During the festive season, discounts increased the average daily sales of Ola Electric Company News

Buyers of other variants of the S1 can also get a discount of up to Rs 25,000, while those eyeing the flagship S1 Pro can get an exchange bonus of Rs 5,000. As reported by this newspaper recently, the sale of Ola Boss is already under regulatory scrutiny as the Automotive Research Association of India (ARAI) has raised concerns over the company's recent pricing practices.

In an October 8 email to the Bhavish Aggarwal-led company, ARAI Boss did not inform Ola about the price cut of the S1 X 2 kWh model before the sale began. This oversight may impact the model's eligibility for government grants under the PM Electric Drive Revolution in Innovative Vehicle Improvement (PM E-DRIVE) program.

Pricing its e2W below Rs 50,000, Ola Electric has offered a 33% discount compared to the 5-10% discount offered by its competitors. Experts warn that such aggressive pricing strategies may come at the expense of profitability.

“Buying a vehicle under Rs 50,000 is a steal,” says Pritesh Singh, CASE and alternative powertrain expert at NRI Consulting & Solutions.

“Sales are expected to increase as consumers will not choose products costing more than Rs 100,000 when they can buy them at half the price. However, this increase is only a temporary solution; Such large discounts are unsustainable and may threaten profitability in the long run,” Singh added. Ola Electric did not respond to Business Standard's queries on the number of vehicles sold at a discount, the impact of these sales on its profits and other details related to it.

Among the top four players in the e2W market, Ola Electric is the leader with the lowest starting price of ₹74,999, even before any discounts are applied. The Bajaj Chetak starts at Rs 1,00,000 and the TVS Motor starts at around ₹ 1,07,000. The fourth player, Athar Energy, tops the group with a starting price of ₹1,10,000. These four players captured 85 percent of the total 51,079 e2W sold in the first 15 days of October.

This pricing strategy positions Ola Electric as a strong competitor, making it difficult to keep pace in the competitive landscape, say market observers.

“The Ola CEO discount was implemented strategically to protect its market share in the face of increasing competition, customer complaints and increased regulatory scrutiny. However, the company is taking advantage of government incentive programs, especially the Production Linked Incentive (PLI) program, which can help reduce some of its financial burden,” said Punit Gupta, director of S&P Global Mobility.

Singh, however, said excessive discounting by industry players could push earnings further into the future, delaying returns. This challenge deepens as the cost of key components such as batteries increases – an increase that seems inevitable in the coming years.

The company reported a net loss of ₹ 1,584.4 crore for FY24 compared to a loss of ₹ 1,472.1 crore in the previous year. In the April-June quarter, the net loss was ₹347 crore, compared to ₹267 crore in the same period last year.