Ola Electric has secured $300 million in its latest funding round, which would push up the electric vehicle maker's valuation to $6 billion for the electric two-wheeler business. The paper work on the deal will be finalised in a few weeks.
Last January the company has raised $200 million at a valuation of $5 billion.
The fund raise has been led by a marquee and leading sovereign fund company and has received overwhelming response from other investors. Softbank, which was the first investor in the company, putting in $250 million (which gave it a $1 billion valuation) is not participating in this round. An Ola spokesperson declined to comment on the fund raise.
In the previous deal, Ola Electric had raised $200 million from Tekne Private Ventures, Alpine opportunities Fund, Edelweiss, among others. The firm has so far raised $866 million in eight rounds.
The company will use the money to increase its electric two-wheeler capacity from 500,000 units to two million units, set up an advanced cell chemistry battery plant for which it is already eligible for incentives under the production linked incentive scheme. Also in the works is the setting up of an electric passenger car facility sometime in 2024.
The company has laid out a plan to eventually build a 10 million-per-annum two-wheeler plant (which is half of the total two wheelers sold in the country annually) and raise its cell-making battery capacity from 20 GWH (for which it is eligible for PLI) to 100 GWH to meet captive needs.
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Ola has a current revenue run rate of $1.2 billion and is already Ebitda positive on its E2W business-a feat achieved in 18 months of its launch. It has also emerged as the country's largest electric scooter player. This April, year based on VAHAN data, it reached its highest registrations (sales are higher) since its launch to 21,560 electric scooters, grabbing 34 per cent of the market even as sales of rivals Ather, Ampere, Okinawa, hero Electric and TVS fell.
The company has ambitious plans. It is looking at hitting sales of one million by the end of this year (currently it has 300,000 vehicles running on the roads). It is also expected to launch its electric motorcycle in the second half of this year.
Also in the works is its most inexpensive electric scooter, which will available from this July at a price of sub Rs 84,999, and is expected to give a big push to its sales numbers.
The company, however, faces real challenges like any other electric two wheeler maker. One key area is the government’s move to bring down the FAME-2 subsidy on each scooter by about a third.
Subsidy removal would translate into a hit of Rs 40,000-50,000 per scooter at the premium end. As a result, prices of models are expected to rise as companies aren't expected to absorb such a large cost increase even through frugal engineering or leveraging the advantage of scale. Most will have to rejig their strategy, go for trimmed-down versions of the same model and hike prices by 10-15 per cent.
While Ola hasn't divulged its plans in a post non-subsidy world, it is among the players who have maintained a neutral stance on the extension of FAME-2 as demanded by some competitors for a few years. However sources who know the company say it does not see any change in the overall upswing of sales- leading to a faster shift of customers from ICE to scooters except for a few months.
