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Informist, Monday, Jul 29, 2024

 

--Ola Electric CEO: To launch e-motorbikes early next year 

--Ola Electric CEO: More on e-motorbike on Aug 15 

--Ola Electric: Production at 1.4 GW cell mfg unit to start next yr 

--Ola Electric CEO: Positive about India's future in new energy space 

--Ola Electric CEO: India EV growth story in nascent stage 

--Ola Electric CEO: See cyclical ups, downs based on subsidy changes 

--Ola Electric CEO: Don't expect any slowdown in e-vehicle space 

--Ola Electric CEO: To focus on domestic sales initially 

--Ola Electric CEO: Exports are part of long-term roadmap 

--Ola Electric CEO: See margin improving as we scale up 

--Ola Electric CEO: Focus remains on localisation of parts 

--Ola Electric CFO: To use 8 bln rupees from IPO to retire debt 
--Ola Electric CEO:To use IPO funds to retire part of debt, for capex 

 

By Darshan Nakhwa 

 

MUMBAI – India's electric vehicle story is at the nascent stage and there's a lot of potential to grow with the introduction of new products, Ola Electric Mobility Ltd's Chief Executive Officer Bhavish Aggarwal said. However, sales in this segment may witness ups and downs due to changes in government subsidies and other seasonal factors, he added.

India's electric vehicle story began three years ago when Ola launched its first product, Aggarwal said. Before that, there were hardly any such vehicles, he added. From three years ago to now, the penetration rate of electric scooters has gone up to almost 15%.

 

"The growth story is consistent and secular. The potential is very large because, in the automotive (sector) globally, the debate is clear that it will become electric over time, and category by category might follow a different strategy. So I don't see any slowing down of the story. In fact, with more and more product launches, you will actually see electric vehicle expansion," Aggarwal said during a press conference. 

 

In 2022-23 (Apr-Mar), Ola had reported a manifold on-year increase in electric scooter sales to 156,251 units, and it ended the year with a market share of 21%. The company's revenue from operations for the period was 26.31 bln rupees, compared to 3.73 bln rupees in 2021-22. However, with expansion in sales, the company's loss also widened to 14.72 bln rupees in 2022-23 from 7.84 bln rupees in the year-ago period. 

 

In 2023-24, the company's electric scooter sales increased 90% on year, and EBITDA (earnings before interest, tax, depreciation and amortisation) margin is now (-)19% compared to (-)43% a year ago, Aggarwal said. "If you look at manufacturing industries in general, as you grow revenue, you get a lot of operating leverage because your fixed costs don't scale in line with revenue growth."

 

"That's been our story in the last couple of financial years. We've invested for higher volume, and as we're growing into that capacity, our margins are improving. Now I can't tell you when the intersection will happen, but you can extrapolate and make your own guess," Aggarwal said.

 

Ola Electric Mobility currently sells S1 Pro, S1, S1 Air and S1 X+ branded scooters in India. It also manufacturers certain electric vehicle components like battery packs, motors and vehicle frames. In August 2023, the company announced new scooter models S1 X with a 2 kWh battery pack and a 3 kWh battery pack. Further, it had unveiled a line-up of motorcycles called Diamondhead, Adventure, Roadster and Cruiser.

 

According to Aggarwal, Ola will commence delivery of the S1 X by the first half of 2024-25, and will launch electric motorcycles early next year. The company will make more announcements about electric motorcycles during its annual event on Aug 15. Meanwhile, Ola also plans to bring a mass segment electric motorcycle.

 

Responding to a question on the company's sales plan, Aggarwal said, "Our focus is to get the Indian market to scale. We have the capacity and product portfolio already. Again, with bikes, the focus will be first India and then sell internationally. I can't comment on the exact timeline (for exports)." 

 

On a question related to cell manufacturing in India, Aggarwal said the government has built an encouraging ecosystem for electric vehicle and core component manufacturers with the production-linked incentive scheme, Faster Adoption and Manufacturing of Electric Vehicles scheme and an allocation for critical minerals in the recently-announced Union Budget. Ola's very optimistic about India's future in new energy, and it wants to contribute to it, and wants to be one of the leaders in it, he added.

 

Ola has been approved for India's production-linked incentive schemes – one relating to the manufacturing of advanced automotive technology products, and another relating to advanced cell chemistry batteries. Under the Automobile PLI scheme, the incentive amount ranges 13-18% of the determined sales value. Under the Cell PLI scheme, the company has been awarded 20 GWh capacity. The Cell PLI scheme provides for a cash incentive to be distributed to the company on a quarterly basis which is dependent on the percentage of value addition during the relevant period and actual sale of the advanced chemistry cells.

 

The company has invested around 5 bln rupees in the lithium cell manufacturing project and has taken a 19-bln-rupee loan for the same. So far, 1.4 GWh phase of the unit is completed, and commercial production is expected to begin early next year, the company's management said today.

 

Under the Cell PLI scheme, Ola is required to manufacture cells as per the committed capacity specified in its bid. Accordingly, the company is required to achieve 1 GWh capacity in the first year in 2023-24, 5 GWh in the second year, 10 GWh in the third year and 20 GWh by the fourth year.

 

On a question about localisation of parts, Aggarwal said the company is focussed on localising more components. In the last three financial years, the company's imported supplies comprised 37.03% of the cost of materials consumed in 2023-24, 31.11% in 2022-23 and 29.76% in 2021-22, according to the red-herring prospectus.

 

The Bengaluru-based electric two-wheeler manufacturer's initial public offering will open for subscription on Friday and close on Aug 6. The offer includes a fresh issue of shares worth up to 55 bln rupees and an offer for sale of up to 84.94 mln shares by the promoters and investor selling shareholders. The company plans to utilise proceeds from the offer for capital expenditure, and investment in research and development. It also plans to utilise 8 bln rupees for repayment of debt.  End

 

Edited by Tanima Banerjee

 

 

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