Usman Salis
OLA Electric (OLA) shares declined by 9% on the BSE, with a third consecutive session of losses. The electric vehicle maker faces rising competition and sales challenges.
OLA Electric (OLA) saw a significant decline in its share price on Monday, with shares dropping as much as 9.4% in intraday trading on the Bombay Stock Exchange (BSE). By mid-morning, OLA's stock was down 7.21%, trading at Rs 91.91 per share, while the BSE Sensex posted a slight gain of 0.28%, trading at 81,456.57. This marks the third consecutive trading session in which OLA has posted losses, accumulating a total decline of 12.6% over the past few days.
One of the key reasons for OLA Electric’s (OLA) declining stock performance is its recent sales figures. The company reported its lowest monthly sales for 2024 in September, selling only 23,965 vehicles. This marked the second consecutive month of declining month-on-month (M-o-M) sales. As a result, OLA's market share has been shrinking steadily, dropping from over 50% in April 2024 to just 27% in September. In contrast, competitors such as TVS Motor and Bajaj Auto have steadily gained market share over the same period.
Rising Competition from TVS and Bajaj
The stiff competition from industry players like TVS Motor and Bajaj Auto has added pressure on OLA Electric (OLA). TVS and Bajaj have both reported steady gains in market share, with Bajaj’s Chetak e-scooter program making significant strides. Bajaj, for example, increased its dealership count from 100 to over 500 between June 2023 and June 2024. During the same period, OLA only managed to expand its dealership count marginally, from 750 to 800, further highlighting the operational challenges it faces.
Investor concerns have also spilled over into social media, particularly on Twitter (now rebranded as X). Stand-up comedian Kunal Kamra publicly criticized OLA Electric’s service network, citing the daily reliance of workers on two-wheelers. Kamra's tweet, which responded to a post by OLA CEO Bhavish Aggarwal about the company's Gigafactory, sparked a heated exchange. Aggarwal accused Kamra of being paid to speak negatively about OLA, offering to pay him more than what he allegedly earned for the critical tweet.
Kamra’s tweet read: “Do Indian consumers have a voice? Do they deserve this? Two-wheelers are many daily wage workers' lifeline… @nitin_gadkari is this how Indians will get to using EVs? @jagograhakjago any word? Anyone who has an issue with OLA electric leave your story below tagging all.”
In response, Aggarwal countered with: “Since you care so much @kunalkamra88, come and help us out! I’ll even pay more than you earned for this paid tweet or from your failed comedy career. Or else sit quiet and let us focus on fixing the issues for the real customers.”
IPO Performance and Future Outlook
Despite these setbacks, OLA Electric (OLA) remains a notable player in the electric vehicle (EV) market. The company had a successful initial public offering (IPO) on August 9, 2024, with shares listing at Rs 75.99 on the BSE and Rs 76 on the NSE. Post-listing, OLA shares rallied by 17.77%, reaching Rs 89.50 on the BSE, indicating strong investor interest at the time.
However, ongoing competition, falling market share, and public criticism have clouded the company's short-term outlook. Investors are watching closely as the company continues to navigate these challenges, while OLA's service network remains a point of contention among its customers.
Conclusion
OLA Electric (OLA) is grappling with multiple hurdles, including declining sales, rising competition, and service network issues. The company's market share is shrinking, and investors are responding with skepticism, reflected in its recent stock performance. However, with its Gigafactory expansion and the possibility of overcoming service challenges, OLA's long-term success will depend on how well it can adapt to the evolving EV market.
Usman Salis
