What's Up With Ola Electric? A Look At Its Latest Controversies

A clash is unfolding between sales numbers and the profit margin of the company, with both moving in opposite directions. On one hand, Ola Electric claims that its sales figures are on the rise, while on the other, stakeholders are still eager to see greater returns on their investments.

A company's reputation can often be shaped by its CEO and when a CEO becomes the face of the brand, every action can significantly impact the company’s valuation. Consider Elon Musk; his name is synonymous with Tesla. Similarly, the late Ratan Tata is synonymous with the Tata Group and its companies.

In the case of Ola, Bhavish Aggarwal has become intertwined with the brand and its controversies. History has shown that CEOs can greatly influence company valuations and it repeats itself again.

For instance, Elon Musk faced a backlash that harmed Tesla’s valuation after his controversial appearance with a weed on Joe Rogan's podcast. Unfortunately, Bhavish Aggarwal has recently tarnished Ola reputation with his latest actions.

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Let’s analyse what went wrong with OLA Electric

The Kunal Kamra Controversy:

Things were going in favour of Ola (at least it seemed to); the share market was going up and stakeholders were gaining massive returns. But on 6th October, comedian Kunal Kamra posted an image of Ola Electric Scooters gathering outside a dealership on X (previously known as Twitter). He quoted, “Do Indian consumers have a voice? Do they deserve this? Two-wheelers are the lifeline of many daily wage workers...” Moreover, he also tagged Mr Nitin Gadkari (Minister of Road Transport and Highways of India) in his post.

In response, CEO Bhavish Aggarwal replied, “Since you care so much, Kunal Kamra, come and help us out! I’ll even pay more than you earned for this paid tweet or from your failed comedy career." A couple of posts followed in what ensured an entertaining heated exchange between the CEO and Kamra.

What startled Aggarwal's followers and his company's stakeholders was the unprecedented argument that is unacceptable from a brand's CEO. People eventually started supporting Kunal Kamra for raising a voice in the public’s favour and affected customers joined in to express their displeasure over Ola Electric's service. Consumers even chimed in by sharing images of bouncers hired by Ola Electric service stations to keep off disgruntled owners.

When your face is attached to the brand, the brand is affected by each and every act you perform but even after this negative marketing, Ola managed to show massive sales figures in the market.

Since you care so much @kunalkamra88, come and help us out! I’ll even pay more than you earned for this paid tweet or from your failed comedy career.

Or else sit quiet and let us focus on fixing the issues for the real customers. We’re expanding service network fast and backlogs… https://t.co/ZQ4nmqjx5q

— Bhavish Aggarwal (@bhash) October 6, 2024

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Ola is selling more, but at what cost?

Ola has recently claimed that total sales numbers increased in October, indicating 68 per cent month-on-month growth. The brand sold 27,615 scooters in August and 24,716 scooters in September. These declining numbers have reduced the company’s market share to approximately 30 per cent.

The company claims this all happened because of their assurance to consumers after a majority of consumers received assurance on service-related issues. The new numbers also indicate a yearly growth of 74 per cent. This is the highest number of retail units by Ola after the FAME-II EV subsidy expired.

On one side, Ola Electric is claiming that they hold a huge market share in EV scooters, but the report for the fiscal year 2025 (Q1 FY25) states that the brand recorded a huge loss of INR 347 crore, which was INR 80 crore more than the previous year.

There is a term in economics that you only make a profit when your selling price is more than the cost plus operating costs. It looks like Ola has recently offered multiple discounts to gain the attention of customers. The festive season and additional festive discounts can also be the main reasons behind the increased sales numbers. But despite pushing out more units on a monthly basis, Ola Electric's books don't show a positive picture.

In fact, Ola Electric has listed its shares at INR 75.99. Within a few weeks, investors got double the amount, and as of writing this story, the stock is again close to the listing value, at INR 80.6.

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Undelivered promises

People begin to lose interest in a company when it fails to deliver promised products on time, and OLA Electric has fallen into this trap.

Let's look at some of the big announcements that Ola Electric has struggled to deliver timely:

- The Ola Electric car, which was showcased in 2023 and promised to be delivered by the end of 2024, has seen no prototypes under testing. The brand hasn't shared any updates ever since. 

- The latest trio of electric motorcycles, including the Roadster Pro boasting a range of over 500 km., has vanished from the news cycle altogether. The motorcycles were said to be hitting the showroom floors by Diwali 2024. But there's no update on that front either.

-  The Krutrim AI chatbot, which promised an Indian alternative to ChatGPT, hasn't seen major updates or fixes. Not only has the focus gone away from the generative AI chatbot but the hype has totally vanished. 

Burning cash is not a sustainable strategy for capturing market share. Ola Electric is already facing challenges, but these can be addressed by resolving service centre issues and delivering on their promises.

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