What went wrong for Ola Electric after its $4 billion IPO?

This approach fetched the company a valuation of $4 billion in its initial public offering (IPO) last August. Things went downhill soon. 

Its stock has nearly halved in value, even as the BSE Sensex rose 3% during this period. An underwhelming stock is just one of the many troubles weighing on Aggarwal, Ola Electric and his other big business, cab-hailing. Earlier this month, an investor in Ola’s cab-hailing business valued the private company at $1.25 billion, down 83% from its prime of $7.3 billion in 2021.

Today, Ola Electric is Aggarwal’s main business, and it is facing multiple challenges. It ceded the leadership position to Bajaj in two of the first four months of calendar 2025, according to Vahan data. TVS too has narrowed the gap. An Icra report this month pointed out that Bajaj and TVS had a combined share of 40% this fiscal, against just 7% in 2021-22.

Ola Electric used its digital platforms to directly tap its initial set of customers across India. TVS and Bajaj used the traditional showroom route, leveraging their existing networks. Ola responded by pressing the pedal on its physical distribution network, expanding it from 870 in March 2024 to 4,000 by December 2024. Despite this aggressive expansion, Ola has been losing ground to its rivals, raising concerns about its road to profitability.

Margin woes

Ola Electric has not made a profit yet. For the first nine months of 2024-25, it posted a negative operating margin of (-)26.7%, compared to (-)22.7% in the year-ago period. On average, it has lost ₹425 crore a quarter in the past seven quarters. In its latest December quarter, it posted a net loss of ₹564 crore on a 19% decline in revenues, due to lower-than-expected sales volumes.

According to Icra, this has resulted in a longer-than-expected period of cash burn and stretched its road to profitability. It warned that Ola may have to raise funds over the next 12-24 months. Much hinges on monthly sales. In his Q3 earnings call, Aggarwal said break-even at an operating level was at monthly sales of about 50,000. “Now, when we get there, it depends on market conditions as well as EV penetration," he said, adding it could be in the next few quarters.

Also Read: Icra downgrades Ola Electric Technologies as sales slump

Internal challenges

While Aggarwal framed sales growth as a broader market issue, Ola Electric itself faces operational, regulatory and reputational challenges. Operationally, it has been grappling with product quality and after-sales service problems. Last October, the Central Consumer Protection Authority issued it a show-cause notice after receiving over 10,000 customer complaints since 2023. 

In January, the capital market regulator warned Ola for announcing expansion plans on social media before informing the stock exchanges. More damagingly, Ola said it sold 25,000 vehicles in February, while Vahan registrations showed about 8,600.

Ola often hits headlines for the wrong reasons, eroding customer trust. According to Google Trends, outside of the IPO, interest in Ola was the highest in October 2024, after comedian Kunal Kamra slammed the company for its service quality. It bumped again in November for mixed reasons—Ola fired 500 employees that month and launched its most affordable scooter, Ola Gig, at ₹39,000.

Big picture

Ola expects mass-market products such as Ola Gig to help it win market share, while premium products improve margins. In his latest earnings call, Aggarwal said a wide product range—from entry-level Gig model to premium scooters and Roadster motorbikes—was one of the three pillars of the company's strategy. However, in the last two quarters, the increase in mass models is more than offset by a decline in premium models.

The other two pillars identified by Ola are strengthening its distribution network and doing more things in-house, including cell manufacturing plant and software work. However, investors are worried about Ola's ability to pull this off. 

Meanwhile, Ola faced another round of reputational damage when Maharashtra last month ordered local authorities to shutter 121 Ola stores because they were operating without trade certificates. Can Ola keep it on the road it mapped for itself?

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