What went wrong for Ola Electric after its $4 billion IPO?
Ola Electric has displayed ambition in product launches and distribution networks, but faces operational, regulatory and reputational challenges.
Ever since he founded Ola Electric Mobility, Bhavish Aggarwal has been pushing for leadership in electric two-wheelers with ambitious plans, aggressive expansion and disruptive pricing. This approach fetched the company a valuation of $4 billion in its initial public offering (IPO) last August. However, its stock has nearly halved in value since then.
An underwhelming stock is just one of 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 Auto in two of the first four months of calendar year 2025, according to Vahan data. TVS Motor, 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.
Initially, Ola Electric used its digital platforms to directly tap its 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. Despite this aggressive expansion, Ola has been losing ground to its rivals.
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 with (-)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, the company posted a net loss of ₹564 crore on a 19% decline in revenue, 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 breakeven 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 (electric vehicle) 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 itself faces operational, regulatory and reputational challenges. Operationally, it has been grappling with product quality and after-sales service problems. In 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 after it announced expansion plans on social media before informing the exchanges. Then, Ola said it sold 25,000 vehicles in February, while Vahan registrations showed about 8,600, which the company attributed to issues with vehicle registration partners.
Also read: Ather Energy IPO: India's Tesla of two-wheelers vs Ola Electric. Who will win?
As per Google Trends, outside of the IPO, interest in Ola was the highest in October, after comedian Kunal Kamra slammed it for its service quality. Interest rose again in November for mixed reasons—it fired 500 employees and launched its most affordable scooter.
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 the entry-level Gig model to premium scooters and Road-ster motorbikes—was one of the three pillars of Ola’s strategy. However, in the previous 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 and software work. However, investors are worried about its ability to pull this off.
Also read: Ola Group surges in deep-tech, owns majority of patents granted to 117 unicorns
Meanwhile, Ola faced more reputational damage last month when Maharashtra ordered 121 Ola stores shuttered for operating without trade certificates.
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