Ola Electric Adjusts Sales Goals Amidst Government Incentive Reductions

Ola electric scooter price

Ola Electric, a frontrunner in India’s burgeoning e-scooter market, has made significant revisions to its sales targets for the upcoming years, slashing projected figures by over half and delaying profit targets by a year.

This decision, prompted by diminished government incentives that led to increased e-scooter prices, marks a strategic shift for the company, as reported by a document and sources familiar with the company’s financial trajectory, Reuters news report said.

The adjustments arrive on the heels of Ola’s impending $700 million stock market debut plan, positioning the SoftBank-backed enterprise in a recalibration phase despite its prominent stature in the rapidly expanding e-scooter domain, drawing comparisons to Tesla in the West.

In an unexpected move earlier this year, India’s government slashed cash incentives available for e-scooter buyers, a decision bereft of explicit explanation. Ola’s CEO, Bhavish Aggarwal, initially referred to the reduced incentive as a “short-term blip” for sales, assuring minimal impact on volumes despite the altered landscape.

However, a confidential document obtained by Reuters delineated Ola’s revised financial projections, highlighting a significant downturn in expectations. The company now anticipates recording 300,000 e-scooter sales in the ongoing fiscal year, a sharp decline from the earlier target of 882,000 projected in July. Similarly, revenue expectations for the same period have been curtailed to $591 million, down from the initial goal of $1.55 billion.

When approached for comment, Ola refrained from acknowledging the document or addressing the internal forecast adjustments directly. Instead, the company emphasized that future financial targets remain subject to verification and classified the information as confidential.

Insiders familiar with Ola’s financials attributed the downward adjustments directly to the government’s reduced subsidies. These revised figures aim to ensure that the company either meets or exceeds expectations, aligning with investor preferences.

Despite these setbacks, Ola continues its strides in the e-scooter market, introducing new models while managing a nationwide network of over 400 service hubs dedicated to maintaining and repairing its electric vehicles. However, challenges have surfaced within this network due to a surge in sales, as reported by Reuters in a recent analysis.

India’s ambitious goal of achieving 70 percent electric two-wheeler sales by 2030, advocated by Prime Minister Narendra Modi, faces hurdles amid reduced government incentives, shrinking the previously offered subsidies from 40 percent to 15 percent.

Despite these hurdles, Ola’s CEO, Bhavish Aggarwal, recently slashed entry-level e-scooter prices by approximately 20 percent, aiming to augment their allure and bolster EV adoption. Aggarwal remains optimistic, asserting that the industry has rebounded robustly post-government incentive cuts, alleviating concerns surrounding the impact on the e-scooter sector.