Government to grant Ola Electric ₹73.7 crore under the PLI-Auto incentive program for auto components manufacturing.
Ola Electric, the Bengaluru-based electric vehicle (EV) manufacturer, is currently facing financial difficulties, as it has yet to settle its dues of approximately ₹17-18 crore with Rosmerta Digital Service Pvt. Ltd. This comes after the company decided to transfer the vehicle registration process to in-house, a move aimed at saving revenue.
The vehicle registration process previously cost Ola Electric ₹1,500-₹1,800 per electric scooter registered through Rosmerta Digital Service Pvt. Ltd. However, the company has not disclosed any savings from this transfer.
In 2021, the Indian government launched the Production Linked Incentive (PLI) Scheme for the Automotive and Auto Components sector, with a budget outlay of ₹25,938 crore for five years. The main aim of the PLI-Auto Scheme is to boost domestic manufacturing in the automotive sector and promote the adoption of EVs. In 2023, Ola Electric received ₹73.77 crore in incentives under this scheme.
Despite receiving incentives and transferring the vehicle registration process in-house, Ola Electric faced financial challenges in 2024, resulting in losses of ₹564 crore. This was followed by the hiring of bouncers to safeguard its establishments across the country.
In an attempt to improve its financial situation, Ola Electric has taken steps to streamline its operations. In 2021, the company launched its debut range of electric motorcycles, the Roadster, and updated its S1 portfolio with added features.
However, Ola Electric's financial troubles have not gone unnoticed. The Central Consumer Protection Authority issued notices to Ola, challenging its claim of settling 99% of the complaints filed with the jurisdiction body.
Recently, Ola Electric made headlines for layoffs, as it announced the termination of over 1,000 employees earlier this month. The company has not yet disclosed any cost reduction measures or plans for recovery.
Despite these challenges, Ola Electric continues to compete in the EV market. In 2023, the company was the first to receive a grant under the PLI-Auto program for the production of electric two-wheelers. However, legacy manufacturers Bajaj Auto and TVS Motor Company have caught up, selling more electric two-wheelers than Ola Electric despite a smaller portfolio.
As Ola Electric works to address its financial difficulties and streamline its operations, it remains to be seen how the company will navigate the competitive EV market in the coming years.
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