Ola Electric Expands Battery Capacity for Energy Storage Pivot Amidst EV Market Challenges

Ola Electric has revised its plans for battery cell manufacturing capacity. Initially planning a 5 GWh plant by FY26, the company now aims to reach 5.9 GWh by March 2026 and a substantial 20 GWh by the second half of 2027. This aggressive expansion is primarily fueled by its strategic pivot towards becoming an electric vehicle and energy storage company, marked by the introduction of its 'Ola Shakti' battery energy storage system (BESS).

Financially, for the second quarter of FY26 (ending September 2025), Ola Electric reported a consolidated net loss of INR 418 Cr, a 15% year-over-year reduction, attributed to cost control and improved margins. However, operating revenue plummeted by 43% year-over-year to INR 690 Cr, largely due to reduced vehicle sales and market share.

The auto segment, however, turned EBITDA positive, posting INR 2 Cr with a gross margin of 30.7%, aided by lower operating expenses and vehicles from its Gen 3 platform. The company expects the auto segment's gross margin to reach 40% by FY26 end.

Despite these operational improvements, Ola Electric has lost significant market share in the two-wheeler EV segment, falling behind rivals like Bajaj Auto, TVS Motor, and Ather Energy. The company attributes this decline to competitors' aggressive discounting tactics.

Ola Electric is now focusing on improving its cost structure and driving margin expansion for profitable growth, a shift from its previous 'growth-at-all-costs' approach. This focus is driven by investor pressure and substantial cash burn, evidenced by a net decrease of INR 294 Cr in cash reserves during Q2 FY26. The company's shares have seen a significant fall, trading over 38% below their IPO price.

Addressing after-sales service issues, Ola Electric is opening its HyperService platform for direct purchase of genuine spare parts via its app and website.

Guidance for FY26 has been cut, with expected vehicle deliveries reduced to 2.2 Lakh units from 3.25-3.75 Lakh units, and revenue guidance lowered to INR 3,000-3,200 Cr from INR 4,200-4,700 Cr.

The 'Ola Shakti' BESS offering, targeting the residential energy storage market, has generated strong interest, with revenue expected between INR 100 Cr in Q4 FY26 and INR 1,000-2,000 Cr in FY27, although deliveries start mid-January 2026.

Experts like Deb Mukherji note a constant shift in Ola Electric's focus, questioning the results and value destruction, while acknowledging the long-term potential of an 'EV + energy' combo but predicting short-term pain. Profitability remains a distant dream with ongoing investments required.

Impact This news is significant for Ola Electric's strategic direction, its financial future, and the competitive landscape of India's EV and emerging energy storage sectors. Its success or failure will influence investor sentiment towards Indian EV startups and renewable energy storage solutions. Rating: 8/10

Difficult terms: GWh: Gigawatt-hour, a unit of energy capacity, often used for batteries. FY26: Fiscal Year 2026 (April 2025 - March 2026). Q1 / Q2 FY26: First / Second Quarter of Fiscal Year 2026. EV: Electric Vehicle. YoY: Year-over-Year, comparing a period to the same period in the previous year. QoQ: Quarter-over-Quarter, comparing a quarter to the preceding quarter. EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization; a measure of operating performance. OEM: Original Equipment Manufacturer, a company that makes products for sale under another company's brand. E2W: Electric Two-Wheeler (electric scooter or motorcycle). BESS: Battery Energy Storage System, used to store electrical energy. CMD: Chairman and Managing Director. IPO: Initial Public Offering, the first sale of stock by a private company to the public. HyperService: Ola Electric's customer service platform. Gigafactory: A factory for mass production of batteries. INVasset PMS: An investment management firm. ADM Prime Consulting: An automotive consulting firm.