 "OLA")
Ola Electric’s stock opened lower, slipping 5.3 per cent from its previous close of ₹90.82 to hit ₹86 | (Photo: Shutterstock)
Bhavish Aggarwal’s Ola Electric made a late-night announcement on Monday, informing the stock exchange about receiving a show-cause notice from the Central Consumer Protection Authority (CCPA).
The company assured that it would file a detailed response within the mandated time frame of 15 days, backed by supporting documents, but the markets showed no mercy the following morning.
Click here to connect with us on WhatsApp
On Tuesday, Ola Electric’s stock opened lower, slipping 5.3 per cent from its previous close of ₹90.82 to hit ₹86. However, the stock quickly regained momentum and reversed its losses, trading at ₹92 at 9:50 AM, marking a recovery of around 7 per cent from the day’s low.
The company added that the CCPA notice “wouldn’t impact its financial, operational, or other business activities.”
The notice came on the heels of a barrage of consumer complaints, with the CCPA citing 9,948 grievances lodged on the National Consumer Helpline between September 1, 2023, and August 30, 2024. These complaints spanned the gamut—from delayed deliveries and faulty vehicles to misleading advertisements and poor customer service. The CCPA has given Ola Electric 15 days to present its side of the story, failing which corrective actions may be enforced.
This regulatory storm hit Ola Electric amidst a public spat between its founder, Bhavish Aggarwal, and stand-up comedian Kunal Kamra. The dispute, which erupted on social media, saw Kamra criticising the service quality of Ola EVs and tagging Union Minister Nitin Gadkari in the conversation. Aggarwal retaliated, dismissing the remarks as “paid” comments.
The market reaction was swift, with shares tumbling over 8 per cent on Monday to close at ₹90.82 per share, compounding the woes of Tuesday’s nosedive.
Not the first speed bump for Ola
This is not the first time the three-year-old Ola Electric has found itself in a regulatory crosshair. Last year, it faced scrutiny along with Ather Energy, TVS Motor, and Hero MotoCorp’s Vida for violating ex-factory pricing norms under the second phase of the Faster Adoption and Manufacturing of Electric Vehicles (FAME-II) scheme.
This paper reported in February 2023, highlighting how these companies billed chargers separately, breaching the maximum ex-factory price limit of ₹1.5 lakh—meant to make EVs more affordable.
The companies eventually agreed to reimburse around ₹300 crore to consumers in May 2023, with Ola alone paying nearly ₹130 crore to about 100,000 customers who had been overcharged.
The tsunami again
The CCPA’s recent notice highlights a pattern of alleged violations under the Consumer Protection Act, 2019, including service deficiencies, unfair trade practices, and misleading advertisements. The CCPA, under the Ministry of Consumer Affairs, safeguards consumer rights and enforces fair trade practices per the Consumer Protection Act, 2019.
Of the 9,948 complaints filed, 3,364 were related to slow service and repairs, 1,899 concerned delayed deliveries of Ola’s electric scooters, and 1,459 highlighted unfulfilled promises of service, resulting in widespread frustration. Many customers also reported faulty vehicles, citing manufacturing defects, poor build quality, and recurring technical issues, which have undermined consumer trust, the notice stated. Business Standard has reviewed a copy of the notice.
Additionally, some accused the company of misleading advertisements, claiming that Ola exaggerated the performance, features, and availability of its products. Dissatisfaction with customer support also emerged as a common theme, with complaints about difficulties in reaching support, delayed responses, and inadequate resolutions.
Despite the turbulence, Aggarwal has made public efforts to address the situation. Amid the online spat, the 39-year-old entrepreneur acknowledged the challenges on X (formerly Twitter), saying, “We’re expanding the service network fast and backlogs will be cleared soon.”
The Other Breaches
Ola Electric is grappling with more than just market turmoil and regulatory scrutiny; the Bengaluru-based company is also facing a significant dip in sales. In September, Ola’s month-on-month sales plummeted by 10.6 per cent, dropping to 24,665 units from 27,589 units in August.
While Ola struggled, its competitors—Bajaj, TVS, and Ather—continued to ride the upward wave, boasting sales increases of 13 per cent, 2 per cent, and 15 per cent, respectively, according to Vahan data from the Ministry of Road Transport and Highways.
Once commanding over half of the e2W market with a dominant 52 per cent share in April, Ola’s grip has significantly weakened, now down to just 27 per cent by September—a clear signal of a shifting competitive landscape.
On Monday, Ola Electric’s market capitalisation fell below $5 billion for the first time since its August listing, closing at $4.7 billion on October 7. This is a stark contrast to its IPO valuation, which soared above $7 billion at an issue price of ₹76.
As the company burns through cash to maintain its market presence, losses have accelerated to ₹347 crore ($41.4 million) in the April-June quarter, a jump from ₹267 crore during the same period last year. The road ahead looks challenging, as Ola Electric navigates a storm of declining sales and mounting financial pressures.
First Published: Oct 08 2024 | 10:44 AM IST
Leave a Reply