๐ Ola's Bumpy Ride Towards Its IPO
Ola had entered the market as a tough competitor to Uber. But the company is now suffering under a mountain of problems. Here's why.
When Ola came into the picture in 2010, it changed the way people travelled, disrupting the entire transport ecosystem.
Soon, headlines like "Ola: India's upstart start-up puts Uber in the shade" began circulating.
Ola had seemingly managed to take on a foreign giant and mark its victory.
And 7 years later looking at the popularity of electric vehicles, it soon launched a new vertical Ola Electric.
And it also became a market leader in this space at one time.
But lately Ola has been facing nothing but troubles, which is a huge issue especially with an IPO coming ahead soon.ย
Wondering what kind of troubles Ola has been having? ReadOn!
๐ Ola's Electric Problem
Though it started out at the top, Ola Electric is bottoming out.
Its registrations have dropped by over 36% and it is no longer the top EV manufacturer.
The infamous electric fires have pushed it down to the fourth position in the list.
And why just Ola. Several other two-wheeler EVs have also caught fire in the last couple of months due to faulty batteries and the scorching summer.
Not only has this made people wary of buying EVs but also invited government attention.
The government has sent Ola Electric and many other EV players a show cause notice and may even impose penalties on them for selling faulty vehicles.
Moreover, the government is introducing EV battery standards to avoid such fires, which means Ola Electric may have to make changes to its manufacturing process to ensure safety.
For a company that recently saw a loss of ~Rs. 200 crores last year, this could be problematic.
But this isn't the only reason. Customers have lost trust in Ola Electric because of unkept promises
Not only did the company deliver scooters much beyond the promised date (the scooters were supposed to arrive in October but were delivered in December), when they finally did arrive they created problems for customers.
The scooters had dents, the charger installation was delayed, there were issues with insurance policies and so on.
On top of this, when customers tried to call customer care, they got no response.ย
The worst part? Ola's EVs are some of the most expensive two-wheelers out there.ย
So, when customers didn't get their money's worth even after spending so much, they lost faith in the company.
However, the company claims these problems are temporary. The slowdown in registrations is because of battery cell shortages and because initial demand has already been met through pre-orders.
But even if that is the case, Ola is not entirely out of the woods. Every arm of Ola has been facing some issue or the other.
โพ Ola's Neverending Problems
The company may have managed to beat Uber back in the day but the story has been much different after that, especially thanks to the pandemic.
The company has been seeing losses after losses and is also seeing a majority of its workers exit.
Ola Electric alone saw 32 high profile exits in the last 60 days. And 16 other major executives have left the company in the last two years.
Its drivers exited the company in hordes last year because it failed to pay them the monthly installments for their car loans.
Also, the company has stopped giving drivers the incentives and benefits it had earlier promised while boarding them.
This, plus the high commission the company charges and the insane price of oil, made it difficult for drivers to make ends meet.
This lack of drivers has created another problem for Ola: not enough cabs for customers.ย
So, its workforce is angry and its customers are angry: a truly difficult position for a company to be in.
On top of this, the company has to lay off the few employees that had stuck around.
It will be firing 500 employees of its 1,100 strong workforce to make ends meet.
And that's just the story of its ride-hailing business.
The other businesses are struggling even more.
So much so, that the company has had to shut down Ola Cars (the company's car leasing business) and Ola Dash (its quick commerce arm).
And Ola Financial Services (which provides loans for vehicles) has been fined Rs. 1.67 crores for not complying with rules about KYC and pre-paid instruments.
While problems are closing in on the company from every corner, its ambitions haven't dwindled. For instance, the company aims to introduce fast EV charging and claims it will reach an average annual revenue of Rs. 700 crores (up from Rs. 500 crores).
Not all these plans are tall claims. The company has managed to create the country's first domestically produced Lithium-ion battery. Mass production of this battery is set to begin in 2023.ย
And it has also set up a research factory to build more EV tech.
This could be a gamechanger for the company and in fact the entire EV sector.
But will this be enough for Ola to stay afloat or will its other problems drown it?
โก In a line: Ola started out strong but as it gets closer and closer to its IPO its troubles are growing, with both customers and executives upset with the company.
๐ก Quick question: Are you betting big on Olaโs IPO?
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