OLA Electric Mobility IPO

Ola Electric Mobility, a prominent player in the Electric Vehicle (EV) sector in India, is strategically developing comprehensive technology and manufacturing capabilities for EVs and their components, including cells.

Since the initial product announcement in August 2021, Ola Electric Mobility has successfully delivered four products and unveiled six new ones. The Ola S1 Pro, the company’s first EV model, was introduced in December 2021, followed by subsequent models such as the Ola S1, Ola S1 Air, and Ola S1 X+. Notably, the company announced new scooter models, Ola S1 X (2 kWh) and Ola S1 X (3 kWh), and a lineup of motorcycles named Diamondhead, Adventure, Roadster, and Cruiser in August 2023. Deliveries for these new models are slated to commence in the first half of Fiscal 2025 and Fiscal 2026, respectively.

Ola Electric Mobility achieved significant milestones, becoming India’s top-selling electric two-wheeler (E2W) brand within nine months of delivering its first EV scooter in December 2021. The company has the highest revenue among Indian electric 2W original equipment manufacturers (OEMs) from E2W sales in Fiscal 2023.

The company’s business model strongly emphasises research and development (R&D) and technology. Ola Electric Mobility conducts R&D activities in India, the United Kingdom (UK), and the United States (US) to drive in-house product innovation. The construction of an EV hub in Krishnagiri and Dharmapuri districts in Tamil Nadu, India, is underway, housing the Ola Futurefactory, the upcoming Ola Gigafactory, and co-located suppliers.

The Ola Futurefactory, recognised as India’s largest integrated and automated E2W manufacturing plant by an E2W-only OEM as of September 30, 2023, manufactures EV scooters using in-house components and third-party sourced components. Additionally, Ola Electric Mobility operates a Battery Innovation Center (BIC) in Bengaluru, India, focused on advancing cell and battery technology and manufacturing processes for the forthcoming cell manufacturing at the Ola Gigafactory.

The company has established its direct-to-customer (D2C) omnichannel distribution network, comprising 935 experience centres and 414 service centres across India, as of October 31, 2023. The network includes India’s largest company-owned network of experience centres, according to the Redseer Report as of September 30, 2023. This network, combined with the Ola Electric website, enhances the accessibility of Ola Electric Mobility’s products and services to customers.

OLA Electric Mobility IPO Strengths

• Ola Electric Mobility seamlessly integrates diverse technologies, from in-house operating systems to manufacturing processes. This interconnected approach enhances control over product development, performance, and cost.
• With a vertically integrated manufacturing ecosystem, Ola Electric Mobility streamlines core EV component production. This approach, combined with a resilient supply chain and flexible assembly lines, effectively drives down costs and optimises capital expenditure.
• Ola Electric Mobility’s direct-to-consumer omnichannel distribution integrates sales, service, and charging networks on a common platform. This streamlined approach ensures a consistent customer experience across all EV models, allowing for scalability and efficient infrastructure investment for future models.
• Ola Electric Mobility operates in the second-largest global 2W market, representing 15-20% of worldwide production in Fiscal 2023. Although India’s E2W penetration is currently lower than several countries, it is anticipated to surge from 4.5% in Fiscal 2023 to 41-56% by Fiscal 2028, reflecting a significant growth opportunity for Ola Electric Mobility.

OLA Electric Mobility IPO Risks

• Ola Electric Mobility faces challenges with its limited operating history, ongoing losses, and negative cash flows due to continued investments in business expansion and product development.
• Potential risks include defects, quality issues, and disruptions in the supply chain, leading to increased material costs and potential impacts on manufacturing timelines.
• Brand and reputation risks arise if electric vehicles fail to meet industry standards, potentially triggering product recalls and legal actions.
• The Ola Gigafactory in Tamil Nadu may encounter obstacles in its in-house cell manufacturing capabilities during the construction and expansion phases.
• The company is exposed to the risk of reduced government incentives, including subsidies and tax concessions, which could increase the purchase cost of electric vehicles and negatively impact customer demand.