Ola Electric is cutting costs, regaining market share and betting on batteries, dealers and new products to put its business back on track
Under deep public scrutiny, Bhavish Aggarwal’s Ola Electric
has spent the past year trying to fix a business that had moved sharply away from growth to prevent market share erosion.
The two-wheeler EV maker stepped into FY27 with a clear and simpler objective: sell more vehicles, bring down its cost base and get its manufacturing investments to start paying off.
Its first-quarter numbers show that some of these efforts are working. With that said, the financials also make it clear that Ola Electric is still far from a comfortable position.
In Q1 FY27, Ola Electric’s consolidated revenue from operations rose 72% QoQ to ₹455 Cr, while its net loss narrowed 22% YoY to ₹336 Cr from ₹428 Cr. Sequentially, the loss came down from the ₹500 Cr it posted in Q4 FY26.
Yet revenue was still down 45% from ₹828 Cr in Q1 FY26. Delivery of scooters stood at 39,192 units, almost double the 20,256 units shipped in Q4 FY26, but well below the 68,192 units delivered in the year-ago quarter.
The gap between the sequential recovery and the YoY decline is material. The company is today recovering from a very low base rather than returning to the volumes it once commanded.
Inc42 has tracked this dwindling base throughout the past year: revenue fell 55% YoY in Q3 FY26 and then 57% in Q4, the stock hit successive lows before bottoming at ₹21.21 in March, and the company cut about 5% of its workforce in February.
After the most recent quarter, the Bengaluru-based company is betting on a combination of lower costs, more products, a wider distribution network, its own battery cells and new revenue streams to improve its unit economics.
The key highlight of Ola Electric’s Q1 performance was the sharp improvement in volumes.
Orders jumped 96% QoQ to 44,071 units, while deliveries rose 94% to 39,192 units. Registrations grew 97%, from 22,088 units to 43,921, compared with 17% growth for the broader electric two-wheeler market. As a result, Ola’s market share increased from 5.1% in Q4 FY26 to 8.4% in Q1 FY27.
That is well short of what the company promised. Reporting its Q4 numbers in May, Ola said it aimed to regain a 15-20% market share within the current calendar year and take its gigafactory to 6 GWh in Q1 FY27. Neither has happened yet.
The gap with EV rival Ather Energy also continues to be significant. Ather delivered 83,173 scooters in the same quarter, more than twice Ola Electric’s count, on revenue of ₹1,216.9 Cr and a net loss of just ₹51.1 Cr. Ather commanded 16.8% of the market against Ola’s 8.4%.
Ola Electric said sales grew across regions. Sales in the West grew around 61% QoQ, while the North and South grew 54% each and the East rose by 34%. Its strongest markets, though, are already in the North and East — Uttar Pradesh, Uttarakhand, Punjab, West Bengal, Bihar, Jharkhand and Assam. On the other hand, Gujarat, Maharashtra, Karnataka and Tamil Nadu were flagged as markets still to be scaled up.
But there’s a catch to the volume recovery.
During the earnings call, management attributed the sequential decline in average selling price to product mix, with sales currently skewed towards two products. It expects the mix to improve as its premium models and motorcycle portfolio gain traction.
The mix shows up in the margin. Consolidated gross margin fell to 30.5% in Q1 FY27 from 38.5% in Q4 FY26. Ola has pitched 30.5% as industry-leading resilience, and it did face a roughly 11% rise in industry commodity costs during the quarter, driven by copper, aluminium, lithium and crude-linked materials. Even so, the direction is downwards, and Ola now has to prove that higher volumes can also bring better revenue per vehicle. A recovery driven mainly by lower-priced models will limit how quickly the topline can recover.
Ola Electric has, however, made progress on costs as consolidated operating expenses fell 22% QoQ to ₹333 Cr.
But a nuanced reading of the costs show that auto operating expenses fell from ₹313 Cr to ₹280 Cr, or about 11%. The rest came from the cell business where a PLI-related credit resulted in negative operating costs. Management itself flagged that, excluding the PLI benefit, operating expenses were around ₹380 Cr in Q1 and could move towards ₹300-325 Cr over the next couple of quarters, against a steady-state target of about ₹300 Cr.
Compared to FY26, this is a change in strategy. Now, the company is trying to add volumes without bringing back the cost structure that hurt the business when sales were falling.
Profitability, regardless of these structural changes, remains some distance away. Consolidated adjusted operating EBITDA stood at a loss of ₹195 Cr in Q1 FY27, while free cash flow remained negative at ₹351 Cr. So while the cost base is coming down, Ola Electric still needs considerably more scale before the savings turn into a profitable business.
Besides bringing down costs, the company is also trying to reduce its dependence on scooters.
Its Roadster electric motorcycle saw deliveries rise 67% QoQ in Q1 FY27. The startup is focusing on states such as Uttar Pradesh, Madhya Pradesh, Rajasthan, Maharashtra and Bihar, where motorcycles have a much bigger role in personal mobility.
The move makes sense for Ola. The company has spent years building manufacturing and technology capability around two-wheelers, so motorcycles give it another category without requiring an entirely new business. But the product will have to generate meaningful volumes rather than simply add another model to the portfolio.
Distribution is the other part of the plan, and here Ola is marking a big change.
Just before the results, Aggarwal announced a shift to dealer-led sales and repair across the country. Ola’s own stores will act more like experience centres, while dealers will become the backbone for transactions and service. Dealerships are expected to go live as early as mid-August, with a wider rollout planned before Diwali. In this context, Ola said it has received over 1,200 indications of interest from prospective partners.
The shift reflects the changing nature of Ola’s business. When the company was building its brand and product, controlling the retail experience through its own stores made sense. As it moves deeper into smaller cities and towns, local dealer networks are a cheaper way to expand sales and service coverage.
The company is also banking on dealers to help with its service problems, which are not new. Ola has faced sustained after-sales complaints and was under a CCPA probe. In February, a consumer commission issued an arrest warrant against Aggarwal in a consumer case — an order the Bombay High Court stayed days later.
Under the new model, dealers will hold Ola’s own parts inventory, which the company expects will ease those complaints. And help it move on to the growth phase rather than dealing with these teething issues.
It is also meant to help the topline. Ola, which has over 1 Mn customers, is targeting service revenue of ₹400-500 Cr by FY28, compared with around ₹130 Cr in FY26, at a gross margin of around 65%.
Parts and warranty are also where the company’s supplier troubles sit. In July, the NCLT’s Bengaluru bench issued a notice on a third insolvency petition against Ola, filed by vendor Seoyon E-Hwa Summit Mobility Krishnagiri over ₹9.57 Cr in alleged unpaid dues, with the matter posted to 31 August.
Two other suppliers, Sterling E-Mobility Solutions and Anevolve Mando E-Mobility, had filed petitions days earlier. Ola told the exchanges the disputes were pre-existing and already in arbitration, and said it had raised warranty and spare-part concerns about the vendors’ supplies.
The most expensive part of Ola Electric’s long-term strategy is its decision to build its own battery technology and manufacturing capacity.
The company is exploring cell demand from drones, defence and near-space applications as well. With its 1 Mn unit annual automobile factory already built, Ola expects future auto capex to remain limited, and it raised ₹780 Cr through a QIP in Q1.
That QIP is one of several money-raising moves this year. In March, Ola moved ₹475 Cr of IPO proceeds from R&D to debt repayment and raised ₹2,000 Cr for the EV and cell units in May.
Market tailwinds also helped Ola Electric to gain some revenue momentum. The broader E2W market grew 17% sequentially, EV penetration crossed 10% for the first time in June, and Delhi’s ₹15,000 Cr EV policy lifted both Ola Electric and Ather.
Ola ended Q1 with a ₹336 Cr net loss and burned ₹351 Cr in free cash flow, with dealerships still to open, the gigafactory still to reach 6 GWh and a market-share target it set for itself still some way off.
Ola says its 4680 NMC Bharat Cell is already being used in performance-focused two-wheelers, while its 46100 LFP cell has received BIS certification and is ready for use in vehicles below 4 kWh.
According to the company, a few thousand vehicles are already running Ola-made cells, with three of roughly 9-10 vehicle SKUs using the 4680 cell. Ola paused cell production during Q1 as it expanded capacity from 2.5 GWh to 6 GWh, and production is expected to ramp up once that is done.
For a company that has spent heavily on cell manufacturing, ₹5 Cr of cell revenue in Q1 FY27 is very low. The segment’s adjusted operating EBITDA turned positive at ₹22 Cr, but that is the PLI credit again — the cell business still posted a net loss of ₹28 Cr and burned ₹143 Cr in free cash flow during the quarter.
Ola Electric and Aggarwal are now betting heavily on LFP cells, which management expects to use across most of its automotive portfolio, keeping NMC for around 20% of higher-performance models. Its 6 GWh gigafactory is now expected to be operational by September, a quarter later than the Q1 FY27 target it gave in May.
Mahashakti, its next big energy storage product, is due to launch on August 15, 2026, and is positioned for large-scale commercial deployment. It signed an Axis Energy MoU to supply up to 20 GWh by 2032, which will be a critical contract under this vision.
That one’s for next quarter, but this quarter’s improved picture does have a few kinks. If we discount the PLI credit in Q1, we find that Ola Electric sold more scooters at lower margins, at a time when its automotive cost base fell 11%. The company is calling that the start of operating leverage.
In the next quarter, without the crutch of government PLIs, and with Ola’s admission of a push towards growth, this claim will get tested.
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Edited By Nikhil Subramaniam
Creatives: Varshita Srivastava
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