Ola electric car project plan suspended, company to focus on scooters and bikes
Ola Electric has decided to suspend its ambitious electric car launch plans to concentrate on its growing electric scooter business. This strategy comes just ahead of its highly anticipated August IPO, where the company aims to raise approximately USD 660 million.
Bhavish Aggarwal, the founder of Ola, had laid out plans in 2022 to introduce an electric sports car capable of reaching 100 km/hr in 4 seconds. These plans were reaffirmed by Aggarwal as recently as September 2023 during an interview. However, sources close to the matter have revealed that the project has been shelved to streamline the company’s focus on the two-wheeler market and address mass electrification challenges, particularly the need for robust charging infrastructure.
The suspension underscores the hurdles faced by automakers in India’s electric vehicle market, such as the lack of sufficient charging infrastructure. This move also indicates a strategic response to the growing demand for electric scooters. By June this year, around 4,83,000 electric scooters had been sold in India, in contrast to only about 45,000 electric cars.
One insider mentioned that the electric car project is on hold for at least two years, with the company’s immediate focus on increasing two-wheeler sales and enhancing battery production capabilities. Despite these changes, Ola Electric did not provide an official comment on the matter.
The company’s forthcoming IPO is set to be one of India’s largest this year. Although Ola Electric remains loss-making, it has secured a 46% market share in the electric scooter segment within three years of its inception. This achievement comes despite a reduction in sales goals following the government’s cutback on industry incentives last year.
Previously, Aggarwal had announced plans to build a factory in Tamil Nadu capable of producing 1 million electric cars annually. The project, which envisioned a departure from India’s trend of small or midsized vehicles, involved deploying external consultants and hiring over 100 employees. However, about 30% of this team has since left, with some being reassigned to new roles or projects.
While initial talks with auto component suppliers had been held and a prototype akin to a BMW luxury sedan was developed at Ola’s UK studio, the company now plans to pivot towards developing an affordable, mass-market electric car if and when the project is revived.
This decision to halt the electric car project also reflects broader industry challenges, including increased competition from cost-effective Chinese rivals and a weakening outlook for automotive sales globally.
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