Ola Electric Plans to Use In-House Batteries by Early 2025

Bengaluru: Ola Electric, led by Bhavish Agarwal, aims to start using its own battery cells in its electric vehicles from early next year, according to the company’s managing director, who spoke at a press conference on Saturday.

“We expect to see our battery cells in our products by early next year,” Agarwal stated. “We still have a few more months of work to finalize the production process and make it commercially viable, but we are in the final stages.”

The company did not reveal the expected cost savings from manufacturing its own battery cells. However, this move is part of a larger strategy to boost the company’s overall profitability ahead of a public listing expected later this year.

The manufacturing process for these batteries, known as 4680, has already started. Agarwal anticipates that these batteries will be integrated into Ola Electric vehicles by the end of this year.

Ola claims that these new battery cells provide nearly five times more energy than the average industry batteries. They have also received a BIS certification, which assures consumers of their quality, reliability, and safety.

Long-Term Plans

The battery cells, produced at Ola’s Gigafactory in Krishnagiri, Tamil Nadu, will be used in vehicles made at Ola’s Futurefactory. This factory is responsible for producing electric two-wheelers and other key components like battery packs, motors, and vehicle frames.

Ola’s Gigafactory will produce cells for current product lines, future products, and energy products like battery-energy storage systems. The company also benefits from government subsidies under the production-linked incentives and FAME schemes.

Earlier this month, Mint reported that Ola received approval from the markets regulator Sebi to raise up to ₹5,500 crores through an initial public offering. The company is seeking a valuation of about $7 billion, according to several media reports.

Ola Electric has achieved over 40% market share in electric two-wheeler sales, driven by significant discounts and a wide range of competitively priced e-scooters. As of May, Ola remained the leading player in India’s electric two-wheeler market by volume.

Challenges Ahead

While Ola has maintained its top position in the country’s electric two-wheeler market, the market itself has seen flat volumes over the past three months. Data shows that registrations for high-speed electric two-wheelers dropped by 27% in May compared to the previous year’s high base.

The government’s decision to significantly reduce FAME-II subsidies on electric two-wheelers starting June 1, 2023, led to a surge in pre-purchases to take advantage of lower prices.

However, since April 2024, the central government has further reduced subsidies for electric two-wheelers as part of its transition policy between the expiration of FAME-II (on March 31, 2024) and the upcoming FAME-III policy.

Agarwal acknowledged this shift. “The subsidy has been tapering off over the last two to three years, and the government has been very clear in its communication to the industry,” he said. He added that as the electric vehicle industry matures, cost structures are becoming more affordable, helped by more in-house manufacturing efforts.

Despite these challenges, Ola Electric held an impressive 48% market share in May. However, electric two-wheelers still only make up 5% of the overall two-wheeler market in the country, similar to last year’s levels.