Ola Electric To Fire 500 Employees To Attain Profitability

Amid concerns about its losses and after-sales service woes, electric two-wheeler manufacturer Ola Electric has undertaken a restructuring exercise to cut its workforce by about 500. 

The exercise will impact employees from across departments and levels, sources told Inc42. 

The Bhavish Aggarwal-led company is aiming to improve its operational efficiency by reducing redundancies in order to turn profitable, the sources added.

“The exercise is currently ongoing and will impact employees across departments. The aim is to cull expenses to drive profitability and improve margins. There’s no set time period for the completion of the exercise,” one of the sources said.

The development was first reported by Moneycontrol.

Ola Electric posted a net loss of INR 495 Cr in the second quarter of the ongoing fiscal year (Q2 FY25). While loss narrowed 5.5% on a year-on-year (YoY) basis, it rose 43% from INR 347 Cr in Q1 FY25.

In its investor presentation for the quarter, Ola Electric said it would focus on improving its bottom line by investing in margin gains. 

In a post-earnings call, founder and CEO Aggarwal said that the company expects to keep its operating expenses “flat or maybe slightly lower” over the next couple of quarters.

“As we continue to scale distribution… so revenue keeps growing and operating expenses will largely be flat or probably even down over the next couple of quarters,” he said. 

As per its red herring prospectus, Ola Electric had over 4,000 on-roll employees at the end of FY24. The company spent INR 139 Cr on its employees in Q2 FY25, up 13% quarter-on-quarter and 23% YoY.

It is pertinent to note that in June this year, it was reported that Ola Electric was planning to trim its workforce by about 400-500 in a bid to streamline its operations before listing. Besides, it also undertook similar restructuring exercises twice in the last two years. 

The latest exercise comes at a time when Ola Electrics’ shares have been on a continuous decline over the last few months. Shares of the company hit a fresh all-time low of INR 66.85 on Thursday (November 21), down over 12% from its listing price of INR 75.99. 

The decline in the stock comes amid mounting complaints about the company’s escooters. 

Last week, it was reported that the Central Consumer Protection Authority (CCPA) has launched a detailed investigation into the consumer complaints filed against the company. 

Last month, the CCPA issued a show cause notice to Ola Electric over user complaints. Following this, the company said that 99.1% of the 10,644 complaints were resolved to the complete satisfaction of the customer. In November, reports said that Ola Electric’s claims were found to be false by the CCPA.

Shares of Ola Electric ended today’s trading session 2.93% lower at INR 67.24 on the BSE. Its market capitalisation stood at INR 29,658 Cr (about $3.50 Bn).