Business

Ola Electric to lay off 500 employees amid financial struggles and ongoing controversies

Ola’s financial performance for the July-September quarter (Q2 FY25) reveals a 43% increase in net losses

November 22, 2024

Ola Electric’s layoffs will affect employees across multiple departments

Ola Electric, the electric vehicle (EV) manufacturer led by Bhavish Aggarwal, is set to lay off at least 500 employees as part of a major restructuring initiative aimed at improving operational efficiency and driving profitability. The company is grappling with mounting financial losses, controversies, and a government probe, which have raised concerns about its future performance.

Reports suggest that the layoffs will affect employees across multiple departments as Ola Electric seeks to reduce redundancies and streamline its operations. According to a source cited by Inc42, the company’s primary objective is to reduce expenses, improve margins, and boost profitability. However, there is no specified timeline for the completion of the restructuring process.

Ola Electric, which has faced significant challenges in recent months, did not immediately respond to inquiries about the layoffs.

The company’s financial performance for the July-September quarter (Q2 FY25) reveals a 43% increase in net losses, reaching Rs.495 crore, up from Rs,347 crore in the previous quarter. Revenue also saw a sharp decline, dropping 26.1% to Rs.1,214 crore, compared to Rs 1,644 crore in Q1 FY25. Despite the growing losses, the company reported a narrowing of net losses on a year-on-year basis.

In the post-earnings call, Aggarwal indicated that the company’s operating expenses had decreased on a quarter-to-quarter basis. He expressed optimism, stating that as distribution scales, revenue will continue to grow while operating expenses are expected to remain stable or even decline over the next few quarters.

Ola Electric’s market share also experienced a significant drop, falling to 33% in Q2 from 49% in the previous quarter. Industry experts attribute this decline to heightened competition and challenges in the company’s service network, which has impacted its market position.

Ola Electric’s stock has seen a substantial decline, with the company losing more than Rs.38,000 crore in market value over just a few months. On Friday, the stock was priced at around Rs.67 per share, significantly lower than its debut price of Rs 76 and down by over 56% from its all-time high of Rs.157.40. The company’s market capitalization has shrunk from a peak of Rs.69,000 crore to approximately Rs.31,000 crore.

Adding to its troubles, several customers have reported issues with Ola Electric’s products, including software glitches, battery problems, and jammed tyres. In response, the Central Consumer Protection Authority (CCPA) has ordered a comprehensive probe into the company’s consumer complaint redressal practices.

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