Ola Electric consolidates electric two wheeler leadership with market gain

Ola Electric, which filed its Draft Red Herring Prospectus (DRHP) for a Rs 5,500 crore IPO last month,  has pushed the pedal on sales, grabbing a market share of over 41 per cent in the electric two wheeler market, its highest in CY23 with 30,219 registrations last month. 

The increase was partly the result of a fall in registrations by Ola’s top competitors — TVS, Bajaj and Ather — from their levels in November.

Ola’s increase in market share was substantial. In November, it stood at 33.5 per cent. Bajaj and TVS collectively surpassed Ola with a 34.6 per cent share. But in December, their collective share fell to 30.8 per cent. TVS saw a sharp fall in registrations of 36 per cent in December after hitting a peak in November. 

However, India’s overall total two wheeler market in CY23 fell short of the one million mark. It reached 0.82 million, primarily because of the adverse impact of subsidies being reduced during the middle of the year and various regulatory challenges. 

As a result, an industry with over 115 players is experiencing swift consolidation. The top four now account for 73.5 per cent of the market share compared to less than half in CY22.  

Based on financial year numbers, the industry expectation to hit 1.2 million looks like a pipedream. Registrations from April-December were only 0.61 million. That’s half the target, with only three months to go.

Despite the challenges, the growth in CY23 over the previous year has been impressive for many players. Ola Electric grew 2.4 times;  Ather two times; Bajaj nearly three times; and TVS 3.5 times within a year.

As a result, while Ola’s market share in CY23 might have been 32 per cent, TVS garnered an over 20 per cent market share to be in the second spot, followed by Ather and Bajaj.

The Ola push is understandable as it is clearly looking at building volumes before the IPO opens sometime in March if it gets regulatory clearances in time.

But for those looking to invest, the key questions are how far Ola can push its volumes and dominate the market, how far it can build scale, and how its financials will look by December.

In its DRHP, Ola has shown  financial results only till  Q1 FY24  which does not reflect the impact of subsidy cuts by the government (it will be felt later) or the discounts it gave in order to build volumes.