Ola Electric “Redesigns” Distribution Network With An Eye On Profitability

With an eye on boosting its bottom line and curb cash burn, electric vehicle (EV) major Ola Electric has reportedly shut all its regional warehouses across India. 

Citing sources, news agency PTI reported that the listed EV maker now plans to leverage its 4,000 retail stores across the country to maintain vehicle inventory, spare parts, accessories, and last-mile deliveries.

As per the report, the move is expected to boost Ola Electric’s EBITDA margins by almost 10 percentage points, “improve” inventory management and enable faster customer deliveries. 

Besides, the EV major also expects to rake in roughly INR 30 Cr in monthly savings from this “redesigned” distribution network and new plans to optimise vehicle registration process.

“The front-end network redesign represents a fundamental rethinking of how we manage inventory and serve customers… Our initial distribution model served its purpose during our early growth phase, and now the company’s rapid expansion necessitated the front-end redesign,” a senior company executive said. 

According to the report, the restructured network will allow Ola Electric to maintain inventory directly at retail locations, thereby eliminating the entire distribution layer. The move will enable these standalone retail stores to function as delivery points, which will help the company reduce last-mile expenses and improve customer experience. 

The inventory pipeline has also been halved to 15 days from 30 days earlier and the delivery timelines have also been brought down to 4-5 days from an earlier timeframe of 10 days, sources reportedly added.

Part of the company’s larger restructuring plan to drive profitability, Ola Electric earlier this month announced that it was renegotiating contracts with vehicle registration agency partners to streamline the process and further reduce costs. The company said that the move will “temporarily” impact its registration numbers on the government’s VAHAN portal in February 2025 due to automation of some aspects of vehicle registration processes. 

Nevertheless, sources within the company indicated that Ola Electric is well poised to sell over 25,000 units this month and “maintain” its leadership in the EV two-wheeler segment.

The development comes at a time when the Indian two-wheeler EV space is witnessing intensifying competition amid rising EV adoption in Tier-III and Tier-IV cities and overall demand growth. Legacy players such as TVS Motor and Bajaj Auto are fast catching up with Ola Electric, with their differentiated offerings and a wide servicing network. 

Meanwhile, Ola Electric is under government scrutiny over complaints about its after-sales service. Making matters worse is rising losses and falling stock price. 

Earlier in the day, shares of Ola Electric hit an all time low at INR 56.18 during the intraday trading on the BSE. 

The EV maker’s consolidated net loss widened 50% to INR 564 Cr in the Q3 FY25 from INR 376 Cr in the year-ago quarter. Operating revenue also declined 19% to INR 1,045 Cr during the quarter under review from INR 1,296 Cr in Q3 FY24.