With BESS as its new bet, Ola Electric shifts strategy from EV dominance to “EV + energy”—but profitability may still be out of reach
Ola Electric’s Changing Narrative: From EVs to Energy
After years of EV-first expansion, Ola Electric is pivoting to a broader “EV + energy” strategy. The star of this transition is Ola Shakti, a battery energy storage system (BESS) that marks the company’s entry into residential and commercial energy storage.
- This new focus is set to increase cell manufacturing capacity to 20 GWh by FY27, from just 2.5 GWh currently.
- The company plans to use its upcoming in-house produced cells across its own EVs and the Ola Shakti product line.
While promising in the long term, this pivot reflects mounting pressure to find new revenue streams amid plummeting sales and deepening investor concerns.
EV Sales Slide, Profit Still Out of Reach
Despite efforts to tighten costs, Ola Electric is still far from profitability at a company level.
- Q2 FY26 net loss narrowed 15% YoY to INR 418 Cr, but revenue dropped 43% YoY to INR 690 Cr.
- The company’s cash reserves fell by INR 294 Cr, and its stock price is down 38% from IPO levels.
- Vehicle sales forecast for FY26 was slashed from 3.75 Lakh to 2.2 Lakh units.
Ola’s move away from a growth-at-all-costs approach toward profitability is real—but the transition is painful.
Auto Segment Margins Improve, But At What Cost?
The auto business, once Ola’s growth engine, is now shrinking in scale but showing early signs of margin improvement.
- Gross margin rose to 30.7% in Q2, and EBITDA turned positive at INR 2 Cr.
- This improvement came with a decline in deliveries and market share, slipping below Bajaj, TVS, and Ather.
The company blames aggressive discounting by competitors, but industry experts point to persistent issues with product quality and after-sales service.
Service & Trust: Still A Work in Progress
The company’s service challenges have been a major drag on reputation and repeat business.
- One-day service guarantees have failed to address delays and dissatisfaction.
- The new HyperService platform now allows customers to buy genuine parts directly, a step toward transparency and customer trust.
- Founder Bhavish Aggarwal admitted challenges stem not just from internal issues but also the lack of trained EV technicians across India.
Efforts are underway, but the damage to brand trust has already impacted market share.
Ola Shakti: A Bold Bet on Battery Storage
The company’s pivot to BESS is ambitious. Under the Ola Shakti brand, Ola will serve the residential, commercial, and utility-scale energy markets.
- Ola expects revenue of INR 100 Cr in Q4 FY26 and INR 1,000–2,000 Cr in FY27 from BESS.
- Product deliveries, however, won’t begin until mid-January 2026.
- These projections are optimistic, especially since market traction is untested.
To back these plans, Ola is scaling cell production from 5.9 GWh (by March 2026) to 20 GWh by H2 FY27—a massive capital commitment.
High Capex, Uncertain Returns
This strategic shift comes at a cost.
- The budget for the first 5 GWh plant alone is INR 2,800 Cr. Scaling further would demand even greater investment.
- Ola Electric is yet to prove demand for Ola Shakti at scale or demonstrate that it can deliver high-quality, reliable systems.
- Marketing and establishing a foothold in a new and competitive energy sector will put additional strain on the bottom line.
Meanwhile, net profitability at the company level wasn’t even mentioned in the Q2 shareholders’ letter—signaling that it’s still out of reach.
The Real Puzzle: Focus or Diversion?
Industry observers worry that Ola’s frequent shifts—from scooters to motorcycles, to batteries, and now BESS—reflect a lack of strategic focus.
“We’ve seen a constant shift of focus. The results haven’t been great… Net result is serious value destruction,” said Deb Mukherji, CEO of ADM Prime Consulting.
Despite potential in energy storage, the company risks overextending itself in search of profitability.
Conclusion: Hope in Energy, But Headwinds Remain
The “EV + energy” vision may pay off in the long term, but in the near term, Ola Electric’s profitability remains elusive.
- The company must balance investments, execute flawlessly, and rebuild customer trust.
- Until then, energy storage looks more like a hedge than a solution to the profitability puzzle.
Ola Electric’s pivot to energy storage with Ola Shakti shows long-term promise but demands massive investment amid falling EV sales and shaky after-sales support. With mounting losses and strategic pivots, profitability remains a distant target despite early margin gains.
