As motoring journalists, a ride-hailing company is just about convenience for airport runs or transportation on the odd non-car day. But we’ve all booked a cab from the Ola app over these years. Ola was a revolutionary company at the beginning of the last decade when the unorganised cab market had become a nuisance on the customer service front. Bhavish Aggarwal made transportation simple for Indians which led to huge investments in the company. Ola cabs scaled quickly and soon dominated the marketplace. Uber made it a two-horse race a few years later, crushing the unorganised space in the process.
The Uber challenge was serious for Ola. Market share fell from as much as 80 percent in 2016 to about 50 percent when the pandemic struck. The ride-hailing business has halved during the pandemic and that has put even more pressure on Ola. What was once a hugely successful start-up was now facing serious headwinds.
Ola needed to pivot fast. The $250 million Softbank investment in 2019 that made Ola a unicorn appears to have put pressure on the company when the ride-hailing business suffered. After setting up Ola Electric in 2017, the wholly owned subsidiary of Ola cabs, electrification of the fleet was nowhere close to announcements made by the company. In an interview with BusinessToday, Anand Shah, the co-founder of Ola Electric and senior VP at Ola said that they had plans to deploy a million battery-powered vehicles by 2022. What we need to understand here is that India didn’t produce many electric cars back then, and the numbers were so small, a million units by 2022 was like a pre-election campaign promise by a politician.
The electric subsidiary was basically going nowhere until Ola acquired the Dutch electric scooter manufacturer Etergo BV at the peak of the pandemic in May 2020. That made huge news in India because the Etergo AppScooter was pitched as a tried and tested product. By early 2021, Shah had quit the company and Bhavish Aggarwal was front and centre of everything Ola Electric. The pivot was complete – while the ride-hailing business struggled, there was a huge future growth story to be told with the electric vehicle business.
A little digging however, and you will find that the company was bought by Ola Electric before the AppScooter’s mass production had started. A scooter that was in development since 2015 was yet to reach customers in the Netherlands so the company had no data about its product in the hands of customers. Common understanding is that electric two wheelers don’t need as much testing as their ICE counterparts due to fewer moving parts, however key components like the motor and battery cannot escape rigorous road testing, the one aspect of developing a vehicle that could be very time consuming if you get something wrong during the development process.
Here's where the immaturity of Ola Electric gets highlighted. After purchasing Etergo in May 2020, the company teased the launch of the scooter in March 2021, just 10 months after the acquisition. By August, the scooter was launched and we started hearing news from the company of setting up one lakh charging points, one lakh reservations in 24 hours, the largest scooter manufacturing plant in the world and more. In fact, all Ola has done so far is delivered 7,000 units by March 2022, according to company claims. What the huge PR push by the company to announce headline numbers were doing is simultaneously rushing the Indian development of the scooter.
There are considerable differences between the S1 and S1 Pro and the AppScooter. A fixed battery instead of the three removable ones in the AppScooter and a more powerful motor means the most important components on the Ola scooter are new. The question we need to ask is that is about 15 months since Etergo’s acquisition enough to design, develop and test these crucial components by a company that had no experience in the automotive manufacturing industry. Even if you poach the best talent in the business from legacy manufacturers, the EV industry itself in India is so young, there just aren’t many experts who can claim over a decade of experience in EVs, or a couple of cycles of product development.
Now coming to the scooter that caught fire, there could be details emerging soon. Until then, it creates two groups. The sceptics who start losing hope in EVs for the near future and the believers who think that the fire could be a sabotage to dent Ola Electric’s rise. Let us not jump to conclusions because we have seen other EV manufacturers work hard on their products and continuously improved them. Ather’s development cycle took long but that ensured that there were very few things to complain about. It has led to building a strong Ather community who swear by their scooter. Bajaj took its time too with the Chetak and banked on Bosch’s electric package to produce a well-rounded product. We can see that with the TVS iQube too, a safe play from TVS. I hope the Ola scooter fire does not lead to scepticism on these scooters.
What is clear is that any investigation about the fire that may shed a positive light on the scooter will not wipe off the visuals of the S1 Pro engulfed in flames. Ola is now in fire fighting mode, pardon the pun. All this while the success of the company on the financial front tries to grab headlines.
The financial markets offer few windows of opportunity when a private company can ride the positive wave of a bull run and make a killing for its investors as it lists on the stock exchange. Ola was racing to a mid-year listing however, with the scooter fire flooding the internet, I see little chance of that happening now. This could be good news for Ola engineers though. The scooter is excellent to ride, as we have experienced recently. However, if there is a manufacturing defect, a lack of testing in Indian conditions that led to the fire or anything else, they need the time to course correct. Bhavish needs to take a breather too, focus on the product and the success will come. And stop teasing concept car pictures for a while, there’s a thin line between being seen as a maverick and a joke.