Ola: The rise and wobble of India’s EV pioneer Ola

It was once the sun of the Indian start-up industry, but Ola is presently facing a number of setbacks.

It was established in 2010 and rapidly rose to fame as it transitioned from ride-hailing to electric vehicles and battery-powered cars, challenging itself to the same name as Uber.

Krutrim, India’s second AI firm, was the first to acquire AI in 2023, and the business jumped on the AI trend.

Marquee international investors backed this growth, including Temasek from Singapore, SoftBank from Japan, Tiger Global from the US, and Tiger Global from Singapore. In a record-breaking initial public offering ( IPO ), India’s largest in 2024, Ola’s electric vehicles ( EV ) arm raised close to$ 734 million ( £567 million ) last year.

However, this ambitious surge has come with a number of controversy, especially at its EV arm.

In the seven weeks since the Investor was launched, Ola Electric has lost close to 70 % of its value. Along with increasing governmental attention, it is in the face of competition from more well-known two-wheeler manufacturers.

Sales of Ola’s scooters have decreased by less than half from April next year, and the agency’s costs have increased. Ola scooter are currently on fire or breaking down in mid-ride, according to clients ‘ videos on social media.

At thousands of newly opened Ola showrooms, a federal investigation is currently being conducted regarding licenses and registrations. Ola claimed in a speech to stock markets that the company had settled its debts case in addition to one of its vendors.

Former people and business solutions tell The BBC that many important suppliers and transportation partners have ended ties with them as a result of delayed payments.

In an effort to cut costs and cut losses, Ola has been automated functions, restructuring operations, and hiring new employees. More than 1, 000 positions have been eliminated, according to press reports that it has had a second round of cuts since November.

Ola was contacted by the BBC with extensive inquiries regarding these issues. The business did not specifically respond to all the inquiries, but it did provide links to some of its earlier media releases.

What’s then gone bad?

Bhavish Aggarwal, the company’s CEO, made the position that Ola is Tesla’s two-wheeler similar, thereby addressing the market’s price-sensitive emission issue.

He invested millions of dollars into promotion, opening Ola stores all over India, and even delivering scooters to people who had made online reservations.

However, according to Rohit Paradkar, an analyst for the car newspaper Overdrive, Ola has struggled to read the business effectively.

Its bike is based on the Dutch start-up Etergo, which Ola Electric purchased in 2020, to create its own bike.

Many former employees told the BBC that Ola’s second EV bicycle was released without much modification to Etergo’s edition. A former staff in the compliance department claimed to have been rushed into obtaining clearances in order to meet impossible launch deadlines.

In response to questions, Ola referred to a blog post from October 2023 that addressed the “myth” that the car had” never been engineered and tested for India.” It claimed to have “fully re-engineered” the bike used by Etergo and had” tried it out for” Indian problems.”

For India,” the entire vehicle has been tested at three levels,” according to the post, “including automotive field tests, component tests, and electronic simulations.”

However, users reported a number of safety-related incidents, which prompted questions.

Some scooter started catching flames, which automobile experts believe was most likely caused by short-circuits or a malfunctioning battery management system.

To look into the flames, Ola recalled more than 1,400 first-generation scooter in 2022, but the review was not made available to the public. The power systems were then described as being in accordance with American and Continental standards, but it didn’t go into detail about what caused the fires.

Some users also reported that the wheel’s front suspension, which holds the vehicle in place, broke while they were riding, causing injury.

In early 2023, after such an accident, Ola called it a rare case, noting there were only a few such issues among 150,000 scooters.

According to them, the entrance fork arm had a significant safety margin for injuries and was built to withstand 80 % more weight than what it would usually experience while in daily use.

Nevertheless, Ola’s rivals, which are mostly well-known manufacturers, have successfully introduced electric scooters, adding to the strain on the business.

The business was shook by their passage. By December, Ola’s share had fallen from 52 % to 19 %, before recovering to 25 % in January.

Analysts doubt the company’s goal of selling 50, 000 units per month to become profitable, despite the company claiming recent restructuring and faster deliveries have resulted in monthly savings of$ 10 million.

Government data indicates that less than 10, 000 scooter were sold in February, but Ola claims 25, 000, blaming membership delays as a result of vendor agreement adjustments. The national transportation government has issued notices regarding the gap. Over 23, 000 scooters were sold in March, according to Ola, and they held a 30 % market share for the entire fiscal year.

However, Jay Kale, professional vice-president and engine scientist at Elara Capital, said that rival scooter with fewer capabilities are now outselling Ola simply because they come from reputable, well-established companies.

Ola has launched newer versions at lower cost items in an effort to increase sales. However, from$ 43.6 million a year ago to$ 65 million in the October-December quarter, losses have increased to$ 65 million.

According to Kale, the stability of its customer service has been a big issue in addition to product problems.

When upset customers complained about the flames and front suspension and flooded social media and consumer helplines, apparently their support calls remained unresolved for days.

A former Ola personnel once claimed that thousands of complaints were piled up each month. After receiving 10, 000 complaints over the course of a year, India’s consumer rights organization, the Central Consumer Protection Authority (CCPA ), issued a notice to Ola.

However, frustrated customers had few places to turn to because Ola had chosen to discontinue the established dealer network in a bid to market directly to customers and only had a few service centers.

Ola informed the CCPA late last year that the organization had a “robust mechanism to address complaints” and that the regulation had resolved the majority of the issues properly.

Following a cooked public discussion on X with a stand-up artist who took up the cause of the customers, Aggarwal initially denied the issues with social media, but later announced that Ola may be opening almost 4, 000 shops with company facilities.

However, the government was put under the bust for the majority of these new centers because they lacked the necessary permits to store and sell cars.

On March 21, Ola confirmed investigations in four claims and said it was responding to specialists.

Investors are becoming increasingly concerned about the strong move in Ola’s riches, particularly those who bought in at high Offering valuations.

Ola has played a significant role in India’s efforts to reduce greenhouse gas emissions and increase production.

It receives two distinct state grants, one for scooter manufacturing and the other for building its own 20 gigawatt Vehicle power grow. However, Reuters has reported that the pricey factory project has been delayed and has missed a significant milestone, which could result in fines.

Critics claim that Ola’s issues stem from normal culture issues that plague several start-ups, such as CEO-driven decision-making, continuous pivots, and unrealistic, high-pressure deadlines.

Software mindsets don’t work with technology products, which require time to develop, according to Deepesh Rathore, who was previously Ola Electric’s head of product strategy and then conduces consulting company Insight EV.

A previous Ola Cab CEO who quit within month is just one of the top professionals in the larger firm. Additionally, key players in technology, marketing, sales, and organization left last season.

According to researchers, Ola’s attempts to resolve product and service problems have also been impacted by the exits.

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