Ola preparing for a world without any subsidies
Ola preparing for a world without any subsidies
Ola Electric founder and CEO Bhavish Aggarwal stated that his company is preparing for a world without incentives and subsidies as it pursues aggressive development plans and increases investment.
In an interview with ET, Aggarwal stated that Ola’s electric two-wheeler business is EBITDA (earnings before interest, tax, depreciation, and amortization) positive. “We have scaled the fastest, and we have gotten to profitability the fastest,” he said.
Aside from scooters, plans are in the works to launch four to five electric motorcycles in the coming fiscal year.
Ola Electric plans to release an electric vehicle later next year. According to the CEO, the corporation is also increasing its investments in cell manufacturing in order to increase localization levels.
“At peak capacity, Ola Electric plans to produce 10 million electric two-wheelers, 1 million cars, and 100 GWh of batteries,” he said, without specifying a time frame.
According to Aggarwal, the move to electric vehicles has already begun in the Indian market. In Bengaluru, for example, e-scooter penetration is 40%. “The ambitious target I’ve set for ourselves and the industry is that by 2025, three years from now, India can completely move to electric two-wheelers, including motorcycles,” he said.
At present, electric models account for 5% of the total domestic two-wheeler market, the segment having nearly tripled in the last two years.
Scooters in Spotlight
Ola Electric has so far released two variations of its e-scooter S1 and sold 109,369 units in the previous fiscal year. Deliveries of the third model, the S1 Air, which is positioned in the mass market, will begin in June-July of this year. In the first three months of this year, average monthly sales for the S1 Pro and S1 were around 18,500 units.
According to data from the VAHAN portal compiled by the Federation of Automobile Dealers’ Association, Ola Electric’s market share in the first two months of this year was 27-28%. The company has recently been in the news due to complaints of broken front forks in their scooters, as well as criticism over its choice to ‘update’ rather than recall its product.
Blaming “vested interests” for wanting to derail the company’s growth, Aggarwal said, “We addressed it (the front fork issue) very clearly. No other OEM (original equipment manufacturer) has addressed an issue this transparently.”
“We put out our data,” the Ola founder said. “You could have seen what the number of issues was at the PPM (parts per million) level. Because of the negative narrative that was being created, some of my customers were getting anxious. We did the right thing and proactively announced a free upgrade for all our customers.”
According to Aggarwal, mandatory recalls occur in the automotive industry when failure rates exceed a certain ‘ceiling’.
“We were 200 times below that ceiling. If you look at recalls of other OEMs, they have happened after years, not in months. This upgrade was offered because we are upgrading the vehicle on a continuous basis. That is the way we do our product development,” he said.
Incentive No Bar
In response to reports that the government may not extend demand incentives under its flagship FAME II (Faster Adoption and Manufacturing of Electric Vehicles) scheme, Aggarwal stated that the government would make its own decision on tapering or discontinuing incentives with higher adoption.
“We are preparing ourselves for a world without any incentives and subsidies. Any incentives and subsidies are benefits and reinvestment for our growth and scale,” he said. “Because of our strategy around developing technologies in-house and doing large-scale manufacturing from day 1, (as well as our) different front-end strategy, our sales model works. If FAME was to go, we would not be affected. We have worked out a way to live without the subsidy.”
Ola Electric has signed an agreement with the Tamil Nadu government to invest Rs 7,614 crore in the establishment of an EV hub, which will comprise manufacturing facilities for electric two-wheelers, vehicles, and lithium-ion batteries, as well as vendor parks.
Join All India EV Community on LinkedIn
Content Credit: The Economic Time
