Despite a 20% rise in gross margin and expansion into motorcycles, Ola Electric faces revenue decline and widening losses in Q3 FY25. Can its aggressive expansion and new product launches drive future profitability?
Ola Electric, India’s leading electric two-wheeler manufacturer, has reported its financial results for the quarter ending December 31, 2024. The company achieved a revenue of ₹1,069 crore during this period, a decrease from ₹1,336 crore in the same quarter of the previous year.
Despite the decline in revenue, Ola Electric maintained its market leadership with a 25.5% share in the electric two-wheeler segment, as per VAHAN data. This position was bolstered by the company’s dedicated focus on electric vehicles, a robust product lineup, and technological advancements.
The company reported a net loss of ₹564 crore for the quarter, an increase from the ₹376 crore loss recorded in the same period the previous year. This widening loss is attributed to substantial discounts offered to counter rising competition and investments aimed at enhancing service quality at workshops.
In terms of gross margin, the automotive segment saw an improvement, reaching 20.8% in Q3 FY25, up by 2.2 percentage points year-over-year. This resilience was driven by approximately a 1 percentage point reduction in Bill of Materials (BOM) costs and the benefits of Production Linked Incentive (PLI) accruals across the product range. These margin gains have been reinvested into the business to make electric vehicles more affordable and to further drive EV penetration.
Looking ahead, Ola Electric anticipates that its path to profitability will be driven by improvements in gross margin, optimization of operating costs, and operating leverage through product portfolio expansion, including new categories such as motorcycles and models like the Gig and S1 Z. The company also emphasizes its commitment to technology leadership.
In January 2025, Ola Electric launched the S1 Gen 3 products, offering a 20% increase in peak power, an 11% reduction in cost, and a 20% increase in range compared to the previous generation. Deliveries are set to begin in February 2025. Additionally, the company entered the motorcycle market in February 2025 with the launch of its mass-market EV motorcycle portfolio, including the Roadster X and Roadster X+. Deliveries for these motorcycles are scheduled to start in mid-March 2025.
During the quarter, Ola Electric delivered 84,029 vehicles, a slight decrease from the 86,775 units delivered in the same period last year. To meet increasing demand, the company expanded its distribution network to over 4,000 touchpoints by December 2024, up from 784 company-owned stores in September 2024. This expansion represents one of the largest global EV footprint growths, positioning Ola Electric as India’s largest EV distribution network.
The company has also been focused on enhancing its service infrastructure to provide a seamless ownership experience. All new Ola Stores are co-located with service facilities, reinforcing the #HyperService initiatives. Efforts to scale service capabilities include training 100,000 third-party mechanics with EV expertise, ensuring readiness to serve customers nationwide and further drive EV adoption in India.
Ola Electric’s in-house 4680 Bharat Cell is on track for commercialization, with module-level testing for integration into vehicles having commenced in Q3 FY25. Vehicle deliveries featuring these cells are expected to start in Q1 FY26. The company continues to invest in cell research and development, working on the Gen 2 NMC Cell, which will have higher energy density, and LFP Cells for automotive and Battery Energy Storage System (BESS) applications.
In summary, while Ola Electric faced challenges in the recent quarter, including a decline in revenue and an increase in net loss, the company has maintained its market leadership and is actively expanding its product portfolio and distribution network. Strategic investments in technology and service infrastructure are expected to drive future growth and profitability.