Ola Electric Suspends India Car Project to Focus on Scooters, Bikes Ahead of IPO
- ByStartupStory | July 26, 2024
Ola Electric, the SoftBank-backed electric vehicle company, has suspended its plans to launch electric cars in India. The company, which is gearing up for a major IPO, aims to concentrate its efforts on its booming e-scooter and bike business, according to sources with direct knowledge of the decision.
Ola’s founder, Bhavish Aggarwal, had previously announced ambitious plans in 2022 to launch an electric sports car within two years. The vehicle, featuring an all-glass roof, was expected to reach speeds of 100 km per hour in just four seconds. These plans were reiterated as recently as September 2023 in an interview with Forbes. However, the project has now been suspended as Ola prepares for its IPO in August, aiming to raise approximately $660 million.
“Focus is all on the two-wheeler market, including bikes, and mass electrification is still some time away – you need to have (charging) infrastructure,” one source told Reuters.
The decision to halt the electric car project underscores the significant challenges, such as the lack of adequate charging infrastructure in India, which hinder the mass adoption of electric vehicles. While e-scooters have rapidly gained popularity, with around 483,000 units sold by June this year, electric car sales lag behind, with only about 45,000 units sold in the same period.
Another source indicated that Ola’s car project might be deferred for at least two years as the company focuses on bolstering two-wheeler sales and battery production.
The suspension of the car project, which had the potential to compete with models from companies like Tata Motors in India’s burgeoning electric vehicle market, highlights the pragmatic approach Ola is adopting. The company did not respond to a request for comment.
Ola Electric’s IPO next month is poised to be one of the largest in India this year. Despite being loss-making, the company has secured a 46% market share in the e-scooter segment within just three years of its inception. However, it adjusted its sales targets last year following the Indian government’s reduction of certain industry incentives.
Aggarwal had previously announced plans to build a new plant within the existing Tamil Nadu campus with the capacity to manufacture one million electric cars annually. The cars were envisioned to break away from the traditional small or midsized vehicles prevalent in the Indian market.
Ola had engaged external consultants and hired over 100 employees for the car project. According to the second source, 30% of the team has since left, with some being reassigned to other roles or projects. The company had also initiated discussions with auto component suppliers and developed a prototype of the car, modeled after a BMW luxury sedan, at its studio in the United Kingdom.
However, the first source indicated that if Ola resumes the car project in the future, the focus would shift to developing an affordable, mass-market electric car, a significant deviation from Aggarwal’s initial vision of a premium sports car.
The global transition to electric vehicles, coupled with growing competition from more affordable Chinese rivals and a weakening sales outlook in major markets, continues to pose challenges for automakers.
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