Ola Electric Mobility Ltd had its own set of problems, and the goods and services tax (GST) rate cut from 28% to 18% on ICE two-wheelers has only made matters worse.
Ola’s November retail sales, as per Vahan data, came in at 8,046 vehicles, the lowest since February. After the GST cut, , effective 22 September, traditional ICE two-wheeler manufacturers such as Hero MotoCorp Ltd, Bajaj Auto Ltd and TVS Motor Co. Ltd have slashed prices by at least ₹5,000 per vehicle.
Effectively, it neutralizes the maximum benefit of ₹5,000 per electric vehicle available under the PM E-Drive scheme to the buyer. Notably, even the PM E-Drive benefit for electric two-wheelers will expire in March.
Thus, the gap between the pricing of Ola’s electric two-wheeler and its ICE rivals is likely to become at least ₹10,000 per vehicle. What is the significance of ₹10,000 per vehicle? Well, it is 25% of Ola’s gross margin per vehicle of ₹40,000 achieved in the September quarter (Q2FY26).
Investors are taking note. Ola’s shares at ₹41 are close to its all-time lows hit in July, and have halved in 2025 till now. True, in recent months, the stock price had jumped after Q1FY26 results where sales volume rose 33% QoQ to 68,192 units as per the company’s delivery data. However, the rally fizzled out after the delivery volume fell to 52,666 units in Q2FY26.
Vahan data shows Ola has sold 16,048 and 8,046 units in October and November, respectively, indicating that Q3FY26 volumes are likely to be lower sequentially. If this scenario plays out, it would be below the auto business breakeven volume of around 20,000 units per month, as mentioned by management during the Q2 earnings call.
The dull sales volume highlights another disappointment. Ola had launched motorcycles with much fanfare and this was expected to complement sales of its scooters. Not only have motorcycle sales been disappointing so far, but scooter volumes have also fallen sharply QoQ than the overall sales volume.
As per the management, motorcycle sales were about 12-15% of its Q2FY26 total volumes, which works out to at least 6,000 units. If Q2FY26 motorcycle sales are deducted from total sales, the QoQ drop in scooter volume is even more alarming. As Q1FY26 had negligible motorcycle sales, Q2FY26 scooter sales fell by about one-third QoQ.
Next bet
While Ola’s auto segment has not been rewarding for investors so far, the company’s next big bet is on lithium ion-based battery energy storage system (BESS) called Ola Shakti.
BESS is for both residential and commercial applications where it will substitute lead acid batteries that are being used with inverters. The management expects potential revenue of ₹1,000 crore from BESS in FY27.
While demand for residential BESS is expanding, especially with the rooftop solar power projects, Ola faces tough competition as the existing lead acid battery manufacturers, such as Exide Industries Ltd and Amara Raja Energy & Mobility Ltd, have also invested in lithium-ion battery production, with likely commissioning of their plants over the next year.
Ola’s FY27 revenue based on Bloomberg consensus estimates is ₹4,700 crore for FY27. This means the stock trades at 3.8x of FY27 estimated sales, which is hardly cheap even as it is currently much lower than the IPO issue price of ₹76. This emphasizes that the IPO issue was overpriced in hindsight.
