Ola Electric Plans To Launch Series Of EV Products - Scooters, Motorcycles, Sedans & SUVs

Holistic approach towards electrification. Ola Electric has laid out their vision to become a vertically integrated electric mobility player across two-wheeler and passenger vehicle segments. The company calculates the opportunity size at US$1 tn at a volume of 155 mn units. The company has also announced its target to attain 15 per cent of the global capacity for electric two-wheeler vehicle manufacturing. Further, it plans to make significant investments in R&D to drive the vertical integration strategy, especially in battery cell technology as well as traction motors.

Technology and Vertical Integration to be Key Strategic Drivers for Ola Electric

We recently visited the Ola future factory and interacted with the management at Ola Electric. We gather that the company is focused on becoming the leading vertically integrated mobility player. The company expects the EV two-wheelers to completely substitute ICE two-wheelers in India by FY2025E. The company has identified technology and vertical integration as the key enablers, which will lead to rapid adoption of EVs in the domestic market. 

Product Roadmap – Focus on Reaching Leadership Position in Electric 2W and PV Segments

Ola Electric plans to be a leading EV maker across two-wheeler and PV segments. The company plans to launch a series of new EV products across scooters, motorcycles, sedans and SUVs. The company plans to launch its mass scooter in CY2022E. After that, the company plans to launch its premium motorcycle in CY2023E followed by the mass market variant and sports motorcycle. On the passenger car front, the company plans to launch a premium SUV and premium sedan in CY2024E followed by mass-market variants for both of them. Finally, the company plans to launch Robotaxi with L3 autonomous capabilities to complete its suite of products. The aftermarket service for the vehicles is to be delivered through dark service stores and mobile vans augmented to service vehicles. The customer experience is to be further enhanced through the use of predictive and preventative maintenance delivered to the customer.

Services Roadmap – Location and Charging Services to Enhance User Experience

Ola Electric plans to expand its service offerings to location services and charging infrastructure, beyond the existing ride-hailing and financial services arms. The location services would be Ola maps and it would empower all its EVs and the Ola ride-hailing. The location services are expected to be more tailored for the Indian roads using the data from Ola cabs. The charging infrastructure will be compatible across both two-wheeler and passenger vehicle segments. The company expects the hypercharger network to be able to charge 50 per cent of the battery under 20 minutes in three years. This is expected to complement the home chargers and capture 20-30 per cent of the energy needs for EVs.

Technology Roadmap – Focus on Indigenisation of EV Components

The company plans to invest aggressively in developing its capabilities in technology to develop in-house solutions across the value chain. The company has invested US$100+ mn in setting up an R&D center for battery technology. It currently employs 200+ researchers and plans to expand the strength to more than 500 PhDs in the next few years. The technology headquarters will be in Bangalore with research centers in San Francisco in the US, Coventry in the UK, Pune and Japan. The company plans to build cell technology capabilities in NMC 2170 by CY2022E, LFP by CY2024E, NMC 4680 by CY2025E, NMC solid state by CY2026E, LMFP/Si and Na ion by CY2026E, and metal anode solid-state technology by CY2026E. Apart from cell technologies, the firm also wants to develop the technologies for L3 autonomous capabilities with point-to-point navigation, emergency braking and collision avoidance.

Vertical Integration to Drive Cost Leadership

Vertical integration is the key strategy behind the company’s push for building manufacturing capabilities across the value chain. The company expects the pace of technology evolution to remain high. The company expressed that vertical integration would allow the firm to improve its control on technology and the cost of manufacturing of the products. To achieve this, the company plans to develop capabilities in key areas such as cell technology, motor technology and autonomous driving capabilities. The company expects the current cell cost of US$150 /kWh to reduce to US$100 /kWh as it moves this in-house from its current vendor LG Chem. The company expects this move to lead to 10-20 per cent reduction in the total cost and 8.5 per cent improvement at EBITDA level. In order to achieve these objectives, the company has managed to obtain the incentives under ACC PLI scheme to set up 20 GWh of annual capacity. This is expected to enable the company to control its costs further.

Expect a Ramp-up of Production Volumes over the Coming Quarters

The future factory in Krishnagiri is designed for a capacity of 10 mn units of scooters annually across 10 assembly lines. One assembly line is currently operational with a capacity of 1 mn units annually. The current throughput is about 500k units annually and is expected to ramp up in the next few months. The company highlighted that the order book continues to remain robust; however, the supply chain mainly related to battery cells continues to impact production ramp-up. 

The plant is designed to be highly automated with robots transporting the material between all supply chains. The plant employs state-of-the-art manufacturing technologies such as laser cleaning to prepare the bus bar and cells for welding, ultrasonic welding to weld cells without any heat and a fully automated painting line. The plant is fully operated by women and is expected to generate employment for 10,000 women at full capacity.

Other Key Takeaways

1. The company expects to turn cash-flow positive in three quarters and highlighted that it has more than 60,000 scooters on the road. 

2. The company plans to manufacture 6 cars across 2 platforms and 4 cell variants across 2 form factors in the Krishnagiri plant. The plant is expected to deliver a scooter every 2 seconds at full capacity across 10 lines with a cycle time of 20 seconds for each line.

3. The plant is leading on safety with no accidents in the 7 mn hours after groundbreaking.

4. 95 per cent of the water used in the plant is recycled or reused. The paint shop generates zero emissions through capture and incineration.

5. The company has experienced one fire incident to date. The initial findings of the government suggested issues with battery and battery management system. The company stated that as an isolated incident and with stricter regulations, the company expects the EV ecosystem to become much safer over the coming period.