Ola Electric Mobility Ltd is facing mounting challenges as a recent government tax change has significantly narrowed the price gap between its electric scooters and traditional petrol-powered two-wheelers, leading to a sharp drop in sales.
Sales Slump and the GST Impact
According to Vahan data, Ola Electric's retail sales for November 2025 stood at just 8,046 vehicles, marking the company's lowest monthly sales figure since February. This decline comes after the government reduced the Goods and Services Tax (GST) on internal combustion engine (ICE) two-wheelers from 28% to 18%, effective 22 September 2025.
Major ICE manufacturers like Hero MotoCorp, Bajaj Auto, and TVS Motor promptly cut prices by at least ₹5,000 per vehicle. This move effectively neutralized the maximum benefit of ₹5,000 available under the PM E-Drive scheme for electric vehicle buyers. With the PM E-Drive subsidy itself set to expire in March 2025, the pricing disadvantage for Ola's electric scooters could widen to at least ₹10,000 per vehicle compared to their ICE rivals.
Financial Strain and Investor Concerns
The potential ₹10,000 price gap is a substantial concern, representing about 25% of the gross margin of ₹40,000 per vehicle that Ola reported for the September quarter (Q2FY26). Investors have reacted negatively to these headwinds. Ola's shares, trading around ₹41, are hovering near the all-time lows hit in July and have halved in value so far in 2025.
The sales trajectory is worrying. After a post-Q1 rally driven by a 33% quarter-on-quarter volume jump to 68,192 units, deliveries fell to 52,666 units in Q2FY26. Vahan data for October and November shows sales of 16,048 and 8,046 units respectively, indicating that Q3FY26 volumes will likely decline sequentially. If this trend continues, monthly sales could fall below the auto business breakeven volume of around 20,000 units per month, as stated by management.
Furthermore, the company's much-hyped motorcycle launch has failed to boost overall numbers. Management indicated motorcycles constituted only 12-15% of Q2FY26 sales (roughly 6,000 units). Excluding these, the quarter-on-quarter drop in scooter sales is even more alarming, falling by about one-third from Q1FY26, which had negligible motorcycle sales.
The Next Big Bet: Ola Shakti
With its automotive segment struggling, Ola Electric is pinning hopes on its next major venture: a lithium-ion-based Battery Energy Storage System (BESS) branded Ola Shakti. This system targets both residential and commercial markets, aiming to replace traditional lead-acid batteries used with inverters.
The company's management anticipates potential revenue of ₹1,000 crore from BESS in FY27. However, the competition is fierce. Established lead-acid battery giants like Exide Industries and Amara Raja Energy & Mobility have also invested in lithium-ion production, with their plants expected to be operational within the next year.
Despite the current stock price being far below its IPO issue price of ₹76, valuation concerns persist. Based on Bloomberg consensus estimates of FY27 revenue at ₹4,700 crore, the stock trades at 3.8 times estimated sales, a multiple that is not considered cheap, underscoring the view that the IPO was overpriced in hindsight.
