Ola to raise $300 million for expansion in its two-wheeler operations and battery facility business. Ola Electric Mobility Pvt. Ltd. is India’s largest electric two-wheeler manufacturing company.
Ola Electric raises $300 million for expansion
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Introduction To Ola’s new Fundraiser
The company’s EBITDA (Earnings before interests, taxes, depreciation, and amortization) are expected to become positive in 2024. This is expected to make Ola Electric the biggest electric two-wheeler company in the country which will even surpass TVS Motors and Hero Motocorp in terms of valuation.
This fundraiser shall be managed by Goldman Sachs. The funds will be raised from existing and marquee global investors.
Hitherto, Ola Electric has raised about $866 Million in funding. Ola has recently been working closely with Sovereign wealth funds which include Abu Dhabi Investment Authority and Qatar Investment Authority. The company has also been working with climate-centric and energy Transition based funds including Blackstone and BlackRock. Spokespersons at Ola Electric have said that management discussions are still “in their nascent stages”.
According to Vahan Data, Ola Electric has been leading the market with more than 20% of the market share of the electric two-wheelers industry under its belt.
The electric two-wheelers industry’s business has increased in volume to 65,798 units in February from 35,074 units the previous year. Total sales volume for the current fiscal year stands at 683,000 units. Ola Electric has sold more than 142,000 units during the current fiscal year, raising its market share to 20.88%. Ola’s average monthly run rate currently stands at 20,000 units. The company plans to open over 500 Experience Centres throughout India’s major cities, by the end of 2024.
Ola is expected to hit a revenue of $400-500 million this fiscal year. However, the company will still end up in losses. Ola is expected to bounce with positive EBITDA in the fourth quarter. By 2024, Ola is expected to have a turnover of more than $1 Billion and an EBITDA profit of over $50 Million.
Spokespersons at Ola, demystifying the issue of batteries catching fire, said that “The whole vehicle has been tested at three different levels which include vehicular lab tests and components test, vehicular field tests, and digital simulations.”.
Ola’s Future Plans For Expansion
Ola claims its manufacturing plant in Krishnagiri to be the world’s largest two-wheeler manufacturing plant. They’re also setting up their own lithium-ion cell factory with a starting capacity of producing over 5 gigawatts hours (GWh) at the same place in Tamilnadu.
The plant shall later be upgraded to 20 GWh. Ola has also signed up with the Government’s productivity-linked incentive scheme to develop advanced cells. Ola is also going to invest over $500 million in battery research. This initiative is expected to usher Ola towards its plans to manufacture four-wheelers at cost-competitive prices by 2024.
Moreover, Ola will launch its electric motorcycle by the end of 2024. Ola aims to launch over 9 different electric vehicles in the two-wheeler and four-wheeler segments in the next three years.
Since third-party cell manufacturers skim a nearly 18-20% margin, the profitability of OEM (Original Equipment Manufacturers) businesses increases. As cell chemistry and production factors get integrated for OEMs, they may see leverage increased profits.
Ola had also raised $200 Million at a valuation of $5 Billion in January last year from investors which included Tekne Private Ventures, Edelweiss, and Alpine Opportunity Fund.
Ola To Raise $300 Million
Ola is all set to raise $300 million in funding to expand its battery cell manufacturing and two-wheeler manufacturing businesses. The fundraiser shall be managed by Goldman Sachs. Funds shall be raised from old, existing, and marquee investors from all over the world. Ola is also expected to end in losses this fiscal year but as its EBITDA profit turns positive from the fourth quarter of the next fiscal year, Ola will become the market leader exceeding legacy two-wheeler manufacturers like TVS Motors and Hero Motocorp. Ola is poised to dominate the Electric Two-wheelers and four-wheelers market by the next fiscal year as its turnover exceeds $1 Billion.
Read More: Ola Electric to build a cell manufacturing plant in India
