Bhavish Aggarwal, Chairman & MD, Ola, says India needs to build its own EV paradigm, its products, and its core technology in the EV stack to become a large part of the global EV revolution. Aggarwal says that is his mission and therein lies the opportunity for the whole industry in India to contribute to this EV future.
On EV trajectory in India, reducing subsidy
Bhavish Aggarwal: There are a lot of moving parts, but with the FAME subsidy, the government has indicated a certain trajectory and we support that. About a year-and-a-half ago, the subsidy was INR 60,000 per vehicle and now it is about INR 10,000 a vehicle but the industry has grown in that period. And I believe the industry has grown because the consumer is clear that EV is the future. Consumers are increasingly preferring EVs over ICE globally. If you look at the data, even globally with a little bit of ups and downs cyclical movement, structurally the industry is still growing very fast because the EV proposition to the consumer is great.
We have a vehicle that does not vibrate. It does not tire you. It has better acceleration, torque, and better cost of ownership because the usage cost of EV over petroleum or ICE vehicles is so much better. India began its EV journey only a few years back and when we founded Ola Electric four years ago, we founded with the mission that we want to make, do our bit to make India a global EV hub because India is a country of consequence. India is 20% of the world’s population.
So, India needs to build its own EV paradigm, its products, and its core technology in the EV stack to become a large part of the global EV revolution and that is what our mission is and that is what I believe the opportunity is for the whole industry in India to contribute to this EV future. We started selling products only two-and-a-half years back and in two-and-a-half years you have seen how the industry has grown, how our volumes have grown, and how, as you said, our market share has grown. We have also built a strategy of really doing deep technology in-house and deep vertical integration of manufacturing which helps us bring better products, lower costs, and higher scale.
With this 50% market share, with the competition coming in, we are seeing that the companies are trying to give more benefits to the customers, they are decreasing the prices of the EVs and, of course, there are some of the incentives that you are enjoying right now. How do you see the market leadership for Ola Electric in the times ahead? This 50% is defendable or a little doubt there with the competition, of course?
Bhavish Aggarwal: See, if you look at Public Vahan Data, you will see how the market share has grown. Over the last 24 odd months our market share has gone as you said in one direction only. I do not want to comment beyond that. Now, people have entered the market. This is the start of the EV penetration. India is the world’s largest two-wheeler market. 20 million two-wheelers are sold a year. Over time,EV penetration will grow to a much larger percentage in the overall industry and there is no one single company that can achieve that full transition. The whole industry has to come together to build a future of clean energy, better solutions for the consumer and global leadership for India. We are investing in this. I expect the incumbents to invest behind this and if they do not invest, they will be left behind.
Many years back, you started from a cab ride company. You got into electrical two-wheelers and then planned a Gigafactory. You are indeed a visionary and you have been building for so many more years. How do you see Ola six-seven years down the line? Will that be a majorly two-wheeler company?
Bhavish Aggarwal: In the ICE or the internal combustion engine era, which defined the automotive industry for the last 100 years, the core technology was the engine, the internal combustion engine and those companies that had the engine technology were able to build very large automotive product portfolios, ecosystem, scale, market cap, whatever. Now in the EV era while you have to build the product also, the core technology, similar thing to the engine in EV is the cell. So, when we set out on this journey on Ola Electric to build this EV transition for India, we decided that not just want to build the products, but we also wanted to build the core technology, which is this lithium cell.
A lot of the product features and product performance depend on the cell. For example, how fast can you charge, how much energy and range does it have, what is the life of the battery pack and the cell and the vehicle, all of this depends on the cell. So, we decided four years ago to start investing in the cell technology and today we are actually at a very much more advanced stage. In our battery lab, which you visited today, you saw us developing the core technology. It is all indigenously developed.
We have built a cutting-edge 4680 cell technology here in India, one of the few companies in the world that has successfully developed it. Then, in addition to the lab, we have now set up the Gigafactory, which you saw again. You saw that we are at the trial production now. The trial production completed through the next six to nine months and early next year we will commence commercial production and put our cell into our vehicles. In addition to this, we have also recently crossed a very major milestone in our Gigafactory journey, which is the BIS certification of our 4680 cells, which again demonstrates that we meet all the specs, safety, standards, etc, performance, quality, again a major milestone in this journey.
With this PLI scheme, you are aiming for 20 gigawatt-hour capacity in a few phases. How much of this could be used for the captive and how much you are looking to cater to the needs of the other companies and in the passenger vehicle segment? Why do you feel that the companies will come to you to give you orders?
Bhavish Aggarwal: So, I will start with the PLI. So, we have been given the largest allocation of the PLI by the government, 20 gigawatt hour and we have moved along as speedily as we could have to develop to deploy the factory. Our phase one out of the 20 is 5 gigawatt hours and within 5 1A is 1.5, and 1B is the remaining 3.5 so a total of five. Now, by this time next year, we will deploy 5 gigawatt hours, that would be enough to serve our requirements of more than a million two-wheelers because each vehicle has roughly 3 kilowatt hours, so 3 into a million is 3 gigawatt hours. So, we will have surplus capacity, which we can provide to other automotive companies or even to other industries like energy storage, etc.
Now, because we have frontier technology with the 4680 cells, we believe our proposition there to other potential customers will be relevant, but that is a bridge we will cross when we get to that capacity.
Ola has been an exciting company. We all know that much excitement was related to the passenger vehicle and the EV cars that that a couple of years back you did showcase and the plans were discussed. But no mention in the DHRP. Why so? Is that plan shelved? Will that not be a part of Ola Electric or is this something that you are keeping for the future?
Bhavish Aggarwal: We have never publicly spoken about anything regarding a four-wheelers. We have been very focused on two-wheelers. We keep exploring concepts and all and maybe at some event, we have shown a video concept or something. But our very strong focus is to build the two-wheeler ecosystem and that is where we started with the scooter. And now, after achieving a certain market share and penetration, we have focused on the motorcycle. Our focus as a business is to step by step build different automotive verticals, where we can significantly contribute to increasing electric penetration and having a good market share.
Is that something that you are keeping for the future?
Bhavish Aggarwal: We will see in the future.
All right, we will wait for that. But coming to the motorcycle segment was very interesting and we did see some of the prototypes there. The market is very niche, just a couple of players out there. For the rural market, how do you feel that the market will develop for these particular products or it is the urban market that you want to start with?
Bhavish Aggarwal: A lot of our scooters also are being sold in rural India because we have close to 1,000 stores pan-India. Many of them are in the hinterland or smaller towns, etc, or even in the rural markets. So, a lot of people in rural markets actually like the fact that it is because again, the cost proposition is very relevant. Bikes, also, by design bikes are more rugged because they have bigger wheels, etc. EV may be the same benefit is there. And the bike in the rural market again provides the same benefit of lower cost of operations. So, I do expect rural customers to significantly like the bikes as and when they come and we will see how the market grows.
Ola is one such company that with such a large workforce you are still managing to grow at a phenomenal rate. But apart from that, one of the concerns that investors have is the high attrition rate. It is almost 50%e. Why so?
Bhavish Aggarwal: You have to understand our organizational structure and hence in that context, attrition. We are a very vertically integrated company. On the back end, which is manufacturing a lot more in-house manufacturing components and now the cell also, and even so in the front end. We do not do dealership-led distribution. We have our own sales outlets. We have our service centres all across the country. So, as you can imagine, we have a lot more workforce in the two ends, the back end as well as the front end, and especially the front end which is distributed across 1,000 odd places across the country and those are more field force workers, etc. so that is where larger part of the attrition comes from.
At the centre, the R&D, the corporate leadership, etc, is much more stable. We have very senior people. We have people who have been with the company for many many years and those who continue to grow with us.
Since we are talking about the IPO and you are also offloading some of the stake out there, much of the anticipation is around what will you do with the money because as you mentioned in some of the PCs as well that Ola is maybe your first child, is still what you live for. And you have also disclosed plans regarding AI as well. So, any thoughts on where you plan to put in some money – in some future tech or elsewhere?
Bhavish Aggarwal: As an investment office, I will decide what to do with the money. I do not think I would like to share my investment thesis with the public out there, but the IPO is a largely primary issue. We have in our book put a INR 5,500 crore primary issue and the offer for sale is a very small part of the overall issue and my shares are a prorated percentage of that. Everybody has to offer a certain amount of shares, It is in that light I expect people to understand.
