Ola Electric Raises $300 Million in Funding to Fuel Expansion Plans
- ByStartupStory | May 23, 2023
In a recent funding round, Ola Electric, the prominent electric scooter maker, has successfully secured $300 million in funding, elevating its valuation to $6 billion, according to sources familiar with the matter. This latest financing effort, led by a leading sovereign fund company, has garnered significant interest from other investors, and the finalization of the deal is expected in the coming weeks.
The funding infusion comes after Ola Electric raised $200 million at a $5 billion valuation in January 2022. Notably, SoftBank Group, one of the company’s initial major investors, is not participating in this round. Ola Electric’s spokesperson declined to comment on the fundraise.
With this fresh capital injection, Ola Electric aims to substantially expand its electric two-wheeler production capacity from the existing 0.5 million units per annum to 2 million units per annum. Additionally, the funds will facilitate the establishment of an advanced cell chemistry battery plant, furthering the company’s eligibility for incentives under the production-linked incentive scheme. Ola Electric is also actively working towards setting up an electric passenger car facility, which is anticipated to materialize next year.
Presently, Ola Electric boasts a revenue run rate of $1.2 billion and has achieved positive Ebitda in its electric two-wheeler business within just 18 months of its launch. It has emerged as the largest electric scooter player in the country, capturing 34% of the market share in April this year, as per the VAHAN data. In contrast, its competitors such as Ather, Ampere, Okinawa, Hero Electric, and TVS witnessed a decline in sales during the same period.
Looking ahead, Ola Electric has set ambitious targets, aiming to reach cumulative sales of 1 million units by the end of this year. The company also plans to introduce its electric motorcycle in the second half of this year. Furthermore, a more affordable electric scooter model is scheduled to be available from July, priced at Rs 84,999, with the aim of boosting sales.
However, Ola Electric faces challenges in light of the government’s recent decision to reduce the FAME II subsidy on each scooter by nearly one-third. Without the subsidy, the company may experience a hit of Rs 40,000-50,000 per scooter at the premium end, potentially leading to price increases. Consequently, Ola Electric, along with other industry players, will need to strategize and consider offering trimmed-down versions of their models while adjusting prices by 10 to 15 percent.
The infusion of $300 million in funding will undoubtedly strengthen Ola Electric’s position as it continues to revolutionize the electric mobility sector in India. The company’s expansion plans, increased production capacity, and battery plant construction align with its vision to lead the nation’s sustainable transportation revolution.
Follow Startup Story
Related Posts
