Home / Opinion / Views /  Ola’s EV gambit calls for a silver bullet on wheels

As petrol-fuelled vehicles attain ever higher levels of villainy in popular perception for their role in climate change, the urge to go electric could catch on swiftly across India once attractive options come along. Covid precautions have made public transport a last resort for many urban commuters, a shift that might endure for years as the virus continues to play hide and seek with us. Together, these two factors can spell a mass market for electric two-wheelers. This is a clear business opportunity. But still, the bet that Bhavish Aggarwal of Ola Electric Mobility has taken on flooding Indian streets with battery-run scooters is in a class of its own. Consider the audacity of it. As a name, Ola is familiar as a ride-hailing service. Founded in 2017, its electric vehicle (EV) arm bought a Dutch firm called Etergo last year. This gave it access to EV designs. Today, backed by SoftBank and others, it is setting up the world’s largest e-scooter factory on a 500-acre plot in Tamil Nadu. With an investment of $330 million, this plant hopes to start production this June with an annual capacity of 2 million units and then aims to crank out 10 million units every year from 2022 onwards. Even if exports take up large volumes, its domestic supply would have to grab a sizeable chunk of a fiercely competitive two-wheeler market estimated at less than 24 million units. In short, what Ola needs is a rip-roaring success, a silver bullet on two wheels, no less.

Ola’s devotion to the project should be clear from the uncertainties in its primary market. The pandemic has slowed the once-booming business of app-ordered cab rides, even as regulatory pressure on gig-economy players mounts over the terms of work offered to contractual workers (such as drivers). With Ola’s revenue and cost dynamics in flux, its EV venture must charge ahead. But for this, it would need the offline equivalent of a ‘killer app’, an offering that few looking for low-cost mobility can resist. So far, electric scooters have been niche products. Among the head-turners of late has been Ather Energy’s e-scooter. Its Ather 450X model is reported to offer an impressive ride, but with an ex-showroom sticker price of nearly 147,000 in Delhi, it demands a hefty premium for relieving our streets of carbon exhaust. Leisure and hobbyist bikers apart, Indian two-wheeler buyers are extremely price sensitive. The bulk of our demand is for workhorse machines that sell for about half of Ather’s price and can stretch a fuel tank of under 10 litres for more than 600km on a single top-up. For a two-wheeled EV to hold appeal, it would require not just a network of charging stations, but a range that assures users that it will not run out of juice too soon.

Ola has adapted an Etergo design for India, presumably, but the core technology that it expects to deploy remains under wraps. It is not impossible for it to hawk a ‘smart’ e-scooter for under 1 lakh, so long as fixed costs are apportioned across vast volumes achieved rapidly. Economies of scale and cost re-engineering will both have to be summoned to the task. Yet, if going cheap drops the vehicle’s performance below a certain level, it would risk finding few takers. Local road conditions favour an ability to overtake larger vehicles in a jiffy. Inadequate pick-up could easily doom any two-wheeler’s prospects of mass offtake. While affordability is crucial, much will depend on whether Ola’s offering makes the cut on power and range.

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