Ola Electric Mobility held an investor meet at its Futurefactory in Tamil Nadu on 11 July. Ola’s plan of building an electric vehicle (EV) ecosystem is encouraging. It aims to become a vertically integrated electric mobility company in the two-wheeler (2W) and passenger vehicle (PV) segments, where the total addressable market is around $1 trillion with a market size of 155 million vehicles, according to the company. Ola, which has one premium scooter in the market, plans to additionally launch four electric 2Ws and its maiden electric PV by CY24. Its Futurefactory, being built on a total area of 500 acres, is likely to have an annual manufacturing capacity of 10 million 2Ws and 1 million PVs. However, the velocity of EV penetration would depend on factors such as charging infrastructure, subsidies, and safety. Still, Ola expects electric 2Ws to fully replace internal combustion engine 2Ws in India by CY25. This seems far-fetched. _1657735779467.jpg "Holding on")
View Full ImageHolding on Supply chain constraints continue to linger. Shortage of cells is a concern for the EV industry. Ola plans to backward integrate and manufacture cells in-house. It is a recipient of the production linked incentive scheme for advanced chemistry cell battery storage. Currently, it incurs a cost of $150/kWh for cells, which would drop to $100/kWh with insourcing. The company unveiled its indigenously made lithium-ion cell on Monday. This would aid its plans to become cash flow positive. ICICI Securities pointed out that a successful automobile brand in India should tick all these boxes- favourable running cost economics, attractive capital cost with due longevity of the vehicle, better than peer resale value, design features in sync with the market, and problem-free servicing. “With large incumbents satisfying these criteria for decades, we believe it would be a long journey for Ola to create a sustainable impact as against making a quick impact in the space through disruption and gain market share,” said ICICI Securities analysts in a report on 13 July. Even so, increasing competitive intensity would mean that it is crucial for the incumbents to step up and enhance their presence in the EV market. Bajaj Auto and TVS Motor Co. have launched their electric 2Ws, while Hero MotoCorp is yet to launch its product. However, their market shares constitute only a small portion of the overall pie.
Incumbents that do not build EV market share will face a significant derating risk, according to Nomura Global Markets Research.
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