Ola Electric to Layoff 500 Employees amid Restructuring Exercise to Boost Profitability
Ola Electric is looking to restructure its operations as per a report stating that more than 500 employees in different roles may lose their jobs. The move is meant to enhance the company’s profitability and margins in view of stiff market and regulatory competition.
This is not the first time the electric vehicle company has made such a decision. In 2022, Ola Electric went through two restructuring exercises. In July of that year, the company laid off around 1,000 employees and shut down three business units: Used Cars, Cloud Kitchen, and Grocery Delivery, to streamline its focus on the electric vehicle segment. Later, in September 2022, the company started hiring a new to centralize and unify its operations across various verticals.
As of March 2024, Ola Electric had 4,011 staff on roll, the company stated in its IPO document released back in August. Despite all efforts, the electric scooter maker, which is backed by SoftBank, has failed to turn profitable, citing steep operational costs and a cut in government subsidies for electric vehicles. According to the company, the use of in-house batteries for scooters will play a crucial role in reducing costs and driving profitability.
Ola Electric’s challenges are compounded by increasing competition and regulatory scrutiny. Following its strong stock market debut in August, the company has faced issues related to service standards and product quality, prompting investigations by India’s leading product certification agency. Additionally, competitors have launched electric two-wheeler models priced similarly to Ola’s, gradually eroding the company’s market dominance.
While Ola Electric’s losses narrowed in the July-September quarter as sales improved, the share price of the EV major has declined and closed at a record low on the last trading day of Rs. 67.23, showing investor concern over its profitability and long-term sustainability.
The company is making efforts to cut costs and streamline its operations to address the financial issues, putting itself in a good position to ride the swiftly growing electric vehicle market in India.
