Ola Electric, once hailed as the leader of India’s booming electric scooter market, is now facing turbulent times. Despite selling more scooters than ever before, the company’s finances are heading in the opposite direction — raising serious concerns among investors and EV enthusiasts alike.
Stock Crash Raises Eyebrows
Ola Electric’s stock, which once traded at a high of Rs 146 per share, has now fallen drastically to Rs 48. The steep drop reflects growing doubts about the company’s ability to turn rising sales into real profits.
The Sales-Revenue Mismatch
In FY23, Ola earned an operating income of Rs 2,651 crore. That figure nearly doubled to Rs 5,103 crore in FY24, a strong sign of growth. However, in FY25, despite delivering more scooters (3.59 lakh units compared to 3.29 lakh the year before), revenue dropped by around 9% to Rs 4,645 crore.
In Q4 FY25, the situation worsened revenue fell by a shocking 60% year-on-year to just Rs 649 crore, while net losses widened to Rs 870 crore.
Why Revenue Fell Despite More Sales
The primary reason for this paradox lies in Ola’s new product strategy. The launch of lower-cost scooters like the S1 X pushed up volumes (1.96 lakh units sold in FY25), but reduced the average selling price, leading to less revenue per scooter.
So while Ola sold more, they earned less from each unit — a classic volume vs profitability dilemma.
Losses Continue to Mount
Ola Electric remains unprofitable. Its net loss expanded considerably to Rs 2,276 crore in FY25, up from Rs 1,584 crore in FY24. The company’s EBITDA margin in Q4 FY25 sank to -101%, largely due to a Rs 250 crore one-time warranty provision related to earlier scooter models (Gen 1 and Gen 2).
Key Challenges Behind the Decline
Several factors contributed to Ola’s poor financial performance:
- End of FAME-2 Subsidy: Government subsidies for EVs ended in April 2024, leading to higher prices and lower demand across the industry.
- Intensifying Competition: Legacy players like Bajaj Auto and TVS Motor have captured 40% of the high-speed electric scooter market.
- Operational Issues: Problems with VAHAN registration and after-sales service further weakened Ola’s growth.
- Losing Revenue Rank: For the first time, Ather Energy overtook Ola Electric in quarterly revenue during Q4 FY25.
Ola’s Comeback Plan
In response, Ola has rolled out two key initiatives:
- Project Lakshya: Focuses on cutting costs and improving margins.
- Project Vistaar: Aims to expand the sales network and improve operational efficiency.
To break even, Ola needs to sell 25,000 scooters per month and earn Rs 44,000 profit per scooter — a high target given the current situation.
Margin Goals and Competition Pressure
Ola projects that its gross margin will rise to 36.5% by Q2 FY26. While this sounds promising, industry experts are skeptical. Rivals like TVS and Bajaj already have stronger margins, and it remains to be seen if Ola’s vertical integration strategy will help it catch up.
Management’s Outlook: Hopeful but Watchful
Ola Electric’s leadership claims the worst phase is over, citing reduced costs and an improved sales network. They expect revenue and profits to improve in the coming quarters.
Cash Woes Still Loom
Despite plans for a turnaround, Ola’s cash flow remains negative, and its debt levels are high. The company recently got board approval to raise Rs 1,700 crore to stay afloat and fund operations.
Investor Sentiment: Cautiously Optimistic
With uncertain profitability, high competition, and ongoing cash issues, it’s hard to pin down Ola’s true value right now. Investors will be watching closely to see if the company can truly achieve profitability and strong volume growth to justify a rebound in its stock price.
Bottom Line:
Ola Electric’s journey is far from over. While its scooters continue to sell in high numbers, the company must find a way to turn those sales into profit — and fast. Otherwise, its promising EV dream may continue to lose charge.