The investment will mainly be used to support Ola's deployment of electric vehicles. The three companies will collaborate on developing a unique fleet of India-specific electric vehicles and related infrastructure, among other things, according to a joint statement released on Tuesday.
The investment is the latest backing of ride-hailing startups as the fight for market share heats up. Singapore's Grab announced earlier this month that it had raised a total of $4.5 billion to fend off rival Go-Jek, while the latter recently received an additional $100 million investment from local conglomerate Astra International.
The latest deal follows an announcement last year that Ola plans to have 1 million electric vehicles on the road by 2021. It will also benefit drivers, according to Bhavish Aggarwal, co-founder and chief executive of Ola.
"This partnership will also significantly benefit driver-partners on our platform, as we collaborate with Hyundai to build vehicles and solutions that enable sustainable earnings for millions of them, in the time to come," Aggarwal said.
The investment is part of a fundraising series that Ola embarked on a few months back. The equity financing round, which has raised $500 million so far, has seen interest from Sachin Bansal, the co-founder of Indian e-commerce company Flipkart, and Mirae Asset-Naver Asia Growth Fund, a Seoul-based investment fund.
Although the company has not given further details about Hyundai's investment, the Economic Times had earlier reported that the automaker could pick up a 4% stake in Ola, for a valuation of about $6 billion.
As part of the collaboration, the companies have agreed to create solutions to operate and manage fleet vehicles. The partnership will also offer Ola drivers financial services, including lease and installment payments, while vehicle maintenance and repair services are expected to enhance customer satisfaction.
Though Uber has pulled out of Southeast Asia and China, it remains Ola's biggest rival in India, and the U.S. company said last year that it sees the South Asian country as "absolutely a core market." Ola controls nearly 60% of the local market.
This is not the first time Hyundai and Kia, both affiliates of Hyundai Motor Group, have invested in ride-hailing startups. In 2018, they pumped $250 million into Grab. This is part of a larger trend, as automakers seek to hedge against slowing global car sales. Toyota Motor, Ford Motor and General Motors, have all invested in ride-hailing services such as Uber and Lyft, another U.S. startup.
"India is the centerpiece of Hyundai Motor Group's strategy to gain leadership in the global mobility market, and our partnership with Ola will certainly accelerate our efforts to transform into a smart mobility solutions provider," said Euisun Chung, executive vice chairman of the group. "Hyundai will proactively respond to market changes and persistently innovate to deliver greater value to our customers."
Founded in 2011, Ola now operates in over 125 cities across India, Australia, New Zealand and the U.K., and has over 1.3 million drivers on its platform.