Ola Electric set to invest Rs 3,500 crore in five years under PLI scheme

Ola Electric has committed total investments of Rs 3,500 crore in five years, much higher than the minimum investment required for such firms (Rs 2,000 crore) under the production-linked incentive (PLI) scheme for the automobile industry. It is one of six non-automotive investors that made the cut for the scheme.

Sources say Ola had announced that it would invest Rs 2,400 crore in the first phase of its electric two-wheeler plant with an initial capacity of 2 million and work started in February-March 2021. As part of the scheme’s conditions, it will be able to include a substantial chunk of the investment it has already made in the new plant. That is because cumulative new domestic investments starting from April 1, 2021, will be considered under the scheme.

Ola was also able to take advantage by applying as a non-automotive company, defined under the PLI scheme as companies  that have no revenue from manufacturing of automobiles as on March 31, 2021.

Ola started selling its scooters only by the end of 2021. And it also met a moderate  networth criterion requirement of only Rs 1,000 crore for non-automotive players. Ola Electric declined to comment on the issue. 

However, its key rival and start-up, Bengaluru-based Ather Energy (in which Hero MotoCorp has invested), which had also applied under the existing two-wheeler champions category, did not make it to the list.

While a spokesperson of Ather Energy declined to comment on the issue, sources said it has approached the central government to ascertain why it was not selected, as it is the first electric two-wheeler start-up and has been selling scooters in the country for over three years.

Some auto players say the PLI scheme seems to have ignored existing electric two-wheeler companies by putting in stiff financial eligibility rules for them, while making it very easy for non-automotive players.

However, defending the scheme, some analysts argue that the government’s aim was to rope in large players who can make big investments. Hence, Ather’s investor, Hero MotoCorp, the largest two-wheeler maker in the country, has made the cut. 

However, since Ather has been making electric two-wheelers for three years now it had to apply as an existing auto company and was confronted with stiff eligibility criteria— the company or its group companies needed to have minimum revenue of Rs 10,000 crore and a gross block of Rs 3,000 crore.

Under the scheme, non-automotive companies have been provided incentives that vary from 13-16 per cent, depending on their sales value.