SUMMARY
- Ola Electric leads the EV 2W market with a gross margin of 18.4%, surpassing competitors like TVS and Bajaj Auto.
- Ola’s strong vertical integration and aggressive localisation efforts have placed it on the path to EBITDA profitability.
- Ola is planning 14 new launches and expanding into electric three-wheelers, enhancing its competitive edge in the EV space.
Ola Electric, led by Bhavish Aggarwal, is steadily expanding its dominance in the electric two-wheeler (EV 2W) market, driven by a diverse product lineup, high vertical integration, and a direct-to-consumer (D2C) distribution model. According to a research note by brokerage firm Bernstein, the company’s aggressive pricing, supported by Production Linked Incentive (PLI) and Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) subsidies, is also playing a key role in its growth.
Bernstein’s report highlights that Ola is on track to achieve EBITDA profitability, boasting the highest gross margin among its peers. In Q1 FY25, Ola Electric achieved a gross margin of 18.4%, outperforming TVS Motor (14%), Bajaj Auto (12.3%), and Ather Energy (7%). The company also reported an EBITDA margin of -2% in the June quarter of FY24, significantly better than its competitors TVS (-7.9%), Bajaj (-10.4%), and Ather Energy (-37%).
Ola’s premium models, such as the S1 Pro and S1 Air, have been driving positive operating EBITDA. In contrast, competitors like TVS and Bajaj are incurring per-unit EBITDA losses of 7.5% and 10.5%, respectively.
Ola’s competitive edge stems from its aggressive localisation and in-house manufacturing, which help reduce costs and improve scalability. Its D2C model further boosts profitability, allowing Ola to maintain competitive pricing while targeting urban, tech-savvy, and cost-conscious customers.
While Ola competes in both the premium and mass market segments, Ather Energy focuses solely on premium customers but faces challenges with lower volumes and higher pricing. Bajaj Auto, with its Chetak escooter, is also lagging in performance and range, despite being the only escooter in India with a metal body.
Goldman Sachs recently initiated coverage on Ola Electric with a ‘buy’ rating, expecting the company to achieve EBITDA breakeven by FY27. The firm pointed out that Ola Electric has the strongest product pipeline, with 14 planned launches, followed by TVS (8) and Bajaj Auto (6). Ola’s future expansion plans, including the launch of electric three-wheelers, are expected to further solidify its position in the EV market.
