Ola Electric, the highly ambitious Indian electric vehicle (EV) maker on the move. Ever since its purchase of Dutch start-up Etergo in 2020, it’s been walking a very bumpy road. The company has since unveiled its first electric scooter based on Etergo’s AppScooter. This rollout has been imperiled by several factors, including a toxic mix of operational retrenchment, bottom-line bleeding and fierce competitive headwinds. Ola has a long way to go to establish itself as the leader in the Indian EV market. Tough internal realities and external pressures dog it on the road ahead.
Ola’s acquisition of Dutch scooter maker Etergo was designed to strengthen its foray into the electric scooter sphere. The original Ola scooter looked strikingly similar to the Etergo one. It used the technology that the Dutch firm had pioneered, with just a few tweaks, building on that intellectual capital. Unfortunately, from the start, Ola has been facing numerous challenges that have inhibited its focus on a rapid growth path.
In the last couple of months, the company has made serious layoffs and other cost-saving moves, drastically reworking company operations. These steps are a welcome first step to addressing the growing losses. They jumped to $65 million in the October-December quarter, a dramatic gain from $43.6 million in that same quarter last year. The ongoing financial pressure has caused Ola to accelerate its plans for finding alternative routes to profitability.
Ola’s troubles don’t stop at the scale of their accruing financial losses. The company just last year had to publicly recall more than 1,400 of the first-generation scooters in 2022 to probe cases of spontaneous fires. The move sent ripples of doubt through the public about the safety and reliability of its products. Further, Ola’s customer service is heavily criticized for being inconsistent and unreliable. Now customers are posting videos on social media with scooters bursting in flames or self-destructing without notice.
Perhaps the most daunting challenge for Ola is the competitive landscape. Yet, the company is competing with entrenched two-wheeler titans that already dominate consumer preference and are deeply rooted in the market. In addition to these issues, regulatory scrutiny towards EV manufacturers is increasing, further complicating Ola’s situation.
If history is any guide, Ola has more than setbacks to contend with. The company benefits from two state subsidies: one aimed at manufacturing scooters and another to support the establishment of a 20-gigawatt EV battery plant. In order to be profitable, Ola aims to manufacture and move 50,000 units per month. Many analysts still doubt this ambitious plan is achievable.
In order to increase sales, Ola has had to resort to deep discounting and launching of new models at lower price points. This is an example of the company’s aggressive pricing strategy in its attempt to seize market share from competitors in a heated market environment.
Ola’s share of the market saw extreme volatility. It had dropped from 52% down to 19% by December but started to bounce back, getting to 25% in January. This volatility shines a big spotlight on the challenges the company faces. It continues to battle in order to stay at the front of the rapidly evolving EV space.
Bhavish Aggarwal, CEO of Ola, has described the company as the two-wheeler version of Tesla. He stresses that Ola’s vision must focus on solving the emissions challenge in a highly price-sensitive market such as India. “The whole vehicle has been tested at three levels [for India] – digital simulations, component tests and vehicular lab tests, and vehicular field tests,” he stated regarding the rigorous testing protocols implemented for their scooters.
Yet, as Amanda Hickman from Sidewalk Labs has warned, moving from a more software-enabled strategy to concentrating on actual hardware deployments is a long-game industry wide. Deepesh Rathore remarked, “Software mindsets don’t work with hardware products, which need time to build.” This feeling is a testament to the natural challenge that comes with building tangible products as opposed to software products.