Ola Electric heads for two-wheeler stock market listing in what is India first EV IPO

Ola Electric, the electric scooter venture founded by Bhavish Aggarwal, is gearing up for a high-profile initial public offering (IPO) in early 2024, aiming to become India’s first listed electric vehicle company. Aggarwal, also the co-founder of ride-hailing giant Ola Cabs, sees the IPO as a testament to the significant impact his electric scooters have had on India’s emerging EV market, as per a report by the Financial Times. Ola Electric faces some major challenges, including lukewarm market interest in start-ups, high employee turnover, heightened competition from established manufacturers, and the expiration of government subsidies, making electric scooters less appealing to consumers. The IPO, expected to be one of India’s largest in the past two years, aims to raise $661 million for purposes such as establishing a battery factory in India, funding research and development, and clearing debts at the loss-making start-up. While Aggarwal, who owns 37 per cent of Ola Electric, insists the company does not require additional private capital after a Rs 3.2 billion funding round last year, some challenges persist. The company’s losses before tax widened to Rs 14.7 billion for the financial year ending March 2023, attributed to the establishment of a massive scooter factory in Tamil Nadu and the initiation of battery cell production, as per Reuters. Despite losses, total revenue for the same period was Rs27.8 billion, a sixfold increase from the previous year. Ola Electric faces competition not only from traditional rivals like Uber but also from established automakers such as Honda, Hero, and Bajaj entering the electric scooter market. Analysts predict a potential shrinkage in Ola Electric’s market share but suggest that sustaining a 20-25 per cent share in the e-scooter market is achievable. The Indian government’s support for electric two-wheelers, with generous subsidies in recent years, has propelled market growth. However, as subsidy programs wind down, challenges arise in maintaining competitive prices. Manufacturing costs for e-scooters remain up to three times higher than their fuel-burning counterparts, with Ola’s electric two-wheeler priced at around Rs 1,20,000 ($1,500). Beyond scooters, Ola Electric aims to enter the electric car market, with plans to begin commercial production of designed batteries later this year, after missing a previous 2023 deadline. Despite achieving sales exceeding 250,000 scooters annually, the company has faced challenges in product delivery and after-sales service, prompting customer complaints and even mass part replacements. Aggarwal defended Ola Electric’s intense work culture amid accusations of high staff turnover, stating that attracting top talent requires individuals with passion and a strong work ethic. Despite an employee attrition rate of 47 per cent in the last financial year, Aggarwal believes the company’s aggressive approach has yielded tangible results in establishing a significant presence in the EV two-wheeler market within a short timeframe. (With inputs from agencies)