Ola Electric, India’s biggest electric two-wheeler manufacturer, experienced a significant surge in its shares during its public debut, with prices rising by up to 20% on Friday. This marks the largest listing for an Indian company in the past two years.
The Bengaluru-based company, backed by investors such as SoftBank and Temasek, saw its shares soar to ?91.18 (approximately $1.1) after opening at ?76, which was the higher end of its IPO price range. Despite filing for an IPO at a valuation 26% lower than its $5.4 billion funding round in October 2023, Ola Electric now boasts a market capitalization of $4.75 billion.
With a 46% market share, Ola Electric has established itself as the leading player in India’s electric two-wheeler market. Since introducing its first electric scooter in December 2021, the company has sold over 330,000 units in the financial year ending March 2024. However, despite its success, Ola Electric has yet to turn a profit, reporting a net loss of ?16 billion (around $200.5 million) and an EBITDA loss of ?13 billion (about $162.8 million) on annual revenue of ?50 billion (approximately $626.3 million) in its previous financial year.
To enhance quality, supply chain efficiency, and cost control, Ola Electric has been investing in vertical integration. The company is working on developing its own battery cell technology and expanding its manufacturing capabilities, with plans to increase capacity to 20GWh by the second quarter of 2026.
The electric vehicle market in India is expected to experience significant growth in the coming years. According to Macquarie, an investment banking and research firm, electric two-wheelers are projected to gradually increase their market share, with estimates of 7%, 10%, 13%, and 16% for the fiscal years 2025, 2026, 2027, and 2028, respectively. In contrast, Ola Electric is more optimistic, forecasting a market share of 41%-56% for electric two-wheelers by fiscal year 2028.
Despite recent reductions in government subsidies for electric two-wheelers impacting sector growth, the Indian electric vehicle market has undergone some consolidation. The Herfindahl-Hirschman Index (HHI), a measure of market concentration, has risen to 2,810 as of June 2024 from 1,200-1,330 in fiscal years 2022-2023. This figure surpasses the HHI of 2,160 for traditional two-wheelers powered by internal combustion engines.
