Uber Triggers Price War, Announces Rs 6/km Tariff; Ola to Raise $1 Billion To Fight Uber’s Saudi Money

Traditionally, telecom firms are known to trigger price war by suddenly dropping price and forcing competitors to do the same.

But due to cut throat competition within Indian taxi app market, we are witnessing a new level of price war, among the existing apps.

Uber Go Price Drops To Rs 6/km

In order to compete with Ola’s low cost cab service Ola Micro, Uber has decided to slash their rates for Uber Go and bring it down to Rs 6/km from existing Rs 8/km.

This huge price war will now ensure that Uber Go is able to compete against Ola and bring down their market share. Ola had shared earlier that their Micro category has alone beaten entire Uber in India.

This massive price cut has been announced for Delhi region as of now.

After intense battle with Delhi Govt. and Karnataka Govt. over price surging, this is indeed a welcome respite for the commuters as such price war will ensure lower rates in the coming days.

In April Delhi CM had threatened to permanently ban Uber/Ola if they don’t stop price surge in the national capital. Besides, both of these taxi app’s cabs were seized in Bengaluru after the state govt. described them as illegal.

Besides Delhi, Karnataka and Maharashtra had also banned surge pricing by such taxi hailing apps. Compared to legal route, price war is certainly a better way to fight the business war.

Together, both Ola and Uber have made investments worth $2.5 billion in India: Uber operates 3,50,000 cabs in 26 Indian cities while Ola commands 5,50,000 across 100+ Indian cities.

Ola Raising $1 billion to Fight Uber’s Saudi Money

After Saudi Arabia’s Public Investment Fund invested $3.5 billion in Uber, speculations are rife that a substantial portion of this amount would be spent in India, which is Uber’s fastest growing market globally.

Uber’s recent price cut is a testimony of this new strategy; and Ola will do everything to counter this aggressive stand by Uber.

As per reports emerging, Ola is attempting to raise $1 billion (Rs 6700 crore) by end of July so that they are able to get prepared to fight Uber’s multi-billion dollar warchest.

Ola is already talking with existing investors SoftBank, Sequoia Capital and DST Global and two unnamed US based investors.

Besides Saudi angle, there is another aspect to this whole story: China.

Apple, which had recently invested $1 billion in Didi, a taxi hailing app based in China, which is considered as a stiff competitor of Uber. It seems Didi will also invest in Ola, thereby making a strong anti-Uber front in India.

Note here that Ola, Didi, Indonesian taxi aggregator Grabtaxi and Lyft from USA are part of a global alliance of taxi app firms, whose customers can use their home apps in other countries.

As per various sources, Ola is twice as big as Uber in India and gets 2.5 times more calls as well.

Once Didi invests in Ola, it would be an interesting fight between Uber and the anti-Uber alliance.

We will keep you updated as more details come in.