In today’s finshots, we talk about Ola Electric’s challenges and see if it has what it takes to rise from the ashes.
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The Story
Stock markets are known for reacting to the news, sometimes in dramatic ways, and Ola Electric just got a taste of it.
A few days ago, a public spat on X (formerly Twitter) between Ola Electric’s CEO Bhavish Aggarwal and comedian Kunal Kamra grabbed a lot of eyeballs. The comedian was voicing frustrations on behalf of unhappy customers. And just a day later, Ola Electric’s shares tanked nearly 9%.1
So, what caused this steep drop?
Well, it seems the comedian struck a nerve with many Ola Electric scooter owners who’ve been waiting endlessly to get their vehicles back from repairs. Apparently, the turnaround time was painfully long.
For some context, Ola Electric has been battling multiple issues, such as battery failures, handlebars locking up, software issues, as in the Ola Electric app refusing to connect with the vehicle and repair delays that have left many scooters sitting idle for weeks, if not months. Even customers with premium service plans are facing the same fate.
Why? Because Ola’s service centres are overwhelmed. Reports suggest they could be handling as many as 80,000 complaints a month, with some days seeing up to 7,000.2
With numbers like that, it’s no wonder they’re struggling to keep up.
And this isn’t the first time Ola’s found itself in hot water.
Remember those viral videos of scooters catching fire? Or the front fork arm of the S1 electric scooter collapsing under heavy braking?3 Well, Ola tried to control the damage by offering “voluntary replacements” of faulty parts, but the issues kept piling up.
Some customers, completely fed up, also resorted to extreme measures like setting showrooms on fire in Karnataka or strapping placards on their scooters, warning others not to buy Ola.4
And as if that wasn’t bad enough, there’s more.
Last week, after a flood of customer complaints, the Central Consumer Protection Authority (CCPA) issued a show-cause notice to Ola Electric.
The charges? Misleading advertisements and unfair trade practices. In fact, over the past year, the CCPA logged over 9,000 complaints against Ola Electric.5
And the company’s market share tells the story; it’s plunged from almost 50% in April to just 27% now.6
Sure, there’s no official audit or report to confirm every complaint, but the consumer frustration is loud and clear.
So, what’s driving this downfall for Ola Electric?
It seems Ola’s aggressive expansion strategy could be partly to blame. They might have stretched themselves too thin in their rush to dominate the market. Add in global supply chain disruptions causing production delays and component shortages, and the problems just snowballed.
As a result, Ola lost its lead in five of the top ten states for electric vehicles, which make up nearly 80% of the total market. Their sales are even down by over 50% compared to the start of FY25, suggesting that these service troubles are hitting monthly sales, too.
And here’s the irony. Despite its current struggles, Ola Electric’s story started off on an inspiring note.
Even with competition from established players like Bajaj and TVS, as well as a flood of Chinese EVs, Ola managed to carve out a massive share of the market. To put things in perspective, in less than five years, they sold nearly 7 lakh electric scooters, commanding a third of India’s electric two-wheeler market.7 With an average of 35,000 units sold monthly, they outpaced both legacy companies and new entrants alike.
Yet, while Ola captured the market, they couldn’t keep up with customer support or maintain efficient supply chains. And as these cracks began to show up, legacy players like Bajaj Auto seized the opportunity.
Bajaj, which initially struggled, has nearly doubled its market share, climbing to upwards of 20% today.8 Bajaj and TVS now have a combined 38% of the e-two-wheeler market. With lower-priced scooters like the Bajaj Chetak and TVS’s iQube variant starting at around ₹95,000, they’re undercutting Ola’s S1 Pro, which sits at ₹1,30,000.
But Bajaj’s strategy offers Ola a lesson.
Both Bajaj and TVS launched their electric two-wheelers back in 2020 before Ola came along in 2021. Yet, they chose to watch and wait, letting startups like Ola build the market. And now, they’re swooping in with a better cost structure.
Bajaj’s playbook?
Timing, affordable pricing and sustainable growth. They’re also looking long-term, focusing on releasing models only when they’re truly road-ready. Ola, on the other hand, has often been called out for launching vehicles despite performance issues. And even when complaints pile up, it doesn’t recall its models. Unlike Bajaj and TVS, which have a solid service network, Ola struggles to service its faulty vehicles, with its existing centres being understaffed as well.
So, if Ola wants to stage a comeback, they might need to take a leaf out of Bajaj’s book, scale production wisely, focus on affordability, and keep customers in the loop.
But before we go gaga over legacy players, here’s a twist: are they really doing that much better?
A recent Bernstein report suggests that the electric two-wheeler industry is grappling with losses.9 The report claims only a handful of EV players will survive in the long run.
Ola currently enjoys the highest margins among electric scooter makers, but legacy players like TVS, Bajaj, and Hero are bleeding money. While Ola profits on its premium models like the S1 Pro, it’s losing on its mass-market offerings like the S1X. TVS is reportedly losing ₹11,000 per scooter, and Bajaj’s losses are steeper, nearing ₹15,000 per vehicle.
Everyone in the EV space will need to ramp up operations and drive down costs to compete with traditional internal combustion engine scooters truly. Bernstein’s report suggests that dominant startups like Ola could eventually become mainstream players while traditional manufacturers like Bajaj, TVS, Hero and the like may struggle to keep pace.
So yes, Bernstein’s report favours startups like Ola dominating the EV space. But to get there, Ola has a lot of ground to cover to win back the hearts of Indian EV buyers.
After all, who wouldn’t want to see a homegrown startup rise to the top and become a legacy player one day?
But until then, the road ahead looks pretty bumpy.
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Story Sources: Economic Times [1] [4] [9]; Livemint [2] [3] [5]; Outlook Business Desk [6]; NDTV Profit [7]; Business Standard [8]
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