Post by : Badri Ariffin

Once a key player in India’s thriving EV sector, Ola Electric is now confronting a critical funding shortfall just a year after its highly successful IPO. Earlier eager investors are now hesitant, given concerns over the company’s declining sales figures, accumulating losses, and the significant drop in its share price this year.

Ola has engaged various investors in its pursuit of raising ₹1,500 crore but faces difficulties in garnishing commitments. Additionally, potential lenders are showing reservations about the board-approved strategy to secure ₹1,700 crore through debt financing, according to sources acquainted with the situation.

This caution follows Ola's latest quarterly disclosures, which revealed a staggering 43% decrease in revenues and a 47% reduction in sales. The company has also downgraded its expectations for the latter half of the financial year, anticipating a full-year revenue drop that stands about 40% lower than its initial projections. Its negative cash flow during the first half is attributed to ongoing losses and disappointing sales volumes.

In the competitive e-scooter market, Ola's standing has diminished considerably, with market share now down to 11.5%, a substantial decline from last year’s 30%. Competitors such as Bajaj Auto, TVS Motor, Hero MotoCorp, and Ather Energy have consistently broadened their market presence, leaving Ola struggling to regain its position.

The company’s financial strains have been exacerbated by a nearly 53% drop in stock prices this year, alongside regulatory issues, allegations regarding technology mismanagement, and operational setbacks. Furthermore, filings indicate that more than 8% of founder Bhavish Aggarwal’s stake is collateralized, increasing worries about margin-call risks if the stock continues to decline.

In an attempt to regain traction, Ola is pivoting towards a new venture: battery-energy storage systems for homes and small enterprises. The recently introduced Ola Shakti units feature the company’s 4680 Bharat cell technology and are priced between ₹1.2 lakh and ₹1.25 lakh. Ola anticipates that this segment will generate ₹100 crore in revenue by the March quarter once deliveries commence, with even more ambitious revenue targets set for FY27.

However, this shift will be challenging. The home inverter market is largely governed by well-established brands offering considerably more affordable lead-acid options. Ola intends to market its products via its retail outlets and online platforms, entering a sector where distribution depth and consumer trust play crucial roles.

As Ola forges ahead with its new battery initiative and gears up for new motorcycle launches, the company still faces the overarching challenge of reclaiming its status in the electric two-wheeler market. The forthcoming months will reveal whether this strategic pivot can alleviate the intensifying pressures on its primary operations or if deeper changes will be necessary for a successful turnaround.

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