Ola Extends Lead Over Rivals In EV 2W Market, On Track To Achieve EBITDA Profitability: Bernstein

Bhavish Aggarwal-led Ola Electric is extending its lead over its rivals in the electric two-wheeler (EV 2W) market on the back of a diverse product portfolio, high vertical integration, D2C distribution model and aggressive pricing supported by PLI and FAME subsidies, according to brokerage firm Bernstein.

In a recent research note, analysts at Bernstein said Ola Electric is on track to achieve EBITDA profitability and has the highest gross margin among its peers. 

Ola reported an EBITDA margin of -2% in the June quarter of the financial year 2023-24. On the other hand, its competitors TVS Motor, Bajaj Auto and Ather Energy reported an EBITDA margin of -7.9%, -10.4% and -37%, respectively, during the period.

The brokerage firm pointed out that Ola is already generating positive operating EBITDA from the sale of its premium models such as S1 Pro and S1 Air. In contrast, its competitors TVS and Bajaj Auto are incurring a per-unit EBITDA loss of 7.5% and 10.5%, respectively.

In Q1 FY25, Ola Electric boasted a gross margin of 18.4%, with TVS trailing behind at 14%, Bajaj at 12.3% and IPO-bound Ather Energy at 7%, as per the report.

Ola’s push for aggressive localisation, greater mix of in-house manufacturing of components, and better scalability in EVs is helping the recently listed EV startup clock better EBITDA profitability and higher gross margins as compared to its rivals, Bernstein said.

While Ola sells a range of escooters targeting premium and mass market segments, Ather Energy caters to premium customers and its EV 2Ws are priced higher than Ola’s. Ather Energy has lower volumes as compared to its peers, it added.

“Ola primarily targets urban commuters and tech savvy, cost conscious customers, which has driven its leading volumes till now. It aims to build scale by offering multiple form factors,” the report said.

While Bajaj Auto’s Chetak is the only escooter in India with a metal body, it lacks youth appeal and premium features and lags in performance and range despite being affordable. Moreover, unlike Ola Electric, Bajaj outsources critical EV 2W components such as motors and battery backs, it said.

The report comes days after brokerage firm Goldman Sachs initiated coverage on Ola Electric with a ‘buy’ rating, saying it expects the EV mobility startup to achieve EBITDA breakeven by FY27E, primarily driven by decrease in battery pack prices.

Analysts at Goldman Sachs pointed out that Ola Electric has the strongest product pipeline among its competitors, with 14 planned launches. It was followed by TVS with eight planned launches and Bajaj Auto with six.

It is pertinent to note that Ola Electric last month unveiled its Roadster series of electric motorbikes and is also gearing up to foray into the electric three-wheeler market, with the move expected to give the company a further competitive edge over its competitors.

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