Ola Electric Mobility has announced a significant investment of ₹2000 crore aimed at bolstering its electric vehicle (EV) and battery manufacturing operations. This strategic move is designed to enhance localisation and vertical integration, addressing the growing competition and profitability challenges in the EV sector.
The board has approved a ₹1500 crore infusion into Ola Electric Technologies (OET) and ₹500 crore into Ola Cell Technologies (OCT) through compulsory convertible preference shares, as detailed in a stock exchange filing. The company intends to utilize these funds for various business requirements, although specific allocations have not been disclosed.
This investment comes at a critical time for Ola Electric, led by CEO Bhavish Aggarwal, as the company faces pressure to improve profitability following a slowdown in sales and a decline in market share within India's electric two-wheeler segment. Recent reports indicated that ICRA downgraded Ola Electric Technologies due to weak sales performance and ongoing losses, despite efforts to enhance unit economics.
Market Context
Currently, legacy manufacturers like Bajaj Auto and TVS Motor Company dominate the market, while competitors such as Ather Energy and Hero MotoCorp are also performing well. Ola Electric's revenue from its core EV business fell to ₹4717 crore in FY25 from ₹5149 crore the previous year, indicating significant pressure.
Battery Operations Growth
In contrast, Ola Cell Technologies has experienced a remarkable increase in revenue, rising to ₹73 crore from just ₹3.97 crore in FY24. This growth highlights the scaling up of its battery operations, which is a crucial aspect of Ola Electric's strategy.
ICRA noted that Ola's ambitions in battery manufacturing could attract investor interest, particularly in next-generation cell technologies. A successful fundraising effort for the cell business could stabilize the battery unit and improve its medium-term outlook.
Focus on Localisation
The latest capital infusion emphasizes Ola Electric's commitment to battery localisation, a key strategy for Aggarwal. The aim is to build an integrated EV manufacturing ecosystem that encompasses vehicles, batteries, software, and cells. Currently, India relies heavily on imports for battery cells, which are among the most expensive components in electric vehicles.
Ola Cell Technologies, established in 2022, is responsible for battery and cell manufacturing, while Ola Electric Technologies, founded in 2021, oversees the production of electric vehicles and related services.
Future Prospects
Recent reports suggest that Ola Electric is also exploring raising an additional ₹2000 crore specifically for Ola Cell Technologies, indicating that the battery business may evolve into a more significant standalone asset over time.
