Ola Electric’s stock price has hit a lifetime low, falling over 9 percent to approximately Rs.89.55 per share amid ongoing service issues and a significant decline in market share1. The company reported a drop in sales, with only 22,800 units sold in September, down from 41,732 units in July, raising concerns about its competitive position against rivals
Ola Electric’s market share has been notably affected by ongoing service issues, resulting in a 43 percent drop in its stock value from its peak. The company is dealing with a surge in customer complaints, with close to 1,00,000 service requests being recorded each month, largely due to hardware and software malfunctions.
This decline has opened opportunities for competitors such as Bajaj Auto and TVS Motor to capture additional market share, intensifying Ola Electric’s challenges in retaining its leadership in the electric vehicle sector.
Unit Economics Comparison
According to a report by BERNSTEIN, Ola Electric has the leading margin profile among OEMs, thanks to its early market entry, aggressive localization, platform efficiency, dealership ownership, and access to PLI and FAME subsidies.
While all manufacturers, including TVS, Bajaj, and Ather, remain unprofitable, with margins ranging from (-2) percent to over (-35) percent, these differences may lessen at the EBIT level due to variations in capital deployment.
OLA v/s TVS
Ola Electric’s superior EBITDA profitability compared to TVS is attributed to its access to PLI and FAME subsidies, higher localization, in-house manufacturing, and scale advantages. Although TVS charges about Rs.30K more for comparable scooters, its cost structure is higher due to lower scale and dealer margins.
While TVS expects to receive PLI subsidies soon, it may choose to use these benefits to lower prices and gain market share rather than focus solely on profitability.
OLA v/s Bajaj Auto
Ola Electric also outperforms Bajaj in EBITDA profitability due to higher localization, increased in-house component manufacturing, no dealer margin leakage, and better EV scale, which enhances gross margins. In contrast, Bajaj relies on outsourcing key components such as motors and battery packs and incurs higher costs because of Chetak’s full metal body compared to the fiber bodies used by competitors.
OLA v/s Ather
Ather, despite its premium pricing, experiences the highest loss per unit due to high costs and lower volumes, further constrained by its ineligibility for PLI subsidies. With the FAME subsidy, Ather achieves a 7 percent gross margin, which drops to 1 percent without it. Its emphasis on in-house battery pack design and integration of key components helps maintain its margin performance.
Market Share
As of September, Ola Electric commands a market share of 27 percent, followed by Bajaj Auto at 21 percent and TVS at 20 percent. Ather holds a market share of 14.3 percent.
Financial Performance
In its latest financial update, the company reported net sales of Rs.1,644 crore for Q1 FY25, marking a 32.2 percent increase from Rs.1,243 crore in Q1 FY24. Despite this growth in sales, the company continues to incur losses, posting a net loss of Rs.347 crore in Q1 FY25 compared to a net loss of Rs.267 crore in Q1 FY24.
Conclusion
Ola Electric might emerge as a leader in the EV race, given its current strong position compared to competitors. The company’s advantages include a robust margin profile, efficient manufacturing processes, and strategic access to subsidies, which could help it maintain competitive pricing and profitability.
However, the dynamic nature of the market means that Ola’s success will depend on its ability to adapt to changing consumer preferences and effectively navigate challenges posed by rivals like TVS, Bajaj, and Ather.
Written by – Siddesh S Raskar
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
