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Ola Electric's Storm

Updated: Oct 5, 2022

It was the year 1993

In an exhibition of automobile component manufacturers, the newly appointed chairman of Tata Sons, Ratan Tata announced his dream of manufacturing India’s first fully indigenous car. Remember, this was a time when the Indian automakers were importing several key auto parts to assemble a car in India. Naturally, the idea of developing the entire car comprising 3800 small parts, 700 dies and 4000 joints, out of Indian factories, met with criticism from the experts, given the country’s clear lack in infrastructure and know-how.

Outcome? The Visionary trod on. After 6 years of careful designing, Ratan Tata finally unveiled the Tata Indica in Dec’98, the first car to be truly made in India. The company broke all domestic records by bagging 1.25 lakh pre-launch bookings. What’s more, within the 1st month of its launch, Indica captured 14% of the market share. History was made.

 
Fast forward to 2019

A leading tech Entrepreneur, Bhavish Aggarwal, co-founder of Unicorn OlaCabs, unveiled his dream of setting up the world’s largest two-wheeler manufacturing facility, to manufacture electric two-wheelers under the name of Ola Electric. The facility would produce 10Mil units annually at full capacity by the summer of 2022 (In comparison, TOTAL number of two-wheelers manufactured and sold in India in 2018-19 was 21Mil). Remember, this was a time when the global EV story was just beginning to boil up. Both Tata Motors and Bajaj had just launched their 1st EV models in India. Tesla was worth a mere $75Bn (vs $900Bn+ now) and clocked a sale of a little under 3.5Mil EV in 2019 (2% of total 4-wheelers sold in USA that year). Outcome? The move was celebrated by Entrepreneurs and Investors alike who were now eagerly watching Ola Electric’s developing story.

 
Timeline 2019-21

Aggarwal took 2 years to arrange funding, gather a team, create a brand with all the hype and start rolling out the E-scooters. Here are some key events:

 
OLA ELECTRIC'S STORM (OCT'21-SEP'22)

As a company that did not have any prior experience in selling automobiles OR manufacturing one, it has had its fair share of hiccups along the way. To put it succinctly, here’s what has happened in the past 1 year:

Well one would like to believe that given repeated cases of E-bikes catching fire and fears of rising inflation probably all the industry players are experiencing a de-growth, right? Turns out, NOT!!

Here's the sales data of the period May'22 to Jul'22 that shows that Ola Electric seems to be losing grip:

- Observe Hero Electric that went from being last in the list to finishing at the top in Jul'22.

- Observe Okinawa that also experienced a de-growth in Jun'22 but quickly buckled up and bounced back in Jul'22.

So much for showing all of us a dream, right? So, what now? We write him off?

 
The 1st Tata Indica was a failure

Soon after the first lot of Tata Indica rolled out in 1999, customer complaints started to mount. The company was called out for flaws in the basic design of the car. The experts ruled that it was always a bad idea to make an indigenous car. All they had predicted had indeed come true.


But who said bringing a change comes easy?

The Tatas took control of the matter. They set up customer camps across the country and offered to replace the defective parts free of cost, costing them a whopping ₹500 Crore back in 2000-01.


The turning point: Within a short span, the company launched a new improved version of the car, calling it Indica V2 with the tagline Even more car per car. Indica V2 changed the fortune of Tata Motors for good. The car became the most sought-after personal mobility choice for Indians for YEARS to come, winning several awards and even being exported to European and African countries.

 
TESLA was Almost A failure More than once or twice
  • In 2008 Tesla launched its 1st all-electric car, the Roadster. However, soon after its launch it found itself amidst a deep funding crunch following the stock market crash of ‘08 that dried up all its possible funding sources. At its lowest point, on Christmas eve, they were down to their last $0.5 million, days away from a bankruptcy.

  • In 2008, Tesla's co-founder and then CEO Martin Eberhard was forced to exit by Elon Musk, (then largest investor) because of alleged wrongdoings.

  • In 2012 the Company came up with an FPO amidst the New York Times raising several red flags including Tesla's inability to repay loans.

  • In 2013 Tesla’s latest launch, Model S, started reporting cases of its Li-ion batteries catching fire.

  • Between 2017-2019 Tesla started experiencing a funding crunch all over again amidst efforts to scale up the production for its new Model 3.

And yet, Tesla has bounced back every time because of investors and customers who have continued to believe in Tesla's products and Musk's leadership:

  • Model 3 went on to become the bestselling car of Tesla till date.

  • In 2020, Tesla generated $31.54 Bn (₹2.5L Cr) of revenue with $721 Mn (₹5,900Cr) profit.

  • Today, Tesla delivers more than 200,000 vehicles each quarter. It is valued north of $800 billion (making it the most valuable car brand in the world), having 6 manufacturing facilities in 3 countries.

  • All Tesla models combined claimed 74.49% of all US electric vehicle deliveries in the first quarter of 2021. The company has now become the gold standard for an industry that for too long has been reluctant to innovate.

 
LOOKING UP

Despite sever setbacks, criticisms and key leadership exits, Ola Electric is still striving to make a dent:

  • In Jul'22, Ola Electric unveiled the 1st indigenously made Li-ion cell developed in its FutureFactory. Shortly after, the Company inked a deal with the GoI for Production Linked Incentive (PLI) scheme benefit (Govt. subsidy) for manufacturing the battery cells.

  • In Aug'22, Ola Electric launched a new, improved and more affordable version of Ola S1 Pro. On 2nd Sep, it booked 10,000 orders for the more affordable version.


Brilliant thinking is rare, but courage is in even shorter supply than genius

~Peter Theil, in his book Zero to One


Ola Electric's run to become an established auto player in the Country will indeed be a steep uphill battle. If it falls, then it was always more likely to be anyway. And yet if it reaches the top, it'll be a story for the ages. Probably that's what Entrepreneurship is all about, anyway.

Before we end this, here's a tweet from Bhavish Aggarwal that's the perfect cover for this write up:

 

This article is a part of the September'22 edition of our Startup Newsletter. Here's the complete publication:


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