Ola Electric Expands into Battery Storage but Faces Tough Road Ahead

Ola Electric Mobility Ltd., once a favourite of investors, is finding it difficult to pick up steam as its market share declines and share price falls. The SoftBank-backed electric scooter manufacturer is currently having trouble attracting investors for its most recent fundraising attempts after seeing its IPO oversubscribed more than four times last year. Ola faces a variety of difficulties.

The company lowered its full-year sales projections to over 40% below earlier guidance after reporting a 43% decline in revenue and a 47% decline in sales in its most recent quarterly results. From a world-leading 30% last year, its market share in the e-scooter industry dropped precipitously to 11.5% in October. Kotak Securities analysts cautioned that the company is displaying "visible strain" and that if core volume difficulties are not resolved, the dangers would increase.

Bhavish Aggarwal Betting High on New Venture

In an attempt to revitalise the company, Chairman Bhavish Aggarwal is placing his money on a new business venture into home battery storage. Launched last month, the Ola Shakti line offers backup power systems for households and small enterprises that range in price from Rs 1.2 lakh to INR 1.25 lakh.

The segment, which is based on Ola's in-house 4680 Bharat battery cells, is expected to make INR 1 billion in the March quarter and strives to reach INR 10 billion by the end of the next fiscal year, which would represent about one-third of the planned revenue. Experts warn that the house battery business is fiercely competitive and requires a significant amount of capital. Most Indian houses rely on affordable lead-acid backup systems, and Ola will require a strong sales network, technical education for consumers, and strategic alliances to grab market share. Analysts pointed out that a strategy that is solely centred on retail would encounter major challenges.

Ola Navigating Through Troubled Waters

Ola remains under regulatory investigation, facing allegations of cross-border technology theft and intense competition from established companies such as Bajaj Auto, TVS Motor, and Hero MotoCorp, and emerging rival Ather Energy. Although there were modest stock increases for the company in August and September, they have largely been erased.

With ambitions to launch motorbikes and address operational issues, Aggarwal has highlighted cost-effectiveness, margin improvement, and product expansion as crucial initiatives. According to analysts, the company's recovery will rely on both its entry into battery storage and a robust core car sector. Investors are keeping a close eye on Ola Electric's recovery narrative to determine if the firm can be stabilised in the face of intense competition and financial strains through the home battery storage pivot.