In today's Finshots we look at the lofty aspirations of Ola and see why there is so much optimism in the electric scooter industry right now.

The Story

Ola Electric became the newest entrant in the EV scooters segment launching two attractive models priced at ₹99,999 and ₹1.29 lakh, respectively. And while this may still seem a bit pricey for people’s liking, bear in mind, you could get a discount on this price if your state government is subsidizing the cost. For instance in Gujarat, the more affordable variant is expected to cost a mere ₹79,999. This is tantalizingly close to the utopian dream of building and marketing an EV scooter at a truly competitive price.

And at this point, you have to ask — Is the EV scooter revolution finally upon us?

Well, yes and no. For starters, there’s no doubt that the EV industry is in fact witnessing the perfect storm.

Fuel prices are at record highs. State governments are competing to offer subsidies for EV vehicles. The likes of Ola, Hero, and Ather Energy have been hyping up an all-electric future. Big investors are financing their dreams. And the cost of production is on a constant decline. If there was ever a time to foray into the EV scooter segment then that time is now.

What’s more? The public seems to have bought some of this vision at least. Last year the industry sold 25,000 odd units, despite the pandemic. This year they have already sold close to 30,000 units in just the first 6 months. And while these aren’t exactly world-beating numbers, the likes of Ola are promising to scale production by the millions this year. And they have close to 100,000 pre-orders to show for it. Surely, this is a sign of things to come no?

Well, you could make a case for it. But not everybody is this optimistic. Sure, sales figures are picking up. But you’ll have to reconcile these lofty aspirations with the cold hard realities of building a truly scalable business in this domain. Ola, for instance, has promised to design, engineer, and manufacture its own batteries, motors, motor controllers, and software, despite acquiring a Dutch EV company last year. They’ll also have to build out the supply chain to be able to sell these vehicles to the masses. Not exactly something that’s easy to do when you’re up against the clock. Then there’s the fact that Ola has never done anything of this sort before. It would be particularly challenging to seamlessly manufacture millions of scooters without encountering some hiccups along the way.

Case in point — “When Tesla originally began producing Model 3’s — a truly affordable mass market electric vehicle, they could barely meet their target. There were problems with the assembly line. There were problems with the robots. There were problems with battery manufacturing. And it was taking forever to solve these niggling issues. The company’s automation dreams were falling apart and in an infamous interview with CBS, Elon Musk called it production hell.”

Then there’s the demand side equation. As prices begin to moderate, more people will definitely warm up to the idea of owning an electric scooter. But if you were gunning for practical utility, then you’ll still have to contend with the range problem. The more expensive variant within Ola’s offering is expected to offer about 180 km of range. This is by no means an untenable proposition. But the claimed range seldom tallies up to real-world experience and if you fear being stranded somewhere with your vehicle out of charge, then you better hope that the charging infrastructure scales alongside the production capacity.

Also, there’s still some ambiguity surrounding charging standards and adapter technology. Granted, the government and other industry stakeholders are working on it as we speak, but they’ll have to expedite these discussions if we are talking about manifesting an EV revolution in the next couple of years.

Nonetheless, even if the stated dreams don’t materialize fully, it still feels quite surreal to think about the progress we’ve just made in the last decade.

India is going electric one way or another. The only question is — Can we get there super fast?

You tell us.

Until then…

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