India@75: A nation in the making

Ola Electric wants to disrupt India's car industry. Does it have what it takes?

Ola has always adopted scale and localisation to bring down costs. But, like the big guns in the space, it will also need to build an ecosystem and explore synergies rather than roughing it out alone

Manu Balachandran
Published: Aug 18, 2022 03:11:06 PM IST
Updated: Aug 18, 2022 07:30:37 PM IST

Ola Electric wants to disrupt India's car industry. Does it have what it takes?Ola will launch an electric vehicle that has a range of over 500 km, and even zooms from 0-100 in less than 4 seconds

For a few years now, Bhavish Aggarwal, the CEO of Ola, has made it a habit of making a splash around Independence Day. Exactly a year ago, on August 15, Aggarwal and Ola Electric launched their much-anticipated electric scooter, which had by then already mopped up bookings of 100,000.  

Then, on August 15 this year, as India celebrated her 75th Independence Day, the CEO of Ola Electric went all out to tell the world that it was time to put an end to the era of internal combustion engines. To do that, and in the process make India a hub for the global electric vehicle revolution, Aggarwal and his team at Ola are bringing their electric car by 2024. Unlike a mass-market electric vehicle, this time, Aggarwal and his team are planning to bring something of a sporty high-performance vehicle, albeit on the expensive side, with the potential to rival some of the world’s best high-performance cars.

Ola Electric—which began manufacturing two-wheelers only last year—will launch an electric vehicle that has a range of over 500 km, and even zooms from 0-100 in less than 4 seconds, which Aggarwal claims will be the sportiest car made in India. The car will deliver a drag coefficient of less than .21, which would be the best in its class according to Aggarwal, and will feature an all-glass roof and a smooth aerodynamic body.

“The cars being built today are dull and boring,” Aggarwal said in a video presentation on August 15. “Indian carmakers are conservative, thinking that we only want small cars or mid-sized cars. Global automakers think that the Indian market is not ready for world-class technology and hence sell their hand-me-down tech in India. Now we need to change this. We deserve a car that defines this new India, an India that is fearless and believes in writing its own destiny."

The company plans to launch its first car priced at less than $50,000 compared to the global price tag of around $70,000, according to Aggarwal. “It will be the sportiest car ever built in India,” the 36-year-old said at the launch. “With these goals, this is the most ambitious car project ever undertaken in India. Built in India, by Indians for the entire world.”

Already, despite some criticism surrounding the quality of its two-wheelers and its services so far, Aggarwal has shown that he means business, and most certainly deserves credit for scaling up an electric two-wheeler business, including acquiring land and setting up what’s touted to be the largest two-wheeler manufacturing facility in the world. That was done in less than a year, and production commenced in 2021 with deliveries starting shortly after. But since then, sales have floundered, and Aggarwal had to reintroduce a variant last week after the company had put a halt on manufacturing early this year.

“Pragmatically speaking, one may want to deliberate on the underpinnings of this announcement as they have a lot of initiatives playing out and lots of commitments to fulfill,” says Harshvardhan Sharma, head of auto retail practice at Nomura Research Institute. “I believe they can surely disrupt with such a product, there is surely a market albeit niche, but the challenge is always how to scale.”

Until July this year, Ola Electric had sold a little over 45,000 units, and reportedly vehicles had begun piling up at the factory, leading to a shutdown of the plant. Ola, however, denied that that was the case and said that the move to shut the factory was over planned maintenance, as is the practice across the world.

Also read: EU to halt combustion engine sales by 2035

“Ola is best known as a key disruptor in the mobility space in India with its shared mobility services,” Bakar Sadik Agwan, senior analyst, automotive, at GlobalData PLC says. “Its experience and depth of coverage of its shared mobility services in the country have given it a better understanding of the personal and passenger mobility market dynamics. The company holds the potential to disrupt the e-mobility space with its two-wheelers, but that said, with the announcement to enter the electric passenger vehicle business, Ola is stretching itself too thin.”

In the 365 days since the last Independence Day, Ola has had a tumultuous journey. Many of its top leadership have left the company, a scooter had caught fire forcing the company to recall some vehicles, and customers were let down by the scooter’s real-world offering, particularly its range and after-service. That seemed to have affected sales. In July 2022, the company sold 3,426 units of scooters, cornering a paltry 0.34 percent of the domestic two-wheeler market with other electric two-wheeler makers such as Okinawa and Ampere outperforming the Bengaluru-headquartered electric automaker. In July, Hero Electric sold 8,679 vehicles followed by Okinawa Autotech with 7,999 vehicles, according to the Federation of Automobile Dealers Association.

“Ola is new in the two-wheeler business and is yet to prove itself as a sustainable player,” adds Agwan. “The recent incidents of battery fires, faulty BMS (Battery Management System), software issues and degraded EV range have negatively impacted the company’s reputation and acted as one of the factors behind decreasing sales and hence inventory pile-up.”

Does it have what it takes?

Ola’s announcement to foray into the four-wheeler business came on the same day that the 77-year-old Mahindra Group announced its plans to launch five new electric vehicles, indicating a serious ambition from domestic automakers to push forward with electric vehicle plans as India looks to reduce its dependence on fossil fuels.

Mahindra has already announced plans to set up a subsidiary to focus entirely on building electric vehicles and the company had roped in British International Investment (BII), the UK’s development finance institution, to invest in the new subsidiary valuing the subsidiary at $9.1 billion.

Already, Mahindra’s homegrown rival, Tata Motors, India’s largest electric vehicle manufacturer, has set up an electric vehicle subsidiary, raising $1 billion from private equity major TPG Rise Climate. The deal had valued the subsidiary at over $9 billion. Tata Motors is India’s largest electric vehicle carmaker cornering some 75 percent of the market, led by its hugely popular Nexon EV which currently receives some 4,000 orders a month and is priced between Rs 14 lakh and Rs 20 lakh, almost half the price at which Aggarwal’s Ola plans to sell its cars.

Apart from the Nexon, India’s electric vehicle portfolio currently includes Hyundai Kona which costs Rs24 lakh and the MG ZS that costs nearly Rs26 lakh. Over the next few years, market leader Maruti Suzuki has also firmed up plans to launch its electric vehicle, and could most likely target the lower end of the spectrum.

India’s electric vehicle (EV) market is expected to have a compound annual growth rate (CAGR) of 90 percent in this decade to touch $150 billion by 2030, according to a report by consulting firm RBSA Advisors. Yet, EVs are in their infancy in India, and lag in markets like China and the US, as domestic sales pale in comparison to what carmakers sell on the internal combustion engine (ICE) platforms.
India is a signatory to the Paris Climate Agreement, which means that the country needs to reduce its carbon emissions by around 35 percent of its 2005 levels by 2030. The government has tried everything—from tax cuts to manufacturing incentives in the automobile sector—to kickstart an EV revolution in the country.

“Established players such as Mahindra and Maruti Suzuki have taken their own sweet time to bring in their core EV products,” adds Agwan. “Many market players share common thoughts that India is not yet ready for mass electrification as far as passenger vehicles are considered. Given that Ola has no experience in car manufacturing and battery manufacturing, partnerships look to be the last resort for the company.”

Also read: Can Ola kickstart India's electric vehicle revolution?


To build its own ecosystem, Ola had recently showcased its first indigenously developed lithium-ion cell and signed an agreement under the government’s production-linked incentive (PLI) scheme to manufacture advanced cells in India. The company had also announced plans to invest some $500 million in setting up its battery innovation centre (BIC) in Bengaluru, which will focus, among others, on core cell technology and battery innovation.

“Multiple new players and incumbent battery manufacturers are entering the EV battery space in India,” Mohit Mittal, partner at Praxis Global Alliance, says. “Localised battery and cell manufacturing are being promoted on a large scale by the Government of India through the PLI (production–linked incentive) scheme for (ACC) advanced cell chemistry manufacturing. Ola Electric has already been granted, along with three other players, the incentive for producing 80 GWh of power locally. Further, Ola Electric can bring down prices through long-term contracts with vendors, bundling of services, in-house manufacturing, and R&D of components such as motor and chassis.”

Ola Electric wants to disrupt India's car industry. Does it have what it takes?When fully complete, Ola says its factory will produce one million cars, 10 million two-wheelers, and 100 gigawatt-hour of cells.

As of 2021, EVs account for 1 percent of total vehicle sales in India. That number is expected to grow rapidly to 39 percent by CY27, driven largely by electric two-wheelers (E2Ws) and electric three-wheelers (E3Ws) according to a report by EY. While e-buses have a lower adoption rate, state government initiatives could significantly ramp up sales in the coming years. However, the large-scale adoption of electric four-wheelers (E4Ws) is expected to take longer due to range anxiety, varying duty cycles, and sparse charging network issues, according to EY.

In 2021, the Indian EV industry attracted investments of $6 billion and is projected to attract $20 billion by 2030. According to Niti Aayog, the country’s EV financing industry is projected to be worth Rs 3.7 lakh crore in 2030, about 80 percent of the current retail vehicle finance industry. Between 2020 and 2030, the estimated cumulative capital cost of the country’s EV transition will be Rs 19.7 lakh crore across vehicles, electric vehicle supply equipment, and batteries (including replacements).

“Like any new entrant, they are learning from the market and hopefully improving their offerings. It’s a process,” adds Sharma of Nomura. “However, given the scale of commitment made regarding their (Ola) scooter business, it may be prudent to recalibrate downstream and upstream functions in line with consumers and a competitive environment from incumbents. Surely Ola has made an impact with their stellar entry, however, as we know, Indian consumers are very demanding, especially at that price point and hence the product and aftersales both need more nurturing. It’s an organic process and takes time to build the capability. There can’t be a 'minimum viable product’ mindset when it comes to customer experience.”

All that means that it becomes even more important how Ola manages its battery and the wider ecosystem. Today, most electric vehicles use lithium-ion batteries that require metals like lithium, magnesium, cobalt, and nickel. With an inadequate supply of these resources in India, the country has been heavily dependent on imports, and according to EY estimates, India spent $865 million to import 450 million units of lithium-ion batteries.

“Also, the global EV industry is fearing a shortage of EV battery materials by the end of the decade, over and above the existing semiconductors shortage. It will be ‘wait and see’ if Ola can bring in a car at a lower ticket price than global standards with the committed range and features in such a scenario,” adds Agwan.

Ola has meanwhile expanded its factory to accommodate car manufacturing and battery manufacturing in addition to its two-wheeler plans. “We are doing a lot of development and testing, comprehensive testing here in our Battery Innovation Centre, and by the end of next year we’ll have them in our products,” Aggarwal said on August 15. “India is going to be the epicenter of the global EV revolution.” When fully complete, Ola says its factory will produce one million cars, 10 million two-wheelers, and 100 gigawatt-hour of cells.

Also read: Is the new Nexon EV Max the game changer that Tata Motors needs to fuel India's EV transformation?

So, what happens now?

Rising fuel prices in addition to new launches and a wider concern for the environment could be a key factor in pushing sales. In addition, setting up charging infrastructure could further push demand in the coming years. India’s import of crude oil required for vehicular fuel has been increasing over the years and stood at $40 billion in 2017. That number is projected to more than double to $90 billion by 2030 at the current pace. At the same time, battery cost has reduced from $800 per kilowatt-hour in 2011 to $137 per kilowatt-hour in 2020.

“Battery prices are estimated to not fall below $100 per KwH but associated commodity and semiconductor prices are also rising, cancelling out any further cost consolidation unless a new chemistry is deployed besides LiB, but it would still take some more time to get commercialised and maybe 2024 is too optimistic of a view,” says Sharma of Nomura. “But having said that, it’s possible with subsidies, and the entry version may be able to hit that number as a promotion strategy.”

In addition, Ola will also need to build up an ecosystem, similar to what the likes of Tata have done, or what Mahindra is planning to do. “Today many OEMs are looking at collaborating to explore synergies,” adds Sharma. “Case in point is large OEMs such as VW and M&M or Toyota and Suzuki. Such a collaboration is symbiotic in nature and paves the way for economies of scale. Therefore, we might witness collaboration instead of competition going forwards. Car manufacturing is a CAPEX intensive business prone to many demand and supply volatilities, and hopefully new entrants will try to examine the merits of collaboration instead of roughing it out standalone.”

The Tata group has set up Tata UniEVerse, an ecosystem that will leverage group synergies, where several Tata companies have come together to provide EV solutions to consumers. The company has partnered with Tata Power to provide end-to-end charging solutions at home, the workplace, and public charging facilities. Under this partnership, the company has installed fast-charging stations in metros, including Mumbai, Delhi, Pune, Bengaluru, and Hyderabad, in addition to chargers on highways. So far, Tata Power has set up 1,000 EV charging stations across India in some 180 cities.

The company has also tied up with Tata Chemicals in its attempt to build a component supplier ecosystem and manufacture lithium-ion battery cells, in addition to looking at active chemical manufacturing and battery recycling.

Last year, Ola said that the company is planning to set up its Hypercharger Network, which the company claims will be the widest and densest electric two-wheeler charging network in the world, with more than 100,000 charging points across 400 cities. In the first year alone, Ola is setting up over 5,000 charging points across 100 cities in India, more than double the existing charging infrastructure. The company is also spending some $2 billion over five years for that.

“Ola has always adopted ‘scale’ as a mantra to ‘disruption’ across all its business models,” says Agwan. “Likewise, for electric cars, it is aiming to achieve economy of scale with mass production and a high degree of localisation including batteries to bring down manufacturing costs and hence product acquisition costs. However, in the absence of a clear roadmap regarding partners for EV and EV battery manufacturing and supply partners, it remains difficult to comment on the future of Ola’s electric cars.”

Whether he can scale up and crack the market remains to be seen. But one thing is certain. Aggarwal has moved quickly in one of the world’s fastest growing segments. Now he needs to make the most of it.

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