Ola’s woes multiply as gap with ICE peers narrows after GST move; focus now on battery system

Ola's Retail Sales Plummet to Lowest Level Since February

Ola's November retail sales stood at 8,046 vehicles, marking the lowest sales since February, as per Vahan data. This downward trend follows the GST cut, which was effective from September 22.

Price Slashes by ICE Manufacturers Erase PM E-Drive Benefit

• Hero MotoCorp Ltd, Bajaj Auto Ltd, and TVS Motor Co. Ltd have reduced prices by at least ₹5,000 per vehicle.
• This price cut effectively nullifies the maximum benefit of ₹5,000 per electric vehicle available under the PM E-Drive scheme.

The gap between Ola's electric two-wheeler and its ICE rivals is likely to widen to at least ₹10,000 per vehicle.

Significance of ₹10,000 per Vehicle

₹10,000 accounts for 25% of Ola's gross margin per vehicle of ₹40,000 achieved in the September quarter (Q2FY26).

Ola's Shares Near All-Time Lows, Investors Worry

• Ola's shares at ₹41 are close to its all-time lows hit in July.
• The stock price has halved in 2025 till now.

A recent jump in the stock price after Q1FY26 results, where sales volume rose 33% QoQ to 68,192 units, has fizzled out after the delivery volume fell to 52,666 units in Q2FY26.

Declining Sales Volumes Raise Concerns

• Ola has sold 16,048 and 8,046 units in October and November, respectively, indicating lower Q3FY26 volumes.
• This would be below the auto business breakeven volume of around 20,000 units per month.

Motorcycle Sales Disappoint, Scooter Volumes Fall Sharply

• Motorcycle sales accounted for 12-15% of Q2FY26 total volumes, which works out to at least 6,000 units.
• Q2FY26 scooter sales fell by about one-third QoQ.

Ola's Next Big Bet: Lithium Ion-Based Battery Energy Storage System (BESS)

Ola's next big bet is on lithium ion-based battery energy storage system (BESS) called Ola Shakti, which aims to substitute lead acid batteries in residential and commercial applications.

Competition in the BESS Market

• Ola faces tough competition from existing lead acid battery manufacturers, such as Exide Industries Ltd and Amara Raja Energy & Mobility Ltd.
• These manufacturers have invested in lithium-ion battery production, with likely commissioning of their plants over the next year.

Ola's Revenue Estimates and Stock Price

• Ola's FY27 revenue based on Bloomberg consensus estimates is ₹4,700 crore.
• The stock trades at 3.8x of FY27 estimated sales, which is hardly cheap.