Under regulatory scanner, Bengaluru-based Ola Electric has witnessed an uptick in its sales after facing a decline during the last few months. The company’s daily average sales rose to 1,154 units in October, according to Vahan data from the Ministry of Road Transport and Highways (MoRTH). With sales reaching 17,315 units between October 1 and October 15, the company has also boosted its market share to 34 per cent, up from 27 per cent in September, in the electric two-wheeler (e2W) segment.
While this surge provides a breather for the EV manufacturer, industry experts caution its adverse impact. The sales spike is largely fuelled by the festive season and discounts offered by Ola, which are unlikely to be sustainable in the long run. Moreover, despite this temporary boost, the current sales figures still lag behind those recorded over the past five months in this calendar year, said EV market experts.
Buyers of other versions of the S1 also enjoyed up to Rs 25,000 off, while those eyeing the flagship S1 Pro could avail a Rs 5,000 exchange bonus. The Boss sale of Ola is already under regulatory scanner as the Automotive Research Association of India (ARAI) has raised concerns over the company’s recent pricing practices, this newspaper reported recently.
In a mail dated October 8 to the Bhavish Aggarwal-led company, the ARAI has flagged Ola’s failure to inform it about a price reduction for its S1 X 2kWh model before the launch of the Boss sale. This oversight could affect the model’s eligibility for a government subsidy under the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) scheme.
By pricing its e2W under Rs 50,000, Ola Electric has rolled out discounts exceeding 33 per cent, in stark contrast to the modest 5-10 per cent reductions offered by its competitors. Experts caution that such aggressive pricing strategies may come at the expense of profitability.
“Landing a vehicle for under Rs 50,000 is a steal,” said Preetesh Singh, a specialist in CASE and alternative powertrains at NRI Consulting & Solutions.
“The uptick in sales is anticipated, as consumers are unlikely to opt for products priced above Rs 100,000 when they can snag one at half the cost. Yet, this boost is only a temporary fix; sustaining such steep discounts is not feasible and could jeopardise profitability in the long run,” Singh added. Ola Electric did not respond to Business Standard’s query regarding the number of vehicles sold at a discount, the impact of these sales on its profitability, and other related details.
Among the top four players in the e2W market, Ola Electric takes the lead with the lowest starting price of ₹74,999, even before applying any discounts. Bajaj Chetak comes next with a starting price of Rs 100,000 while TVS Motor has a starting price of around ₹1,07,000. The fourth player, Ather Energy, tops the group with a starting price tag of ₹1,10,000. These four players cornered 85 per cent of the total 51,079 e2Ws sold in the first 15 days of October.
This pricing strategy positions Ola Electric as a formidable contender, making it a tough act to follow in the competitive landscape, said market observers.
“Ola’s Boss discount was strategically implemented to safeguard its market share amid increasing competition, customer grievances, and heightened regulatory scrutiny. However, the company benefits from government incentive schemes, particularly the Production Linked Incentive (PLI) scheme, which could help alleviate some of its financial burdens,” said Puneet Gupta, director, S&P Global Mobility.
Singh, however, said excessive discounting by industry players can push profitability further into the future, delaying returns. This challenge becomes even more concerning if the prices of critical components, such as batteries, rise — an increase that seems inevitable in the coming years.
The company posted a net loss of ₹1,584.4 crore for FY24, as against ₹1,472.1 crore loss during the previous year. In the April-June quarter, its net loss stood at ₹347 crore, up from ₹267 crore in the same period last year.
First Published: Oct 15 2024 | 11:56 PM IST
