Bengaluru, India – July 14, 2025: Ola Electric reported a sharp 49.6% year-on-year drop in Q1 FY26 revenue to ₹828 crore, down from ₹1,644 crore in the same quarter last year. Its consolidated net loss widened by 23.3% to ₹428 crore, driven by a steep fall in vehicle deliveries, which dropped to 68,192 units from 1,25,198. While the company saw some sequential improvement in margins and revenue, the results reflect growing competition and ongoing operational hurdles. As India’s EV market eyes a $20 billion valuation by 2030, Ola’s Q1 performance casts uncertainty over its profitability roadmap.
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A Financial Setback for Ola Electric
Ola Electric Q1 FY26: Revenue and Losses in Focus
Ola Electric Q1 FY26 saw operational revenue crash by 49.6% to ₹828 crore, down from ₹1,644 crore in Q1 FY25, reflecting a significant sales slump. The company delivered 68,192 e-scooters, a 45.5% drop from 1,25,198 units in the same quarter last year, per Business Standard. The net loss widened to ₹428 crore, up 23.3% from ₹347 crore, with an EBITDA loss of ₹237 crore compared to ₹205 crore in Q1 FY25. Total expenses reached ₹1,065 crore, including ₹441 crore for materials and ₹362 crore in other costs, despite ₹68 crore in other income.
Sequential Gains Offer Hope
Despite the year-on-year decline, Ola Electric showed sequential improvement. Revenue rose 35.5% from ₹611 crore in Q4 FY25, and the net loss narrowed from ₹870 crore, per Moneycontrol. The auto segment achieved EBITDA positivity in June, with margins improving to -11.6% from -90.6% in Q4 FY25, driven by cost optimization and vertical integration.
Factors Driving the Downturn
Plummeting Sales Volumes
Ola Electric’s vehicle deliveries fell to 68,192 units in Q1 FY26 from 1,25,198 units in Q1 FY25, a 45.5% decline, hurt by stiff competition from Bajaj Auto, TVS Motor, and Ather Energy. The end of FAME-2 subsidies in April 2024 increased EV prices, dampening urban demand. Ola’s premium segment saw the steepest drop, with mass-market scooters dominating sales but lowering average selling prices (ASPs), per The Economic Times.
Battery Unit Struggles
Ola’s battery cell division remains a financial drag, generating just ₹3 crore in revenue but incurring a ₹43 crore EBITDA loss, with a -1,579% margin, per YourStory. The 5GWh gigafactory project, backed by ₹2,800 crore in capex, produced only 11,744 cells, highlighting scaling challenges. Management expects the unit to turn cash flow positive by FY27, but investors remain wary.
Bright Spots Amid the Gloom
Improved Gross Margins
Ola Electric’s gross margin rose to 25.8% from 18.4% in Q1 FY25, driven by Gen 3 scooters, which accounted for 80% of sales. These scooters, with reduced bill of materials (BOM) through vertical integration, lowered warranty claims and boosted efficiency, per India Today. Ola targets 35-40% margins by FY26’s end, bolstered by PLI incentives worth ₹40,000-₹45,000 per vehicle.
Cost-Cutting Success
Project Lakshya, Ola’s cost optimization initiative, slashed monthly auto operating expenses from ₹178 crore to ₹105 crore, with consolidated opex at ₹150 crore, targeting ₹130 crore by FY26’s end, per The Financial Express. Free cash flow improved to ₹107 crore from negative ₹455 crore in Q4 FY25, reflecting operational discipline.
Market and Competitive Pressures
Fierce Competition Intensifies
Ola Electric, holding a 30% share in India’s electric scooter market, faces growing competition. Bajaj Auto and TVS Motor increased their high-speed e-scooter market share to 40% in FY25 from 7% in FY22, per The Indian Express. Service-related issues and VAHAN registration delays further eroded Ola’s momentum, contributing to a 45% sales drop in June 2025 (20,189 units), per Business Today.
Stock Market Volatility
Ola Electric’s share price surged 17% to ₹46.85 on July 14, 2025, despite the weak results, driven by sequential improvements and optimistic guidance, per Moneycontrol. However, the stock is 70% below its 52-week high of ₹146 and 37% below its IPO listing price, reflecting investor concerns about sustained losses.
Strategic Shifts and Outlook
Focus on Profitability
CEO Bhavish Aggarwal emphasized a pivot to profitable growth, moving away from aggressive expansion. Ola projects 3.25-3.75 lakh vehicle sales and ₹4,200-4,700 crore in revenue for FY26, nearly flat from FY25’s ₹4,514 crore, per The Economic Times. The auto segment is expected to remain EBITDA positive from Q2, with 5% full-year auto EBITDA targeted.
New Product Launches
Ola plans to launch the S1 Sports scooter and S2 platform with three models, alongside the Ola Roadster electric motorcycle in 200 stores, per The Financial Express. MoveOS+ premium software, adopted by 50% of customers, is boosting revenue, up from 2% last quarter, per YourStory.
Implications for India’s EV Market
A Test for EV Leadership
Ola Electric’s Q1 FY26 struggles highlight the volatile EV market, projected to grow at a 45% CAGR to $20 billion by 2030. Its 30% market share is under threat, and failure to scale efficiently could cede ground to rivals. However, cost reductions and Gen 3 scooters position Ola for a potential rebound.
Investor Sentiment at Stake
With ₹4,000 crore in cash reserves and plans to raise ₹1,700 crore in debt, Ola remains well-capitalized, per Outlook Business. Yet, widening losses and a 53% stock drop in 2025 raise concerns about long-term viability, especially as Hyundai and Kia reduced stakes, per Angel One.
Conclusion: A Staggering Challenge
Ola Electric Q1 FY26’s 49.6% revenue plunge to ₹828 crore and 23.3% wider losses at ₹428 crore paint a grim picture, but sequential gains and margin improvements offer hope. With Gen 3 scooters, cost cuts, and new launches, Ola aims to navigate the funding winter and fierce competition. As India’s EV market accelerates, Ola’s resilient strategies could spark a turnaround, proving that even in a tough storm, innovation can shine.
also read: Shashank Shekhar’s Startup Funding: Dazzling $4M Boost from Peak XV in 2025
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