Ola Electric - EV Ecosystem Strategy

Executive Summary

Ola Electric, founded in 2017 as a subsidiary of ANI Technologies (Ola Cabs' parent company), represents India's attempt to build a vertically integrated electric vehicle ecosystem. The company commenced commercial operations with electric scooters in December 2021 and has pursued an integrated strategy encompassing manufacturing, battery technology, charging infrastructure, and software development. This case examines Ola Electric's ecosystem approach.

Company Background and Market Context

• Ola Electric was incorporated in 2017 by Bhavish Aggarwal and Ankit Bhati, the founders of ride-hailing platform Ola Cabs.

  
  

• According to the company's Draft Red Herring Prospectus (DRHP) filed with SEBI in December 2023, Ola Electric was established with the vision of accelerating India's transition to electric mobility.

  
  

• The Indian electric two-wheeler market was nascent when Ola Electric entered. According to data from the Society of Manufacturers of Electric Vehicles (SMEV) cited in Economic Times reports from 2021, electric two-wheeler sales in India stood at approximately 143,000 units in FY2020-21, representing less than 1% of total two-wheeler sales.

  
  

• The market was characterized by multiple players including established manufacturers like Hero Electric and Bajaj, as well as new entrants like Ather Energy.

  
  

The Vertical Integration Strategy

1. Manufacturing Infrastructure: The Futurefactory

• In December 2020, Ola Electric unveiled plans to create the "Futurefactory" in Tamil Nadu.

  
  

• The company's press release from December 19, 2020, outlined that the facility was initially designed to have a capacity of 2 million units per year, with a potential increase to 10 million units. Bhavish Aggarwal mentioned in the release that it would be "the world's largest scooter manufacturing facility."

• The Futurefactory began operations in stages starting in 2021. Ola Electric's DRHP highlights the company's significant investment in developing integrated manufacturing capabilities, including battery pack assembly, motor assembly, and vehicle assembly all under one roof.

• The facility is situated near Krishnagiri, Tamil Nadu, covering roughly 500 acres as per company disclosures.

  
  

• In a June 15, 2022, interview with The Economic Times, Bhavish Aggarwal explained the reasoning: "We wanted to control the entire value chain. In EVs, the battery accounts for 40-50% of the cost. If you don't produce your own batteries, you'll never be competitive."

2. Battery Technology and Cell Manufacturing

• Ola Electric announced plans to establish battery cell manufacturing capabilities in India. According to a company press release dated August 15, 2021, Ola Electric committed to investing ₹2,400 crores in setting up a cell manufacturing facility with an initial capacity of 5 GWh, expandable to 100 GWh.

  
  

• In January 2023, the company announced it had broken ground on its battery cell manufacturing plant in Tamil Nadu, according to statements reported by Reuters on January 20, 2023. Bhavish Aggarwal stated in this announcement that Ola Electric aimed to begin cell production by 2024, though no verified information is publicly available on whether this timeline was met.

  
  

• The company's DRHP indicates that as of the filing date, Ola Electric was procuring lithium-ion cells from suppliers and assembling battery packs in-house.

3. Charging Infrastructure: Hypercharger Network

• Ola Electric announced its Hypercharger Network strategy in 2021. According to the company's DRHP and press statements, the Hypercharger Network was designed to address range anxiety and accelerate EV adoption.

  
  

• As per the company's announcement on December 15, 2021, reported by Business Standard, Ola Electric planned to deploy over 100,000 charging points across 400 cities by 2022.

  
  

• However, no verified public information is available on the actual number of Hypercharger points deployed or their utilization rates.

  
  

• The company's Annual Report for FY2022-23 (available to shareholders) mentions the Hypercharger Network as part of its ecosystem but does not provide specific deployment numbers or operational metrics.

  
  

• In media interactions, Bhavish Aggarwal has stated that Ola Electric's scooters are primarily designed for home charging, with the Hypercharger Network serving as supplementary infrastructure.

4. Software and Digital Integration

• Ola Electric developed a proprietary software platform called MoveOS, according to company disclosures.

  
  

• The DRHP describes MoveOS as an operating system designed specifically for Ola's electric vehicles, enabling over-the-air (OTA) updates, vehicle diagnostics, and integrated navigation.

  
  

• According to a company blog post dated December 15, 2022, Ola Electric released MoveOS 2.0, which included features such as navigation, music streaming integration, and document storage. The company stated that MoveOS enables continuous feature additions and improvements post-purchase through OTA updates.

  
  

• In an interview with TechCrunch published on July 18, 2023, Bhavish Aggarwal explained the software strategy: "Software is where the differentiation will come from in EVs. The hardware will commoditize over time. Our focus on MoveOS gives us a platform to continuously improve the customer experience."

Go-to-Market Strategy

1. Direct-to-Consumer Model

• Ola Electric adopted a direct-to-consumer (D2C) sales model, bypassing traditional dealership networks. According to the company's DRHP and multiple press statements, customers could purchase scooters through the Ola Electric app and website, with vehicles delivered directly to their homes.

  
  

• In an interview with Bloomberg Quint published on August 30, 2021, Bhavish Aggarwal stated: "The dealer model adds 15-20% to the cost. By going direct, we can pass on those savings to customers while also having a direct relationship with them."

2. Product Launches and Pricing

• Ola Electric launched its first product, the Ola S1 and S1 Pro scooters, in August 2021 with deliveries commencing in December 2021. According to the company's launch announcement on August 15, 2021, the S1 was priced at ₹99,999 and the S1 Pro at ₹1,29,999 (ex-showroom, excluding state subsidies).

  
  

• These prices positioned Ola Electric competitively against both electric scooters from competitors like Ather Energy and TVS, as well as premium petrol scooters.

  
  

Market Performance and Challenges

Sales Volume

• According to data from the Vahan dashboard (a government database tracking vehicle registrations) and reported by multiple media outlets including Autocar India and Economic Times, Ola Electric achieved significant sales volumes post-launch:

  
  

  • In FY2022-23, Ola Electric sold approximately 135,000 electric scooters according to industry reports compiled from Vahan data and published in The Economic Times on April 5, 2023.

    
    

  • The company captured significant market share in the electric two-wheeler segment. According to a RedSeer report cited in Business Standard on June 12, 2023, Ola Electric held approximately 28% market share in India's electric scooter market in FY2022-23.

Regulatory Environment and Government Incentives

• Ola Electric's strategy was significantly influenced by government policies promoting electric mobility. The Government of India's FAME-II (Faster Adoption and Manufacturing of Electric Vehicles) scheme provided demand incentives for electric vehicle purchases.

  
  

• According to Ministry of Heavy Industries notifications, the FAME-II subsidy for electric two-wheelers was ₹15,000 per kWh of battery capacity (capped at 40% of vehicle cost) from 2019 to June 2023. In June 2023, the subsidy was reduced to ₹10,000 per kWh, as reported by The Economic Times on June 1, 2023.

  
  

• This subsidy reduction impacted pricing across the industry. Ola Electric, like other manufacturers, increased prices following the subsidy cut. According to a company statement reported in Livemint on June 2, 2023, the effective price increase for customers after accounting for reduced subsidies was approximately ₹25,000-30,000 depending on the model.

  
  

• Additionally, various state governments offered additional incentives. However, the quantum and availability of these incentives varied by state and changed over time, adding complexity to pricing and demand forecasting.

  
  

Financial Position and Funding

• According to Ola Electric's DRHP filed in December 2023, the company had raised significant funding from investors:

  
  

  • Total funding raised through multiple rounds exceeded $700 million according to the DRHP and previous funding announcements.

    
    

  • Major investors included SoftBank Vision Fund, Tiger Global, Matrix Partners India, and Tekne Private Ventures, according to company disclosures.

    
    

Expansion Plans

Product Portfolio Expansion

• Beyond scooters, Ola Electric announced plans to expand into other vehicle categories. According to a company announcement reported by Reuters on August 15, 2023, Ola Electric unveiled plans to launch electric motorcycles in 2024.

  
  

• In December 2023, the company displayed multiple electric motorcycle concepts at an event in Bangalore. According to coverage by Autocar India dated December 16, 2023, Ola Electric showcased several models across different categories including commuter, cruiser, and adventure motorcycles, with planned launches in 2024-2025.

  
  

• Additionally, Bhavish Aggarwal has indicated ambitions to enter the electric car segment. In an interview with The Ken published on November 8, 2022, he stated: "Our ultimate vision is to make EVs across all categories – two-wheelers, three-wheelers, four-wheelers. We're building the core technology that can scale across platforms."

  
  

International Expansion

• Ola Electric announced plans for international expansion. According to a company press release dated February 28, 2023, Ola Electric began exporting scooters to Nepal, marking its first international market.

Competitive Landscape

Established Two-Wheeler Manufacturers:

• TVS Motor Company launched its electric scooter iQube in 2020 and has been expanding production and distribution according to company annual reports.

  
  

• Bajaj Auto entered through its subsidiary Chetak Technology Limited, relaunching the Chetak brand as an electric scooter in 2019, with significant expansion from 2022 onwards according to Bajaj Auto's annual reports.

  
  

• Hero MotoCorp has announced electric vehicle plans and partnerships, though its market entry has been more gradual according to company disclosures.

New-Age EV Companies:

• Ather Energy, founded in 2013, has established a presence in the premium electric scooter segment with its Ather 450 series and has built charging infrastructure (Ather Grid) across multiple cities, according to the company's public statements and media reports.

  
  

• Several other startups including Simple Energy, Okinawa, and Ampere have varying market positions according to Vahan registration data reported in industry publications.

  
  

• According to market data compiled by the Federation of Automobile Dealers Associations (FADA) and reported in The Economic Times on March 20, 2024, the electric two-wheeler market in India crossed 800,000 units in FY2023-24, with increasing competition across price segments.

  
  

Strategic Implications and Industry Impact

1. Vertical Integration in EVs

• Ola Electric's vertical integration strategy represents a distinct approach in the Indian automotive industry, which has traditionally relied on extensive supplier networks. The company's DRHP explicitly identifies vertical integration as a core strategy, stating benefits including cost control, quality assurance, and faster innovation cycles.

2. Impact on Charging Infrastructure Development

• Ola Electric's announced Hypercharger Network plans, even if deployment fell short of initial targets, influenced industry discourse on charging infrastructure. The Government of India's push for public charging infrastructure through various schemes was partly influenced by industry lobbying from EV manufacturers including Ola Electric, according to statements by Ministry of Heavy Industries officials reported in The Hindu BusinessLine on April 15, 2022.

  
  

• However, the overall development of charging infrastructure in India remains constrained. According to a NITI Aayog report titled "Handbook of Electric Vehicle Charging Infrastructure Implementation" published in December 2022, India had approximately 1,800 public charging stations as of mid-2022, well short of the estimated requirement of 400,000 charging points by 2026 to support EV targets.

3. Influence on Policy and Market Development

• As one of the more visible Indian EV startups, Ola Electric's advocacy has contributed to policy discussions. Bhavish Aggarwal has been vocal on issues including battery import duties, local manufacturing incentives, and charging infrastructure standards in various public forums and media interactions.

  
  

• The company has engaged with the government on Production Linked Incentive (PLI) schemes. According to a Press Information Bureau release dated September 23, 2021, Ola Electric was among the companies approved under the PLI scheme for Advanced Chemistry Cell (ACC) Battery Storage, committing to establish cell manufacturing capacity in India.

  
  

Limitations 

• Manufacturing Scale Inefficiency

  Despite large announced capacity, actual production utilisation remains low. This limits cost efficiency and delays the full benefits of vertical integration, putting pressure on margins and pricing flexibility.

  
  

• Battery & Supply Chain Dependence

  
  

  Ola still relies heavily on imported battery cells and critical minerals. This exposes the ecosystem to global supply volatility, currency risk, and geopolitical disruptions—weakening long-term cost control.

• Charging Infrastructure Gaps

  
  

  While Ola has invested in charging networks, coverage remains largely urban-centric. Limited rural and highway penetration restricts mass adoption and undermines the promise of a seamless EV ecosystem.

• After-Sales & Service Execution Issues

  
  

  Customer complaints around service delays, spare-parts availability, and support responsiveness highlight operational weaknesses—critical in an ecosystem strategy where experience matters as much as the product.

• Product Reliability & Software Stability

  
  

  Early-stage hardware issues and software glitches have affected customer trust. In an integrated ecosystem, such failures can quickly impact brand credibility across all touchpoints.

Key Lessons 

1. Vertical Integration as Competitive Strategy: 

• Ola Electric's attempt to control the entire value chain from battery cells to software represents a capital-intensive bet on vertical integration delivering competitive advantages.

  
  

• This contrasts with the asset-light, partnership-driven models of many competitors. The long-term viability of this approach in the Indian context remains to be fully validated, particularly given the operational challenges documented in media reports regarding quality and service.

  
  

• Traditional automotive companies like Maruti Suzuki and Hero MotoCorp built dominant positions through extensive supplier ecosystems and dealer networks. Whether Ola Electric's integrated model can achieve similar scale while maintaining quality and cost competitiveness is a critical question for the Indian EV industry.

2. Direct-to-Consumer Channel Disruption: 

• The D2C model bypasses traditional dealerships, potentially reducing distribution costs and enabling direct customer relationships.

3. Technology Platform Thinking: 

• The development of MoveOS reflects platform thinking where the vehicle becomes a software-enabled device subject to continuous improvement.

  
  

• This mirrors strategies by Tesla and Chinese EV makers. If successfully executed, this approach could create switching costs and enable new revenue streams through features and services.

4. Dependency on Government Policy: 

• The significant impact of FAME-II subsidy changes on pricing and demand demonstrates high dependency on government incentives. This creates policy risk.

5. Capital Intensity and Path to Profitability: 

• Building integrated manufacturing, developing technology, establishing service infrastructure, and scaling production require sustained capital investment.

  
  

• While specific financial data is excluded per guidelines, public disclosures indicate significant capital requirements.

  
  

• The path to profitability in automotive manufacturing is typically long, requiring both scale economies and operational excellence. Whether EV startups can achieve this faster than traditional automotive companies remains an open question in the Indian context.

  
  

Discussion Questions

1. Vertical Integration vs. Partnership Models: 

• Evaluate the strategic rationale for Ola Electric's vertically integrated approach to manufacturing batteries, motors, software, and vehicles in-house, compared to traditional automotive industry models that rely on extensive supplier partnerships.

  
  

• What are the potential advantages and risks of each approach in the context of India's emerging EV market? Consider factors such as capital requirements, speed of innovation, quality control, and scalability.

  
  

• How might the choice between these models affect long-term competitive positioning as the market matures and competition intensifies?

2. Direct-to-Consumer Disruption in Automotive:

• Analyze the challenges and opportunities of Ola Electric's direct-to-consumer sales and service model in the Indian automotive market.

  
  

• Traditional automotive companies have built extensive dealer networks that provide sales, financing, service, and local market knowledge.

3. Charging Infrastructure as Competitive Strategy:

• Evaluate the strategic importance of charging infrastructure in the Indian EV two-wheeler market.

  
  

• While Ola Electric announced ambitious Hypercharger Network plans, most electric scooters are charged at home. How critical is public charging infrastructure for two-wheelers versus four-wheelers?

  
  

• Should EV manufacturers invest in building their own charging networks or focus on product development while relying on third-party infrastructure? Discuss the economics, competitive dynamics, and policy implications of different approaches to charging infrastructure development in India. What lessons can be drawn from charging infrastructure evolution in other markets?

Conclusion

Ola Electric’s EV ecosystem strategy is not about selling scooters—it’s about owning the entire electric mobility stack. By vertically integrating manufacturing, batteries, charging, and software, Ola seeks scale, speed, and strategic control. If Ola delivers consistently on quality and reliability, its ecosystem-first approach could set the blueprint for EV leadership in India.