Ola Electric Lays Off Over 1,000 Employees, A Sign of Deeper Trouble?

Ola Electric is cutting more than 1,000 jobs in a major restructuring move as it struggles with rising losses and market challenges. The layoffs, which impact multiple departments including procurement, fulfillment, customer relations, and charging infrastructure, come at a time when the company is facing increasing competition and financial strain.

This is the second round of job cuts in less than five months, signaling deeper concerns for the Bhavish Aggarwal-led company. Since its public listing in August 2023, Ola Electric has seen its losses grow by 50% in the December quarter, triggering regulatory scrutiny and investor worries.

TICE brings inside details of this present layoff round at Ola Electric.

Why Is Ola Electric Cutting Jobs?

Ola Electric is implementing cost-cutting measures to curb losses. The company has been automating parts of its customer relations operations to reduce dependency on manpower.

A spokesperson for Ola said, “We have restructured and automated our front-end operations, delivering improved margins, reduced costs, and enhanced customer experience while eliminating redundant roles for better productivity.”

The latest round of layoffs follows a similar move in November 2023, when Ola let go of around 500 employees. The current cuts reportedly amount to over a quarter of its 4,000-strong workforce as of March 2024, though this number includes contract workers who are not part of public disclosures.

Challenges Facing Ola Electric

Despite once being a market leader, Ola Electric has been losing ground to competitors like Ather Energy, TVS iQube, and Bajaj Chetak. Several factors have contributed to its struggles:

1. Falling Market Share: In February 2024, Ola Electric reported sales of over 25,000 units, capturing a 28% market share. This is far below its target of 50,000 units per month, a figure that CEO Bhavish Aggarwal had previously stated was necessary for achieving EBITDA breakeven.

2. Customer Complaints: The company has faced increasing backlash from customers over product quality and after-sales service. Many buyers have taken to social media to voice their dissatisfaction, which has impacted Ola’s reputation.

3. Regulatory Scrutiny: Ola Electric has faced investigations from market regulators and consumer protection authorities, adding to its challenges.

Cost-Cutting Strategy: A Necessary Move or a Sign of Trouble?

Apart from automating operations, Ola is restructuring its logistics and delivery strategies. Reports suggest that front-end sales, service, and warehouse staff at its showrooms and service centers have also been affected by the layoffs. The company is renegotiating terms with key vendors to reduce costs and improve efficiency.

While these measures may help in the short term, industry experts believe Ola Electric must address deeper operational issues to regain stability.

What’s Next for Ola Electric?

Ola Electric’s stock has dropped over 60% from its peak since its IPO, raising concerns among investors. The company continues to have strong backing from SoftBank and other investors, but if losses keep piling up, investor confidence may weaken further.

With increasing competition in the EV market and continued financial pressures, Ola Electric faces a tough road ahead. The company must now focus on stabilizing its operations, improving product quality, and rebuilding customer trust to stay competitive in India’s growing EV market.