Fundraise of $200 mn triples Ola Electric valuation to $3 billion

Ola Electric, the ride-hailing firm’s electric vehicle arm has raised over $200 million led by Falcon Edge, Softbank and others, tripling its valuation to $3 billion.

In July 2019, Ola Electric raised $250 million from Masayoshi Son’s SoftBank. It was just a two-year-old firm at that time. The investment made the fledgling venture a “unicorn”, or a start-up valued at more than $1 billion.

Ola will accelerate development of other vehicle platforms including electric motorbike, mass market scooter and its electric car. The funding will further strengthen Ola’s ‘Mission Electric’- which urges the industry and consumers to commit to electric and ensure that no petrol two-wheelers should be sold in India after 2025.

“We’re proud to lead the EV revolution from India to the world,” said Bhavish Aggarwal, Chairman and Group CEO, Ola. “India has the talent and the capability to build technologies of the future for the industries of the future for the entire world. Together we will bring mobility to a billion and sustainability to the future.”

The fundraise comes at a time when Ola has already set the benchmark in two wheeler sales by selling over $150 million of scooters in its first purchase window – outselling the entire two-wheeler industry on each of the two days.

Ola Electric has built its Futurefactory, the largest, most advanced 2W (two-wheeler) factory in the world that has completed phase 1 construction and is currently undergoing production trials. Ola built the factory in a record time of just 6 months. Ola Futurefactory is also the world’s largest factory that is entirely run by women. At full scale, it will have over 10,000 women employed.

Ola had announced in December 2020 that it would be investing Rs 2,400 crore for setting up phase 1 of the factory. The Ola Futurefactory is coming up on a 500-acre site in Tamil Nadu. At full capacity of 10 million vehicles annually, it would be the world’s largest two-wheeler factory and would handle 15 per cent of the world capacity.

In India, Ola is now in direct competition with electric two-wheeler makers, such as Ather Energy, Hero Electric, Bajaj and TVS Motor Company. The new funding at Ola Electric comes at a time when electric vehicle (EV) adoption is getting traction in India with more vehicles sold in the first seven months than the whole of 2020.

EV makers sold 121,170 units across all categories between January and July against 119,647 EVs sold in the whole of last calendar year, according to the data from the government’s Vahan platform.

The registered EV sales in July 2021 witnessed a month-over-month jump of 134.8 per cent, at 26,127 units, clocking the highest registrations in a month so far in 2021, according to JMK Research. This increase was driven by a jump in E2W (electric two-wheeler) registrations following the previous month’s FAME-II notification which increased the incentives on the EVs, further bringing down their prices.

Last month, Ola Electric took the wraps off its maiden e-scooter offerings – the S1 and S1 Pro – for a commercial launch with prices starting from Rs 99,999 (excluding state government incentives, registration fee, and insurance cost). Aggarwal had said the e-scooters were designed and engineered in India for the world and would deliver the best scooter experience to the consumer.

Among all the states and UTs, Uttar Pradesh continues to have maximum monthly registered EV sales with 17 per cent of overall sales in India in July 2021, according to JMK Research. Karnataka has the 2nd highest sales at 15 per cent share, followed by Tamil Nadu (12 per cent) and Maharashtra (10 per cent).

India’s electric vehicle market could be worth nearly $206 billion in the coming decade if India were to achieve its 2030 EV ambitions, according to an independent study released by the CEEW Centre for Energy Finance (CEEW-CEF). The report also estimates a cumulative investment need of over $180 billion in vehicle production and charging infrastructure until 2030 to meet the country’s EV ambition.

Aggarwal has also shared the vision for the future of mobility. These range from electric scooters, cars to drones and flying cars. In India, just 2 per cent (30 million) people own a four-wheeler and only 12 per cent (160 million) own a two-wheeler. “That means more than a billion people in India have been shut out of mobility by this system!,” Aggarwal said recently.

Aggarwal had said SoftBank-backed Ola is building this New Mobility ecosystem with the consumer at the core. The 3 pillars of this new ecosystem include new mobility services, energy vehicles and auto retail. These three pillars amplify and enhance the impact of each other as part of an integrated Ola New Mobility Platform.

Today Ola provides multi-modal mobility access to 100 million people through taxis, auto-rickshaws, 2 wheelers, day hires and outstation rides. But this is just 7 per cent of India’s population.

Aggarwal had said that it would bring this multi-modal mobility to all 1.3 billion people by Ola designed EVs customised for the diverse shared mobility needs.

“In the coming quarters, we will expand our EV range with more scooters, bikes and cars,” said Aggarwal recently. “Our EVs are smart, connected AI machines and will leapfrog current personal vehicles that are dumb mechanical devices.”

In a tweet on Thursday evening, Aggarwal said India is building technologies of the future and becoming a global EV hub. “With this raise, we will accelerate our vehicle development across 2W scooters, motorbikes and 4W (four-wheelers).”

However, the Organization of the Petroleum Exporting Countries (Opec) has said that Indian motorists will struggle to move away from gasoline- and diesel-powered cars over the next quarter of a century. It has suggested that the country’s push towards electric vehicles may not be a complete success.

Diesel and gasoline will make up 58 per cent of India’s oil demand in the next 25 years, from 51 per cent now, according to Opec. It said the addition of 200 million passenger and commercial vehicles mean diesel and gasoline will continue to dominate oil consumption in the country.