India’s IPO-bound Ola Electric has suspended its electric car launch plans as the Softbank-backed company wants to focus on its e-scooter business, two people with direct knowledge of the decision said.
Ola’s founder Bhavish Aggarwal laid out plans in 2022 to launch an electric sports car with an all-glass roof in two years that could reach 100 km per hour within four seconds.
Aggarwal reiterated those plans as recently as Sept. 2023 in an interview with Forbes, but the two sources said the project is now suspended ahead of its planned August IPO, where it is set to raise around $660 million.
Ola’s “focus is all on the two-wheeler market, including bikes, and mass electrification is still some time away – you need to have (charging) infrastructure,” the first source told Reuters.
The suspension of Ola’s plan for electric cars, which could have competed with likes of Tata Motors in the nascent yet fast growing space, shows how challenges such as a lack of charging infrastructure in India weigh on plans.
E-scooters have become popular in the country in recent years and infrastructure has been built fast. Around 483,000 e-scooters were sold this year by June, but that period saw only about 45,000 electric car sales in the world’s third-biggest auto market.
One of the sources said Ola’s car project has been put off for at least two years as focus remains on two-wheeler sales and battery production.
Ola Electric did not respond to a request for comment.
The company’s stock market debut next month will be one of India’s biggest IPOs this year.
Ola, though still loss making, has gained a 46% market share in e-scooters in the three years since it was founded, even though it slashed its sales goals last year after Prime Minister Narendra Modi’s government reduced some industry incentives.
Aggarwal already has an e-scooter factory in Tamil Nadu. In 2022 he said he would build a new plant within the same campus with capacity to manufacture 1 million electric cars a year. The cars, he said, would be designed to break the national trend of dull, small or midsized vehicles.
Ola deployed external consultants and hired more than 100 employees for the project, the second source said, adding that 30% of the team had now quit and some had been given new roles or projects.
The company had held initial talks with a few auto component suppliers and even built one prototype of the car model, which was designed along the lines of a BMW luxury sedan, at its studio in the United Kingdom, the person added.
The first source said, however, that as and when Ola revives the car project, it will focus on developing an affordable, mass market electric car – a departure from Aggarwal’s earlier plans to launch a premium sports car.
The transition to electric vehicles, growing competition from cheaper Chinese rivals and a weakening outlook for sales across major markets are weighing on automakers this year.
Reuters