations which are wearing from one state to another and a good amount of companies have Run into the trouble of transport department.
A source from ola told that the fights with the authorities for becoming a massive cash drain for the company and if they go the electric way, it will help all the authorities as well as all the electric vehicles.
This will become more and more flexible over time. There are different startups like the bike taxi startup which become popular with the young generations for commute purposes. Yes, those startups already exist but they have to still wait for a long time so that these things get regulated.
When we talk about electric vehicles, the investments are low and the returns are When we talk about electric vehicles, the investments are low and the returns are high. The running cost is also really low. Rapido believes that the future of bike taxi is electric. The cost of maintenance will be down and this will put more money in the pocket of the bike people. This bike has no maintenance of engine and other moving parts.