At Ola Electric, Layoffs Are A Friday Feature — Exclusive

That, when its scooters are finding fewer takers, despite steep discounts.

People are fired every Friday at Ola Electric, one of the three people cited above told NDTV Profit on the condition of anonymity. Just last Friday, on Nov. 15, 100 laptops were deposited back at the HQ, they said.

At least 100 people (have been fired) every week, for the past month or so, the second person told NDTV Profit. When asked if the layoffs started right after the company’s listing on Aug. 9, this person said they took hold after the service-related issues surfaced in the media.

According to Tracxn data based on the company’s filings with the Employees Provident Fund Organisation, Ola Electric’s headcount fell to 3,754 in October from 4,665 in August. That’s nearly 1,000 employees in three months. As on March 31, the company had 4,011 employees, according to its red-herring prospectus.

The product and service teams are seen as the most affected, as well as the supply chain. In fact, key personnel who were hired for their years of expertise at incumbents have been let go. The affected include those who left their hometowns and families to work for Ola Electric’s Futurefactory in Tamil Nadu.

Future employers are wary of you if you have Ola Electric on the resume, the first person cited above said. They have no choice but to move back home now and look for a job, they said.

On Thursday, NDTV Profit sent an email to Ola Electric to no response. In response to a WhatsApp text, a spokesperson said, “We will not comment on this.”

To be sure, this isn’t the first restructuring at Ola Electric. The firm prunes its headcount across verticals on an annual basis.

In July 2022, Ola Group’s parent ANI Technologies Pvt. shut three of its businesses—used cars, grocery and cloud kitchen—to focus on the electric mobility vertical. About 1,000 employees were laid off. In September, Ola Electric brought on board 800 people—including strategic hires—to build and design its electric scooters as well as localise cell manufacturing.

In 2021, Ola Consumer announced plans to let go 10% of its staff. Hemant Bakshi, the chief executive officer at Ola Cabs, resigned as part of that restructuring.

The latest Ola Electric layoffs, according to a third person, are a function of what billionaire Founder Bhavish Aggarwal sees as priority.

Earlier it was valuation, now (after listing) it’s profitability, this person, who has worked at Ola Cabs and Ola Electric, said on the condition of anonymity. Aggarwal wants to set up a long-term business, but wants to get there as soon as possible, they said.

That’s easier said than done.

In the three months ended Sept. 30, 2024, Ola Electric’s revenue fell 26% from the previous quarter to Rs 1,214 crore, even as net loss widened to Rs 495 crore from Rs 347 crore in the April-June period, according to the company’s letter to shareholders released on Nov. 8. That was due to lower sales—98,619 units in the second quarter of fiscal 2025 versus 1,25,198 units in Q1.

Operational profitability—measured as the earnings before income tax, depreciation and amortisation—weakened on the back of discounts. Ebitda loss stood at Rs 233 crore in Q2 FY25 versus Rs 65 crore in the previous quarter.

Warranty was another cost that ate into margins. The company set aside Rs 64 crore—or nearly 5% of the topline—to pay for vehicle repairs, indicating that complaints related to the product and after-sales service persist. Warranty costs made up 5.5% of earnings in the fiscal ended March 31, 2024.

Then, there was the matter of paying employees. The company’s employee costs rose to Rs 139 crore—or 11.45% of the topline—in Q2 FY25 as against Rs 123 crore—or 7.48% of the topline—in Q1 FY25.

“Our directional commentary is that we'll balance growth and profitability. But given the balance, gross margins will continue to improve quarter on quarter,” Aggarwal said during a post-earnings analyst call on Nov. 8. “Our strategy is to continue to gun for strong penetration and market leadership.”

In a post-earnings call on Nov. 8, Ola Electric acknowledged that its service centres were facing overcapacity, so much so that some of them were starting to resemble a graveyard of sorts of its scooters.

To address that, Aggarwal aims to more than double its sales outlets to 2,000 by the end of fiscal 2025 from 780 at present, and open 1,000 service stations by December this year. That will require skilled manpower that’s hard to come by. The company now aims to train local mechanics in the know-how of its electric scooters.

The layoffs, seen as par for the course, come at a time when Ola Electric is expanding its dealership and service network to handle a barrage of product and service-related issues.

Aggarwal doesn’t see the 80,000 complaints per month as an issue.

“An 80,000 number is not bad for an eight lakh-unit operation, if you assume a lot of it is just scheduled or minor queries,” he said during the post-earnings call on Nov. 8. 

The layoffs also follow government action over the quality of Ola scooters.

On Oct. 7, Ola Electric informed the stock exchanges that it has received a show-cause-notice from the Central Consumer Protection Authority to explain within 15 days the alleged violation of “consumer rights, misleading advertisement and unfair trade practices”. The action followed more than 10,000 complaints received by the National Consumer Helpline in the past one year over the quality of Ola scooters. On Oct. 21, Ola Electric claimed that 99.1% of the complaints were resolved.

The CCPA was not impressed.

In an order issued on Nov. 6, the CCPA directed the Director General of Investigation, who also heads the Bureau of Indian Standards, to look into Ola Electric, citing concerns over “whitewashing” of consumer grievances. The BIS DG has 15 days to submit the investigation report.

“The investigation has been ordered because the company, in response to the CCPA show cause notice, said that it has resolved 99.1% of the 10,644 complaints lodged with CCPA,” Nidhi Khare, secretary - department of consumer affairs at the Ministry of Consumer Affairs, told the Press Trust of India on Nov. 14.

“However, when a sample of complainants were contacted, they expressed dissatisfaction,” she said. “The consumers said their grievances were only whitewashed and closed.”

The Union Ministry of Heavy Industries has also stepped into the matter.

The HD Kumaraswamy-led ministry has directed the Automotive Research Association, or ARAI, to conduct an audit of Ola Electric and sought inputs on the 10,000-odd complaints filed against India’s largest electric scooter maker. The report is awaited. 

Separately, the ARAI pulled up Ola Electric over “deep discounting” that violated the PM E-Drive EV subsidy scheme. The company said it was only till stocks last.

To be sure, no amount of discounting has kept rivals at bay.

In the July-September quarter, Ola Electric recorded two straight months of record low volumes as rivals TVS Motor Co., Bajaj Auto Ltd. and IPO-bound Ather Energy Ltd. captured market share from the leader. Sure, Ola Electric clawed back market share amid record volumes in October, but the rivals aren’t going anywhere.

As on Nov. 21, Ola Electric had a slim lead of 1,355 units over TVS Motor in retail sales, according to VAHAN data. The gap with Bajaj Auto and Ather Energy stands at 3,998 units and 12,366 units, respectively.

Over the next couple of years, Ola Electric plans to launch 20 new products—that’s more than one every quarter, Aggarwal said in the post-earnings call. These include electric motorcycles, the third-generation of scooters, and an electric three-wheeler as well. At the same time, the Ola Gigafactory would go onstream. The first locally produced cells will power the scooters from the first quarter of fiscal 2026.

That’s a lot of work. It would require people. Against that backdrop, the recent layoffs—especially those of industry veterans—seems like an aberration.

To be sure, layoffs are a limited margin lever to shore up profitability. For that to happen, Ola Electric needs to boost sales meaningfully—not by way of discounts but by addressing product and service-related issues. That’s also crucial for the firm to remain the market leader, as the competition—incumbents and upstarts alike—are increasingly snapping at its heels.