In the bustling streets of Delhi and Bengaluru, BluSmart Mobility once promised a cleaner future for urban transport, operating an all-electric fleet that challenged ride-hailing giants like Uber and Ola. Founded in 2019, the startup quickly scaled to thousands of vehicles, betting big on India’s push toward sustainable mobility. But by early 2025, BluSmart’s operations ground to a halt, ensnared in allegations of financial mismanagement and a regulatory probe that exposed deeper vulnerabilities in the electric vehicle sector.

The company’s downfall began with whispers of fraud, culminating in a Securities and Exchange Board of India (SEBI) investigation into co-founders Anmol and Punit Singh Jaggi. Accusations centered on the diversion of funds from their publicly listed entity, Gensol Engineering, intended for vehicle leases. As detailed in a report by Stackwealth, this led to leadership exits and a cascade of operational failures, leaving employees unpaid for months and customers with unreimbursed wallet balances.

The Hidden Perils of EV Asset Valuation in Emerging Markets

What started as a corporate governance scandal soon illuminated a global crisis: plummeting resale values of electric vehicles. BluSmart’s fleet, primarily composed of Tata Xpres-T models, became a liability as lenders scrambled to repossess and offload around 2,000 EVs. According to India Today, financiers sought new buyers or lessees amid the startup’s inability to secure fresh funding, highlighting how rapid depreciation eroded asset values faster than anticipated.

This wasn’t isolated to India. Worldwide, EVs were losing half their value within three years, driven by battery degradation uncertainties and evolving technology standards. A piece in Boing Boing noted that such depreciation rates were unprecedented, threatening fleet operators who relied on resale to recoup investments. For BluSmart, this meant that vehicles once valued as long-term assets turned into financial anchors, exacerbating liquidity crunches.

Failed Partnerships and the Ripple Effects on Ride-Hailing

Attempts to salvage the business through partnerships faltered spectacularly. Discussions with Uber to integrate BluSmart’s fleet as a supplier collapsed over disputes on vehicle valuations, with high depreciation rates omitted from pricing models. As reported by Livemint, Uber pulled out, wary of inflated figures that didn’t account for the EVs’ diminishing worth, leaving BluSmart without a lifeline.

The broader implications rippled through the industry. Competitors like Evera eyed the vacuum left by BluSmart’s 8,000-vehicle fleet, but the episode underscored systemic risks. A Times of India article described lenders racing to recover dues by dumping 1,500 to 2,000 repossessed EVs, flooding the market and further depressing prices in a vicious cycle.

Regulatory Scrutiny and the Path to Insolvency

By mid-2025, BluSmart filed for insolvency, as confirmed in an order from India’s company law tribunal. Reuters highlighted how governance lapses, including fund diversion, pushed the firm into this corner, with co-founders facing mounting legal heat. Employees, unpaid since February, took to social media, amplifying the chaos through viral posts on platforms like X, where the company bizarrely blamed its founders for the fraud.

This saga extended beyond BluSmart, mirroring troubles in China’s EV sector, where startups like WM Motor folded under similar financial strains. An earlier analysis in Rest of World from 2024 foreshadowed these slowdowns, driven by funding shortages and price wars that eroded profitability.

A Cautionary Tale for Global EV Adoption

The core issue, as explored in a recent Rest of World feature, is how depreciation crises threaten the world’s shift to electric transport. BluSmart’s collapse exposed the fragility of business models built on optimistic asset lifecycles, particularly in high-mileage applications like ride-hailing. Industry insiders now warn that without standardized battery warranties or resale guarantees, similar failures could deter investment.

Looking ahead, the fallout may spur reforms, such as better depreciation accounting in financing deals. For now, BluSmart’s remnants—scattered EVs and unresolved debts—serve as a stark reminder of the economic hurdles in electrifying mobility, urging stakeholders to recalibrate expectations in this evolving arena.