Ola Electric, the electric vehicle venture of Ola, India’s leading ride-hailing company, is planning to go public by the end of 2023. The company has appointed investment bank Goldman Sachs and domestic bank Kotak to oversee the IPO, as per a report by Reuters.
The company, which raised funds at a valuation of $5 billion in 2022, has not finalized how much it will raise in the IPO or what valuation it will seek, the report said.
Ola Electric is aiming for a valuation higher than $5 billion. If it sells 10% in the IPO - the legal minimum to list - at that price, it could be India’s biggest IPO this year amid weak market conditions.
The report said that the company’s CEO and founder Bhavish Aggarwal determined the timeline of filing the draft documents, marketing to investors, and listing by the end of the year, which would be “difficult”.Ola Electric, which was founded by Bhavish Aggarwal, who also founded Ola and competes with Uber in the ride-hailing segment, is looking to tap into India’s budding electric vehicle market.
More investment banks are likely to come on board closer to the deal, the report said.
What is Ola Electric and What Does it Do?
Ola Electric is a subsidiary of Ola, which is a cab-hailing service that was launched in 2010 by Bhavish Aggarwal on the lines of Uber in the global markets. Since 2010, Ola has raised nearly $4 billion and the proposed IPO is likely to look for valuations of $8-9 billion. During the pandemic, Ola had to let go of many of its staff as services were shut.
Ola Electric is an electric vehicle startup that makes electric scooters and aims to build charging infrastructure for them. The company has recently launched its first product, the Ola S1 electric scooter, which claims to offer superior performance, range, features, and affordability than its competitors. The Ola S1 has a top speed of 115 kmph, a range of up to 181 km on a single charge, and a battery capacity of 2.98 kWh. It also has a touchscreen dashboard, voice assistant, cruise control, reverse mode, hill hold, and anti-theft features. The Ola S1 is priced at Rs 99,999 (ex-showroom), which is lower than some of the existing electric scooters in the market.
Ola Electric has also announced its plans to set up the world’s largest two-wheeler manufacturing plant in Tamil Nadu, with an annual capacity of 10 million units. The company said that the plant will create 10,000 jobs and will be powered by renewable energy. The plant will also have an integrated battery manufacturing facility and will use artificial intelligence and robotics to automate the production process.
Ola Electric is not only focusing on making electric scooters, but also on building charging infrastructure for them. The company has launched Ola Hypercharger Network, which aims to install over 100,000 charging points across 400 cities in India by 2022. The company said that the network will enable users to charge their Ola S1 scooters up to 50% in just 18 minutes.
Why Ola Electric is Going Public and What are its Challenges
According to a source familiar with the matter, Ola Electric has engaged investment banks Kotak Mahindra Capital and Goldman Sachs for the IPO, which is likely to hit the market in early 2024. The source said that the company is trying to go public before the government subsidies for electric vehicles are discontinued. The government currently offers incentives for electric two-wheelers under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, which is expected to end by March 2024.
Ola Electric is also aiming to capitalize on the growing demand for electric vehicles in India, which is one of the largest markets for two-wheelers in the world. According to Avendus Capital's report, India's electric two-wheeler market is expected to grow at a compound annual growth rate (CAGR) of 57% between 2020 and 2025, reaching 6.3 million units by 2025. The report also said that electric two-wheelers have a lower total cost of ownership than conventional ones, making them more attractive to consumers.
However, Ola Electric faces competition from both domestic and international players in the electric two-wheeler market. Some prominent players include Ather Energy, Hero Electric, Bajaj Auto, TVS Motor Company, Okinawa Autotech, Ampere Vehicles, and Revolt Motors. Some of these players have also announced their plans to launch new models or expand their production capacity in the near future.
Moreover, Ola Electric may face regulatory hurdles, customer preferences, infrastructure challenges, and supply chain issues in its journey to go public and capture the electric vehicle market in India.
Conclusion
Ola Electric is one of the most ambitious and innovative startups in India’s electric vehicle space. The company has a clear vision to make electric mobility accessible and affordable for millions of Indians. By going public, Ola Electric hopes to raise funds to fuel its growth and expansion plans. The IPO will also be a milestone for India’s startup ecosystem and will showcase its potential to global investors.