Ola Electric, once a pioneer in India’s electric vehicle (EV) industry, is facing a turbulent phase as it plans to lay off over 1,000 employees in an effort to control mounting losses. This move marks the second major layoff in less than five months, raising concerns about the company’s financial health and future sustainability. As shares plummet and competition intensifies, Ola Electric is undergoing restructuring to navigate its challenges.
The Rise of Ola Electric
Ola Electric, a subsidiary of Ola Cabs, was founded in 2017 with the ambitious goal of revolutionizing India’s electric mobility sector. Led by Bhavish Aggarwal, the company quickly positioned itself as a frontrunner in the EV space, securing significant investments from global giants such as SoftBank Group Corp. Ola Electric made headlines in 2021 with the launch of its electric scooters, which saw an overwhelming response. By 2023, the company had emerged as the largest electric two-wheeler manufacturer in India, commanding a substantial market share.
However, despite its rapid rise, the company has struggled with financial instability, regulatory scrutiny, and operational challenges.
Mass Layoffs and Cost-Cutting Measures
Ola Electric’s latest decision to lay off over 1,000 employees and contract workers is part of a broader cost-cutting initiative. Departments affected include procurement, fulfilment, customer relations, and charging infrastructure. The company has also been automating parts of its customer service operations to improve efficiency and reduce costs.
A company spokesperson stated, “We have restructured and automated our front-end operations, delivering improved margins, reduced cost, and enhanced customer experience while eliminating redundant roles for better productivity.” However, the exact number of affected employees remains undisclosed.
This marks the second round of layoffs in five months. In November 2023, Ola Electric reportedly let go of around 500 employees. The latest layoffs account for over 25% of its workforce, raising questions about the company’s long-term viability.
Declining Market Position and Financial Struggles
Since going public in August 2023, Ola Electric has faced significant market challenges. The company reported a 50% rise in losses in the December quarter, contributing to a steep decline in its stock value. Ola Electric’s shares have plummeted by over 60% from their peak, and news of the recent layoffs caused another 5% drop, hitting a 52-week low of Rs 54.
Competition has also intensified. Once the dominant force in India’s electric scooter market, Ola Electric has been overtaken by Bajaj Auto Ltd and TVS Motor Co. By the end of 2023, Ola Electric had lost its leadership position in nine of India’s top 10 EV markets, based on government vehicle registration data.
Despite these setbacks, Ola Electric continues to push forward. In March 2024, the company reported selling over 25,000 electric scooters in February, securing a 28% market share. However, this figure falls short of CEO Bhavish Aggarwal’s target of 50,000 units per month—a threshold required to achieve EBITDA breakeven.
Addressing Customer Concerns and Expanding Reach
One of Ola Electric’s major challenges has been customer satisfaction. Reports suggest that the company receives as many as 80,000 customer complaints each month, highlighting issues related to service quality, delivery delays, and product performance.
In an effort to improve its market presence and address these concerns, Ola Electric launched 3,200 new outlets in December 2023. While this expansion aimed to strengthen its customer support network, it remains uncertain whether it will be enough to restore consumer trust.
The Road Ahead for Ola Electric
Ola Electric’s future remains uncertain as it grapples with financial losses, operational inefficiencies, and fierce competition. While the company is actively restructuring its business model and cutting costs, its ability to regain market dominance will depend on how effectively it addresses customer concerns and stabilizes its finances.
Despite its current struggles, Ola Electric remains a key player in India’s EV revolution. The company’s long-term success will hinge on strategic partnerships, innovation in product offerings, and a commitment to improving customer experience. With the EV market in India poised for exponential growth, Ola Electric still has the potential to reclaim its position as a market leader—if it can navigate these turbulent times effectively.
(With inputs from agencies)
