Ola Electric Down 40% From Its Highs: Is It Time To Buy?

Stocks In News | Ola Electric Mobility, a leader in the electric scooter industry, is currently grappling with a significant setback as its stock price has plummeted over 40% from its recent high of Rs 157.40.

This downturn largely stems from a show cause notice issued by the Central Consumer Protection Authority (CCPA), accusing Ola Electric of misleading advertising and unfair trade practices.

In fact, over the past year, the CCPA logged over 9,000 complaints against the company. The regulatory filing from October 7 demands Ola's response within 15 days. 

Twitter Feud Adds Fuel to Ola's Falling Reputation

Furthermore, a public dispute unfolded on social media between Ola's CEO, Bhavish Agarwal, and comedian Kunal Kamra, further affecting investor sentiment.

The conflict began over a post by Agarwal showcasing Ola's gigafactory, which Kamra countered with an image of unserviced Ola scooters. Agarwal retorted by dismissing Kamra's comments as those of a "failed stand-up comic" and reassured stakeholders of rapid expansions in Ola’s service network.

Customer Service Woes

A significant factor in Ola’s market challenges includes the performance of their service centres. Reports of long queues and customer dissatisfaction have marred the brand's reputation. In a striking incident last month, an irate customer set fire to an Ola showroom in Karnataka due to service issues.

The volume of complaints Ola Electric handles is overwhelming, with as many as 80,000 complaints registered monthly, and peak days seeing up to 7,000 grievances. These issues range from battery failures and software malfunctions to handlebars locking up and severe repair delays—problems leaving scooters inoperative for extended periods. 

Drop in Market Share

Ola Electric's market share has seen a notable decline, falling to 27.4% by the end of September 2024 from a high of nearly 50% in April. In contrast, competitors like Ather, Bajaj, and TVS have seen an increase in their market shares.

Bajaj, in particular, has nearly doubled its market share, now exceeding 20%. Combined, Bajaj and TVS hold 38% of the e-two-wheeler market. Their competitively priced models, such as Bajaj Chetak and TVS iQube, which start at around Rs 95,000, are significantly undercutting Ola's S1 Pro priced at Rs 1,30,000. 

Alarming Attrition at Ola Electric

Employee turnover at Ola Electric is notably high, with an attrition rate of 47.48%, indicating that nearly half of its workforce leaves each year. This rate significantly exceeds those of its competitors, with Ather experiencing 18-20% attrition and TVS at just 10%.

Can Ola Electric Bounce Back?

With electric scooters making up only 15% of the market and overall EV penetration at just 5.4%, there’s a significant opportunity for growth. Yet, there are challenges ahead. Ola Electric is facing stiff competition from seasoned players like Bajaj Auto and TVS Motor, who are introducing more affordable models, challenging Ola Electric to maintain its position in the market. 

Moreover, the firm’s financial losses have deepened, more than doubling from Rs 784 crore in FY22 to Rs 1,584 crore in FY24. The management acknowledges that these losses may continue in the near term due to investments in expanding the business.

Ola Electric has considerable challenges to overcome to regain the confidence of Indian EV consumers. The journey ahead may be bumpy, but the potential for recovery and growth remains if the company manages to overcome these roadblocks successfully.

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