Ola Electric said to cut over a thousand jobs to stem losses

By Alisha Sachdev

Ola Electric Mobility Ltd. is laying off over a thousand employees and contract workers, people familiar with the matter said, as one of India’s top scooter-makers races to pare ballooning losses.

The cuts at the SoftBank Group Corp.-backed firm, span multiple departments, including procurement, fulfillment, customer relations and charging infrastructure, the people said, asking not to be identified as the information is private.

It’s the second round of layoffs in under five months as the Bhavish Aggarwal-led company, which just listed last August, battles crises on several fronts. It posted a 50 per cent surge in losses for the December quarter and has been censured by India’s market regulator and consumer protection authority in recent months.

Around 500 employees were laid off last November, according to local reports. The current round of layoffs amount to over a quarter of Ola’s 4,000 employee size as of end-March 2024, but includes contract workers that aren’t counted in the company’s public disclosures.

As part of the restructuring, Ola is automating parts of its customer relations operations, the people said. The layoff plans may change over time as per business needs, they added.

“We have restructured and automated our front-end operations delivering improved margins, reduced cost, and enhanced customer experience while eliminating redundant roles for better productivity”, an Ola spokesperson said in an emailed response to Bloomberg, without addressing the number of workers cut.

Front-end sales, service and warehouse staff at Ola’s showrooms and service centers are also being let go as the Bengaluru-based firm revamps its logistics and delivery strategy to reduce costs, the people said.

Backlash

Shares of Ola Electric have plunged over 60 per cent from its peak since a blockbuster IPO debut in August. In recent years, the company has been the target of buyer complaints, social media backlash and market share loss as rivals toppled it from its perch as the sector leader.

On Friday, Ola Electric told Indian exchanges that it sold more than 25,000 units in February with a 28 per cent market share — far lower than the 50,000-unit monthly target Aggarwal said in a Feb. 7 earnings call was the threshold for Ebitda breakeven.

Ebitda is earnings before interest, tax, depreciation and amortization.

Days earlier, the company had informed investors that its vehicle registrations will be impacted in February as it renegotiates terms with two of its vendors to reduce costs and improve efficiencies.

Once India’s dominant electric two-wheeler maker, Ola has been steadily ceding ground to rivals.

Bajaj Auto Ltd. overtook it as the market leader in electric scooters in December, pushing Ola Electric down to third place after TVS Motor Co., according to the Indian government’s vehicle registration data.

The firm had lost its leadership position in nine of India’s top 10 EV markets by December, Jay Kale, an analyst at local brokerage Elara Capital wrote in a Jan. 1 note.

Ola Electric added a record 3,200 outlets in one go in a store launch blitz in December as it sought to expand its footprint and address customer frustration related to shortcomings in service. Local media reports said it was facing as many as 80,000 customer complaints in a month.