Ola Electric CEO Bhavish Aggarwal on July 29 said that the EV industry’s growth story is consistent and secular, adding that he doesn’t see any slowing down of the EV story.
Aggarwal, speaking at a press conference on the launch of the IPO of the EV two-wheeler maker, which opens on August 2, was commenting on the recent slowdown seen in EV sales numbers in the month of June, when sales dropped by around 14 percent compared to the previous month.
“The EV story in India is in its absolute early days. Three years ago when we launched our product there was hardly any EV and now you can see that in scooters, the penetration has gone up to almost 15%. There will be cyclical ups and downs, either subsidy changes or some cyclical seasonal stuff,” said Aggarwal.
He further added that Ola Electric, on a year-on-year basis has seen its EV sales grow by almost 90 percent in Fiscal 2024 and that even in the first quarter of Fiscal 2025, the company has seen its market share grow.
“The potential is very large. Globally, the debate is clear that overtime the automotive industry will become electric, although category by category might follow a different strategy. So I don’t see any slowing down with the story. With more and more product launches, you will actually see more expansion. And you also now see the incumbents, they’re also joining the party,” said Aggarwal.
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Ola Electric’s Rs 6,146-crore initial public offering, one of the biggest this year, opens for bidding on August 2. The electric vehicle maker has fixed a price band of Rs 72-76 for the offer, which is the first IPO from an Indian EV two-wheeler manufacturer.
The IPO comprises a fresh issue of Rs 5,500 crore and an offer for sale (OFS) of up to 84.94 million shares. On the upper price band, OFS adds up to Rs 645.96 crore. The IPO closes August 6, while the anchor book will open for a day on August 1.
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Commenting on the company’s profitability roadmap, Aggarwal said that Ola has made significant upfront investments in creating capacities and its distribution channels and as its capacity utilisation scales up, the company’s margins will continue to see an improvement.
“If you see our numbers, FY 24 revenue was one of 90 percent over FY 23. Gross margin has gone up to 16 percent from 7 percent. And EBITDA margin has gone from negative 43 to negative 19 percent in just one year. And Q1 of this year, further, our volumes have gone up. If you see manufacturing industries in general, as you grow revenue, you get a lot of operating leverage, because your fixed costs don’t scale in line with revenue growth. We’ve invested for high volume, and as we’re growing into that capacity, our margins are improving,” said Aggarwal.
Harish Abichandani, CFO, Ola Electric added that the company’s installed capacity is 1 million for the Future Factory, although infrastructure can support up to 4 million units capacity. Last fiscal capacity utilisation was at 49 percent, said.
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Further commenting on margin improvement, Aggarwal added that he expects further improvement in that area as the company progresses on its vertical integration plans with its cell manufacturing capacities.
“The cell is absolutely the heart of the EV even in terms of cost, with the cell contributing to one-third of the overall cost of any typical EV. So as we bring that into India and make it ourselves, it kind of further improves our modules,” said Aggarwal.
Ola Electric has set up a capacity of 1.4 Gigawatt hours (GWh) for cell manufacturing and expects commercial production of cells to begin early next year.
Abichandani, CFO of Ola Electric, added that the company has so far invested Rs 500 crore for cell manufacturing capacity and has availed a credit line of Rs 1,900 crore as it works towards scaling up its cell capacity to 5 GWh.
Commenting on Lithium prices in light of the recent budget proposal to cut customs duties on critical minerals such as Lithium and others, Aggarwal said that he expects Lithium prices to keep moving in a downward trajectory in the coming years.
“Lithium prices in the last 10 years have come down by nine tenths because it’s a very technology oriented business. So as technology is improving every year or two years, the cost keeps coming down. And that’s the dynamic I foresee in the future also. That’s a good benefit for the whole ecosystem because one of the main input costs comes down. And as we scale up our Giga factory and commercialize it, we actually have the benefit of low prices and because the input costs through our own cell making also comes down,” said Aggarwal
On new product launches, Aggarwal said that the company plans to start sales of electric motorbikes sometime early next year.
“If you look at the Indian market, two-thirds is bike and one-third is scooter. So there’s a lot of market opportunity in motorbikes. And the basic fundamental selling proposition remains the same in scooter and bikes, it is that the total cost of ownership is much lower than ICE vehicles,” said Aggarwal.
“So as we enter the bike segment, although I can’t share forecasts or projections, we feel that we have a good product lineup and we are addressing the right segments of the market with our spectrum of products,” he added.
