Things keep going from bad to worse for Ola Electric.
After the company had been pulled up by SEBI over announcing the launch of its thousands of new service centers on X instead of through stock exchanges, it turns out that many of these new outlets don’t have the required permissions to operate. Bloomberg has reported that only a 100 out of 3,400 Ola Electric showrooms had trade certificates required under India’s Motor Vehicles Act. In response, transport authorities across Indian states have conducted raids, closed showrooms, seized vehicles and sent show-cause notices to Ola Electric, Bloomberg adds.
India’s Motor Vehicles Act mandates that every auto showroom, including two-wheelers, should have a trade certificate conspicuously displayed if it keeps unregistered vehicles. But more than 95 per cent of Ola Electric sctores reportedly lacked basic certification needed to display, sell, offer test rides on or transport unregistered two-wheelers.
Ola however disputed the report. “Your ‘investigation’ findings that there is non-compliance are misplaced and prejudiced,” an Ola spokesperson said. Ola maintains an inventory of unregistered vehicles at its distribution centers and warehouses across Indian states “which are fully compliant with the guidelines of the Motor Vehicles Act, and have the necessary approvals,” they added. Ola, though, didn’t clarify on whether its stores had been raided.
These alleged raids are possibly the result of a cascading list of problems at Ola Electric. Last year, there had been numerous customer complaints regarding the slow repair and service processes of Ola’s vehicles. This had even led to an online altercation between Ola CEO Bhavish Aggarwal and influencer Kunal Kamra, who’d said that the company was shirking its responsibility to its customers. In response, Ola had announced it was setting up over 3,000 additional outlets across India. It appears that in its haste to set up these stores, Ola might not have taken all the requisite permissions to run and operate them.
But even apart from its customer service and store issues, Ola Electric has had a difficult few quarters. It had consistently lost market share which is down from 49 percent in June to just 23 percent in December. In December, Ola also lost its top position, which it had held for a long time, to Bajaj. Around the same time, Ola also laid off over 1,000 employees in a restructuring of its operations. And the company has also seen some high-profile exits — Ola Electric’s Chief Technology Officer and Chief Product Officer had simultaneously resigned in December last year, and its stock has been floundering too — after rising to levels of Rs. 150 per share, it currently trades at Rs. 56. And with its offline expansion running into regulatory issues with government raids, Ola’s path to dominating India’s electric two-wheeler space has just become even harder.