Bhavish Aggarwal vs Kunal Kamra highlights Ola’s rocky ride ahead

The flamboyant founder of Ola Electric, Bhavish Aggarwal, is back to facing a familiar situation. But this time, he may not have fathomed where it might end up.

A rather no-holds-barred face-off with stand-up comedian Kunal Kumra on social media platform X has snowballed into a major controversy, with hundreds of customers joining the chorus of complaints relating to recurring software and hardware faults in its flagship electric scooters.

Ola stocks nosedive

Aggarwal, an IIT graduate and co-founder of Ola Cabs (now Ola Consumer), may end up regretting this confrontation as his electric vehicle venture, Ola Electric, saw its stock nosedive over 9 per cent in mid-afternoon trading to Rs 90.09, signalling a lack of confidence in the company’s ability to resolve these challenges.

The problem runs deeper for Ola than just public spats — structural flaws in customer service, recurring product malfunctions and mounting reliability concerns point to fundamental issues that threaten the company's long-term stability.

The squabble on X

The face-off between Aggarwal and Kamra started when the latter trolled the condition of Ola scooters by posting a picture of several scooters queuing for repair. Inquiring whether the Indian consumer had any voice for such grievances, he tagged Union minister Nitin Gadkari and consumer rights organisations. He requested that they act, particularly for the daily wage worker who had no other resource than scooters to cover the city.

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Aggarwal retaliated on the accusations made by Kamra, saying it was a "paid tweet" as he mocked his profession as a comedian. Aggarwal challenged Kamra to come over and help Ola fix its service issue, promising him more than he might have earned from the alleged paid tweet or his comedy shows.

Mounting customer grievances

Kumra responded, challenging him to prove his claims of a paid tweet. He even asked for reimbursement for the dissatisfied customers who bought Ola scooters in the last four months, stating that accountability needed to be delivered to those who could not reach their workplaces due to service delays. He called Aggarwal's tone arrogant and substandard.

The company has been dealing with customer grievances for months. According to reports, it receives over 80,000 complaints every month. Customers on social media have complained of being hassled by the software, malfunctioning batteries, and poor after-sales service at the service centres. Perpetual issues have dented not just the brand image but also rattled the investors, leading to the current slide in the stocks.

Increasing competition

Despite all this, Ola Electric remains one of the dominant players in the rapidly expanding Indian e-2W market. However, with newer entrants such as Honda and Suzuki, among many others, planning to enter the market in the quarters ahead, Ola appears to be an increasingly vulnerable proposition.

With TVS and Bajaj Auto launching affordable models and mounting customer complaints about Ola, Ola's market share reduced to 31.1 per cent in August 2024 from 52.1 per cent in April 2024. According to an Ambient Capital Research report, Ola's market share will come down to 25 per cent by FY31 as competition surges and key government incentives are reduced. This includes the Performance Linked Incentive (PLI) scheme.

Flattening sales

However, India's electric two-wheeler addressable market remains strong and increasing, with the share of EVs expected to jump from 5.7 per cent in FY25 to around 23.5 per cent by FY29. Central subsidies like the FAME-II scheme were instrumental in supporting EVs, and such policies were recently capped, which contributed to flattening sales over a short period.

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Excluding this, the PLI for auto OEMs is slated to end by FY28. The PLI for ACC (advanced chemistry cells that store and convert electric energy and a key component of lithium-ion batteries) cells is slated to end by FY31, which may seriously undermine Ola's profitability. According to Ambit, the EBITDA margin for Ola is expected to fall to 1.5 per cent in FY29 from the projected 26.1 per cent in FY27 as dependence on such incentives is seen to decline.

Profitability may be hit

Ola is the only e-2W player that manufactures motors, BMS (battery management system) and lithium-ion cells in-house. It will start mass-producing its advanced 4680 form factor cells by 1QFY26, an enormous cost play.

However, experts said that scaling the production of cells up to operational efficiency is a complex and lengthy process that will take several years. Even with this technological advantage, cell manufacturing may be challenging for Ola, as high rejection rates and the steep learning curve could make its cell business lag behind overall profitability in the near term.

Foreign foray

The company is expected to take advantage of export opportunities in Africa, Latin America and Southeast Asia, where the penetration of EVs is relatively low compared to India.

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The global two-wheeler market is around 20 million units annually, excluding China and India. Indian exports form a 20-22 per cent share of this market. Such an intensive presence calls for several investment opportunities in branding and distribution.

Ola’s many challenges

The stock's volatility indicates increased unease over the company's stronghold on an increasingly competitive market. Given how far the company has already gone on its tech-driven integrated business model and first-mover advantage, Ola will have to work very hard to maintain its position in the future.

From now on, Ola Electric will face headwinds due to increasing competition, the phaseout of most critical subsidies and the complexity of scaling up operations in cell manufacturing.