Ola Electric's Meteoric Rise: India's First Publicly Listed EV Maker Faces Stiff Competition and Profit Challenges
Sunday, Aug 18, 2024 11:00 pm ET
Ola Electric Mobility has recently become India's first publicly listed electric vehicle (EV) manufacturer, spearheading the competition in the electric scooter market. The company, which already dominates India's high-speed electric two-wheeler sales, is now focused on expanding its EV and battery cell manufacturing operations. Despite its leading position, Ola faces significant challenges from traditional two-wheeler manufacturers and a looming overcapacity in the battery market towards the decade's end; factors that could compress the entire industry's profit margins.
Ola Electric has made a significant investment across all its business verticals. The company's current market value stands at $6.5 billion, with $147 million from its initial public offering (IPO) dedicated to expanding its battery cell production capacity from 5GWh to 6.4GWh. This expansion is expected to benefit from federal production subsidies.
Since delivering its first electric scooter in December 2021, Ola Electric has quickly climbed to the top of the sales charts. For the fiscal year ending March 31, Ola's revenue surpassed 50 billion INR (approximately $597 million), almost doubling year-over-year. However, the company has yet to turn a profit.
Ola plans to broaden its product lineup by launching four new electric motorcycles by the first half of fiscal year 2026. Competitors like Ather Energy and Hero MotoCorp are also eyeing this segment, each planning to introduce a competing model.
Ola's rapid growth has benefited from its vertical integration strategy. The company is building a battery cell manufacturing plant and aims to use around $147 million from its IPO to boost production capability. This move aligns well with the company's plans to ramp up its own battery production and achieve more control over its supply chain.
However, Ola’s exclusive fast-charging network, which includes 224 charging points with plans to add 900 more within two years, could face utilization and profitability challenges due to a lack of interoperability standards across different EV makers.
Traditional manufacturers with established internal combustion engine businesses pose another challenge. These companies can leverage their profitable conventional vehicle operations to fund EV ventures, whereas Ola primarily relies on external funding sources.
Aggarwal, Ola’s founder, expressed optimism about the rapid adoption of electric vehicles in India. He mentioned that a few years ago, electric vehicles made up only 1-2% of two-wheelers, but now they constitute over 15% in the scooter segment.
Ola Electric's commitment to innovation is also evident in its ongoing development of a "super factory" for lithium batteries, expected to start commercial production early next year. Aggarwal is hopeful that advancements in battery technology will soon make the cost of electric vehicles comparable to, or even less than, that of internal combustion engine vehicles.
Ola Electric has made a significant investment across all its business verticals. The company's current market value stands at $6.5 billion, with $147 million from its initial public offering (IPO) dedicated to expanding its battery cell production capacity from 5GWh to 6.4GWh. This expansion is expected to benefit from federal production subsidies.
Since delivering its first electric scooter in December 2021, Ola Electric has quickly climbed to the top of the sales charts. For the fiscal year ending March 31, Ola's revenue surpassed 50 billion INR (approximately $597 million), almost doubling year-over-year. However, the company has yet to turn a profit.
Ola plans to broaden its product lineup by launching four new electric motorcycles by the first half of fiscal year 2026. Competitors like Ather Energy and Hero MotoCorp are also eyeing this segment, each planning to introduce a competing model.
Ola's rapid growth has benefited from its vertical integration strategy. The company is building a battery cell manufacturing plant and aims to use around $147 million from its IPO to boost production capability. This move aligns well with the company's plans to ramp up its own battery production and achieve more control over its supply chain.
However, Ola’s exclusive fast-charging network, which includes 224 charging points with plans to add 900 more within two years, could face utilization and profitability challenges due to a lack of interoperability standards across different EV makers.
Traditional manufacturers with established internal combustion engine businesses pose another challenge. These companies can leverage their profitable conventional vehicle operations to fund EV ventures, whereas Ola primarily relies on external funding sources.
Aggarwal, Ola’s founder, expressed optimism about the rapid adoption of electric vehicles in India. He mentioned that a few years ago, electric vehicles made up only 1-2% of two-wheelers, but now they constitute over 15% in the scooter segment.
Ola Electric's commitment to innovation is also evident in its ongoing development of a "super factory" for lithium batteries, expected to start commercial production early next year. Aggarwal is hopeful that advancements in battery technology will soon make the cost of electric vehicles comparable to, or even less than, that of internal combustion engine vehicles.