From Star to Struggle: The Rise and Wobble of Ola Electric

Once the poster child of India’s startup revolution, Ola Electric is now grappling with a crisis of confidence. What began as an audacious ride-hailing venture has spiraled into a cautionary tale of rapid expansion, product flaws, and wavering trust.

A Decade of Bold Moves

Founded in 2010 by Bhavish Aggarwal, Ola carved out a niche in India’s competitive mobility space. It didn’t just challenge Uber – it beat it to market dominance in India. From there, Ola evolved. The company pivoted into electric vehicles and battery manufacturing, while making bold AI plays with Krutrim, India’s first AI startup to reach a $1 billion valuation.

With marquee backers like Japan’s SoftBank, Singapore’s Temasek, and Tiger Global, Ola seemed unstoppable. Its electric arm made headlines in 2023 by raising $734 million in India’s biggest IPO of 2024.

The Electric Dream Hits a Wall

But Ola’s ambitious rise has been met with a string of controversies – especially in its EV business. Since the IPO, Ola Electric’s valuation has dropped nearly 70%. Sales of its scooters have halved since April 2023, and regulatory heat is intensifying.

Several customer-reported incidents of scooters catching fire or breaking down mid-ride have raised alarm bells. One key supplier even filed an insolvency claim, which Ola later said had been resolved. Meanwhile, hundreds of newly-opened Ola showrooms are under investigation for license and registration issues.

Former employees and industry sources claim delayed payments led major logistics partners and suppliers to sever ties. The company has responded by slashing costs, laying off over 1,000 employees in two waves of restructuring, and doubling down on automation.

A Scooter Rushed to Market?

Ola Electric’s flagship scooter was born from its acquisition of Dutch startup Etergo in 2020. However, insiders say the launch was hurried, with few modifications made to the original design.

A former compliance team member told the BBC that crucial clearances were expedited to meet ambitious launch deadlines. Ola, in an October 2023 blog post, disputed this, claiming the scooter was fully re-engineered for Indian conditions and underwent comprehensive testing.

Still, the pattern of safety incidents – including scooters catching fire due to suspected battery issues and front suspension failures – suggests otherwise. Though Ola recalled over 1,400 scooters in 2022, the findings from that investigation were never made public.

Service Shortfalls and Customer Outrage

As complaints surged online, Ola’s customer service came under intense fire. Reports emerged of service requests going unanswered for days, and the Central Consumer Protection Authority received over 10,000 complaints in a single year.

Ola’s direct-to-customer model, which eliminated traditional dealerships, left buyers with few options for after-sales support. In response, the company announced plans to open nearly 4,000 service centres. But many of those outlets are now under investigation for operating without proper licences.

Bhavish Aggarwal, initially dismissive of the criticism, eventually pledged change – following a viral social media exchange with a comedian who publicly called out the brand on behalf of frustrated customers.

Cracks in the Foundation

Ola’s problems aren’t limited to customer complaints. Internally, the company has witnessed a string of high-profile exits, including its former cab CEO and leaders across tech, sales, and marketing.

Analysts point to a deeper issue – an over-reliance on a software startup mindset in a hardware-dominated industry. “Software mindsets don’t work with hardware products, which need time to build,” said Deepesh Rathore, a former product strategist at Ola Electric.

Meanwhile, rivals – legacy automakers with vast experience and infrastructure – have entered the EV market with smooth rollouts, eroding Ola’s market share. From a peak of 52%, Ola’s market share fell to 19% in December before rebounding slightly to 25% in January.

An Uncertain Road Ahead

Ola has targeted sales of 50,000 scooters a month to turn profitable, but that goal remains elusive. In February, official data showed fewer than 10,000 scooters were registered – though Ola claimed 25,000 sales, blaming delays from vendor transitions. The federal transport ministry has since raised concerns over the discrepancy.

To stay competitive, Ola has slashed prices and launched cheaper models. Still, losses grew from $43.6 million to $65 million year-over-year in the last quarter of 2023. Analysts warn that lower-cost offerings from trusted legacy brands are now outselling Ola’s feature-rich scooters simply because of better reliability and service support.

Hopes Tied to a Gigafactory

Despite the setbacks, Ola remains central to India’s green energy ambitions. The company benefits from two state-backed subsidy programs – one for EV production, the other for building a 20GW battery manufacturing facility.

However, Reuters recently reported delays and missed milestones at the gigafactory project, which could lead to penalties. It’s another blow to investor confidence – especially those who bought in at IPO highs.

What Went Wrong?

Experts say Ola’s troubles mirror those of many hyper-growth startups: a top-down leadership style, aggressive timelines, constant pivots, and insufficient attention to product maturity and market readiness.

Once lauded as the vanguard of India’s clean mobility movement, Ola now finds itself at a crossroads – struggling to retain customers, repair its brand image, and convince stakeholders that its grand vision still has legs.

Whether Ola Electric can bounce back will depend on how quickly – and sincerely – it can shift from ambition to accountability.