How India’s Musk is feeling the heat of intense public scrutiny

This week, Ola Electric founder Bhavish Aggarwal has been meeting institutional investors in Mumbai. As his meetings were in progress, transport department officials inspected 10 Ola Electric experience centres in the city and seized vehicles.Coincidentally, the search carried out at Ola Electric premises and the seizure of its vehicles in different parts of the country spread to Mumbai when Aggarwal was in the city to update investors about the state of affairs at his company. A few days earlier, Ola Electric had shut experience centres in Aggarwal’s home state Punjab after the chief minister ordered an investigation.Aggarwal’s meetings with investors also coincide with a sharp slide in Ola Electric’s share price, another underwhelming quarter and declining market share. ET Prime in this article showed how Ola squandered its head start in the electric scooter market. Recent promotional events and announcements — be it the demonstration of its new electric motorcycle, the statement about cost reduction or optimistic projections for the next quarter — could not arrest the downward spiral of the Ola Electric stock. medium119291136The company’s fallout with its business partners for vehicle registration, the raids on its showrooms for the alleged flouting of norms and the drop in sales impacted its performance in the public market. In three months, Ola Electric’s stock price has less than halved. Almost every day in the past week, it hit a new low. It hit an all-time low of ₹46.32 on March 18, which was 38% below its issue price and 70% below its peak.Contrasting numbersThe fresh troubles surfaced with the number of Ola scooter registrations in February. The monthly average sales for FY25 were 31,180 till January. That was a 12% uptick in the sunrise sector of electric two-wheelers for a market leader. Then the new registrations for February came in at 8,649, according to Vahan data.That put Ola Electric at a distant fourth after Bajaj Auto, TVS Motor and Ather Energy. An Ola Electric statement, however, claimed that it sold “25,000 units during February 2025 and maintained leadership in EV 2Ws with over 28% market share”.Beneath this contrast of Ola Electric’s new registration figures on the Vahan website and the company’s claim of actual sales thrice as much as them lies its broken relationship with vehicle registration service companies. The termination of this business partnership had several consequences.Sudden break-upValentine’s Day.Ola had its share of banter. &#55356;&#57145;What better day to end a toxic relationship… and start something electric? Tell us why you’re dumping your petrol 2-wheeler and starting fresh with electric! &#55357;&#56474; The most creative breakup wins Ola Roadster X or Ola S1 Pro! Here’s how: ✅ Follow @OlaElectric on Instagram/Twitter… pic.twitter.com/Vua4lMKFrO

— Ola Electric (@OlaElectric) February 14, 2025 Its social media handles discussed ending the toxic relationship with conventional fuel vehicles and embracing clean electric vehicles (EVs). But as the merriment of Valentine’s Day ended, another break-up was brewing.According to three people in the know of things, one of Ola Electric’s vendors who facilitate the registration of its vehicles at regional transport offices (RTOs) got a call after midnight. Aggarwal was on the other end. He demanded that the registration cost that the vendor was charging should be brought down from ₹1,500 per vehicle to ₹500. The vendor representative’s efforts to explain his position didn’t help. The two-plus years of business partnership ended abruptly over a midnight call.The vendor was asked to hand over data, documents and papers of the pending registration work. In the meantime, negotiations with the other vendor were still going on. Ola Electric led a statement with the stock exchange four days later.“We would like to inform you that we are renegotiating the terms of agreement with our agencies, namely Rosmerta Digital Services and Shimnit India, to reduce cost and enhance registration process efficiencies. Due to ongoing negotiations and optimisation of the registration process, our registration numbers for the month of February 2025 (on Vahan portal) will be temporarily impacted. Our sales continue to be strong through February 2025 and the dip in registration will be streamlined in the next few weeks,” the stock exchange filing read.But the renegotiation did not go through. It took nearly a month for daily registrations to return to previous levels. This month, at 11,781, Ola is trailing Bajaj and TVS sales as on March 20, as per Vahan data. It is not clear whether the registrations that reflect on the Vahan website include the backlog that Ola mentioned in the above filing. medium119291231According to sources, from February, Ola Electric hired about 150 people to handle on-ground vehicle registration. Meanwhile, another news hit the company — the raids in its showrooms in different parts of the country for lack of trade certificate and fire-safety NOC became public. That was just the beginning.Public scrutinyWhat followed was an insolvency petition by Rosmerta, one of the two vehicle registration services companies that sought unpaid dues of ₹22 crore. Ola Electric disputed this claim. Following this, a volley of questions on its trade practices, the sanctity of the numbers and veracity of its claims have come up in the public domain. This came in the form of media reports as well as a widely circulated complaint to market regulator Securities and Exchange Board of India (Sebi). Below are some important questions.The complaint to Sebi led by Kamaljeet Soi, a Ludhiana-based road-safety activist, charged Ola’s claim of 25,000 sales in February as patently false and contrary to Central Motor Vehicle Rules and the company’s own stated revenue recognition policy cited in its draft red herring prospectus. Vahan data shows the number of Ola Electric scooters registered during the month was 8,649. Central Motor Vehicle Rules stipulate that a vehicle must be registered before delivery to the customer. If the registration is not completed, how can the company deliver and claim to have sold 25,000 vehicles?Soi charges them as financial misreporting amounting to misrepresentation under Sebi regulations that can mislead investors.Ola Electric’s website shows only 3,457 experience centres while its press release claims 4,000. The letter accused the company of exaggerating the number of experience centres.The letter points to Ola Electric’s reference to 870 experience centres in its draft red herring prospectus ahead of the IPO. It raises questions about whether the compliance status of those centres was verified.The letter also highlighted the hazard of storing lithium-ion battery-fitted vehicles in places without fire NOC.Soi pointed to Aggarwal announcing the launch of Roadster and Roadster X motorcycles at the Ola Sankalp event on August 15. Aggarwal spoke about starting deliveries in January. Following the announcement, the stock price shot up from ₹110 to ₹157 in four days. However, no deliveries have taken place as announced. The letter calls it a “misleading announcement that leads to artificial inflation of stock prices that can be classified as market manipulation”.Soi shot another letter to vehicle testing agency Automotive Research Association of India alleging undue favour to Ola Electric. He listed fire incidents, product recalls, service issues and complaints at the consumer protection authority in this letter.Cost pressuresAccording to sources, a reason for the abrupt ending of Ola Electric’s partnership with the vehicle registration vendors was mounting cost pressures. medium119291272Its revenue and losses have been moving in opposite directions. While revenue is falling, losses are mounting quarter-on-quarter. The company has undertaken a job-cut drive. It overhauled its logistics and fulfillment, shut warehouses, added stores and brought the vehicle registration service in-house. The effectiveness of these measures will become clear in the coming quarters. Its immediate impact is certainly not limited to the sharp dip in registrations.Shimnit, the second registration service company that Ola Electric has engaged with, too, is said to be exploring legal options to get its dues. A source close to the company said it has sought ₹5 crore, which according to the company is mostly the reimbursement of registration fee that it paid at RTOs on behalf of Ola Electric. Also, Rosmerta is learnt to have led another petition with the National Company Law Tribunal (NCLT) for dues worth ₹2.5 crore.In the meantime, there is no official word on Ola Electric’s motorcycle Roadster X, which was scheduled to be delivered in mid-March. After the public demonstration in early February, there is no mention of this product, which would mark the company’s entry into the electric motorcycle segment. The company went conspicuously silent after promoting bookings in early February.The commercial rollout of the motorcycle is quite unlike that of Ola scooters. Aggarwal used to regularly update about the customer interest for Ola S1.There are no such public updates about Roadster X towards its commercial rollout. Its homologation process still continues, and the delivery is further delayed.