Ola Electric is Down 65% from its All-Time High. Buy the Dip or Stay Away?

In 2025, Indian benchmark indices have witnessed a prolonged phase of selling, driven by aggressive foreign investor outflows.

The month of March has continued this trend, although the intensity of selling appears to have eased in recent days. Despite this, the broader market weakness has impacted even traditionally resilient defensive and bluechip stocks.

Amid the selling pressure, Ola Electric, a key player in India's electric two-wheeler segment has a sharp decline in its stock price.

So far in 2025, Ola Electric's stock has plummeted 36% and currently trades more than 60% below its peak of Rs 157.5 touched intraday on 20 August 2024.

Investors remain cautious as multiple challenges weigh on the company's performance.

Here are five key concerns dragging the stock down.

#1 Regulatory Scrutiny

Shares of Ola Electric, fell over 4% on Monday, 10 March 2025, amid reports of raids, vehicle seizures, and showroom closures linked to regulatory issues.

According to media reports, the company has come under scrutiny for allegedly violating provisions of India's Motor Vehicles Act, prompting government warnings.

Following customer complaints, transport authorities in various states reportedly conducted raids, shut down showrooms, seized vehicles, and issued show-cause notices to Ola Electric.

Media reports suggest that out of about 3,400 showrooms analysed, only around 100 had the necessary trade certificates required under the Motor Vehicles Act.

This implies that over 95% of the reviewed locations lacked the mandatory certification to display, sell, offer test rides, or transport unregistered two-wheelers.

Additionally, at least six local transport officials are said to be investigating the company for alleged violations. However, an Ola spokesperson dismissed these claims, stating that reports of non-compliance are "misplaced" and "prejudiced."

#2 Layoffs

Ola Electric is implementing significant workforce reductions, It's laying off over 1,000 employees and contract workers as part of a cost-cutting strategy to manage rising losses.

The job cuts span multiple departments, including procurement, fulfilment, customer relations, and charging infrastructure, as the company undergoes a major restructuring.

This marks the second round of layoffs in less than five months. In November 2024, the company had let go of approximately 500 employees.

The latest round of dismissals accounts for over a quarter of its reported 4,000-strong workforce as of March 2024, excluding contract workers who are not included in official disclosures.

According to the company, front-end operations have been automated to improve margins, reduce costs, and enhance customer experience while eliminating redundant roles for better productivity. However, no specific details were provided regarding the number of employees affected.

After laying off 500, Ola's Chief People Officer and CTO resigned. But Ola's top-level exits have been going on for a while. In 2024, several top executives resigned from Ola Electric, including the Chief Technology Officer (CTO) Suvonil Chatterjee and Chief Marketing Officer (CMO) Anshul Khandelwal.

#3 Market Positioning

Ola Electric's stock has declined by more than 60% since reaching its peak following its market debut in August 2024.

Once the dominant player in India's electric scooter market, the company has faced a sharp 74.5% year-on-year (YoY) decline in sales, dropping from 33,906 units in February 2024 to just 8,647 units in February 2025.

Intensifying competition has further impacted its market standing. Government data from December 2024 revealed that Bajaj Auto had overtaken Ola Electric as the leading electric scooter seller. TVS Motor has also surpassed it.

Despite these challenges, Ola Electric asserts that it remains a key industry player. In February 2025, it reported sales exceeding 25,000 units, translating to a 28% market share.

However, this remains significantly below the 50,000-unit monthly sales target set by the company's leadership to achieve breakeven in EBITDA.

#4 Financial Struggles Deepen

Ola Electric, which launched its first electric scooter in 2021, has yet to turn a profit. It's banking on in-house battery cell manufacturing to improve margins and achieve profitability in the long run.

Despite these ambitions, Ola Electric faces stiff competition from established automakers such as Bajaj Auto and TVS Motor, which have introduced competitively priced models against Ola's scooters.

Ola Electric's stock has been under pressure due to weak Q3FY25 earnings. The company's revenue from operations fell 19.4% YoY to Rs 10.5 bn, down from Rs 12.9 bn in the same period last year.

While October saw strong festival-driven sales, the overall quarter was impacted by rising competition and service-related challenges.

The company reported an EBITDA loss of Rs 4.6 bn, widening from Rs 3 bn in the previous year's quarter, partly due to expansion costs and lower operating efficiency.

The net loss also increased to Rs 5.6 bn in Q3FY25, compared to Rs 3.8 bn in the year-ago quarter.

In the previous quarter, ending September 2024, Ola Electric had posted a net loss of Rs 4.9 bn.

#5 Customer Complaints and Operational Hurdles

Ola Electric's stock has also been under pressure due to ongoing operational challenges and customer dissatisfaction.

The company has been restructuring its business by automating customer service processes and revamping its logistics and delivery operations to reduce costs. This has led to significant layoffs, particularly in sales, service, and warehouse roles at its showrooms and service centres.

Despite expanding its retail presence with 3,200 new outlets in December 2024 to address service and accessibility concerns, customer complaints about product quality and after-sales service remain high. Reports suggest the company has been receiving as many as 80,000 complaints per month.

Additionally, supply chain disruptions have added to its woes. Ola recently warned investors that vehicle registrations in February 2025 would be impacted due to contract renegotiations with key vendors-an attempt to cut costs and improve efficiency.

These operational struggles have raised concerns about the company's ability to maintain market share and profitability, further weighing on investor sentiment.

What Next?

Ola Electric aims to expand its footprint in international markets over the medium to long term while continuing to enhance its battery cell technology.

The company is improving vehicle range, reducing weight, shortening charging times, and optimizing costs to strengthen its competitive edge.

Domestically, Ola plans to deepen its presence in tier 2 and tier 3 cities, ensuring better accessibility and service support for customers across India.

Additionally, it is gearing up for an aggressive product expansion, with plans to launch over 20 new vehicles-including scooters, motorcycles, and three-wheelers-over the next two years.

Conclusion

Ola Electric, with its strong foothold in the EV market, stands to benefit from the government's renewed focus on electric mobility under the PM E-DRIVE scheme.

The push towards reducing battery costs and promoting recycling signals long-term growth opportunities for the EV battery sector.

While the removal of FAME subsidies marks a policy shift, the emphasis on domestic manufacturing and recycling reflects a commitment to building a self-sustaining EV ecosystem.

The NITI Aayog's projection of a 128 GWh demand for recycled batteries by 2030 highlights the sector's potential and companies receiving budgetary support in 2025 could be well-positioned to capitalise on this demand surge.

However, investors should evaluate the company's fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.

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