Chairman Emeritus of Tata Sons, Ratan Tata has recently been fairly active in pumping fresh capital into innovative new-age technologies and startups in the country. He has already invested in a cohort of startups and his automobile company Tata Motors is now also looking to enter the scene with investments in transportation sector.
According to a report from ETTech, Tata Motors is currently mulling over the decision to acquire a stake in shared mobility providers and arch-enemies Ola and Uber. The company is also gearing up to aggressively fund and become a part of a host of new-age startup trying to disrupt the transportation sector.
With cab-sharing gaining popularity, the millennial generation is completely moving away from owning a vehicle of their own. Tata Motors has recognized this shift in their mentality and believes that their buying behavior is going to determine the way in which automobile industry operates. Also, these automobile companies no longer want to be stuck in this clunky metallic manufacturing rut and be recognized as the one moving forward with current research and technologies.
The competition between Ola and Uber is also catching heat, and it possibly could be the right time to invest in the future of shared mobility. Commenting on the same, Guenter Butschek, the managing director of Tata Motors says,
We are very carefully studying possibilities and we are certainly open for all kind of different partnerships.
He further adds that the company is aware of the rapidly changing market scenario, but the only lingering question that remains is,
Should we wait till they actually do our business or we actually invite them with their competences to jointly improve our business!? I would rather favour getting them on board to jointly develop our business than to actually see them getting into our business.
Tata Motors already has a partnership deal with $63 billion American ride-hailing giant Uber to provide drivers with comprehensive vehicle purchase and ownership solutions. It has been launched with the aim of providing 20,000 drivers with opportunities to start their own business on the platform. This transaction has been a fleeting success for Tata, who has seen its sales more than double in the past couple of months.
Ola, on the other hand, has also signed a similar car leasing agreement with Mahindra Group to offer drivers an integrated package that comes with financing, insurance and services. It is looking to create favorable opportunities for over 40,000 driver partners over the next couple of years. This concept of leasing vehicles has also been ported in the country from overseas where Uber already runs a similar program with its partner Xchange Leasing.
The Tata Group has previously also been linked with Uber as its Opportunities Fund is believed to have invested somewhere between $75 million to $100 million in the ride-hailing giant. Thus if Tata Motors plans to further top-up the already flooding war chest of Uber, then it can only be justified on the basis of this existing partnership.
Other automobile companies around the world have also taken similar measure to maintain their relevance and gain business via such opportunities. General Motors has already invested over $500 million into American Uber-rival Lyft at a valuation of $5.5 billion in early 2016. The two are now working as business partners on developing and deploying the one transportation technology that everyone’s after — autonomous vehicles.