Ola Electric’s vertically integrated business model spans R&D, manufacturing, supply chain, sales, service, and charging facilities, ensuring control over quality and efficiency across all operations, driving them to a 35% market share in three years, selling 320K+ units and generating ∼₹5,009 crores in revenue
When Ola Electric first set out on its mission to revolutionise mobility, they had two choices: play incremental and small, or play disruptive and big.
Bhavish Aggarwal chose the latter—he redefined what’s possible.
Fast forward to now, and Ola Electric has done exactly that by taking the Indian electric two-wheeler (E2W) market by storm.
🛵
In 2024, the E2W segment in India sold 10,09,356 units, capturing roughly 58% of total EV sales.
Spearheading this opportunity is Ola Electric — commanding a jaw-dropping 35% market share within three years of launch. 🤯
With over 320K units sold and producing a game-changing ‘Bharat 4680’ cell, Ola is not just leading; it's rewriting the rules of the game
If you're wondering how Ola Electric has achieved market dominance, this blog will uncover the powerful strategies behind their business model that's driving their success and setting new standards in the industry ⚡️
In 2017, Ola was leading India’s cab-hailing market with a 56% share, but Bhavish Aggarwal wasn’t satisfied.
Apparently, around the same time, the cab-hailing industry was losing steam, especially in the West, where companies like Uber struggled as self-driving cars loomed on the horizon.
Realising Ola needed to evolve, Bhavish focused on electrification—the future of mobility.
He started with a pilot in Nagpur, testing electric cabs, buses, and rickshaws.
The goal? Learn what it would take to drive the electric transition in India.
The pilot revealed a hard truth: India wasn’t ready for the electric future yet & the products available on the market couldn’t handle Indian conditions. 😕
So, Bhavish made a bold move: Ola would create its own electric vehicles.
Since 75% of India’s vehicle fleet at that time was saturated by two-wheelers, this opportunity became the first step for them, to build Electric two-wheelers (E2W) for India.
🦄
In 2019, Ola Electric became the first EV business in India to achieve unicorn status after SoftBank invested $250 million, pushing Ola Electric's valuation to over $1 billion.
But Bhavish needed more than just ambition to execute this—he needed speed.
So in 2020, he acquired Etergo, an Amsterdam-based electric scooter company known for its sleek and award-winning designs. This move fast-tracked Ola Electric’s journey into the EV market.
Journey 💫
Ola Electric didn’t want to be just another EV maker—it wanted to play at scale.
And to do exactly this, they announced plans to produce these scooters in India, setting up a manufacturing plant called the "Future Factory” in 2021.
Initially designed for a production capacity of 2 million electric scooters in it’s first phase.
Planned expansion to reach 10 million units per year, when fully operational — which would make it the largest two-wheeler factory in the world!!
Soon, production began and just one year after acquiring Etergo, Ola Electric launched its much-anticipated electric scooters—the Ola S1 and Ola S1 Pro.
🛵
The day they opened pre-orders, they received over 1 lakh bookings within 24 hours, making it the world’s most pre-booked scooter.
Ola’s timing was perfect. ✨
Public interest in electric vehicles was soaring, and Ola was ready with the right product at the right price. Their scooters were not only affordable but also offered better mileage and speed than their competitors.
Ola’s marketing bore fruit as Ola Electric became the market leader in India’s electric two-wheeler space, within just 9 months of launch, overtaking established players like Ather, TVS, and Hero.
Despite initial setback like delays in delivery, software glitches, and even some incidents of scooters catching fire, Ola Electric responded quickly, by recalling affected scooters and addressing the issues.
They even solved the battery cell manufacturing problem, by setting up the Ola gigafactory.
So it becomes safe to say that Ola Electric's journey is far from over, but one thing is clear: Bhavish Aggarwal isn’t just thinking about India's future—he’s building it. 🚀
Ola Electric Snapshot
Ola Electric’s MOAT (Competitive Advantage) 💪🏻
In House Battery Cell Manufacturing 👨🏻🏭
A battery pack comprises 35-40% of the E2W vehicle cost, of which 80-85% is constituted by the cells, making it the most critical component of the E2W.
Traditionally, Indian EV makers source battery cells in two ways:
→ Import Lithium-ion battery cells from countries like China, South Korea, Japan.
→ Rely on partnerships with battery manufacturers in India.
But to stay ahead in the market, companies need to reduce costs which helps them to keep their prices low.
So Ola Electric has taken a different route by producing battery cells in-house at their own Ola Gigafactory, a cell manufacturing facility located in Pochampalli, Tamil Nadu.
Ola Electric Bharat Cell
🔋
Recently, Bhavish Aggarwal unveiled the 4680 Bharat cell calling it the 5G of cells — which delivers 5 times more energy than current 2170 batteries.
But why is this a big deal? 🧐
Ola Electric’s Vision to produce battery cells in-house coupled with the experience of being one of the first OEMs to make EV bikes can help them spot gaps and opportunities that other players might miss.
In-house manufacturing eliminates supplier margins, giving Ola full control over production and enabling them to offer more competitive prices directly to customers.
Their massive Gigafactory, which aims to reach a capacity of 100 GWh, allows them to scale production at their own pace.
By the way if you want to learn about some cool insights about India’s Battery Market, China’s 25 year lead, importing cells etc, watch this GrowthX Inner Circle video, where Akshay Singhal, the founder of LOG9, talks about what it takes to build a 100-core EV battery company. 👇
Pure D2C Omni Channel Model 🤳
According to Ola Electric’s DRHP, they are India’s first E2W OEM (Electrical Two Wheeler Original Equipment Manufacturer) of scale to provide customers with an end-to-end online purchase experience.
Their D2C model is simple: they sell directly to customers without any dealerships. Let’s break down why this is a moat 👇
Cost Savings
Traditional EV companies rely on dealerships to sell their vehicles.
Each dealership takes a cut, which inflates the final price of the vehicle. Ola skips this middleman, which means they save money—and they pass those savings onto you, the customer.
Better Customer Experience
Without dealerships, Ola has direct contact with their customers.
This allows them to quickly gather feedback and adjust their products and services accordingly.
If customers love or hate a feature, Ola can hear it directly and make changes, keeping customers happier.
Inventory Efficiency
Ola uses a centralized system to manage inventory across their 935 experience centers and 414 service centers.
Instead of flooding dealerships with excess stock, they control how much inventory is available and can adjust based on demand.
This means less wasted inventory and more efficient production planning.
Ola’s Brand Recall
Production Linked Incentive scheme 💰
First of all, let’s understand what a PLI scheme is and what it means in the context of an EV.
Under the PLI incentive scheme, an automaker can receive a government grant of 13-15% of the sales value of EVs during a year.
This typically boosts the company's total revenue and helps offset the higher costs associated with investing in new technology, thereby bridging the margin gap between ICE (internal combustion engine) and EVs (Electric Vehicles)
Furthermore, if a company achieves sales of more than ₹10,000 crore within five years of the PLI period, it becomes eligible for an additional 2% government support.
Ola Electric is uniquely positioned as the only EV manufacturer in India benefiting from two significant PLI (Production-Linked Incentive) Schemes as of fiscal 2023.
1. The Automobile PLI Scheme
2. The Cell PLI Scheme
Here's why this strengthens their position 👇
Increased Competitive Pricing
This dual benefit provides Ola Electric with substantial cash incentives for producing both electric vehicles and battery cells domestically - helping them in two ways:
a. Reduce production costs significantly, enabling them to offer better prices to customers while still maintaining profitability.
b. They also give Ola a leg up in future expansion, as they can invest more in scaling their production.
Leading the Industry in Cell Manufacturing
Ola received the largest allocation under the Cell PLI Scheme—20 GWh, more than any other recipient.
This not only gives them a financial advantage but also solidifies their lead in localizing advanced chemistry cell manufacturing in India. (It’s a mouthful, I know)
💡
By the way, the depth you see here is just a feeler of the depth we teach at GrowthX 💫
GrowthX is an invite-only club of over 3000 members who are product, marketing, and business leaders, and founders from top internet-first companies like Google, Canva, CRED, Stripe, Netflix, and more 💎
We teach our members how to scale revenues via frameworks that can be applied starting next Monday morning. The GrowthX Membership is built on 3 core pillars:
1. Learning experience: Where you learn the science of revenue-led growth with frameworks actionable the next Monday morning.
2. Curated community: Where you access a safe space for you to soundboard anything that is stressing you at work.
3. Career outcomes: Over 35% of members are founders & are able to hire growth teams to scale revenue for their companies while operators are able to get into breakout leadership roles.
Explore GrowthX Membership 🏆
Market Overview
India's car and bike market is going through some big changes, thanks to new technology and fresh ideas.
First off, electric vehicles (EVs) are becoming a big deal. Batteries are getting better, and cars are getting smarter with more software.
On top of that, the government wants more of these advanced vehicles made right here in India. This matters globally because India isn’t just any player—we make 15-20% of the world’s two-wheelers and are the third biggest market for cars.
Why does it matter to the Economy?
You see, cars and bikes are a big part of India’s economy.
🧐
In FY24, India made about 28 million vehicles, which is a huge chunk of the country's manufacturing and to put it simply, cars and bikes contribute about 35% to manufacturing GDP and 7% to the overall GDP.
The government wants to boost this to 40% even more by 2026.
Lots of Room to Grow
Even with India’s vast two-wheeler and passenger car markets, not everyone owns one yet.
That means there’s still a huge opportunity for growth. Plus, with the government giving out incentives and subsidies, more people are switching to electric vehicles, which is setting the stage for even bigger changes in the market.
Electrification is leading the Way
India’s electrification is being driven primarily by two-wheelers.
E2Ws reached a 5% share of total 2W registrations in the first half of FY 2024, mostly led by electric scooters and these are expected to comprise almost half of domestic two-wheeler sales by FY 2028.
Leaner charging infrastructure and lower initial price differences between electric and traditional 2Ws make them more attractive to Indian consumers than E4Ws.
🛵
Scooters dominate the electric two-wheeler market, especially in the premium segment where nearly 75% of sales are electric.
This rapid growth is expected to accelerate further, with E2W adoption likely to follow global trends, where penetration rates of 3-5% typically signal a coming boom.
The market for E2Ws is not limited to big cities; smaller towns like Kolhapur and Surat are seeing high adoption rates as well, thanks to government incentives and improved power infrastructure.
Enabling Policies & Support
FAME I & II: Focused on boosting demand for EVs through subsidies and incentives, particularly for two-wheelers.
GST & Tax Breaks: Lower taxes on EVs compared to ICE (Internal Combustion Engine) vehicles make them more attractive.
State-Based Subsidies & Charging Infrastructure: Individual states offer further incentives and support, including reduced registration costs and increased charging station installations.
2W 🏍️
India is a global powerhouse for two-wheeler production, manufacturing around 19.5 million units in FY 2023 alone.
This accounts for 15-20% of the world's 2W production, second only to China.
About 4 million of these vehicles were exported, while 16-17 million were sold domestically, making India the second-largest 2W market by sales volume globally.
🌐
The domestic market's value sits at ₹1.4 - ₹1.6 trillion in FY 2023.
Why are two-wheelers dominating?
Affordability & Accessibility: Two-wheelers offer affordable personal mobility, especially for those who find public transport inadequate or inconvenient. They're cheaper than four-wheelers but provide more reach and convenience.
Suitable for All Terrains: From congested city streets to rural & unpaved roads, 2Ws navigate with ease, making them ideal across varied Indian geographies.
Variety: Consumers have a wide range of two-wheelers to choose from—whether it's scooters or motorcycles—at different price points, tailored to age, gender, and income levels.
Last-Mile Mobility & Delivery Needs: As industries like e-commerce and food delivery boom, 2Ws are increasingly in demand for their role in last-mile deliveries. This is driving growth, particularly in the electric two-wheeler (E2W) segment.
Two Wheeler Domestic Sales
Scooters Leading the Charge
Scooters have gained immense popularity in India due to their ease of learning, gearless operation, and lightweight design—making them a favorite among women, older people, and first-time riders.
They're practical, offering storage space and maneuverability in tight spaces.
🏅
Affordable price segments dominate, with 86% of scooter sales and 77% of motorcycle sales under ₹1 lakh.
Despite high domestic sales, there’s significant room for growth. As of 2022, there were only around 160 two-wheelers per 1,000 people in India—lower than some Southeast Asian nations.
Two Wheeler per 1000 population
With domestic sales recovering post-pandemic, projections suggest the 2W market will grow by 11% CAGR over the next five years, reaching ₹2.8 - ₹3.6 trillion (US$ 35-45 billion) by FY 2028.
3W 🛺
India is the world's largest producer of three-wheelers.
Three Wheeler Sales Split
These vehicles serve dual purposes, from transporting passengers (auto rickshaws) to hauling cargo (loading autos).
Electrification of the 3W segment is accelerating due to favorable policies like tax exemptions, helping the shift towards sustainability.
4W 🚙
India's four-wheeler market produced 4.6 million vehicles in FY 2023, with 3.9 million sold domestically and 0.7 million exported.
The domestic market's size was valued at ₹3.2 - ₹3.5 trillion. While the number of four-wheelers per 1,000 people is still relatively low (25-30), there’s massive potential for growth.
With rising incomes and increasing urbanisation, more households are buying cars. Compact SUVs are growing faster than other segments due to their comfort, road-handling capabilities, and enhanced digital connectivity.
Entry-level hatchbacks are slowly giving way to more premium segments, although affordability remains a key driver of overall demand.
The 4W market is expected to grow at a CAGR of 6% in volume and 8-11% in value, reaching ₹5.2-₹5.6 trillion (US$ 65-70 billion) by FY 2028.
Four Wheeler Domestic Sales
However, electric four-wheeler (E4W) penetration remains low compared to two-wheelers, largely due to higher upfront costs, limited charging infrastructure, and fewer model options. Plus there’s also an increased awareness in the country about the Total Cost of Ownership benefits of running a 2W vehicle.
TCO - Total Cost of Operation of a vehicle is the purchase price of the vehicle + the costs of operation over it’s life span.
Most EV players are adapting ICE platforms for electric models, leaving room for growth as infrastructure improves.
Speaking of 4W, we made a video breaking down how Blusmart became Southeast Asia's biggest all Electric Ride-hailing company, in only 5 years.
Check out this GrowthX Wireframe video where we breakdown some amazing insights on how this 550 Crore startup is coming for a big piece of the pie in India’s 58,000 Crore ride-hailing market. 👇
Trends in EV
1. Battery Tech Driving EV Growth:
In India and worldwide, we’re seeing a shift towards lithium-ion batteries, specifically NMC (Nickel-Manganese-Cobalt Oxide Cathode) and LFP (Lithium Iron Phosphate) batteries.
Each has its benefits: LFP batteries are durable and safe but heavier, while NMC batteries charge faster and provide more energy in a smaller size.
Another advantage of EVs is their lower total cost of ownership (TCO). For example, electric two-wheelers in India are about 45% cheaper to own over their lifespan compared to their gasoline-powered counterparts.
Rising fuel prices and stable, affordable electricity further enhance the appeal of EVs.
Moreover, EVs are crucial for India's goal to achieve net-zero emissions by 2070, thanks to their lower lifetime carbon footprint.
Cost of Ownership of ICE 2W VS E2W
2. Government Push for Advanced Manufacturing
The Indian government is driving domestic automotive manufacturing through initiatives like
a. Production-linked Incentive (PLI) Schemes - Launched in 2020, and with a budget of ₹2.73 trillion, these incentives are designed to encourage the production of advanced automotive technologies in India
b. The Advanced Chemistry Cell (ACC) Battery Scheme - This scheme supports the creation of large-scale battery manufacturing facilities in India. It aims to build a strong domestic supply chain for EV production.
c. The India Semiconductor Mission - With a budget of ₹760 billion ($9.5 billion), this initiative supports the growth of semiconductor manufacturing in India, which is crucial for the automotive industry.
3. Rising Investments and Export Potential
India’s large and young workforce, along with government support for manufacturing, is drawing more investments into the automotive sector. In fact, private capital expenditure in the automotive industry grew by 4-5% in FY 2023.
India is also ramping up its vehicle exports. In FY 2023, about 18% of the vehicles produced in India were exported, and this number is likely to grow as the country strengthens its position as a global manufacturing hub.
4. Vehicles Becoming 'Computers on Wheels'
As drivers demand more safety, comfort, and performance, vehicles are becoming increasingly reliant on electronics and software.
Safety features are now standard, and the cost of electronics in vehicles is expected to make up 25-30% of a car's cost by 2030, reflecting the shift towards more advanced, electrified vehicles.
5. Improved Credit Access and Domestic Manufacturing Support:
Easier access to vehicle loans is driving consumer demand, while higher customs duties on imports are encouraging local manufacturing.
These measures are expected to make domestically produced vehicles more affordable and boost the growth of India’s automotive industry.
Competitive Landscape 🥊
India’s EV market is extremely competitive. Especially in the E2W segment.
Since Ola Electric majorly operates in E2W, we’ll be focusing on competitors in that space. Whether it is listed ICE-based companies like TVS Motors, Baja Auto, Hero MotorCorp or Pure EV disruptors like Ather.
1. TVS Motors
Founded: 1962
E2W Models: iQube 2.2 kWh, iQube 3.4 kWh, iQube S 3.4 kWh, iQube ST 3.4 kWh, iQube ST 5.1 kWh
Revenue: ₹39,145 crores
E2W Market Share: 19.3%
Key points:
Fourth-largest Two-wheeler manufacturer in the world
Partnered with 24M Technologies to build a factory in India, targeting the energy storage and electric mobility markets.
2. Bajaj Auto
Founded: 1945
E2W Models: Bajaj Chetak
E2W Market Share: 11.3%
Revenue: ₹44,870 crores
Key Points:
Launched its first EV, the Chetak, in 2020, which has seen substantial success in Maharashtra.
Plans to expand its EV footprint by increasing its outlets from 200 to 1,000 by the end of August.
Opened a new EV manufacturing unit in Akurdi, Pune, with a capacity of 5,00,000 units annually.
3. Hero MotoCorp
Founded: 1984
Models: Vida (currently only one model)
Revenue: ₹37,789 crores
E2W Market Share: 1.9%
Key Points:
Plans to expand its EV offerings by launching three new electric scooters in 2024 targeting various market segments.
Currently holds a smaller share of the market but is focusing on long-term growth and international expansion, especially in Latin America.
🤝🏻
Hero MotoCorp owns 40.89% of Ather Energy on a fully diluted basis.
The two closely collaborate on things like charging infrastructure, setting up 2,000 fast-charging points across 200 cities this fiscal year.
Sold 1,08,889 units in FY24, representing a 42% growth.
Ather recently turned into a unicorn by raising $71 million, boosting it’s valuation to $1.3 billion
Has an extensive network of 150 experience centers spanning 100 cities
Gearing for an IPO by the end of 2024 — expected to be valued at $2 billion
5. Eicher Motors
Founded: 1948
Revenue: ₹16,536 crores
Key points:
Royal Enfield, India’s leading motorcycle manufacturer in the middleweight segment, is going towards the electric vehicle (EV) strategy.
With 25-30% of Royal Enfield’s Rs 1,000 crore capital allocation for FY24 going towards electric vehicles
💡
By the way, the depth you see here is just a feeler of the depth we teach at GrowthX 💫
GrowthX is an invite-only club of over 3000 members who are product, marketing, and business leaders, and founders from top internet-first companies like Google, Canva, CRED, Stripe, Netflix, and more 💎
We teach our members how to scale revenues via frameworks that can be applied starting next Monday morning. The GrowthX Membership is built on 3 core pillars:
1. Learning experience: Where you learn the science of revenue-led growth with frameworks actionable the next Monday morning.
2. Curated community: Where you access a safe space for you to soundboard anything that is stressing you at work.
3. Career outcomes: Over 35% of members are founders & are able to hire growth teams to scale revenue for their companies while operators are able to get into breakout leadership roles.
Explore GrowthX Membership 🏆
Market Share
E2W Market Share
How does Ola Electric make money? 💸
Ola made roughly ₹5,009 crore in revenue in FY24.
Its revenue model is straightforward, but it’s packed with different ways to bring in cash. Let’s break it down into simple categories:
1. Scooter Sales: This is the heart of Ola Electric’s business. They make the most money from selling their electric scooters. In the last fiscal year, they sold over 3,29,000 scooters, including the popular Ola S1 Pro and newer models like the S1 Air and S1 X+. These sales alone brought in a massive ₹4,604 crore
Model
Sales Volume
Revenue
Revenue Contribution as a % of revenue from operations
Ola S1 Pro (Gen 1)
1,08,701
1687 CR
33.67%
Ola S1 Pro (Gen 2)
83,328
1300 CR
25.95%
Ola S1
9,409
134 CR
2.68%
Ola S1 Air
74,535
948 CR
18.93%
Ola S1 X+
53,645
534 CR
10.66%
🔒
The Ola S1 segment contributes roughly 60% of scooter sales
2. Vehicle Accessories and Traded Goods: Ola also makes money by selling accessories like spare parts, chargers, and other related accessories
(i) Spare parts - ₹85 crore
(ii) Chargers - ₹7 crore
(iii) Accessories - ₹13 crore
These are important because they keep customers coming back for more after they buy a scooter. The total revenue from these traded goods was ₹106 crore
3. Services: Beyond just selling physical products, Ola offers services related to their scooters. This includes things like maintenance and after-sales support. These services added another ₹88 to their revenue.
4. Other Operating Revenue: Ola has a few other ways of generating income:
Vendor Handling Charges: Ola charges its suppliers fees for managing their products, contributing ₹88 crore
Sale of Scrap: They sell leftover materials, bringing in ₹13 crore.
Subscription Income: Ola also has subscription-based services that earned them ₹12 crore
Government Incentives: Thanks to various government programs supporting electric vehicles, Ola received ₹97 crore in incentives.
💸
So, speaking of how Ola Electric makes money—there's this really cool guide we've been working on that you should totally check out.
It’s the FREE Monetization Foundation by GrowthX!
It's all about scaling monetization and improving free-to-paid conversions.
Basically, if you're a founder or a product/growth leader looking to drive revenue, this guide is gold. It covers how to assess if your company's ready to monetize, how to convert free users into paying ones with this value funnel approach, and how to boost ARPU through upselling and cross-selling strategies.
Now, let's talk about the other side of the coin—expenses. You know, the money Ola spends to keep the wheels turning. Here's a quick look at where their money goes:
Cost of Materials: This is the biggest expense for Ola. It's the money they spend on raw materials to make those scooters.
In FY24, they spent about ₹4,400 crore on this. Most of the scooter’s key parts are designed and made in-house, but they still buy some components from other suppliers.
Stock and Inventory: Ola has to keep a stock of finished scooters, spare parts, and work-in-progress items. The cost associated with this increased a bit compared to last year, with closing inventory levels reaching ₹318 crore.
Employee Salaries and Benefits: Ola’s team is growing, and so are their salaries. Last year, they spent ₹4,389 million on employee benefits, including salaries and stock options.
Other Costs: There are a bunch of other expenses too, like warranties, shipping costs, and fees for manpower supply, which all added up to ₹1,459 crore
Overall, Ola’s total expenses went up to ₹6,277 crore last year, which is a lot, but it's expected when your business is growing as fast as theirs.
Market Opportunity 📈
1. India’s two-wheeler market alone represents a massive opportunity 🚀
With an addressable market for 2W exports estimated between ₹7.20 trillion and ₹8.00 trillion.
The shift towards electric vehicles is being driven by several factors, including
The decreasing cost of batteries
Longer driving ranges
Strong government support.
Additionally, electric vehicles (EVs) offer advanced software features, a lower carbon footprint, and overall affordability, making them increasingly popular compared to traditional internal combustion engine (ICE) vehicles.
2. Electric two-wheelers (E2Ws) are leading this change in India 🏍️
With a much lower total cost of ownership (TCO) compared to their gasoline counterparts, E2Ws have quickly gained traction, now making up around 5% of all 2W registrations in India as of the first half of Fiscal 2024.
This is just the beginning—by Fiscal 2028, E2Ws are expected to account for 41-56% of all 2W sales in the country.
3. Rise in exports 📈
Beyond India, there’s also significant export potential.
Regions like Africa, Latin America (LATAM), and Southeast Asia, where domestic E2W production is limited, represent major markets for Indian manufacturers.
😳
In Fiscal 2023, about 75% of India’s 2W exports went to these regions. With an estimated global demand of 100-110 million units/year, Indian E2W manufacturers are well-positioned to tap into this market.
Even though India is one of the largest producers of 2Ws globally, its E2W penetration is still lower than in countries like Germany, China, and France. However, this is expected to change rapidly, with E2W adoption set to skyrocket in the coming years.
4. Government policies are also playing a crucial role in this shift. 📄
The National Electric Mobility Mission Plan (NEMMP) 2020 and the FAME scheme (launched in 2015) are providing incentives to boost EV adoption.
Additionally, production-linked incentive (PLI) schemes are encouraging domestic manufacturing, reducing reliance on imports & boosting exports.
Some states in India are also offering subsidies, tax benefits, and waivers on vehicle registration and road tax to make EVs even more appealing.
Ola Electric, with its vertically integrated approach, focus on technology, and strong R&D capabilities, is well-positioned to seize this massive opportunity.
Disruptor OEMs like Ola Electric have already captured over 70% of the E2W market share by volume in the first half of Fiscal 2024, proving that innovation-driven companies are leading the charge in the EV revolution.
Challenges ‼️
1. Capacity utilisation 🏭
The company has been only able to use 49% of the entire Future Factory capacity.
For context, Ola Electric's Future Factory was built with an initial capacity to produce 1 million electric vehicles (EVs) annually. The plan was to scale up to 2 million next year, and eventually to 10 million per year.
Higher utilization is the only way to ensure to higher economies of scale and better margins in the long run.
The same goes for their cell manufacturing. As by 2026, they aim to produce 20 GWh of battery cells at their Gigafactory, and eventually scale up to 100 GWh. But so far achieved only 1.4 GWh.
💡
For context, even BYD, one of the largest battery manufacturers with its raw material sources, struggled to reach 70 GWh. This raises doubts about how Ola Electric will meet its ambitious goals without similar access to raw materials.
For PLI — Ola has committed to reaching a production capacity of 1 GWh in the first year, 5 GWh in the second year, 10 GWh in the third year, and 20 GWh by the fourth year under India's Cell PLI Scheme.
So what if they don’t achieve this? Well, The Indian govt. has the right to deduct twice the shortfall from the total subsidies payable to the company. Missing these targets could significantly impact their financial outlook due to reduced subsidies or potential penalties.
2. Government subsidies are declining 📉
Ola Electric has benefited greatly from government subsidies like the Faster Adoption and Manufacturing of Electric Vehicles (FAME) and Production Linked Incentive (PLI) schemes.
These subsidies have helped reduce the cost of EVs, making them more competitive with traditional internal combustion engine (ICE) vehicles. However, these subsidies are now being scaled back.
👉🏻 the FAME-II subsidy for electric two-wheelers was reduced in June 2023. The incentive per kWh was cut, and the cap on subsidies was reduced from 40% - 15% of the vehicle's ex-factory price.
👉🏻 This sudden reduction has already led to a significant drop in EV sales. For Ola, this meant an increase in the retail price of their EVs, leading to a 58% decline in orders in June 2023 compared to the previous month.
The reduction or elimination of these subsidies could make EVs less attractive to price-sensitive Indian consumers, slowing down the adoption of EVs.
This, in turn, could hurt Ola's sales and market position, especially as they compete with established ICE vehicle manufacturers.
3. Raw Material Access 🔋
China dominates the global supply chain for lithium-ion batteries, controlling around 80% of lithium chemical production and 70% of cell manufacturing.
🚨
Despite holding less than 7% of the world's lithium reserves, China has managed to secure a massive share of the market.
Without direct access to raw materials like lithium, cobalt, and nickel, Ola Electric is at the mercy of global supply chains and price fluctuations, which are heavily influenced by China.
Moreover, China’s strategic expansion in battery production and its strong ties in the APAC region make it difficult for competitors to secure a stable and affordable supply of these critical materials.
Ola Electric, which doesn't have long-term contracts with suppliers, faces the risk of supply disruptions, quality issues, and price hikes, all of which could derail its production plans and financial health.
4. Inadequate Charging Infrastructure 🔌
For EVs to become mainstream, a robust charging infrastructure is essential.
However, India’s public charging network is currently underdeveloped, with far fewer charging stations than fuel pumps.
This could deter potential customers from buying EVs, as they might worry about the availability of charging stations when traveling.
Ola Electric plans to expand its charging network, but setting up these facilities faces a classic "chicken and egg" problem.
The challenge lies in whether to invest heavily in chargers before the widespread adoption of electric vehicles or wait for more EVs on the road to justify the infrastructure costs.
Type
2024
2023
2022
Hyper Charger guns
248
104
16
Standard Charger guns
764
647
-
🔌
As of March 31, 2024, the cost of a hypercharger unit was ₹0.61 million, not including setup costs.
Moreover, finding suitable locations and securing necessary government approvals are significant challenges that could delay the expansion of Ola’s charging infrastructure.
Without sufficient charging stations, customers might face long wait times or difficulties finding a place to charge their vehicles, leading to dissatisfaction.
If Ola starts charging for the use of their charging stations (which have been free until December 2023), this could further drive away potential buyers. Additionally, competition from other EV manufacturers who are also establishing their own charging networks could eat into Ola's market share if those networks are more accessible or offer better services.
