How can Ola Electric get its spark back?

The Bhavish Aggarwal company is navigating through some tough times with losses widening and market share slipping. But it may not all be gloomy

By Manu Balachandran Forbes India Staff

Published: May 30, 2025 05:10:28 PM IST

Updated: May 30, 2025 05:39:44 PM IST

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Bhavish Aggarwal, Founder and CEO, Ola cab and Ola Electric Image: Selvaprakash Lakshmanan for Forbes India

The empire seems to be finally striking back.

After years of being the country’s largest electric two-wheeler maker, Bhavish Aggarwal-led Ola Electric seems to have found itself on unfamiliar turf. Its market share has been slipping, with incumbents Bajaj and TVS taking away market share. It has not helped that the two-wheeler maker had been hit by customer complaints, forcing even the government to step in.

To compound matters, Ola’s losses for the quarter between January and March this year grew by more than 100 percent compared to the year-ago period. Deliveries of vehicles halved to 51,375 units from 115,000 units. Net loss for the January-March quarter stood at Rs 870 crore while revenue from operations fell 62 percent.

“As we have transitioned from a private to a public company, we must also manage operating risk in a slightly more mature way,” Bhavish Agarwal said in its earnings call on May 29. “So, that lesson has been well learned by everybody at Ola Electric. Going forward, you will see us be deeper as well as thoughtful about capital allocation and operating risk.”

In May, Ola’s market share slipped to 20 percent, down from 22.1 percent in April, according to data from the government-run Vahan portal. In contrast, TVS Motor and Bajaj Auto gained, accounting for 25 percent and 22.6 percent, respectively, despite marginal dips in volumes.

“Ola’s evolution in the Indian electric vehicle (EV) sector exemplifies the transition from disruptive innovation to competitive incumbency amid an intensifying market landscape,” Harshvardhan Sharma, the head of auto retail practice at Nomura Research Institute, tells Forbes India. “While the 'dream run' phase faces headwinds, strategic realignment anchored in operational excellence, ecosystem partnerships, and customer-centric innovation can catalyse sustainable competitive advantage.”

The company reckons that the rollout of its Gen 3 models in January this year has already helped its margins and now believes that with production-linked incentives (PLIs) kicking in in the second quarter of the financial year, it will see further improvement in its financials. PLI is a government initiative that offers financial incentives to companies that increase production and sales. “The company expects its gross margins to improve to approximately 35 percent in Q2 FY26 with PLI,” Ola said in a statement.

Still, it doesn’t take away from the fact that Ola’s rivals, especially the incumbents, have made a dent. “Incumbents control around 30 percent market share in electric two-wheelers and legacy OEMs like TVS Motors and Bajaj are accelerating EV launches with targeted volumes exceeding 100,000 units annually,” Sharma of Nomura adds.

Also read: TVS, Bajaj, Hero are growing in the EV market. Can Ola keep its throne?

Shaking up the order

In December 2020, as India’s economy began swinging back to normalcy after months of a nationwide lockdown, Aggarwal and his team at Ola Electric signed a memorandum of understanding with the government of Tamil Nadu to set up a manufacturing plant in the state to produce electric vehicles.

“In the EV space, the only way we can create impact is to play the scale game,” Aggarwal had told Forbes India in an interview. “We have to build this business at scale. That’s the only way the adoption of EVs will be faster. Because, unless we build at scale, you can't bring the cost down enough, and you can't get consumers excited.”

Soon enough, Ola Electric Mobility attracted the attention of global private equity heavyweights, raising funds from SoftBank and Tiger Global before deciding to go public last year. The IPO was a resounding success. But by December 2024, Bajaj and TVS had usurped the top spots, a trend that seems to have strengthened in the first half of 2025.

“Q4 (of FY25) has been a tough quarter due to lower revenue and a one-time warranty provisioning, but I want to assure everyone that the company’s fundamentals remain focused on our efforts to achieve vertical integration across the system,” Aggarwal said during the earnings call. “We’ve already started monetising our in-house software platform, and while we are one or two quarters behind on our plans to integrate Ola’s battery cell into our products, they are well on track—we are currently coming close to achieving 80 percent yield optimisation in our commercial EV cells.”

Complexity of disruptive innovation

The company’s market capitalisation has slipped by as much as 65 percent since August last year when it went public. “Our focus now is to increase sales productivity per store,” Aggarwal said during the earnings call.

Kotak Institutional Equities has downgraded the stock to Rs 30 from Rs 50 earlier. That target is more than 70 percent lower than the company’s IPO price of Rs 76.

Ola, though, is pinning its hopes on its new electric motorcycle, the Roadster, which claims a range of 501 kilometres. Motorcycles, the company says, have twice the demand of the scooters it currently sells. India’s EV market is expected to grow at a 44 percent CAGR between 2023 and 2030, with two-wheelers accounting for more than 80 percent of EV sales by 2030.

Ola is also in the midst of what it calls Operation Lakshya to bring down its cost structures. The company has already brought down the turnaround time at its service centres to an average of 1.1 days, with attention now turning to increasing sales productivity per store.

“Ola’s position in India’s EV market reflects the complexity of scaling a disruptive innovation in a high growth but capital-intensive environment with entrenched competitors,” adds Sharma of Nomura. “Success will depend on strategic agility—balancing rapid growth with operational rigor, ecosystem orchestration, and deepening customer engagement.”

Aggarwal maintains that the business remains well-capitalised, with gross cash and cash equivalents at the end of Q4 FY25 in excess of Rs 4,000 crore. “We are exploring a non-dilutive debt raise of up to Rs 1,700 crore to refinance existing debt repayment obligations. We remain confident of our capital structure and financial performance to achieve sustainable profitability,” Ola said in a letter to shareholders.