Things came to a head on 17 August when a crowd of 50 irate customers, frustrated by delays, tried to force open the doors of the service centre while the mechanics cowered inside. Most of the scooters had come in for brake pad replacements. There is a shortage and Ola is not able to keep up, leading to customers having to wait for over a month.
This wasn’t a sporadic incident—Ola has a history of run-ins with customers. Despite all these negative incidents, however, nothing seems to affect its prospects. Within six months of its debut, it became India’s largest electric two-wheeler maker in 2022, a position it has only consolidated in the last two years.
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A bumper initial public offering (IPO) earlier this month, which was oversubscribed 4.27 times, has only added to Ola’s credentials. As the first pureplay EV (electric vehicle)-maker to be listed in India, it raked in ₹6,146 crore, further raising the profile of its flamboyant if controversial founder and chief executive officer (CEO), Bhavish Aggarwal. Investors—angel, venture, institutional and now retail—have flocked to him and largely stayed put across his entrepreneurial journey—first with Ola Cabs, then with Ola Electric, and more recently, with AI firm Krutrim.
“We have been privileged to be partners with Bhavish since Ola Consumer and continue to be partners now in Krutrim as well,” said Avnish Bajaj, founder and managing director of venture capital firm Matrix Partners. “Market or perception ups and downs externally do not affect real and deep relationships. Ola Electric has deep moats and cost advantages via its full-stack business model, including BharatCell (Ola’s indigenous lithium-ion cell, which received approval in May) due to be launched soon,” he added.
There are detractors, too, many of them direct rivals. The most vocal of them is Rajiv Bajaj, managing director of Bajaj Auto, who has regularly questioned Ola’s business model.
Bajaj is not entirely convinced EVs are that big a phenomenon. “We don’t think there is any party happening in the first place as far as electrification is concerned. Some people may be messing around in one corner of the room; that doesn’t make it a party,” Bajaj said on 4 July in a thinly veiled dig at Ola.
“In spite of the government pouring so much money into EVs and subsidies, at the end of the day, the electric vehicle penetration in the two-wheeler segment is about 4-5%. It doesn’t really seem that it has taken off like a rocket,” he added.
What has taken off though, is Ola’s stock.
Riding the Market
Between its not-so-happy customers and ever gung-ho investors stands the newly pony-tailed, kurta-clad Aggarwal, who will be just 39 this Wednesday.At Ola’s annual event, ‘Sankalp’, on 15 August, the Ola founder displayed a slide that has passed into meme folklore.
Titled “4th Largest EV Company by Revenue”, it showed Tesla in the top spot, followed by Rivian, VinFast Auto and Ola Electric. At the bottom of the slide, in a font size that would have embarrassed a used-car salesman, were two seemingly innocuous words: “Excluding China”.
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“Well, then even I topped my engineering batch—if you exclude the top 35 students,” quipped the Mumbai-based director of a wealth management firm, who spoke toMint on condition of anonymity.
While sarcasm might trigger a one-time dopamine hit, the market clearly can’t get enough of Ola Electric. What else explains the stock’s dizzying rally?
After a muted opening on the BSE at the upper price band of ₹76 per share, the stock rallied to hit the upper circuit on four of the first seven trading days. On 20 August, it hit an intraday high of ₹157.53—more than double its listing price.
That has led people to wonder if Ola is for real—if the listing went against traditional financial wisdom. Ola is straddled with ₹2,800 crore debt, continues to burn cash and is yet to make a profit. And yet, its stock market performance post-listing defies logic.
Following a block deal of 23 million shares equivalent to 0.5% equity on the same day (20 August), the stock cooled off. By the end of the week, on 23 August, the stock had fallen further to ₹126.21 per share, shedding nearly 20% of the all-time high of 20 August. But with a market capitalization of over $6.7 billion, it is still near the valuation it was initially eyeing last year.
“People have to remember that Ola has a free float of only 17%. The remaining 83% outstanding shares are locked in. In such low free-float companies, initial momentum can take the stock to dizzying heights despite the absence of fundamentals,” the wealth management firm’s director added. “In fact, I would say Ola is a pure momentum play now. The market is paying for narrative. Once the market starts paying for execution, then such companies and their investors will get a reality check.”
New-age companies listing on the bourses have very vocal camps of believers as well as naysayers. A company like Ola, helmed by a bellicose, in-your-face founder, is even more polarizing. But many participants are willing to look beyond the short-term optics and focus on the larger EV story.
“It’s a good start for the EV ecosystem, in both public and private markets. Private markets seemed overvalued versus the public listing demand,” said Pramod Amthe, head of institutional equity research, Incred Capital, a brokerage firm. “With the Ola stock nearly doubling from listing to $7 billion market cap, it indicates public markets are equally excited about the EV opportunity.”
The next hurdle
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With the listing, the pressure for Ola to turn profitable will go up and analysts believe this will govern its stock prices and valuation. While the company has laid to rest doubts about its ability to scale, raise capital or lead the market in terms of sales, Aggarwal still has to show that Ola can turn a profit. It’s something he was pressed on during the company’s first, nearly hourlong analyst call on 14 August.
“Long-term, EVs will have [a] very similar profitability number as ICE vehicles. ICE vehicles are only getting costlier due to compliances and EVs are only getting cheaper due to the battery cost curves,” Aggarwal said at the concall. “At what point that inflection happens, I’m sure all you analysts have your own models. I have my own. Not long but in the next few years we will all be there,” he added.
Compared to established peers such as Hero MotoCorp, Bajaj, TVS and Royal Enfield, Ola’s income statement does not currently make for a good read. Its revenues are a sixth of the top three listed firms in the two-wheeler industry. And while the others are profitable, with double-digit operating margins, Ola is still in the red.
In its first quarter (Q1) FY25 results, Ola claimed it is near break even in the automotive business segment, which accounts for 99.7% of its revenue. Lithium-ion cells generate the rest of the pie. But in absolute terms, losses widened to ₹367 crore from ₹267 crore in Q1 FY24 though they did contract from ₹416 crore in Q4 FY24.
The phaseout of the FAME scheme in March also had an impact on the company—in the last four months, sales have been below the peak of March 2024 (see table). Subsidies have come down from a maximum of ₹60,000 to ₹10,000 per vehicle between June 2023 and April 2024.
“The IPO gives Ola a headstart over others to sustain through some more bleeding. It will also look forward to a ‘meltdown’ and consolidation in the electric two-wheeler industry as soon as possible to allow it to become profitable,” said Avik Chattopadhyay, founder of Expereal, a brand strategy and solutions consultancy firm.
Ola’s broad path to profitability rests on two pillars—its advent in the motorcycle lane and indigenous lithium-ion cell production.
The motorcycle gambit
On 15 August, the company showcased three motorcycles based on its S1 scooter series platform. The entry-level model, Roadster X, has a 2.5Kwh battery pack and 200km range. It will hit the market first, in January 2025, with a price tag of ₹74,999. Two mid-range and top-of-the-line models will follow subsequently.
While a number of companies, including Hero MotoCorp, Bajaj, TVS and Ather, have ventured into the electric scooter segment, electric motorcycles are still virgin territory and Ola is seeking to gain an early-mover advantage here.
At the outset itself, the Roadster X becomes the most affordable electric motorcycle in the country—the nearest rival on price point is Atum Vader S,at ₹108,500. The cheapest petrol motorcycle, Hero MotoCorp’s HF 100, is priced at ₹59,018 (ex-showroom Delhi).
“The next big frontier for EV penetration and EV growth in India is going to be motorbikes. Motorbikes account for about two-thirds of the Indian two-wheeler market. So, it’s a very important step that this company is undertaking,” said Aggarwal at the company’s first investor concall, after announcing the Q1 FY25 results on 14 August.
“Industry research indicates that the electric bike market is expected to grow at a CAGR of 11% to 13%. Although there are already established players in this segment, Ola holds a strong advantage with its well-known brand, extensive sales and distribution network, deep business understanding and technological expertise,” said Saurav Kumar, managing director, Protiviti Member Firm for India, a business consultancy.
Battery charge
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Lithium-ion cells, which account for as much as a third of the cost of an electric vehicle, are Ola’s other big play. The company has set up India’s first gigafactory and the bulk of the capital raised from the IPO will be used to expand capacity from the current 1.4 gigawatt hours (GWh) to 5GWh, and 6GWh in the subsequent phase. There are plans to ramp it up further, to at least 20GWh by 2026, and 100GWh by 2030.
Alongside, the company has developed the 4680 cell, which it claims packs five times more energy, 10% longer range and 1.5 times faster charging than the existing cell sourced from LG Chem that currently powers its scooters. These will be gradually seeded into its products from the first quarter of FY26.
Some industry watchers are positive about the company’s battery plans. If the venture works out as planned, it can enable Ola to make batteries at least at the same price as imported versions, analysts at HSBC Global Research stated in a report on 15 August. In the best-case scenario, HSBC projects Ola will be able to manufacture batteries at a global quality and yield level that costs $15-20 lower per KWh.
Some industry watchers are positive about the company’s battery plans. If the venture works out as planned, it can enable Ola to make batteries at least at the same price as imported versions.
“Ola’s go to-market and localization efforts are noteworthy and should attract investors looking to play the electrification theme in India,” it said.
Elara Capital, however, had a different view in its pre-IPO note. It pointed out that investment in cell manufacturing is a double-edged sword because to claim advanced chemistry cell (ACC) PLI, Ola will have to ramp up capacity to 20GWh by FY28, whereas captive demand could be much lower. “Hence, if Ola Electric does not get OEM customers for its cell manufacturing, it would present a challenge. Even Tesla is finding the going tough to stabilize 4680 cells; hence, scale and cost benefits would be difficult to realize for the 2W arm of Ola Electric,” it added.
Red flags
Analysts also have other major concerns, including EV penetration still being gradual, intense competition in the fractured EV market, and uncertainty over regulatory support.
The Street is paying particularly close attention to the intensifying competition, given that Ola as the market leader has the most to lose if legacy manufacturers bring in enticing EV offerings.
“We believe Ola Electric’s EV market share is not sustainable, given peers have yet to ramp up their product portfolio and distribution network,” Elara Capital said in its pre-IPO note.
And, despite the success of the S1 scooter—the result of a canny acquisition of Netherlands-based Etergo in 2020, there are still lingering questions about Ola’s real ability to design and produce a vehicle from the ground up.
The Street is paying particularly close attention to the intensifying competition, given that Ola as the market leader has the most to lose if legacy manufacturers bring in enticing EV offerings.
Shortly after it unveiled the motorbikes on 15 August, some netizens alleged it had ripped off product shots from Zero Motorcycles, a California-based electric bike brand.
Then, there are the far more serious allegations of Ola copying maps from MapmyIndia, violating a license agreement from 2021, when it launched its own Ola Maps on 5 July. On 29 July, CE Info Systems, the parent company of MapmyIndia, served a legal notice on Ola Electric, which had used its maps in the S1 Pro scooter since 2022.
“You have duplicated our client’s API (application programming interface) and SDKs (software development kits) from proprietary sources belonging to our client to build Ola Maps. It is firmly stated that our client’s exclusive data has been copied/derived by you to further your illegal motive and for your unjust commercial gains,” CE Info Systems’ lawyers said in the notice.
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Aggarwal responded to the allegations in his usual nonchalant, dismissive way. “Empty vessels make more noise. In the run-up to our IPO, they made a lot of sound. They were totally opportunistic about it. We sent them a strong response; we wanted to deal with them after the IPO,” he said on 15 August.
His signature “my way or the highway” attitude is also seen as the reason for the company’s high attrition rate. In the DRHP filed in December 2023, Ola had said it had 3,733 employees on the rolls as of October 2023, and an attrition rate of 47.48%.
“The tone at the top shapes the culture of any organization. While Ola’s rapid growth is often credited to Bhavish’s determination and drive, several senior-level departures have reportedly occurred due to ideological differences with him,” said Protiviti’s Kumar. “So far, the market has not responded negatively to these exits. But with Ola going public, there will be heightened scrutiny on corporate governance and organizational stability,” he added.
Maverick CEOs like Aggarwal, who is often compared to Tesla’s Elon Musk, are a rarity in India. The start has been great but will investors have the stomach for the ride ahead?
