Exploring the Ola Scooter: A Comprehensive Guide

The Ola Scooter has become a significant player in the rapidly growing electric two-wheeler (E2W) market in India, offering a wide range of innovative and eco-friendly options. While the company faces some challenges, including being a loss-making entity, it continues to push the boundaries of electric mobility. This guide provides an in-depth look at the Ola Scooter, its market position, and its future prospects.

Introduction to Ola Electric Scooter

One day, while contemplating an investment in the Ola Electric IPO, I found myself questioning the decision. The company, known for its electric scooters, is running in every corner of India. However, the fact that it is profit-driven and has been supported by anchor investors since its listing time, prompted me to reconsider.

As of now, the issue size for the Ola Electric IPO is set at 848,913,150 shares, with a price band of 72-76 rupees. Since the IPO is considered risky, I opted not to invest. However, for those interested, the IPO application period is from 2nd August to 6th August 2024, and if not allotted, the refund will be on 8th August 2024. The listing date is set for 9th August 2024.

Foundations and Background

Founded in 2017 in Bengaluru, India, Ola Electric originally operated under ANI Technologies, Ola Cabs. It was spun off as a separate entity in 2018-19, specializing in vertically integrated EV technology and manufacturing.

Main Manufacturing Facility

Ola Electric operates India’s largest two-wheeler EV manufacturing facility in Krishnagiri, Tamil Nadu. It also has research and development (RD) locations in India, the UK, and the USA, ensuring a robust development pipeline and innovation.

Direct-to-Customer (D2C) Network

The company’s direct-to-customer (D2C) network includes 935 experience centers and 414 service centers nationwide, providing an omnichannel approach to customer engagement and service delivery. This model not only enhances customer satisfaction but also offers cost benefits through efficient inventory management and accurate demand forecasting.

Product Lineup

The Ola electric scooter lineup includes four variants: the Ola S1 Air, Ola S1, Ola S1 Pro, and Ola S1X. In the coming months, the company plans to launch two more variants with different kWh capacities, reaching the market in the first half of Fiscal 2025. Additionally, the motorcycle lineup, including the Diamondhead Adventure, Roadster, and Cruiser, is expected to hit the market in the first half of Fiscal 2026.

Timeline of Deliveries

Here is a timeline of the planned deliveries:

Ola S1 Pro: Starting December 2021 Ola S1: Starting September 2022 Ola S1 Air: Starting August 2023 Ola S1 X: Starting December 2023 Ola S1 X 2 kWh and Ola S1 X 3 kWh: Expected in the first half of Fiscal 2025 Motorcycles: Expected in the first half of Fiscal 2026

Market Position and Achievements

Ola Electric holds a leading position in the Indian E2W market, accounting for approximately 31% of E2W registrations in India in the first half of 2023. Its unique position is supported by government incentives, including the Quadrilateral Incentive Schemes (PLI) for the Automobile and Auto Components Industries, and the Tamil Nadu government’s subsidies for advanced chemistry cells and EV scooters.

Revenue and Financial Strengths

According to the Redseer Report, the company is the highest revenue generator among Indian E2W original equipment manufacturers (OEMs) in Fiscal 2023. The direct-to-customer (D2C) model offers significant cost efficiencies and accurate demand forecasting, enabling tailored production schedules.

Risks and Challenges

While the company benefits from government incentives, it faces several risks. A reduction or removal of these incentives could escalate purchase costs and dampen customer demand. Additionally, the company may struggle to accurately forecast supply and demand, leading to either shortages or excess inventory. Furthermore, intense competition in the rapidly evolving automotive market could pose significant challenges.

Conclusion

The Ola Electric Scooter is a testament to the rapid growth of the electric two-wheeler market in India. Despite its challenges, the company's innovative products, strong government support, and direct-to-customer model set it apart. Investors and consumers alike should keep an eye on this promising player in the evolving ecosystem of electric mobility.