Ola Electric’s moonshot challenge
It aims to become a game changer in electric two-wheelers and is building up expectations with some high-profile moves
In the last few months, Ola Electric, the vehicle manufacturing division run by Bhavish Aggarwal, founder of cab-hailing platform Ola, has been making announcements that have attracted the attention of every two-wheeler operator in the land.
In March, Ola Electric, which is backed by investors that include Hyundai and Kia, Tiger Global and Softbank, announced that it was setting up a 500-acre Ola Future Factory in Tamil Nadu. Then in April, Ola Electric said it would create a “hypercharger electric network”, which Aggarwal says he hopes to make the world’s largest.
In recent weeks the company roped in expat auto executive Wayne Burgess, who has created vehicles for Aston Martin, Rolls-royce and Jaguar Land Rover, as head of vehicle design. Burgess has worked on models that include the Jaguar F-pace, Jaguar F-type and the Jaguar XE.
That was soon followed by the appointment of former GE India hand N Balanchandar as chief human resources officer. Clearly, these are signs that more high-level hires are to follow.
Like the Tata Nano, Ola Electric is building huge expectations, more so because it is entering a market — scooters — which hardly has a reputation for high-tech in India. So the question is: Can Ola Electric deliver on these expectations? It has one advantage in that it has no internal combustion engine (ICE) legacy to overcome unlike, say, Bajaj Auto, which is making a play with its electric Chetak, announced in 2020.
Naturally, Ola Electric has said its scooters will be featurerich and high-quality with a price that positions it above scooters in the market today. “The object is to make the best scooter, period,” said Varun Dubey, who runs marketing at
Ola Electric, and he means the best regardless of whether it is electric or fossil-fuel driven.
Dubey is well aware that in a price-sensitive market like India every few thousand rupees make a difference. So will Ola Electric price its products according to demand or will they follow the likes of Bajaj Auto and Ather, which sell electric scooters for ~1,40,000 and ~146,000, respectively?
“We will price our products very aggressively so that as many people as possible can afford to buy them,” Dubey emphasised.
Ola’s product launch schedule, slated this summer, remains unchanged, he said, adding that the company will also make motorcycles and cars in the future. The factory will start manufacturing the Ola Scooter as soon as its first phase of 2 million annual capacity is ready. The company claims the Ola Future Factory will be the world’s largest two-wheeler factory, when fully operational, with 10 million annual capacity next year.
Those are big numbers given that the current market for electric vehicles is small — just 155,400 units for both cars and two-wheelers — and is unlikely to accelerate appreciably over the next five years. Suraj Ghosh, principal analyst, South Asia Powertrain Forecasts, IHS Markit, said, “With the current level of visibility on the policy landscape, government support, capital allotment by carmakers, key components’ price trends and consumer perspective, our research estimates that the share of EVS could be between 2.4 to 3 per cent by 2025.” Given that industry projections for two-wheelers are pegged at 25 million units by 2025, EVS’ share would translate to 500,000 to 600,000 units.
Ola claims manufacturing capacity and projections are based on their ambitions to tap global markets as well. But there are well-entrenched players — Hero, Bajaj and Royal Enfield — so what makes this early-stage company think it can take them on? Dubey’s answer is that Ola Electric isn’t an assembly manufacturer and is building as much of the scooters itself through a vertically integrated process. The company entered the twowheeler space via the acquisition route, acquiring the Dutch company Etergo in May 2020 for an undisclosed amount. The company never started manufacturing but had designed its own scooters.
Two-wheeler expert Rishad Cooper, who has been testing and reviewing bikes and scooters for over 20 years, said electric is undoubtedly the best option for two-wheelers. “Low running costs, still to be marketed by the EV makers, are there for all to see. It’s some 30 paise per km versus ~3 rupees per km and rising for ICE two-wheelers, which is a nail in the coffin for a costsensitive market like India,” he said. “Also EVS are super-easy to use; no gears, no clutches and also no thermal management. Remember, all big bikes suffer from overheating in tropical countries.” But Ola Electric’s claim that it aims to democratise the MRP and stay profitable remains an open question. The other metrics to be worked out is the element of convenience around EVS. “An EV will take a minimum of 2530 minutes to recharge. Is that enough for people to be patient?” Ghosh asked.
Ola Electric doesn’t share specific product details but Dubey, who has been test-driving the scooter that will be soon launched, said even though he has ridden it multiple times he can’t get over how silent and how fast it is. “It feels surreal to drive but more than that one can imagine how, when it achieves scale, this will help in reducing both air and sound pollution.”
The bottom line is that current two-wheeler makers in India have the R&D muscle and capability required to produce EVS but aren’t completely committed yet because they want to milk the ICE two-wheeler engines as long as possible. Why? Cooper said one possible reason is that they are waiting for demand to acquire critical mass. If that’s true, then Ola Electric undoubtedly has the potential first-mover advantage. Its challenge, then, would be to ensure that it doesn’t squander this head-start by creating a market that enables others to overtake it.