Ola Electric to fire over 1,000+ employees, having problems from slow sales and high costs of production, despite being the best-seller in electric two-wheeler.
Ola Electric, the top electric two-wheeler maker in the country, is going to lay off over 1,000 employees and contract workers. The news comes as the company seeks to cut costs and improve profitability. The cuts will span several departments, including procurement, fulfillment, customer relations, and charging infrastructure, per a Bloomberg report.
This is the second major layoff at Ola Electric after it laid off hundreds of employees in November last year. Roughly 500 employees were laid off at the time. But Ola continues to lead the electric two-wheeler space in India.
Sales Slowdown
In recent months, Ola Electric has seen a major fall in sales. In February, the company sold around 25,000 units, a steep decline of more than 25% from the prior month. Nonetheless, Ola had a 28% market share of the electric two-wheeler segment, making it the leader of the segment.
Missing the mark has been blamed on everything from growing competition to market saturation and economic woes. On top of that, Ola Electric is struggling when it comes to living up to the ambitious growth targets it set for itself during its launch.
Departments Affected
Employees in various roles will be affected by the layoffs, including front-end sales, service and warehouse employees in showrooms and service centers. Workers who track logistics and deliver orders are also impacted. Ola’s move is in line with its strategy to streamline its logistics and cut operational costs.
The company has not yet made a public statement about the layoffs. Sources tell the tone behind this overhaul is because they need to make the company sustainable over the long term in a crowded EV marketplace.
Profitability Challenges
Ola Electric, which made its foray almost three years back in August 2021 in the electric two-wheeler space, has been finding it difficult to turn a profit. Despite capturing the majority share of the market, the company’s low turnover and overall operational cost took a toll on its financial results.
The company has been slashing prices on its electric scooters to draw in customers. Although this strategy temporarily increased sales, it also compromised overall profitability.
IPO Performance
Last year, much was expected when Ola Electric launched its initial public offering (IPO). Yet the company’s stock hasn’t traded as strong as expected. Market analysts cite slow sales growth and rising operational costs as the reasons for this underperformance.
Data from Tracxn shows that the company’s employee count fell to 3,824 at the end of last year, a decrease of 2% compared to the previous year. Ola’s layoffs come amid wider cost-cutting measures at the company.
Future Outlook
The data breaks off in October 2023, however, we have a general historical understanding regarding this specific period, and as a result, we can see to what extent the current challenges will affect Ola Electric on its way to the electric two-wheelers market. It intends to overhaul its logistics and delivery methods to cut back on costs and enhance efficiencies.
While there are significant hurdles that Ola Electric must overcome, analysts maintain that its market position and the support of the government towards the EV sector make a bounce-back possible. But the path to profitability will need to be carefully executed.
Customer Focus
Customer satisfaction is something Ola Electric always strives for. To better the experience for its customers, the company is working to improve its service and charging infrastructure. Ola to maintain back-end services for its customers despite layoffs.
Ultimately, the more than 1,000 employees laid off by Ola Electric represent the EV maker’s growing pains, which are happening as the market shifts (some of which the company is creating with its controversial use of Techbro pay practices and labor practices). However, with the company now a leader in the electric two-wheeler space, resolving its finances and day-to-day operations will be essential for growth in the future.
Also Read
Tesla’s First Showroom in Mumbai: Big News for India
About The Author
