Electric two-wheeler major Ola Electric Ltd expects its automotive segment to break even in terms of operating profit once its average monthly sales hit the 50,000-unit mark, according to a senior company official.
“We have two segments—auto and cell. The auto segment EBITDA will achieve breakeven at a 50,000 level. Cell margins are booked in the cell segment. When our battery cell comes in we will have an expansion of our margins at a consolidated level,” Ola Electric founder, Chairman and MD Bhavish Aggarwal told investors.
This could mean that Ola Electric’s auto segment would become profitable when the monthly average volume almost doubles from the current monthly average of 28,000 units.
During the third quarter that ended in December, Ola Electric reported a negative EBITDA (earnings before interest, taxes, depreciation, and amortization) margin of 28.8%, against negative 17.9% in the second quarter and negative 12.6% in the third quarter year ago.
The automaker clocked a quarterly volume of 84,029 units in the October-December quarter with one electric scooter in the product portfolio with two variants – S1 Pro and S1 X.
Ola Electric has however expanded its product portfolio in the current quarter. In February, the company launched its mass-market EV motorcycle portfolio, the Roadster, with two variants and five battery pack configurations. Its deliveries are expected to start in March.
Ola has also updated S1 models on to its new Gen 3 platform. The company claims that the Gen 3 platform gives 20% higher peak power, 11% lower cost and 20% increased range over the Gen 2 platform.
“The new Gen 3 platform will reduce the BOM (Bill of Materials) cost by 11% over this year. What we have launched is the starting point of the Gen 3 platform. There will be more cost-reduction activities this year,” Aggarwal said.
“When all those activities are complete there will about 15-20 point gross margin benefit, which will be in the 11% BOM cost reduction range.”