But beyond the colorful proceedings, Ola isn’t living up to
its lofty ambitions. Mass production of its e-scooters is likely to be pushed
back until at least January, according to people familiar with its operations,
who asked not to be identified because the information isn’t public.
The Bengaluru-based unicorn, which has already delayed
initial deliveries to mid-December from October, is pledging to fulfill rest of
the orders by February. But people familiar said Ola, which counts heavyweights
SoftBank Group Corp. and Tiger Global Management LLC as backers, is struggling
to iron out manufacturing wrinkles and is able to make only as many as 150
units a day -- a slow pace if it has to deliver on time the 90,000 orders
Aggarwal said it had received. The company’s body shop is operating at half
capacity and its paint shop isn’t up and running, the people said.
Hobbled by the global chips dearth, and what analysts call
an over-reliance on imported components, Ola Electric’s woes are a microcosm of
the challenges that India’s automobile industry will have to navigate as it
pivots toward electric vehicles.
They also underscore the hurdles India, the world’s
third-biggest emitter, may face as it attempts to become net carbon zero by
2070. The ability of Ola Electric, valued at more than $5 billion in a recent
fundraising round, to deliver on its promise will also rub off on its parent
company ANI Technologies Pvt. as it prepares to woo investors ahead of a
planned initial public offering in Mumbai next year.
Customers waiting for their bikes are already voicing their
unhappiness. When Ola began taking orders in September, it said deliveries
would begin in October, which later got pushed to November and then to Dec. 15.
Many disgruntled customers -- some of whom paid the entire $1,323
upfront -- have taken to social media.
The company’s manufacturing unit is “operational with
automated weldline, battery line and the general assembly line and an installed
paint shop,” Chief Marketing Officer Varun Dubey said by email. “We had a
minimal delay of two to four weeks instead of much longer delays (months and up
to a year) that are common in the industry,” he added, attributing the hold-ups
to the global semiconductor shortage, which has hobbled automakers globally.
Ola Electric declined to share its production numbers citing
confidentiality.
The chip shortage has been “an unpredictable beast for
everybody,” Aggarwal, 36, said during a Reuters Next conference earlier this
month.
“It’s never a great look for anyone if you’ve got a consumer
base that’s not happy with delivery timelines,” said Anthony de Ruijter, a
senior associate at U.K.-based investment advisory Third Bridge Group Ltd. “I
would expect this is going to be an issue for the sector, not just Ola
Electric.”
According to Ruijter, there’s still a lot of reliance in
India on the import-and-assemble model, not just within Ola’s ecosystem but
among automakers in general. This in turn creates too many factors a
manufacturer can’t control and often results in a product that isn’t customized
for the local market, he said.
Critical Component
India currently imports around 70% of electric vehicle-parts
from China, a situation that deprives local carmakers of an indigenous and
reliable supply chain -- a critical component for mass production.
That’s worked to keep EVs in the nation at 1% of overall
annual auto sales, versus 30% in some parts of China. Yet the need for cleaner
transport solutions is urgent: New Delhi battled the world’s most toxic air
last month and according to World Bank estimates, such pollution is costing the
South Asian nation 8.5% of its gross domestic product.
People familiar with Ola’s predicament say because Ola’s
in-house paint shop isn’t functional yet, scooters are being transported to a
plant near Chennai owned by South Korea’s Seoyon E-Hwa Co.
Representatives at the Seoyon E-Hwa plant didn’t answer
phone calls seeking comment. Ola Electric’s Chief Marketing Officer Dubey said
the company works with multiple suppliers across the value chain and declined
to comment on any one of them individually.
The pressure on the company is likely to amplify if its has
to ramp up its annual production capacity to 2 million units in the first phase
as planned. Aggarwal’s plan, shared in March this year, was to expand it to 10
million vehicles annually by the summer of 2022, or one e-scooter every two
seconds.
Some of those who test rode the e-scooter in November found
it underwhelming.
Pradeep M, a YouTuber who reviews automobiles on the
video-sharing platform, test drove Ola’s e-scooters for about five kilometers
(three miles) in Bengaluru last month. He said in an interview with Bloomberg
News that some slowed down and eventually came to a halt altogether when
accelerated to their top speed of 115 kilometers per hour.
Software Issues
While Pradeep says India’s hot climate requires adequate
motor cooling systems and without one, engines don’t run as efficiently, Ola
Electric denied there were any issues around over-heating of the scooter motor.
“We had provided scooters with the beta software during the media test rides”
due to which a handful of scooters had some software calibration, Dubey said.
“These have been fixed in the final version that has been released for customer
deliveries.”
Pradeep, who has one Ola e-scooter on order and owns another
electric bike from rival Ather Energy Pvt., also said that Ola e-scooters use a
horizontal suspension at the rear to make room for boot space. But a vertical
suspension is better at absorbing shocks from bumpy tarmac.
“The horizontal layout leads to a superior ride and handling
and weight balancing,” Ola Electric’s spokeswoman said in an emailed response,
adding that its scooter’s suspension is “industry leading.” and rides on one of
the larger tires.
Other features like hill hold, used to keep a rider in place
on a slippery slope, weren’t available during the test rides, according to
Pradeep. Those functions were not in the scooters delivered earlier this month.
Ola Electric said that several features were still being added and would be updated
even if the vehicle is in use -- a standard practice “like most tech products.”
“Quality issues are more prevalent in the low-speed electric two-and three-wheeler segments in India,” said Komal Kareer, analyst at BloombergNEF in New Delhi. “The segment is flooded with small players that directly import vehicle components from China. After so much anticipation, the delivery delays by Ola are making customers anxious.”
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