Once hailed as a poster child of India's start-up ecosystem, Ola now finds itself grappling with a storm of challenges.
Established in 2010, the company swiftly became a recognisable brand, growing from a ride-hailing platform to foraying into electric mobility and battery technology, taking on rivals like Uber along the way.
In 2023, it ventured into artificial intelligence with the launch of Krutrim — touted as India's first AI firm to surpass the $1 billion valuation mark.
Backed by prominent international investors including SoftBank and Tiger Global, Ola's ambitions soared. Its EV division attracted significant attention last year by raising approximately $734 million through a highly anticipated IPO — the largest in India during 2024.
However, this rapid ascent has recently been marred by growing turmoil, especially within its electric vehicle arm.
Since the IPO, Ola Electric’s valuation has plummeted by nearly 70% in just seven months. The firm is struggling against entrenched two-wheeler manufacturers while contending with increasing regulatory oversight.
Scooter sales have sharply declined — now less than half of what they were in April 2023 — and financial losses have deepened. Social media is awash with user-shared videos of scooters malfunctioning or catching fire mid-ride.
Government agencies are currently investigating several newly established Ola showrooms over compliance with licensing and registration norms. In a separate blow, a supplier filed an insolvency petition, which Ola claimed to have settled in a regulatory statement.
According to former staff and industry insiders, repeated delays in payments have prompted a number of major vendors and logistics firms to sever ties with the company.
In an effort to curb expenses, Ola has reduced its workforce, reorganised internal operations, and turned to automation. Reports suggest a second wave of job cuts since November has seen more than 1,000 roles eliminated.
Bhavish Aggarwal, Ola’s co-founder and chief executive, had envisioned the firm as the two-wheeler counterpart to Tesla — a sustainable solution for India’s cost-conscious consumer base. He invested heavily in marketing and opened Ola-branded showrooms across the country, going as far as delivering scooters directly to online customers’ homes.
But the company failed to gauge the domestic market's nuances effectively. The scooter's design was heavily influenced by the AppScooter from Etergo, a Dutch start-up Ola acquired in 2020. Ola’s inaugural electric scooter was introduced with minimal alterations to the original Etergo model. Approvals were expedited to meet overly ambitious launch targets.
Consumer-reported incidents have sparked safety concerns. Some scooters reportedly caught fire, which automotive experts attribute to potential short-circuits or battery management issues. In 2022, over 1,400 first-generation units were recalled for investigation. Although Ola maintained the batteries met both Indian and European standards, it did not disclose the root cause of the fires.
There have also been cases of the front suspension — critical for holding the wheel in place — snapping during rides, resulting in injuries. Following such an incident in early 2023, Ola labelled it an isolated case, pointing out that only a small number of failures had occurred out of 150,000 units sold.
Meanwhile, as legacy automakers entered the electric scooter space with dependable products, competition stiffened dramatically. Ola’s market share dipped from 52% to 19% by December before rebounding slightly to 25% in January.
Analysts remain unconvinced that Ola can meet its break-even goal of 50,000 monthly sales. While the government’s data placed February scooter sales below 10,000, Ola claimed to have sold 25,000 units, blaming registration hold-ups caused by revised vendor contracts. In response, the Ministry of Transport issued notices over the data mismatch. Ola later stated it had registered over 23,000 sales in March, holding 30% of the fiscal year's market share.
Buyers are opting for simpler models from established brands due to greater trust and reliability. To regain momentum, Ola has introduced aggressive discounts and budget-friendly models. Still, losses have widened
Beyond product-related issues, customer support has been another area of concern, says an observer. As complaints surged about fire hazards and broken suspension parts, many customers reportedly struggled to receive timely service.
Beyond product-related issues, customer support has been another area of concern, says an observer. As complaints surged about fire hazards and broken suspension parts, many customers reportedly struggled to receive timely service.
Thousands of grievances were being registered each month. India’s Central Consumer Protection Authority (CCPA) even issued a notice after logging 10,000 complaints in a single year.
Having bypassed traditional dealerships to sell directly to consumers — and with only a limited number of service outlets — Ola left disgruntled customers with few avenues for redress.
Ola later informed the CCPA that it had a “strong framework to handle complaints” and claimed that most matters flagged by the regulator had been addressed satisfactorily.
Initially, Aggarwal appeared dismissive of the criticism online. However, after a widely publicised exchange with a stand-up comedian on X, he pledged to open nearly 4,000 new outlets with repair services.
Many of these new facilities have since come under government scrutiny over missing permits to store or sell vehicles.
Ola’s shifting fortunes are now giving pause to investors, particularly those who bought in at lofty IPO valuations.
The company has played a pivotal role in India's broader decarbonisation and manufacturing ambitions.
It currently benefits from two distinct state subsidy schemes — one for producing electric scooters and another for establishing a 20-gigawatt battery factory. But this flagship plant has been delayed, missing a key milestone and potentially risking penalties.
Observers say Ola’s problems stem from start-up culture pitfalls — a concentration of decision-making power, frequent strategy changes, and aggressive timelines.
“Software-style management doesn't translate well to hardware,” said a former Ola executive. “Physical products take time to mature.”
A number of senior leaders have exited recently, including a former Ola Cabs CEO who departed after only a few months. Others in leadership roles across technology, sales, and marketing also moved on last year. Experts believe these departures have undermined efforts to resolve lingering issues with both products and service.
Ola was once the shining star in India's start-up sky, but now it is struggling to survive.
