Ola Electric’s valuation has fallen by nearly 70%
Once hailed as India’s answer to Uber and Tesla, Ola’s rapid rise captivated the startup world.
Founded in 2010, it quickly became a household name, expanding beyond ride-hailing to electric vehicles, battery cells, and even artificial intelligence.
Its ventures attracted top-tier investors like SoftBank, Tiger Global and Temasek.
In 2024, Ola Electric’s blockbuster was the biggest in India that year, raising close to £567 million.
Despite the fast rise, Ola is now experiencing a multitude of crises.
Sales have plummeted, investor confidence is shaken, and customer complaints have snowballed into official investigations.
The company’s aggressive growth now appears to be unravelling under the weight of safety concerns, operational chaos and financial pressure.
We explore the core challenges threatening Ola’s future.
Product Safety
A major factor behind Ola’s decline is growing scrutiny of its electric scooters’ safety.
The company has faced repeated incidents involving scooters catching fire or breaking down mid-ride. Customers posted videos of flaming scooters on social media, leading to widespread alarm.
Ola recalled over 1,400 scooters in 2022, saying the battery systems complied with Indian and European standards.
But the cause of the fires was never made public.
Meanwhile, riders also reported cases of the front suspension breaking mid-ride, resulting in injuries.
In early 2023, Ola described one such case as rare, claiming only a few issues among 150,000 scooters.
Ola said: “The front fork arm… was designed to handle 80% more load than what it would typically experience during daily use.”
Despite these reassurances, trust in the product has eroded.
Ola’s rivals have entered the EV market with fewer issues, gaining ground as Ola’s credibility dips.
Plummeting Sales
Ola Electric’s valuation has fallen by nearly 70% in the seven months since its IPO.
The company, once holding over half the market, saw its share drop to 19% by December 2024. It briefly recovered to 25% in January but remains far from stability.
Sales numbers are disputed.
Government data shows fewer than 10,000 scooters sold in February, but Ola claims it sold 25,000.
The company blamed delays on changes in vendor contracts. The transport ministry has since issued notices over the discrepancy.
Despite deep discounts and new models at lower prices, losses widened to £49 million in the October-December quarter, up from £32 million a year earlier.
Analysts question Ola’s target of selling 50,000 units monthly to become profitable.
Mounting Regulatory Scrutiny
Several of Ola’s showrooms are now under investigation for missing licences and registrations.
On March 21, the company confirmed probes across four Indian states.
A vendor also filed an insolvency plea, which Ola said had been settled.
Ola’s battery gigafactory, pitched as central to India’s clean energy future, has also hit roadblocks.
The project, which receives state subsidies, has missed key milestones. Due to these delays, there may be penalties.
Such developments are worrying for investors, especially those who backed the company at peak valuations during the IPO.
Ola’s benefits from public subsidies have come under greater scrutiny as performance lags.
Customer Service Failures
Ola’s decision to bypass traditional dealerships left customers with limited support.
Complaints over safety issues were often met with silence. At one point, thousands of service complaints were reportedly piling up every month.
India’s Central Consumer Protection Authority (CCPA) received 10,000 complaints within a year.
The agency sent a notice to Ola. In response, the company claimed it had a “robust mechanism to address complaints” and that most were resolved.
CEO Bhavish Aggarwal was initially dismissive of the problems online.
But after a public spat with a comedian on X, he announced plans for 4,000 stores with service facilities.
Many of these, however, were found to lack the necessary licences, triggering yet more investigations.
Culture Issues
Critics blame Ola’s turmoil on typical startup pitfalls.
Former Ola Electric executive Deepesh Rathore said:
“Software mindsets don’t work with hardware products, which need time to build.”
Aggarwal had pushed to launch Ola’s first EV scooter, modelled on Etergo’s AppScooter, without a significant redesign.
Former employees admitted that the product was rushed to market, with clearances fast-tracked to meet tight deadlines.
Ola insisted it “fully re-engineered” the scooter for Indian conditions and tested it through simulations, lab tests and field trials.
But market response and safety concerns have undermined these claims.
High-pressure targets and a top-down leadership style have taken a toll.
Since 2023, several key leaders have left, including the former Ola Cab CEO.
Exits spanned across tech, marketing, sales and compliance teams, weakening efforts to stabilise operations.
Ola’s story is no longer just one of innovation and ambition, it’s become a cautionary tale.
The company faces operational, reputational and regulatory headwinds that threaten its long-term survival.
While Aggarwal remains determined to transform Indian mobility, the road ahead demands more than bold vision and marketing dollars.
For Ola to reclaim its place at the top, it must rebuild trust in its product, its service and its leadership.
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