At the heart of the destruction is the deadlock between Ola Electric and its registry. Dispute stagnant scooter delivery, frustrating customers, almost wiped out ₹Investor wealth is 3,000 crore. The consequences also caused government scrutiny.
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The controversy has claimed that a senior executive – general legal counsel Rohit Kumar, was nervous about the situation in the situation.
This marks one of OLA Electric Mobility Ltd’s biggest challenges since its stock market debut in August 2024.
Mint Patch the story of the entire dispute together after talking to seven executives who realized the situation.
What caused this?
The trouble began with the dispute between Ola Electric and India’s two largest vehicle registration agencies – Rosmerta Digital Services Ltd and Shimnit India Pvt. Limited
Since December 2021, these agencies have been working with OLA to process vehicle registration by entering customer details into government databases and printed number boards.
In the past two years, the arrangement has been running smoothly. But by mid-2024, sales of Ora Electric began to slip. Although the company reached a peak of 50,000 units in March last year, it never reached that milestone again.
According to people familiar with the matter, Aola Electric is paying ₹1,400-1,600 units per vehicle are registered, which is a rate set based on expected sales volume.
Ola has driven huge discounts as part of a broader cost-cutting driver launched in November 2024, but these agencies boycotted, believing that lower sales mean higher costs per unit.
By February, negotiations had become a complete standoff.
“One day, the company came and asked us to disagree with the fees, which immediately resulted in the work stopping immediately. No negotiations involved,” an executive said on anonymous condition.
Another executive said Ola asked for a price reduction of nearly 67% which the agency found untenable.
Unlike traditional automakers that rely on dealers, Ola Electric operates a direct-to-consumer model through the Experience Center, making the registry vital to its delivery process. There is no immediate backup plan, registration is stopped.
Amid the cost disagreement, Ola failed to pay the value of Rosmerta’s dues ₹260 million to four to four months prompted the agency to file a lawsuit in the National Corporate Law Tribunal (NCLT). Since then, the case has been withdrawn after the membership dues have been cleared.
Ola believes that it can handle the registration process internally more efficiently at a lower cost.
“Ola Electric hires about 200 people to help with its registration process, rather than relying on institutions to save costs,” one executive said.
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According to those aware of this development, some of Rosmerta are also hired to help with the registration process.
The query sent to Ola Electric has not been answered yet. Rather than answering specific questions about its employees, Rosmerta Group mentioned the statement that all its dues had been resolved and that it would no longer have anything to do with Ola Electric.
In a statement on March 12, Ora said it has already underway for a network transformation and a reduction in OPEX plans.
“The program covers distribution network conversion projects such as closing all regional warehouses and transport vehicles, spare parts and accessories, direct from the factory to the store, automated registration and other processes,” the statement said.
The company claims to have saved ₹Due to the implementation of the plan, it is 900 million per month.
A senior director who is no longer associated with Ola Electric mentioned that in some cases, the company was not satisfied with Rosmerta’s performance.
“Sometimes there are some delays that disrupt the customer-company experience. When the company thinks it can be completed internally, it decides to stop working with these agencies.”
However, another executive close to the matter showed that the decision was mainly caused by Ola’s store network expansion rather than being upset with Rosmerta. The company said there are about 4,000 stores, and the company believes it can register at these locations, similar to dealers.
Consequences: Missed delivery and market troubles
Delivery slowed as Ola worked to transition from its registration body.
The waiting time for its electric scooters soared to 20-45 days from the usual 5-7 days before February, and the store manager of seven Ola Electric Outlets in New Delhi, Mumbai and Bengaluru told Mint.
Under Indian law, vehicles must be registered before delivery and OLA does not publish temporary registration boards.
In February, despite sales this month exceeding 25,000, the company managed to register only 8,652 cars. In March, registration rates rose, reaching 16,412 vehicles so far.
Ola insists that it will clear the backlog soon.
“The company’s daily registration has greatly improved, increasing to more than 800 per day and exceeding the average daily sales in January and February,” it said in a statement. March 12.
Despite the interference, Aola claimed in the same document that the average lead time has increased, from 12 days to 3-4 days.
Market share and investor concerns
The registration crisis is a critical moment for Ola Electric.
Although Ola has led the market share competition in recent years, it was surpassed in December 2024, with Bajaj Auto accounting for 25% and TVS Motor Co. Ltd 23.5%, reducing Ola’s share to 19%. The company regained its first spot with a market share of 26% in January, but investors have doubts about its execution.
Ola Electric’s stock has fallen more than 10% since February 19 when the company notifies exchanges about renegotiation ₹BSE’s share was 53.84, while the BSE Auto Index fell 0.08%. The stock debuts around ₹76 per share.
Financially, the company is still in the red. Ola Electric reported ₹5.64 million from October to December quarter, from ₹3.76 million a year ago. Founder Bhavish Aggarwal repeatedly stressed the need to reach 50,000 monthly sales to break.
“We did reach about 50,000 monthly sales over the next few quarters, which put us in the EBITDA-positive automatic division,” he said.
However, investors are questioning the turning point in Ola Electric’s incident of eroding shareholder value.
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“The events that changed the registration process seemed to indicate a lack of planning and responsive management, which raised questions among investors. The company could have avoided controversy with Rosmerta without a full-scale controversy,” said Shriram Subramanian, founder and managing director of Ingovern Research Services, an agency consulting firm.
