Frontlist | Ola aims to do a Tesla, affordably

on Mar 08, 2021

When ready, Ola’s factory will produce 10 million e-scooters every year, making it the largest two-wheeler maker globally.

Ola aims to make 10 million e-scooters annually
The integrated manufacturing plant will have 10 assembly lines, use 3000 robots and around 10,000 workers

On around 500 acres of land in Tamil Nadu’s Krishnagiri district, Ola Electric Mobility Pvt. Ltd is building what it calls a ‘Future Factory’. When ready, it will produce 10 million e-scooters every year, making it the largest two-wheeler maker globally.

The Bengaluru-based firm plans to start production as early as in June. That’s audacious, given that the land—260 acres for the plant and 240 acres for two supplier parks—is still in excavation mode. The first phase itself will produce 2 million e-scooters, to be retailed in India and exported. To put the planned scale in context, market leader Hero MotoCorp around 6.5 million two-wheelers annually. And 22-25 million traditional two-wheelers with internal combustion engines are sold in India every year. SoftBank-backed unicorn Ola Electric, set up in 2017, is the electric vehicle (EV) arm of transportation platform Ola (ANI Technologies Pvt. Ltd). Its project has taken off at a time when Elon Musk-led Tesla Inc. is set to make its India entry and the government is trying to boost manufacturing of EVs, their batteries and other components. As Ola transitions from ride-hailing fleet management to manufacturing and retailing of EVs, chairman and group CEO Bhavish Aggarwal is clear that he is building an engineering and technology firm—a full-stack makers of electric two-wheelers. While Ola Electric will start with scooters, it will also build separate plants for motorcycles and four-wheelers. “Most companies building EVs in India are not at scale. We believe we are building products that consumers will aspire for and will be built on principles of sustainability, automation and efficiency. The concept is of a mega factory, which will be the world’s largest two-wheeler factory, not just in electric, Aggarwal said in an hour-long presentation at Ola’s Krishnagiri site on Friday.

The integrated manufacturing plant will have 10 assembly lines, 3,000 robots and around 10,000 workers. Each e-scooter will have two removable batteries and the company is building a charging network. Last May, Ola Electric acquired Amsterdam-based electric scooter startup Etergo BV. Ola hired former General Motors veteran Jose Pinheiro as head of global manufacturing and operations and Julien Geffard as director of go-to-market strategy to lead its European operations for its electric business. The appointments came after a number of senior-level exits at Ola Electric.

While Ola didn’t disclose the price of e-scooters, it said they will be priced competitively and will be affordable. Earlier reports had suggested that the e-scooters will be priced below ₹1 lakh. The success of its electric business is crucial for Ola, whose core ride-hailing business was significantly impacted due to the pandemic. Last May, Ola fired 1,400 people. Ola was also expected to start work on a public listing, which has been pushed due to the disruption, said a person with knowledge of the matter. “If Ola Electric’s scooter factory takes off and it produces a good product, it will be a game-changer for the company, the person said.

Agarwal said while Tesla obviously leads innovation in EVs, companies like Tesla and Nio in China are focused on the premium or luxury market. “Urban mobility vehicles like two, three and four wheelers, hatchbacks, small and mid-sized sedans –that’s the meat of the market. It’s a unique opportunity for us and we are starting with the quintessential Indian urban mobility product - scooters within the two-wheeler segment, but we have programs in motion for motorbikes, four-wheelers, Agarwal said. Ola Electric will also use a ‘wire bonding’ technique so the different battery cells are bonded using wires, something which Tesla uses as well. Mitul Shah, head of research, Reliance Securities said an assembly plant typically takes 4-6 months to start operation while a manufacturing facility takes nearly a year’s time.

“Ola’s claim to start production of EVs in 3-4 months’ time seems challenging. We believe e-scooters would have better prospects and higher acceptance in India compared to four-wheelers, because battery charging is an issue and allows a certain km range per charge, Shah said. Experts however believe that If Tesla were to start retailing in India, it would change a lot of things. “While their cars are very expensive and would tap a limited customer segment, as and when people watch their products on the road, it will change the way consumers look at EVs over time. Tesla’s entry would help in boosting sentiments for entire EV space, Shah added. Read More: This new children’s book celebrates India’s female rule-breakers and their untold stories

Source: Live Mint