Ola Electric, the EV business arm of Ola, is driving the growth of the SoftBank-backed mobility giant ahead of its plans to go public in early 2022.
After the market debut of its two-wheeler EV—Ola Scooter—proved to be a runaway success last month, Ola Electric has raised over USD 200 million funding round led by Falcon Edge and SoftBank to accelerate the development of electric scooters and motorbikes as well as electric cars. The deal values the electric vehicle firm at USD 3 billion, the company said in a statement on Thursday.
“India is building technologies of the future and becoming a global EV hub! With this raise, we will accelerate our vehicle development across 2W scooters, motorbikes, and 4W,” said Bhavish Aggarwal, founder and CEO of Ola, in a tweet after the funding announcement.
The development comes two months after Ola Electric received USD 100 million from the Bank of Baroda as a ten-year-long debt to complete setting up the first phase of its EV production facility. The EV firm, which also counts Tiger Global as a backer, has raised over USD 600 million in funding so far.
Ola Electric said it has already set a benchmark in two-wheeler EV sales by selling over USD 150 million of e-scooters in its first purchase window—a two-day sale event in mid-September—outselling the entire two-wheeler industry on each of the two days. Deliveries of these scooters will begin this month across 1,000 cities and towns. The company plans to open a second purchase window starting November 1, coinciding with the Diwali festival.
Aggarwal started focusing on the group’s electric vehicles vertical—set up by Ola as an in-house unit in early 2017 and spun off in March 2019 into a separate arm—after the COVID-19 pandemic shattered Ola’s core cab-hailing business last year due to the restricted mobility.
In May 2020, during the peak of the pandemic when Ola’s revenues were down by 95%, Ola Electric acquired Etergo BV, an Amsterdam-based electric two-wheeler manufacturer, for an undisclosed sum, to become a full-stack manufacturer of two-wheeler EVs. Barely two months after laying off 1,400 people across its mobility, financial services, and food business, the company in August said it would hire over 2,000 people for its EV unit.
In December 2020, the company announced the establishment of an EV manufacturing facility in the Indian state of Tamil Nadu with an investment of INR 24 billion (USD 320 million). Ola said the 500-acre factory—which, once completed, will become the world’s largest two-wheeler plant—will account for 15% of the world’s two-wheeler production. To begin with, it will produce two-wheeler EVs and cater to customers across India, Europe, Asia, Latin America, and other regions. The plant—dubbed by Ola as Futurefactory—will have an initial capacity of two million electric vehicles a year, eventually expanding it to ten million units.
Ola Electric said it has completed the first phase of construction of Futurefactory within six months, which is currently undergoing production trials. The company added that Futurefactory is entirely run by women and, at full scale, will have over 10,000 women employed.
“At a time when the Indian government wants 30% of vehicles sold in India by 2030 to be EVs, it is the right time for Ola to put all its weight behind this segment,” Shivathilak Tallam, senior investment associate at Unitus Ventures, told KrASIA, in an earlier interview. “The government has also pushed a range of incentives for EV adoption among consumers, such as motivating people to take loans to purchase EVs by making them tax-deductible, waiving road taxes, and lower tax rates for EVs.”
Although charging infrastructure may not be the best yet, Tallam said what helps Ola Electric is that “its target audience is young, upwardly mobile millennials who care about the environment and have the ability to afford EVs.”
More recently, Ola has also ventured into the used car retailing space with a new offering called Ola Cars. The move is expected to diversify its product portfolio and open a new revenue channel while demand for its core cab-hailing business recovers.