Mr Gadkari, allowing driverless cars will generate more high-paying jobs

Autonomous vehicles are the logical next step for cab aggregators like Ola and Uber

economy news: Nagpur, the home town of Union Transport Minister Nitin Gadkari, is now a laboratory to test electric vehicles for public transport in India.

Cab aggregator Ola is testing a model that uses electric auto rickshaws, cars, and buses to make adoption of electric vehicles for mass transport viable. If the Nagpur experiment succeeds, Ola will execute the promise by its investor, Japanese internet firm Softbank, of running over a million electric vehicles across India. This vision requires massive investments in cars, buses, and the charging infrastructure. In addition, investments are also required in batteries, which India currently imports.

Both Ola and Uber have an asset-light model — they don't own the cars that run on their platforms. Instead, the cars are leased by the drivers, who repay the loans, spend on maintaining the cars, and then earn enough to fend for themselves. In scale, electric cars have better efficiency and are cheaper to run for more miles than fossil fuel-powered cars.

Till 2016, Ola and Uber splurged billions to woo thousands of drivers to their respective platforms. However, as the taps turned dry and investors pushed them towards profitability, they cut incentives for the drivers and increased prices. This move saw several thousand drivers and customers move away from the respective platforms. There are hundreds of cars on sale now as drivers are finding running on either platform unviable.

The country has seen a spate of protests from drivers seeking government intervention. In this context, Gadkari's statement that driverless cars will not be allowed in India in order to save jobs appears to be aimed at pacifying the unrest among drivers.

The electric cars vision is nice till Ola reaches a certain scale. Ola needs to make profits for itself and its investors. When the network effect comes into play, the winner dominates the market and the runner up becomes a distant second. Google and Facebook have become monopolies because of this network effect — the more users a company has, the harder it will get for rivals to compete with it.

So, after ensuring that there are thousands of electric vehicles on Indian roads and make it a habit for users to use their platform like they did for diesel run cars, their next logical move would be to look at autonomous vehicles.

(READ MORE)