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Ola Electric needs to sell 50,000 EVs a month to be profitable: Bhavish Aggarwal
- Speaking at an analyst call after the company’s December-quarter earnings, Aggarwal said that Ola Electric sold 25,000 units in January, with which he claimed that the company had re-captured its market leadership in terms of volumes.
New Delhi: Homegrown electric two-wheeler maker Ola Electric will need to consistently sell 50,000 units every month in order to achieve profitability, its founder and chief executive officer (CEO) Bhavish Aggarwal said on Friday.
Speaking at an analyst call after the company’s December quarter earnings, Aggarwal said that Ola Electric sold 25,000 units in January, with which he claimed that the company had recaptured its market leadership in terms of volumes.
Responding to queries from analysts, Aggarwal said, “We are looking at a monthly sales figure of 50,000 units in order to break even in terms of Ebitda (earnings before interest, taxes, depreciation and amortization) from our auto sales. To do this, we are diversifying our portfolio by simultaneously selling two generations of our EV scooters to grow margin and volume. We are also expecting the battery cell manufacturing division to start reaping us benefits in terms of expanding our operating margin, and finally, the motorbike category will expand in terms of sales through this calendar year. Overall, we expect this to help our gross margin expand, and maintain our market leadership despite the competitive industry right now.”
He also said that expanding additional expenditure, which contributed to the company’s sequentially higher losses in the December quarter, “was due to our investment in service centre and dealership experiences, as well as one-time investing in a no-questions-asked warranty availability scheme we offered our customers to build market goodwill.”
To be sure, Ola Electric has faced considerable criticism due to widespread customer complaints about poor service centre experience. In September last year, Mint reported that Ola’s service centre backlogs had risen to 80,000 customer complaints per month.
On Friday, Ola Electric’s shares lost about 2% to settle at ₹70 apiece on the BSE—only 8% off its all-time low. The company has been under pressure, as it has been riddled with service centre issues while ramping up its market presence. Last August, Ola Electric debuted on the stock exchanges on par with its issue price of ₹76, before more than doubling to a high of ₹157.53 per share within a month. Its stock has since declined.
Aggarwal started his entrepreneurial journey by setting up ride-hailing app Ola Cabs more than a decade ago. He expanded his mobility venture by starting Ola Electric in 2017, which went public in August last year.
According to data from the Society of Manufacturers of Electric Vehicles (SMEV), an industry lobby, Ola Electric sold 34,161 scooters in April last year. TVS, Ather and Bajaj respectively sold 7,762, 4,142 and 7,559 units. However, by October, the gap had narrowed, as Ola’s sales slowed—the company sold 24,958 scooters in this period. TVS, Ather and Bajaj respectively sold 17,804, 9,095, and 15,883 electric scooters in October.
Aggarwal, however, claimed that the company “maintained a steady industry leadership with a market share of over 25%.”
“We have our Gen-3 scooters coming in from this month, and initial reaction is highly positive. We have also adopted a strategy to sell both Gen-3 and Gen-2 models simultaneously in our showrooms. While Gen-3 is priced at a premium and will improve our operating margin, Gen-2 models will help us cater to the rest of the market by expanding volume and sustaining leadership even in an increasingly competitive market,” he said.
Earlier in the day, Ola Electric reported a 13.9% sequential decline in revenue to ₹1,075 crore in the December quarter, which it attributed to “intensified competition and festive discounts.” While it reported a 20 basis points (bps) sequential increase in operating margin to 20.8% during the December quarter, its quarterly net losses rose to ₹564 crore.
Harish Abichandani, chief financial officer of Ola Electric, said that the December quarter was the first period where “all of Ola’s products received benefits of the government’s production-linked incentive (PLI) scheme.” He added that the first quarter of the next fiscal will see the company introduce its own batteries in its scooters, which he claimed would “reduce battery cost and expand margins.”
He also said that the company’s cost of customer warranty was “2% of the revenue".
Its quarterly shareholder letter added that the December quarter was a mixed bag. “October saw strong performance fueled by festival sales, however the overall quarter was weak due to high competitive intensity and service challenges. We’ve fixed the service issues and with our network expansion, turned the tide on market share and margins. In January, we’re back to market leadership with an expected gross margin of approx 26%, up from 20.4% in Q3FY25,” the letter said.
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First Published:7 Feb 2025, 09:10 PM IST
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