NEW DELHI

Ola Electric, once hailed as a pioneer in India's electric vehicle (EV) market, is now facing significant challenges on multiple fronts. The company, which burst onto the scene with promises of affordable and efficient e-scooters, is grappling with mounting customer complaints, government scrutiny, and a sharp decline in market share.

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At the heart of Ola Electric's troubles lies a growing dissatisfaction among its customers. The company's service centre in Delhi's Moti Nagar has become a hotbed of grievances, with numerous customers struggling to get their vehicles repaired or serviced. Ankit, a 30-year-old customer who travelled over 10 kilometres to have his e-scooter fixed, expressed his frustration, saying, "I should have bought an Activa."

Another customer, a small business owner, highlighted the persistent issues plaguing Ola's e-scooters since purchase. He criticised the company for not addressing these problems before entering the market, noting, "It is no surprise that some consumers are burning their scooters due to frustration."

The internet is awash with similar complaints across various platforms, including Google reviews and social media. In extreme cases, some consumers have resorted to drastic measures, such as burning down entire showrooms out of sheer anger. The situation has escalated to such an extent that the government has now intervened to protect consumer rights.

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The Central Consumer Protection Authority (CCPA) issued a show-cause notice to Ola Electric on October 7, 2024, citing alleged violations of consumer rights, misleading advertisements, and unfair trade practices. Following this, the Ministry of Heavy Industries (MHI) requested the Automotive Research Association of India (ARAI) to investigate whether Ola Electric was fulfilling its warranty obligations and maintaining the required service centres.

The ARAI has also questioned Ola about its failure to inform the authority about a price cut for its S1X 2kWh model before launching the 'BOSS' sale. Experts warn that if ARAI finds violations of guidelines, Ola could face serious consequences, including the potential loss of subsidies under the PM Electric DRIVE Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) scheme.

Ola Electric has acknowledged receiving the notice from CCPA and stated that it will respond within the given 15-day timeframe. The company has also explained that a limited festive promotional campaign offered customers a discount of Rs 5,000 on scooters, with only a select group of buyers eligible for a larger discount of Rs 25,000. Ola maintains that the official price of its S1 X 2KWh scooters remains unchanged.

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The mounting customer complaints have begun to take a toll on Ola Electric's market position. In September 2024, the company recorded its lowest monthly sales and saw its market share plummet to 27% from 47% in September 2023. Ola sold 23,965 vehicles in September, a significant drop from previous months.

Meanwhile, rival firms are capitalising on Ola's struggles. Bajaj Auto sold 18,933 EVs last month, marking a 166% year-on-year growth and overtaking TVS Motor in monthly EV sales for the first time. TVS Motor's e-scooter registrations came in at 17,865 units in September, while Ather Energy saw a 15% month-on-month increase in EV sales to 12,579 units.

The combination of declining market share and increasing government scrutiny has begun to impact Ola Electric's stock prices. The company's shares have slumped 45% from their record high of Rs 157.53, seen on August 20, 2024. As of the most recent trading day, the stock settled at Rs 87.30, dangerously close to its listing price of Rs 76.

Kranthi Bathini, director of equity strategy at WealthMills Securities, commented on the situation, saying, "Currently, Ola Electric is coming to its listing price after touching a high of Rs 157. There has been outrage on social media for the last few weeks, and the stock saw profit booking. Investors with a high-risk appetite and long-term view can buy this stock at the current price range."

In response to the growing crisis, Ola Electric has reportedly acknowledged the issues and promised to improve its after-sales service. The company has announced plans to expand its service network from 400 centres to 1,000 by the end of the year. Additionally, Ola Electric has brought in consultancy firm EY India to help address the rising after-sales issues.