India’s limited electric vehicle (EV) charging network is proving to be a significant hurdle for BluSmart, the country's largest EV ride-hailing service.
In September 2022, when Anmol Jaggi, co-founder of BluSmart, discussed the challenges his all-electric fleet faced, the issue of limited EV models was a major concern. At that time, few electric vehicles were available for fleet operations, and automakers were prioritizing individual sales over taxi fleets. Fast forward to July 2024, and BluSmart has expanded significantly, with its fleet growing from a few hundred vehicles to more than 7,600. Despite this growth, Jaggi's concerns have shifted from vehicle availability to the lack of adequate charging infrastructure—a critical bottleneck that hinders further expansion.
BluSmart operates under a unique business model where it owns all of its vehicles and employs drivers with monthly salaries. This differs from other companies like Ola or Uber, which rely on independent drivers using their own vehicles. While owning the fleet ensures control over the customer experience, it also requires significant capital investment, including the development of charging infrastructure. Currently, BluSmart operates 50 charging hubs to support its fleet. However, as the company plans to expand to 30,000 vehicles by 2026, it will need to increase its charging points significantly.
In Jaggi’s view, "As our fleet grows, we need to grow the number of chargers. We have to keep up with the demand during peak hours—morning and evening—which requires more charging stations." He explained that charging stations are the priority, as acquiring vehicles is no longer a bottleneck, but finding enough charging capacity to keep the fleet operational is crucial.
The charging business itself is proving profitable once utilization levels exceed 20%. However, for BluSmart to break even on its ride-hailing business, each cab needs to complete around nine trips per day, but most BluSmart vehicles currently make about seven. This underperformance is exacerbated by the fact that BluSmart’s fleet is much smaller than competitors like Uber, which operates tens of thousands of vehicles in the same cities.
While BluSmart’s rides don’t have surge pricing, its fares tend to be higher—by about 10-20%—compared to rivals. This makes the service less competitive during off-peak hours, leading to lower demand. On top of this, BluSmart’s relatively smaller fleet means that cars are less available on short notice, with customers often needing to book rides 40 minutes in advance. This limits the company’s ability to generate more revenue per vehicle.
The company is actively working to improve fleet utilization, and Jaggi believes that once they expand the fleet and charging infrastructure, losses will narrow. However, the road to profitability is still long. BluSmart has expanded from 70 cabs in 2019 to 7,600 in 2024, but revenue has grown alongside widening losses. In 2022-23, the company’s revenue reached ₹160 crore, but its losses also grew to ₹216 crore, up from ₹139 crore in 2020-21.
Additionally, the end of the FAME-2 subsidy program, which provided financial incentives for fleet vehicles, will make future vehicle acquisitions more expensive. If a new version of the subsidy, FAME-3, is introduced, it may offer reduced benefits, adding further pressure on BluSmart’s cost structure.
To combat these challenges, BluSmart is exploring non-BluSmart fleet owners to use its charging infrastructure, aiming for higher utilization rates. This move could help BluSmart achieve profitability in its charging business, even if its ride-hailing unit continues to burn cash.
BluSmart is also eyeing international expansion, with plans to enter Dubai, where it has already launched a fleet of 100 Audi e-trons. With higher fare structures and a better-developed charging network, Dubai offers potentially higher profit margins. However, BluSmart's focus for now remains on consolidating its position in Delhi NCR and Bengaluru before expanding to new markets like Mumbai.
Despite the challenges, BluSmart has attracted significant investment, including from high-profile backers like Bollywood actress Deepika Padukone and cricketer M.S. Dhoni. With the backing of these investors and a strategy focused on infrastructure expansion, the company hopes to navigate the growing pains of scaling up in a competitive and evolving market.
In the coming years, the key to BluSmart's success will be its ability to manage the delicate balance between fleet expansion, charging infrastructure, and profitability. Until then, the road to growth remains dotted with challenges, from acquiring enough vehicles to ensuring that customers have convenient access to its service when they need it most.
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