Ola Electric May Lay Off 1,000 Employees Amid Mounting Losses: Report

Ola Electric Mobility Ltd is reportedly preparing to lay off more than 1,000 employees and contract workers in an effort to mitigate rising financial losses. According to a Bloomberg report, the job cuts will impact multiple departments, including procurement, fulfillment, customer relations, and charging infrastructure.

The decision to reduce its workforce comes as part of a larger cost-cutting initiative aimed at stabilizing the company’s finances. Sources close to the matter stated that Ola Electric, backed by SoftBank Group Corp., has been struggling with regulatory challenges and increasing operational costs.

Impact of Layoffs on Ola Electric’s Workforce

This latest round of job cuts is the second significant layoff at Ola Electric in less than five months. In November 2023, the company reportedly let go of approximately 500 employees. With the latest cuts, more than 25% of the company’s workforce of 4,000 (as of March 2024) will be affected.

However, since contract workers are not typically included in public disclosures, the true extent of the layoffs remains unclear. The reduction in workforce is expected to streamline operations, but it may also impact employee morale and service efficiency.

Stock Performance and Investor Reactions

Following the layoff news, Ola Electric’s stock dropped 5%, hitting a 52-week low of Rs 54. Since its public listing in August 2023, the company’s shares have experienced a steady decline, losing over 60% of their peak value.

Investor confidence has been shaken by Ola Electric’s financial struggles, increased competition, and negative customer feedback. The latest job cuts signal deeper operational restructuring, which may influence the company’s long-term prospects.

Automation and Cost-Cutting Measures

To improve efficiency and reduce costs, Ola Electric is automating several customer service processes. According to sources, this move is expected to enhance customer experience while eliminating redundant job roles.

A spokesperson for Ola Electric addressed the restructuring, stating, “We have restructured and automated our front-end operations, delivering improved margins, reduced cost, and enhanced customer experience while eliminating redundant roles for better productivity.” However, the company did not provide specific details on the number of employees affected.

Reports also suggest that layoffs are affecting employees in sales, service, and warehouse operations across Ola showrooms and service centers. Additionally, the Bengaluru-based company is modifying its logistics and delivery strategies to further cut costs.

Rising Financial Losses and Market Challenges

Ola Electric’s financial difficulties have intensified over recent quarters. The company reported a 50% increase in losses for the December 2023 quarter, putting significant strain on its financial stability.

Despite an ambitious IPO launch, the company has struggled to maintain momentum. Increased competition from rivals such as Bajaj Auto and TVS Motor Co. has led to a decline in market share.

In December 2023, Bajaj Auto surpassed Ola Electric as the top-selling electric scooter brand in India, pushing Ola down to third place. Additionally, government data revealed that Ola Electric had lost its leadership position in nine of India’s top ten EV markets by the end of 2023.

Sales Performance and Missed Targets

On March 1, Ola Electric informed stock exchanges that it had sold over 25,000 electric scooters in February 2024, securing a 28% market share. However, this figure is well below the 50,000-unit monthly sales target that CEO Bhavish Aggarwal had set as the benchmark for achieving EBITDA breakeven.

EBITDA, which stands for Earnings Before Interest, Tax, Depreciation, and Amortization, is a key financial metric indicating a company's profitability before accounting for certain costs.

To counteract declining sales, Ola Electric expanded its retail network by launching 3,200 new outlets in December 2023. While this move was intended to improve service accessibility, reports indicate that the company has been receiving nearly 80,000 customer complaints each month, highlighting ongoing service quality issues.

Ola Electric’s Future Outlook

The recent layoffs, financial losses, and market position setbacks indicate a challenging road ahead for Ola Electric. The company must focus on strengthening its service network, improving customer satisfaction, and addressing financial inefficiencies to regain investor confidence.

With growing competition in the EV sector and rising regulatory scrutiny, Ola Electric’s future performance will depend on how effectively it adapts to market demands and enhances its operational strategies.