The advance comes after the company earlier this week announced Production Linked Incentive (PLI) certification for its Gen 3 scooter portfolio, a move Ola said would bolster margins and profitability starting this quarter. The certification covers all seven models of its Gen 3 range, which accounts for more than half its sales volume.
Incentives to strengthen profitability
The Automotive Research Association of India approved the Ministry of Heavy Industries’ scheme, making Ola eligible for incentives ranging from 13% to 18% of sales value until 2028.A company spokesperson said, “Securing PLI certification for our Gen 3 scooters, which form the bulk of our sales, is a critical step towards profitability. This will directly strengthen our cost structure and margins, enabling us to deliver sustainable growth. With our auto business targeted to turn EBITDA positive, the certification acts as a strong catalyst to achieve that goal while ensuring our customers continue to get the best-in-class EVs at highly competitive prices.”
Market share pressures
Yet, the gains in Ola’s stock come amid intensifying competition in India’s electric two-wheeler market. Data from the Vahan portal shows that in the first 27 days of August, Ola Electric sold 13,688 vehicles for a 17.3% market share, trailing Bengaluru-based Ather Energy, which recently overtook Ola with a 17.9% share. TVS Motor retained its lead at 24.8%, while Bajaj Auto slipped to fifth after supply disruptions.“There are both positives and negatives for Ola Electric at this point. The PLI certification is a positive, but the customer confidence dip is a negative, as they have lost significant market share,” VG Ramakrishnan, managing partner at Avanteum Advisors LLP, told ET.
Financial strains
Ola Electric has been under pressure since listing, with shares still trading below their issue price of Rs 76. The company posted a net loss of Rs 428 crore in the June quarter, wider than a year earlier though narrower sequentially. Revenue halved year-on-year to Rs 828 crore, while gross margins improved.
At its first annual general meeting last week, Ola Electric secured shareholder approval to reallocate IPO proceeds and extend its deployment timeline, a shift it said reflects a stronger focus on capital discipline and risk management.
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Industry headwinds
The company, like rivals, continues to grapple with rare earth supply constraints after China tightened export curbs earlier this year. Ola has been developing motors without rare earth magnets for the past two years, and said it accelerated this work in April.
Analysts say a normalisation of supply chains could restore order in the industry. “I think the rare earth magnet and supply chain issues are likely to be behind us very soon, because we have more or less sorted it out with China. Once the supply chain stabilises, companies like Bajaj will go back to their original position, as they were in July,” Ramakrishnan told ET.
Still, Ola is betting on new product launches announced at its recent ‘Sankalp’ event, including the S1 Pro Sport, S1 Pro+ 5.2 kWh, and Roadster X+ 9.1 kWh, to drive future growth. Deliveries of the premium scooters are scheduled to begin later this year and early 2026.
Also read | Ola Electric shares rally 7% on PLI nod for Gen 3 scooter portfolio
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
