Ola Electric Gets Show Cause Notice After Thousands Of Customer Complaints
Ola Electric confirms receipt of the show cause notice in an exchange filing, says it has no impact on financial, operational or other activities of the company.
The central government has issued a show cause notice to Ola Electric due to thousands of customer complaints about the quality of its best-selling electric scooters, according to people familiar with the matter. This action comes in response to over 10,000 complaints received by the National Consumer Helpline in the past year, the people added.
The show cause notice was issued to billionaire founder Bhavish Aggarwal and his company for alleged breaches of the Consumer Protection Act, according to people, who spoke to NDTV Profit, on condition of anonymity.
Ola Electric confirmed receipt of the show cause notice in an exchange filing on Monday night.
"The show cause notice has been issued by the Central Consumer Protection Authority for alleged violation of consumer rights, misleading advertisement, and unfair trade practices," the exchange filing, which signed by Chief Financial Officer Harish Abichandani, said. "The company will file a response to the show cause notice before the Central Consumer Protection Authority."
The exchange filing added that the show cause notice currently has no impact on the company’s financial, operational, or other activities. It does not impose any penalties or financial fines.
Ola Electric has been charged with service delays, delayed vehicle deliveries, and unfulfilled promised services, The people quoted earlier said, adding that the Central Consumer Protection Authority is also investigating manufacturing defects, overcharging, and faulty components related to the company's electric scooters.
Overwhelmed By Complaints
The notice comes at a time when Ola Electric has been receiving widespread customer complaints, with its service centres overwhelmed by broken-down scooters.
An NDTV Profit report two weeks ago highlighted the issues surrounding the "Ola Experience" after interviewing more than a dozen dissatisfied customers in Mumbai and Bengaluru.
The following day, the company announced its "HyperService" initiative to address after-sales service concerns and said that the company plans to double its service network by December this year and train 100,000 third-party mechanics in electric scooter repair by the end of next year.
Declining Sales Amidst Efforts
Despite the company’s efforts, Ola Electric sales have continued to decline. In September 2024, total sales fell 11% month-on-month to 23,965 units, down from 26,928 units in August, according to vehicle registration data from the government’s VAHAN portal on Sept. 30.
In contrast, competitors Bajaj Auto Ltd., TVS Motor Co. Ltd., and Ather Energy reported growth and gained market share.
Ola Electric sales dropped 11% month-on-month to 23,965 units, holding 27% market share.
Bajaj Auto sales increased 13.71% month-on-month to 18,933 units, holding a 21.47% market share.
TVS Motor sales rose 2.43% month-on-month to 17,865 units, with a 20.26% market share.
Ather Energy sales increased 15.20% month-on-month to 12,579 units, holding a 14% market share.
Social Media Showdown
On Sunday, service complaints led to a public exchange on social media between Ola Electric’s founder Bhavish Aggarwal and comedian Kunal Kamra. Kamra criticised the company's after-sales service, which sparked a sharp response from Aggarwal. The interaction drew significant attention, adding to the mounting concerns over Ola Electric's handling of customer complaints.
This is not the first time Aggarwal has engaged in a public spat on social media. In 2022, he had a confrontation with Autocar India editor Hormazd Sorabjee after Sorabjee posted a critical review of Ola’s electric scooters. Aggarwal responded by questioning the credibility of the review.
These incidents reflect Aggarwal’s assertive approach when dealing with public criticism, often taking to social media to defend the company’s products and practices.
Analysts Weigh In
On Monday, the company’s shares hit a lifetime low.
According to an analyst tracking India’s automobile industry, Ola Electric’s challenges stem from its approach to product development. “This is essentially a service enterprise building a product,” the analyst told NDTV Profit on the condition of anonymity, noting that while an app can be launched in beta and improved over time, manufacturing a vehicle requires a different process.
“The lessons from building an app cannot be applied to manufacturing a scooter,” the analyst added.
