Ola Electric lays out vision; plans to launch motorcycles, SUVs, robotaxis

The SoftBank-backed company expects to turn cash-flow positive in three quarters and highlighted that it has more than 60,000 scooters on the road, according to a Kotak Institutional equities report

Ola Electric, the ride-hailing firm’s electric vehicle arm, has laid out its vision to become a vertically integrated electric mobility player across two-wheeler and passenger vehicle segments. The company calculates the opportunity size at $1 trillion at a volume of 155 million units, according to a Kotak Institutional equities report.

The SoftBank-backed company has also announced its target to attain 15 per cent of the global capacity for electric two-wheeler vehicle manufacturing. Further, it plans to make significant investments in R&D to drive the vertical integration strategy, especially in battery cell technology as well as traction motors.

“We recently visited the Ola future factory and interacted with the management at Ola Electric,” said the Kotak report. “We gather that the company is focused on becoming the leading vertically integrated mobility player.”

The Bhavish Aggarwal-led company expects to turn cash-flow positive in three quarters and highlighted that it has more than 60,000 scooters on the road.

The company has experienced one fire incident to date, according to the report. It said the initial findings of the government suggested issues with battery and battery management systems. The company stated that as an isolated incident and with stricter regulations, the company expects the EV ecosystem to become much safer over the coming period.

The company expects the EV two-wheelers to completely substitute ICE (internal-combustion engine) two-wheelers in India by FY2025. The company has identified technology and vertical integration as the key enablers, which will lead to the rapid adoption of EVs in the domestic market.

The company plans to launch a series of new EV products across scooters, motorcycles, sedans and SUVs. This includes unveiling its mass scooter by the end of  CY2022 and launching its premium motorcycle in CY2023. This would be followed by the mass market variant and sports motorcycle. 

On the passenger car front, the company plans to launch a premium SUV and premium sedan in CY2024 followed by mass market variants for both of them. 

“The company plans to launch Robotaxi with L3 (level 3) autonomous capabilities to complete its suite of products,” said the Kotak report.

The aftermarket service for the vehicles is to be delivered through dark service stores and mobile vans augmented to service vehicles. The customer experience is to be further enhanced through the use of predictive and preventative maintenance delivered to the customer.

The location services are expected to be more tailored for the Indian roads using the data from Ola cabs. The company expects the hypercharger network to be able to charge 50 per cent of the battery in under 20 minutes in three years. This is expected to complement the home chargers and capture 20-30 per cent of the energy needed for EVs.

The company has invested over $100 million in setting up an R&D centre for battery technology. It employs over 200 researchers and plans to expand its strength to more than 500 PhDs in the next few years. The technology headquarters will be in Bengaluru with research centres in San Francisco in the US, Coventry in the UK, Pune and Japan. The company plans to build cell technology capabilities in NMC (Nickel Manganese Cobalt) 2170 by this year and its various advanced versions as well as metal anode solid-state technology by CY2026. Apart from cell technologies, the firm also wants to develop the technologies for L3 autonomous capabilities with point-to-point navigation, emergency braking and collision avoidance.

Ola expects the current cell cost of $150/kWh to reduce to $100/kWh as it moves this in-house from its current vendor LG Chem. The company expects this move to lead to a 10-20 per cent reduction in the total cost and an 8.5 per cent improvement at the EBITDA level. In order to achieve these objectives, the company has managed to obtain the incentives under the ACC (Advanced Chemistry Cell) PLI (Production Linked Incentive) scheme to set up 20 GWh of annual capacity. This is expected to enable the company to control its costs further. 

The future factory in Krishnagiri in Tamil Nadu is designed for a capacity of 10 mn units of scooters annually across 10 assembly lines. The company plans to manufacture 6 cars across 2 platforms and 4 cell variants across 2 form factors in the Krishnagiri plant. The plant is expected to deliver a scooter every 2 seconds at full capacity across 10 lines with a cycle time of 20 seconds for each line.

Ola Electric expects to turn cash-flow positive in three quarters.

Has more than 60,000 scooters on the road.

Has experienced one fire incident to date.

It was due to issues with the battery and battery management system.

Planning a series of new EV products across scooters, motorcycles, sedans and SUVs.

The opportunity size is $1 trillion at a volume of 155 million units

Cell costs $150/kWh to reduce to $100/kWh as it moves this in-house.

This would mean a 10-20% reduction in the total cost and an 8.5% improvement at the EBITDA level.

Looking to develop tech for L3 autonomous capabilities, emergency braking and collision avoidance.

(Source: Kotak Institutional equities report)