Inside Ola Electric Crisis: Echoes of BluSmart in India’s EV Mess

India’s electric vehicle (EV) revolution—once turbocharged by glossy promises and billion-dollar ambitions—is starting to feel like a misfiring battery pack.

Just days after the BluSmart-Gensol scandal rattled investor confidence, another name has re-emerged in headlines for all the wrong reasons: Ola Electric. Once celebrated as the Tesla of India’s two-wheeler market, Ola is now grappling with a perfect storm of troubles—from plummeting sales and safety scares to regulatory probes and investor jitters.

The BBC recently reported a cascade of red flags inside Ola Electric—mass layoffs, supplier exits, compliance issues, a ballooning pile of consumer complaints, and a sharp collapse in valuation. It's a sobering look at a startup that raced ahead on branding, but stumbled on the fundamentals of product reliability, governance, and trust.

It all sounds eerily familiar.

Echoes of BluSmart

The parallels between Ola and BluSmart—the EV cab aggregator now under fire for alleged financial misreporting—are unmistakable. Both startups pitched a clean-energy future to the world. Both drew in marquee global investors. And both, as it turns out, may have leaned too heavily on perception over performance.

Where BluSmart is being accused of inflating its numbers, Ola's unraveling seems more operational—but equally alarming. Its $734 million blockbuster IPO in 2024, the biggest that year, now feels like a distant mirage. Since listing, Ola Electric has lost nearly 70% of its market value in just seven months.

A Story of Hype, Not Hardware

Ola’s meteoric rise was powered by a heady cocktail of bold storytelling, aggressive expansion, and founder-driven ambition. CEO Bhavish Aggarwal built a brand that promised self-reliance, futuristic tech, and world-class EVs “made for India.” Its AI startup Krutrim even claimed unicorn status in record time.

But the wheels have come off that dream—sometimes, quite literally.

The company's flagship electric scooter, based on the Dutch AppScooter from Etergo, was rushed to market in 2021. By 2022, fires were reported—likely due to faulty battery management systems. Over 1,400 scooters were recalled, though the company never released the investigation results publicly. In another set of incidents, front suspensions snapped mid-ride, causing injuries and raising fresh safety concerns.

Meanwhile, Ola's sales dropped by more than 50% compared to April 2023, and its market share nosedived from 52% to 19% by December, before recovering slightly to 25% in January. Its bold target of selling 50,000 scooters a month is nowhere close to reality. In February, government data showed fewer than 10,000 scooters sold, though Ola claimed 25,000, blaming registration delays.

Ola Electric’s Rise and Fall: A Timeline of Crashes, Cash & Chaos

Governance Gaps & Regulatory Heat

There’s trouble brewing behind the scenes too. Thousands of service complaints have piled up over the last year—many of them unanswered. Without a traditional dealership or service center network, customers have often been left stranded.

In response to mounting pressure, Ola announced plans to open nearly 4,000 service-enabled stores, but even that backfired. As of March, multiple states had launched investigations into the legality of these outlets, citing violations in registration and storage norms.

At the same time, India's consumer watchdog (CCPA) issued notices after receiving over 10,000 complaints from customers. The Transport Ministry also flagged discrepancies in Ola’s scooter registration numbers.

Financially, the cracks are growing wider. In Q3 FY24, Ola posted a loss of $65 million, up from $43.6 million during the same period last year. Suppliers have walked away due to delayed payments, and one vendor even filed an insolvency plea—since settled, but telling.

In the backdrop, Ola’s heavily publicized 20GW gigafactory project—central to its “Make in India” narrative—is reportedly delayed and may miss government-linked subsidy milestones, triggering possible penalties.

A Familiar Playbook

If BluSmart raised red flags around accounting and compliance, Ola raises alarms about culture, speed, and the limits of visionary rhetoric.

From constant pivots and ambitious deadlines to two rounds of layoffs impacting over 1,000 employees, Ola’s path reflects a deeper problem in India’s startup machinery. Key leadership exits across tech, operations, and even its cab division point to internal churn. It’s a reminder that hardware businesses need a different cadence—measured, tested, and grounded in trust.

“Software mindsets don’t work with hardware products,” said former Ola strategist Deepesh Rathore to the BBC. “They need time, testing, and durability—none of which you can shortcut.”

The Bigger Picture

India’s green mobility transition needs companies that can scale, yes—but also companies that can sustain. Ola’s stumble, coming so close on the heels of the BluSmart saga, should be a moment of introspection.

Do investors need to ask harder questions? Do regulators need sharper teeth? And most importantly, do startup founders need to slow down and build with integrity?

Because the next big story out of the EV sector shouldn’t be another crisis. It should be a course correction.