Whalesbook
Battery Independence Through Vertical Integration
Ola Electric is pushing to produce all its battery cells internally by September 2026, as announced by Chairman and Managing Director Bhavish Aggarwal. This strategic move aims to give the company greater control over a vital part of its electric vehicle supply chain. About 15% of current orders are already fulfilled using Ola Electric's own 4680 Bharat Cells, which are now in production and being used in vehicles. The company's Gigafactory is currently running at 2.5 GWh capacity, with plans to expand to 6 GWh by the end of this quarter. Aggarwal noted that the company is shifting from major construction to "disciplined scale" for its next phase.
Financial Improvements Alongside Revenue Struggles
Ola Electric's financial performance showed significant improvement, with a consolidated gross margin of 38.5% in Q4 FY26. This is up from 34.3% in the previous quarter and 13.7% a year ago, driven by internal production, platform maturity, and price adjustments. Notably, Ola Electric reached its first quarter with positive operating cash flow, reporting ₹91 crore in consolidated cash flow from operations and ₹213 crore from its auto business. Operating expenses have also been reduced significantly, with more cuts expected. However, the company's revenue fell 56.6% year-over-year to ₹265 crore in Q4 FY26, impacting its stock price, which dropped over 4% after the announcement.
Shifting Market Share and Competition
Ola Electric has improved its operational efficiency, reducing service times and warranty costs. Vehicle registrations in April increased by 20% month-over-month, a positive sign compared to a 22% industry-wide decline. Nevertheless, Ola Electric's share in the electric two-wheeler market has dropped considerably, falling to 16.1% in 2025 from 36.7% in 2024. Competitors such as TVS Motor (24.2% share) and Bajaj Auto (21.9% share) have seen their market positions strengthen. Ather Energy has also grown its share to 16.2% from 11.3%. For the Q4 FY26 period, Ola Electric's revenue of ₹265 crore is now lower than Ather Energy's reported revenue.
Profitability Challenges and Execution Worries
Despite gains in gross margins and achieving positive operating cash flow, Ola Electric still faces significant profitability issues. The company recorded a net loss of ₹500 crore for the fourth consecutive quarter. Brokerages like HSBC have kept 'Reduce' ratings with lower price targets, citing production delays for battery cells that have hurt its competitive standing and slowed volume growth. Citigroup maintained a 'Sell' rating, noting lower average selling prices. Ola Electric has lost its previous market leadership and faces fierce competition, especially in the budget-friendly delivery and fleet vehicle sectors. Customer satisfaction and sales have also been affected by concerns over after-sales service.
Looking Ahead: Strategy and Market Potential
Ola Electric anticipates 40,000 to 45,000 orders for Q1 FY27, suggesting a potential recovery. Management's main goals are reducing costs and generating cash flow, with the auto division already achieving positive free cash flow. The company is also considering supplying its lithium-ion batteries to other vehicle manufacturers. The Indian electric two-wheeler market is expected to grow substantially, reaching an estimated USD 8.84 billion by 2033 with an annual growth rate of 22.8%. Ola Electric's focus on in-house battery production is a key strategy to compete in this expanding market, aiming for long-term cost advantages and technological self-sufficiency.