New Delhi: The consumer demand for electric scooters is very strong now. The demand is growing even in semi-urban and rural areas. ”When I go out into the market, talk to customers, 20% of the scooter market is already electric, and the remaining market is very strongly looking at electric, says Ola Electric CEO Bhavish Aggarwal.He is eyeing not only a chunk of India’s two-wheeler market that sold 41 lakh units in Q1 FY2024, but wants to convert all ICE two-wheelers to electric by the end of 2025.
His belief comes from the very strong consumer demand. “When I see the market, I feel that in scooters, consumers have made up their minds that they want EVs. And the reason is simple, the economics just works. It is quite stupid now to buy ICE. Indian consumers are the smartest consumers who care for savings, they care for their wallet, for the environment and the country,” he told a group of journalists at the launch of the new Ola S1 X. He also presented four new electric motorcycle concepts. However Aggarwal did not reveal any updates on the company’s volumes but appeared to be very confident about the future.
He projected his electric scooter portfolio as a great alternative for consumers and his recent endeavours with electric motorcycles as a sprint towards complete electrification of two-wheelers in the country in the near future. While owning an EV might be the only way forward in the future, India’s hit and misses with the FAME-II subsidy, its recent slashing along with questionable EV infrastructure, is every EV maker’s Achilles heel.
From January 2021 to March 2023, Ola Electric reportedly sold 3 lakh scooters thanks to its premium offering, the Ola S1 Pro. The company recently launched the Ola S1 Air. On Independence Day it launched the S1 X across its 1000 sales centres.
“We expect demand, especially with these new products, to grow further. In small towns and rural areas, we are seeing a lot of interest even for the S1 Air. With S1X now, which is even more affordable, we think the demand will go even deeper into the countryside,” he added.
Aggarwal said, “Tesla for the West, and Ola for the rest” because India’s EV paradigm will be very relevant for the rest of the world. “How many people in India will buy cars worth INR 40 lakh, INR 50 lakh, or INR 1 crore? Just a handful. India will grow its two wheeler market, and its small mid-sized car market.”
The electric two-wheeler OEMs sold 45,734 e-scooters and e-bikes in June 2023 recording a massive drop of 56.6% from May 2023, the segment’s best-ever month with sales of 105,338 units. The crash is owing to the slashing of the FAME-II subsidy from INR 15,000/kWh to INR 10,000/kWh. The cap is reduced from 15% of the EV’s ex-factory price from the 40% benefit offered earlier.
According to data available on Vahan, electric two-wheelers sales exceeded 50,000 units in July 2023, far behind the total sale of 13 lakh units (ICE + EV) for two-wheelers in June 2023 (July, 2023 numbers are awaited).
Expansion with motorcycles
Ola is planning big expansion with its motorcycle project. “We are working on mid-level and entry level motorbikes. We are in the process of ramping up our capacity. We have a strong balance sheet to fund this. We have internal accruals also from our existing products, which are profitable. And I don’t know about investors’ valuations and all. We have a certain set of investors who are very supportive of our journey,” Aggarwal said.
“We have to scale up our facilities from the present 1 million capacity as the demand is growing.. We will be scaling it up beyond that. But right now we are ready to serve about a million a year, which is about 80,000 a month and we have the capacity to serve that, ” Aggarwal said.
Despite such strong numbers, Ola Electric is not sure if the brand will be able to cross the 1 million mark this fiscal year.
“Manufacturing business is a business of scale. As you increase your top line, your bottom line actually improves very fast because you get a lot of volume. My costs are already there. We have the balance sheet to build at scale and we built at scale. And we are very confident that when we show our numbers on the top line and bottom line at the right time, you will see how well the business model has worked out. And that’s why we feel confident about introducing new products. That’s why our investors are very confident about continuing to back us in this journey. And you will be hearing more about some exciting corporate actions in due course, ” Aggarwal added.
