Ola Electric’s sales keep declining. How much money can Bhavish Aggarwal raise?

With a 47% year-on-year drop in the second-quarter sales to 50,279 units, the company ceded further market share to rivals such as Ather Energy and legacy players TVS Motor Co. and Bajaj Auto.

It now ranks fourth in the list of Indian electric two-wheeler makers, with Ather jumping to the second position by selling 52,597 units in the quarter. TVS topped the list with 69,195 while Bajaj ranked third with 51,120.

In September, Ola sold only 13,371 units, its lowest ever monthly sales since it went public in August 2024, against Ather's 18,109, TVS's 22,482, and Bajaj's 19,519, showed the government’s VAHAN portal.

The loss in market share comes despite its increasing store count to more than 4,000, the introduction of a new generation of scooters, and the launch of a new electric motorbike over the last 10 months.

In February, Ola Electric Mobility’s chairman and managing director, Bhavish Aggarwal, set a target of selling 50,000 units, at which its auto business would achieve breakeven. This target was revised down to 25,000 units per month in May. However, the company has not yet met either of its sales targets.

In a statement to Mint, the company said it is focused on achieving profitability by improving its margins. "With the company’s continued focus on sustainable growth and profitability, our revenue from operations increased by over 35% quarter-on-quarter from ₹611 crore in Q4 FY25 to ₹828 crore in Q1 FY26. Moreover, our auto gross margins improved from 13.8% in Q4 FY25 to 25.6% in Q1 FY26," an Ola spokesperson said.

But its losses are piling up. Its loss jumped to ₹2,276 crore in 2024-25 from ₹1,584 crore a year ago, while its revenue from operations fell from ₹5,010 crore to ₹4,514 crore.

The company has to pay a total of ₹2,114 crore in debt and interest obligations until 2029-2030, according to its disclosures.

Funding crunch

Even though Ola is on a fundraising spree, its inability to reignite volume growth has prompted warnings from analysts and credit agencies that it must improve sales or raise fresh funds to cover business expenses.

On 30 September, its board approved the issue of preference shares to Ola Cell Technologies to raise up to ₹878 crore, just four months after the board approved raising of ₹1,700 crore to refinance debt.

“If the unit sales volume scale-up remains impacted, the company will be compelled to explore more capital-raising options, which pose funding risk," credit rating agency Icra said in a 1 May note for Ola Electric Technologies (OET), the company through which Ola Electric Mobility manufactures and sells its vehicles. OET is responsible for 99% of the listed entity's revenue.

However, the company will not see revival in volume growth until it invests in improving the product quality, which has drawn widespread customer complaints, said Deepesh Rathore, former head of product strategy at Ola Electric and founder of consultancy firm Insight EV.

“The perception about Ola Electric continues to suffer due to persisting product issues. These issues arise only when product quality is not up to standard. The company has to invest time and money in getting product quality right now as previous generation scooters are facing problems," Rathore said, adding the efforts that will go in today could result in a sales revival a year later.

Meanwhile, Aggarwal has maintained that the company's cash position remains robust despite the decline in sales. To be sure, its revenue declined for three consecutive quarters on a year-on-year basis, from the December quarter last year through the June quarter this year.

“The automotive business to get to free cash positive by the end of this year, which is what we are giving in the outlook, we do expect it to consume only about ₹400-500 crore of incremental cash from here," Aggarwal said during the June-quarter earnings call on 14 July.

“For the business on a consolidated level, we don't foresee the need for any more cash than we have. We have about ₹3,200 crore on the balance sheet as of the end of the quarter," he added.

However, the founder noted that the company will seek additional funding to refinance the older debt.

Ola raised ₹5,500 crore in its IPO and still has around ₹2,592 crore.

It had reallocated more than ₹1,200 crore of the IPO money to expand the cell factory from 5 GWh to 6.4 GWh. The money was allocated for general corporate purposes, growth activities, and debt repayment.

Ola Electric’s share price this year has fallen by 36% against a 15% rise in the Nifty Auto Index. Ather, which was listed in May, has seen its share price surge by 93% since its public listing.