Mumbai, Dec 6 (The Street Press India) – Ola Electric in India has cut its sales targets for 2023-2025 by over 50% and postponed its profit target by a year. This change comes in response to decreased government incentives, causing an increase in e-scooter prices. Insider information from a document and two reliable sources familiar with the company’s finances revealed this adjustment.
Ola’s decision to scale back its targets precedes its $700 million stock market debut plan. Despite being backed by SoftBank and drawing parallels to Tesla in the West, the company remains a front-runner in the compact but rapidly expanding e-scooter market.
In an unexpected turn in May, the Indian government reduced cash incentives for e-scooter buyers without providing a reason. Ola’s CEO, Bhavish Aggarwal, termed the decreased incentive as a “short-term blip” for sales, asserting that it would not impact volumes. However, a recent document obtained by Reuters, outlining Ola’s latest financial projections, reveals a revised expectation of 300,000 e-scooter sales for the current fiscal year ending March 2024—significantly lower than the initial goal of 882,000 reported in July.
The current revenue target for the ongoing fiscal year is $591 million, marking a substantial reduction from the previous goal of $1.55 billion—reflecting a cut of approximately 60%, as outlined in the internal document.
In response to inquiries, Ola issued a statement neither acknowledging the document nor commenting on the adjusted internal forecasts. The company mentioned that future financial targets are still “yet to be verified” and emphasized that the disclosed information is considered confidential.
According to two confidential sources familiar with the company’s finances, the lowered targets are a response to the government’s reduced subsidy. Both sources, who opted to remain anonymous due to confidentiality concerns, indicated that the revised figures aim to ensure the company can meet or surpass them—a strategic move aligned with investor expectations.
Despite Ola’s introduction of new scooters, there are reported strains in parts of its extensive network of over 400 service hubs across the nation. This strain is attributed to an increase in sales, as highlighted in a Reuters report last month.
E-scooter sales in India surged to over 700,000 during 2022-23, nearly tripling from the previous year, with Ola leading the market. However, these figures represent only a fraction of the more than 15 million two-wheelers sold in the country.
Prime Minister Narendra Modi aims for 70% of all new two-wheeler sales to be electric by 2030. Notably, India has reduced incentives for e-scooters from 40% to 15% of the price before tax, resulting in higher prices for these vehicles.
Before the government incentive cuts, Ola, still incurring losses, anticipated its first operating profit of $220 million in the ongoing fiscal year 2023-24. However, revised targets in the document now indicate an operating loss of $92 million this year and a profit of $111 million next year.
Sales projections have also been adjusted, with Ola expecting to sell 900,000 units in 2024-25 and 2.3 million units in 2025-26. These targets represent a 60% and 21% decrease from earlier estimates when incentives were in place.
Despite these changes, Ola’s CEO, Bhavish Aggarwal, reduced prices of the entry-level e-scooter by approximately 20% to around $1,100 to enhance their appeal. Aggarwal expressed confidence, stating that concerns about lower government incentives were not a worry, and he highlighted the industry’s robust recovery despite initial fears.