Ola Electric: India’s EV Poster Child Or The Next Cautionary Tale?

In the colourful landscape of India’s ambitious electric vehicle revolution, Ola Electric once stood tall as the beacon of green mobility—a shining example of homegrown innovation ready to electrify the nation’s roads. But it seems like Holi didn’t send any good wishes for Ola, as the company has been left with stains that won’t wash away quite so easily. What started as a promising journey toward sustainable transportation has become into a web of regulatory hurdles, customer complaints, financial strain, and leadership exodus. Let’s take a sarcastic ride through Ola Electric’s bumpy road and see if India’s EV darling might be following in the unfortunate footsteps of another once-celebrated startup, Byju’s.

Reason 1- The Creditors Come Knocking.

Nothing says “we’re doing great” quite like having your creditors file insolvency proceedings against you. Recently, Rosmerta Digital Services, an operational creditor of Ola Electric Technologies, decided they were tired of sending polite reminders about unpaid bills and escalated to the next logical step of knocking on the doors of the National Company Law Tribunal (NCLT) in Bengaluru.

The petition seeks to initiate a corporate insolvency resolution process against Ola Electric Technologies. This isn’t a simple error or a forgotten invoice tucked under a cabinet. When creditors begin pursuing legal action, it is usually an indication that the relationship has deteriorated beyond the “we’ll pay you next week, promise” stage. This isn’t the type of innovation investors expected from a company that positioned itself as India’s equivalent to Tesla.

Reason 2- Showrooms Showing More Than They’re Allowed.

In what appears to be a masterclass in “scaling first, asking for permission later,” Ola Electric has managed to expand to approximately 4,000 physical showrooms since 2022. That’s impressive growth, right? Well, there’s a slight hiccup—according to a Bloomberg investigation, out of 3,400 showrooms with available data, only about 100 had the trade certificates required under India’s Motor Vehicles Act.

For those keeping score at home, that’s just about 3% compliance with a rather fundamental regulatory requirement. The other 97%? Operating in what can generously be called a legal grey area. These certificates aren’t optional decorations for the showroom walls—they’re mandatory permits required to display, sell, offer test rides, or transport unregistered two-wheelers.

Transport officials across India, perhaps tired of being treated like optional stakeholders in this electric revolution, have stepped up scrutiny. Nearly two dozen notices sent by state-level transport officials have found Ola consistently falling short of meeting this basic requirement at the store level.

It’s almost as if Ola Electric decided that rules are more like suggestions—polite recommendations that can be addressed at some indefinite point in the future when it’s more convenient. In the meantime, why not open 1000s of technically non-compliant showrooms? What could possibly go wrong?

Reason 3- Creative Accounting in the EV World.

In corporate reporting, there’s a fine line between optimistic projections and creative accounting. Ola Electric seems to have discovered an entirely new category: the “scooters we’ve definitely sold but somehow haven’t registered yet” metric.

In a February 28 exchange filing, the company proudly announced selling “over 25,000 vehicles” in the previous month. Meanwhile, the government portal Vahan showed just over 8,600 registrations. That’s quite the discrepancy—about 16,400 scooters apparently sold but existing in some kind of registration limbo.

In India, customers cannot receive unregistered vehicles, and most respectable automakers typically only count registered vehicles in their sales figures. Not registering all the invoiced vehicles even a week after announcing sales numbers to exchanges (despite having a seven-day window under local rules) risks putting Ola at odds with state government laws.

This method of sales reporting coincides with a falling stock price and mounting pressure to increase scooter sales. It’s almost as if the corporation recognized actual sales were falling short of expectations and sought to redefine what “sold” meant.

Reason 4- Missing PLI Targets.

When the government offers you financial incentives under a Production-Linked Incentive (PLI) scheme, the general idea is to meet the production targets you committed to. Ola Cell Technologies, however, appears to have viewed these targets more as aspirational goals than actual commitments.

At the beginning of the month, Ola Cell Technologies received a notice from IFCI Ltd for failing to meet targets under the PLI scheme for advanced chemistry cell manufacturing. They’re now “engaging with authorities” and “preparing an appropriate response,” which is corporate speak for “trying to explain why we didn’t do what we said we would.”

Ola Electric, which was awarded an impressive 20 gigawatt-hour capacity under the scheme, now faces penalties of ₹ 12.5 lakh/day from January 1, 2025, until they meet their commitments. That’s approximately Rs 456 million/year in penalties if they continue to miss targets—a creative way to convert government incentives into government fines.

They’re not alone in this predicament, with Reliance New Energy Battery Storage and Rajesh Exports also receiving notices about missing targets. But being part of a group that collectively disappointed the government isn’t exactly the kind of industry leadership Ola might have been aiming for.

Reason 5- The Great Talent Exodus at Ola World.

Nothing says “we’re thriving” quite like showing 1,200 employees the door over two months. Ola Electric has been busy reducing the number of employees in several divisions, such as procurement, fulfilment, customer relations, and charging infrastructure. When filing for its IPO in March of last year, the EV behemoth stated a workforce of 4,011, which means they’ve lost almost 30% of their workforce, which is hardly a sign of vigorous growth!

But it’s not just the rank-and-file employees heading for the exits. Ola Electric has experienced what can only be described as a senior leadership haemorrhage. On December 27, 2024, Chief Technology Officer Suvonil Chatterjee and Chief Marketing Officer Anshul Khandelwal decided to quit. Their departures add to an already lengthy list of senior executives who have bid farewell to Ola’s trio of companies, including the AI venture Krutrim.

October witnessed the departure of Ola Consumer chief business officer Sidharth Shakdher, who stayed just nine months before moving to Paytm. The same month, Ola Electric’s vice president and head of sales, Mahesh Alan, also resigned.

As the phrase goes, a ship cannot sail smoothly if its captains step down. This flood of high-level exits paves the hints for a bigger problem with the corporate culture, presumably connected to the founder Bhavish’s arrogant style, which has previously aroused concerns. When your leadership team starts treating your firm like a sinking ship, it’s important to assess whether the iceberg you’ve hit is bigger than you thought.

Reason 6- Financial Performance: The Red Flag In Ola!

Ola Electric has been achieving impressive growth in LOSSES. The company’s net loss widened by 50% to ₹ 564 crore in the October-December quarter, up from ₹ 376 crore a year earlier. That’s quite the achievement in the realm of negative financial performance.

Operating revenue, unfortunately, didn’t match this upward trajectory in losses—it actually declined 19% to ₹ 1,045 crore from ₹ 1,296 crore a year earlier. The company’s operational performance weakened sequentially as well, with a negative EBITDA margin of 40.7%, compared with a negative 28.4% in the previous quarter.

Adding to this financial masterpiece, Ola Electric incurred a one-off cost of Rs 110 crore in the quarter to address service issues, including warranty expenses. When you’re spending more than 10% of your quarterly revenue just fixing problems with products you’ve already sold, it might be time to reconsider your quality control processes.

Reason 7- What about The Market Share: Well, It’s A Downward Spiral!

Once India’s biggest scooter maker, Ola Electric now finds itself losing ground to both traditional 2W manufacturers entering the electric space and dedicated EV competitors. TVS Motor, Bajaj Auto, and IPO-bound Ather Energy are proving to be formidable rivals, with these 4 major players together accounting for around 90% of the EV 2W market.

The erosion of Ola’s market share comes amid increasing competition and, perhaps more concerningly, persistent reports of customer complaints about its products and services. In a market where word-of-mouth works, dissatisfied consumers alerting their friends about defective scooters, burning the scooters, and the reels going viral on social media are enough to ruin the company’s image. Moreover, the Kamra-Bhavish tug of war in online world is no new series for anyone!

Reason 8- Regulatory Scrutiny: When the Government Takes Notice!

On January this year, CCPA asked for additional documents from Bhavish’s Ola Electric as part of an ongoing investigation. This followed a show-cause notice issued on October 8, 2024, regarding alleged consumer rights violations, misleading advertisements, and unfair trade practices.

When government consumer protection agencies start using phrases like “misleading advertisements” and “unfair trade practices” in official notices, it’s generally not a precursor to receiving a “Business Ethics Award.” Instead, it suggests that the gap between what Ola promised consumers and what it delivered may be wider than the company would like to admit.

Reason 9- The Stock Market Verdict, That’s Not In Favour Of Ola.

If you’re looking for an unbiased assessment of a company’s prospects, the stock market can be brutally honest. Shares of Ola Electric Mobility Ltd. ended 0.8% lower last Thursday at ₹50.63. The stock is now down 34% from its issue price of ₹76 per share and has corrected nearly 70% from its post-listing high of ₹157.

Over the last month alone, the stock has dropped 18%. Investors appear to be unimpressed with the company’s performance and future prospects.  The market, with its collective wisdom (or panic, depending on your perspective), has rendered a fairly severe verdict on Ola Electric’s voyage thus far!

Reason 10- The Byju’s Parallel: Is It A Warning Sign?

The similarity to Byju’s in the edtech field is more than just imagination, rather it signals to something deeper! Byju, once India’s most valued Ed-tech Poster Boy, has suffered a stunning fall from magnificence due to allegations of aggressive and unethical sales practices, financial irregularities, and an unsustainable business strategy. The ed-tech giant went from being worth $22 billion to facing insolvency procedures and failing to pay staff.

Ola Electric seems to be following a disturbingly similar trajectory: rapid expansion fueled by investor funding, regulatory oversights (or deliberate neglect), mounting customer complaints, deteriorating financials, and an exodus of leadership. The parallels are too striking to ignore.

Both companies were founded by charismatic entrepreneurs who became the faces of their respective industries. Both attracted massive funding based on promises of disrupting traditional sectors with technology. And both appear to have prioritized growth and market share over sustainable business practices and regulatory compliance.

The Bottom Line- Can Ola Electric Turn Things Around?

The market for electric vehicles in India still has great potential. With government backing for green mobility and rising consumer environmental consciousness, demand for electric two-wheelers is projected to rise further. The question is whether Ola Electric can deal with its underlying flaws before it’s too late.

To avoid becoming the Byju of the EV market, Ola Electric needs to take several critical steps.

1. It must emphasize regulatory compliance in all areas of its operations. Operating a major chunk of 97% of showrooms without proper licensing is not an error; it is a habit that indicates a troubling approach to regulatory standards.
2. The company needs to be transparent about its sales figures and financial health, and with Bhavish being a little less arrogant!
3. Ola must address the core reasons of its top personnel exits. When experienced leaders depart in large numbers, it frequently implies underlying organizational flaws that cannot be addressed simply by recruiting replacements.
4. Perhaps most importantly, the company must focus on product quality and customer service. In the long run, no amount of marketing or discounting can compensate for unreliable products or poor after-sales support.

The Road Ahead: Bumpy or Smooth?

Ola Electric stands at a critical juncture. The company can either watch its mistakes and make modifications to its approach, or it can continue on its current path and risk joining the ranks of once-promising Indian startups that couldn’t sustain their early success!

The electric mobility revolution in India is still in its early stages, and there’s room for multiple players to succeed. But success will come to those who build sustainable businesses based on quality products, customer satisfaction, regulatory compliance, and financial prudence—not just rapid expansion and splashy marketing.

For Ola Electric, the colours of Holi this year might have left stains that are difficult to wash away. However, in business, as in life, redemption is always attainable for those who are prepared to admit faults and make true improvements. The question is whether Ola Electric’s leadership have the humility and vision to do so. If we see the arrogance of the Ola Founder, there is hardly any sign of acceptance of what went wrong!

As India watches this unfolding drama in its nascent EV industry, one can only hope that the lessons learned—whether from Ola’s potential recovery or continued decline—will help shape a more sustainable and customer-focused approach to electric mobility in the country.

For now, though, Ola Electric seems determined to answer the question, “Will Ola become the Byju’s of the EV market?“! For the sake of India’s electric mobility dreams, let’s hope they find the brakes before driving off that particular cliff.