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Ola Electric takes off, against the odds

Ola Electric’s founder Bhavish Aggarwal says the company takes very calculated risks. “That’s the essence of entrepreneurship. You shouldn’t take bravado or mindless risks.”Premium
Ola Electric’s founder Bhavish Aggarwal says the company takes very calculated risks. “That’s the essence of entrepreneurship. You shouldn’t take bravado or mindless risks.”

  • The EV firm is now the largest player in the electric two-wheeler industry. But the stakes are getting higher as well
  • Defying pundits, Ola ended 2022 as the largest player in the fast-growing electric two-wheeler industry—the company sold over 100,000 vehicles, ahead of Hero Electric, Okinawa and TVS

For 21-year-old Arpan Rai of Chandausi, a city in Uttar Pradesh, the penny dropped after about an hour at the biennial Auto Expo he visited in January. At the motor show, held in Greater Noida, Ola Electric Technologies Pvt Ltd didn’t have a pavilion.

A second year BTech student, this was the first Expo Rai had ever been to. “I was hoping to check out Ola’s electric scooter from a close proximity and maybe even catch a glimpse of their car," he said. “If I had known they were not participating, I would not have come."

Graphic: Mint
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Graphic: Mint

Rai’s disappointment packs mixed messages for the two-year-old electric vehicle (EV) company that seeks to not just disrupt but also revolutionize the domestic automotive industry. While it highlights how Ola has captured the imagination of people like Rai, who represent the consumers of tomorrow, it also underlines the brand’s lack of accessibility. Unlike other automotive firms, Ola does not have the hub and spoke dealer and service centres. Every transaction is online and the scooters are delivered direct-to-home.

What Ola Electric’s founder Bhavish Aggarwal is trying in India is similar to what Elon Musk did in the US—exploit the traditional industry’s complacency and take advantage of the rapidly evolving technology to make a mark in a mature sector like automobile. Outside of the IT and tech sectors, it is not something that startups have managed to pull off.

Yet, it has been an encouraging start. Defying pundits, Ola ended 2022 as the largest player in the fast growing yet nascent electric two-wheeler industry—the company sold more than 100,000 vehicles, ahead of Hero Electric Vehicles Pvt Ltd, Okinawa Autotech Internationall Pvt Ltd, TVS Motor Company Ltd, and Ather Energy Pvt Ltd.

It is only a start. The company has big plans and, possibly, bigger hurdles to cross in the future.

Trials and Tribulations

It has not been all smooth sailing. To begin with, Ola struggled ramping up capacity at its 10 million unit a year factory in Tamil Nadu. The hype it had generated since the scooter broke cover on 15 August 2021 ensured it received nearly 100,000 bookings.

But Aggarwal soon realized that producing vehicles at scale wasn’t easy. The supply chain wasn’t ready and the global semiconductor shortage erupted at the most inopportune time. Customers had to wait; they got restless. The angst played out on the social media pages of the company.

“From a supply chain perspective, we did have some learnings in the first three-four months. Then we got aligned with our suppliers," said Aggarwal. “They are now very comfortable with our scale and rate of growth and are investing accordingly. Many are actually opening up new units right next to our factory."

The bigger challenge was in the front-end. Without the local dealer, the company needed a robust logistics system to enable delivery of scooter to the doorstep of every customer. It also went pan India from the first day. The inefficiencies of India’s regional transport authorities became a bugbear.

“Again, lot of learnings there...in the registration process and the logistics of taking the vehicle from the factory to the customer. We worked through the first half of the year (2022) trying to sort things out," Aggarwal said.

Ola started with two models, S1 Pro and S1. The first product, S1 Pro, had teething issues. The first lot of customers did not get some of the features that had been promised and the software that runs the scooter wasn’t flawless either. It led to malfunctions and in some cases, accidents. Even as the company was fighting the wave of negativity, one of the scooters in Pune caught fire in March last year.

While Ola became the segment leader in EV two-wheelers in just four months—since December 2021, when they started deliveries—it couldn’t remain on top of the pecking order for long. Sales nosedived in the middle of 2022 and by August, they had come down to nearly a fourth of what the company sold in April (see graphic).

“The intent was always there to deliver a greener, safer and reliable vehicle. But there were so many disruptions which derailed their plan and made it look like they had over promised," said Puneet Gupta, director, S&P Global mobility, an automotive research firm. “Given the kind of disruption the industry has seen in the post pandemic era, we should appreciate that Ola did not get diverted from their core vision."

Gunning for the top

With the niggling issues sorted, sales have rebounded. For four months in a row now, Ola has not only been at the top but has also distanced itself from the rest of the pack.

When needed, the company has tweaked its strategy. For example, it opened up experience centres, which also double up as service centres. There are already over 100 of them in the country. Though the company insists that the sales still happen entirely online, these centres give consumers the ‘touch and feel’ experience they are so used to while buying vehicles.

This is a departure from its earlier stance of not having any footprint on the ground. The willingness to change was appreciated even by some of the company’s staunchest critics.

“They have not delivered on everything they promised but you have to say they have done well," said Vinkesh Gulati, former president of the Federation of Automotive Dealers Association. “With the physical centres, the customer now has a face to discuss any grievance. Half of the problem goes away when somebody can listen to your problem."

For 2023, Aggarwal has set a different target now. With the more affordable S1 Air slated to hit the roads in the next few months, it is aiming to become the overall scooter segment leader by the end of the year. The S1 Air is priced at 85,000, compared to the 1.1 lakh price tag of S1 and 1.28 lakh of S1 Pro.

“The S1 platform will become the largest selling scooter in India by the end of this year. It’s not an easy prediction nor will it be easy to deliver. A lot of back- and front-end has to scale up and we need to deliver many scooters but that is the aim," Aggarwal said, in his now signature nonchalant style.

“We are a company that takes very calculated risks. That’s the essence of entrepreneurship. You shouldn’t take bravado or mindless risks. We analyse, measure and research very deeply and then we commit to a plan," Aggarwal added. “There can be no looking back from there. It has to happen."

Ola, in effect, wants to compete with the long-time bestseller in scooters—Honda Activa, which is priced between 56,000 and 90,000. By all means, it is an ambitious target. Currently, Honda sells more Activas in a month than what Ola managed in 2022. In 2021-22, over 1.7 million Activas were sold in India. Ola would need to scale up over 10 times this year to catch up— at a time when the competition is likely to get more intense.

“The competition will heat up with more products from the traditional companies, i.e. Hero, Bajaj and TVS, expected to be launched. They bring with them a very deep understanding of customers, strong capabilities across the value chain and above all, a brand loyalty," said Ashim Sharma, senior partner and group head (auto, engineering and logistics) at Nomura Research Institute Consulting and Solutions.

“The current market is still nascent with quick shifts in market shares. So, it is premature to crown winners. The startups, of course, have had a head start in the EV space but the advantage will sustain only for those that have utilized this to strengthen their position to build more robust products," he added.

Bikes and cars

Ola’s ambitions don’t stop with scooters. In 2023-24, the company will venture into electric motorcycles. Just like electric scooters, this is also a segment that is waiting for disruption as none of the incumbent players—Hero MotoCorp Ltd, Bajaj Auto Ltd, TVS or Honda Motorcycle & Scooter India Pvt Ltd—have shown any inclination to launch an electric bike. Motorcycles account for over 60% of India’s two-wheeler industry and early movers may stand to gain.

“We will launch a range of bikes and ramp up in terms of sales next year," Aggarwal said. “The motorcycle segment is equally complex and competitive as scooters but it has many more sub-segments, across many price points. We have spent a lot of time understanding this segment and I am now very excited with what we will be bringing to the market," he added.

Sometime in the next calendar year, Ola also plans to launch a car. Aggarwal first teased an image of it back in 2021, even before the first of the scooters had hit the market. This received a fair amount of backlash. Aggarwal remained committed. “It’s not just one car, but a whole spectrum of cars. And it is ‘born electric’—the first greenfield electric vehicle in India," he said.

This is an even more ambitious bet than his tryst with scooters and motorcycles. There are only four companies in the world that straddle both two and four wheels in the automotive industry—Honda, Suzuki, BMW and Mahindra (through its stake in Classic Legends that makes the Jawa and Yezdi bikes). Ola wants to be the fifth. And it will be the only one to go all electric.

Alongside, Ola is also investing in its own lithium-ion cell manufacturing. Lithium-ion cell is the beating heart of any EV since it makes up the battery. It is a hi-tech capital-intensive process but will be crucial in times to come. Aggarwal believes having his own cell will give him the edge.

There are issues the founder doesn’t want to talk about right now. Among them is funding. The last time Ola Electric raised funds was in January 2022, when it received $200 million at a $5 billion valuation. The company, overall, has raised $866 million over eight rounds. There are murmurs within the investor community that funds might be drying up.

“I have access to resources and in any market, resource will not be a problem for anybody with a vision," Aggarwal maintained.

Tempestuous boss

There is yet another issue the founder has to work on—retaining key talent. As in any business, this could determine the long-term sustainability of Ola Electric.

Almost two dozen senior executives have exited the company over the last two years, some calling the working environment almost toxic. Aggarwal has acquired a reputation of being a tough boss.

“Bhavish is not somebody who likes to take no for an answer. If there is something that is not happening, he will say ‘make it happen’. If you can’t, he will judge you as incompetent," said an executive who survived only six months at the firm.

“He can be unreasonable. Working hours are erratic and there is no concept of a weekend. He will call you for a meeting at 11 in the night and expect a final presentation early morning," said another executive.

The IIT Mumbai graduate smiles at these accusations but doesn’t totally refute them. He also doesn’t claim to be reasonable. “If I was a reasonable man, I would have been in a job somewhere," Aggarwal chuckled.

He added that the company is misunderstood. “Many people have formed an opinion without meeting me and I am not who they think I am," he said. “There would always be people who do not like my working style but there are also others who like it and have been with me for years now. We are not doing the usual thing—so, Ola is not your usual place."

This, in short, is Ola’s playbook. And, 37-year-old Aggarwal wants to win by sacrificing the usual and rewriting existing rules. Traditional auto makers will closely watch these new rules.

Sumant Banerji
I have over 17 years of reporting experience with stints in diverse newsrooms such as Business Standard, Indian Express, Hindustan Times, Business Today and more recently ETAuto. My expertise lies in corporate reportage, and as part of the Mint long-form team I would try to bolster corporate coverage for the newspaper. I have a soft corner for automobiles, which I consider as my first love. I also feel strongly about climate change and am eager to chronicle how a growing economy like India balances the need for growth with its climate commitments.
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