Ahead of the launch of its electric two-wheeler next month, Ola Electric, the EV arm of the SoftBank-backed ride-hailing giant Ola, is looking to raise USD 300 million from existing and new backers.
Ola Electric plans to deploy the new capital in building its brand, strengthening distribution, and developing in-house battery management systems as well as software for its electric vehicles, a report by local media Economic Times said, citing sources.
Bhavish Aggarwal, founder of Ola set-up Ola Electric as an in-house unit in 2017. Two years later, in early 2019, Ola spun off its EV segment into a separate arm, which subsequently raised USD 250 million from SoftBank and became a unicorn—a billion dollar company in July 2019. The four-year-old company’s other backers include heavyweights such as Kia Motors, Hyundai Motor Company, Tata Sons Private Limited, Tiger Global Management, Matrix Partners, and Pawan Munjal Family Trust. To date, it has raised about USD 307 million in funding.
Since last year, Ola has been gearing up to commercialize its electric vehicle business after its core cab-hailing business was hit hard by the mobility and transportation restrictions due to the pandemic. In May 2020, Ola Electric turned its focus to become a full-stack manufacturer of two-wheeler EVs and acquired Amsterdam-based electric two-wheeler manufacturer Etergo BV for an undisclosed sum.
Later in August, the company said it would hire over 2,000 people for its electric vehicle business. Then in December, Ola Electric said it is setting up its first manufacturing facility for electric vehicles (EVs) with an investment of USD 326 million (INR 24 billion). The said facility, it claimed, would be the world’s largest EV manufacturing hub that would have an annual production capacity of two million units initially and create employment for about 10,000 people.
The same month, it was reported that Ola was scouting multiple sites in India and Europe to build a network of charging stations for electric two-wheelers.
With its electric scooter, which is priced at INR 90,000 (USD 1,230) and INR 95,000 (USD 1298) per unit, Ola Electric would directly compete with Hero MotoCorp-backed Ather Energy, Bajaj Auto, TVS, and Okinawa, among others. Going forward, Ola Electric aims to become a full-range electric vehicle maker offering two, three, and four-wheeler EVs under its portfolio.
A report released in December 2020 by India Energy Storage Alliance (IESA), said the EV market in India is expected to grow at CAGR of 44% between 2020-2027 and would hit an annual sales of 6.34 million-unit by 2027.