Hook:
Just as Ola was prepared to accelerate its growth in the burgeoning EV market, the fall of 3% share price hit it badly, raising critical questions about the company’s pricing method. How will this spurn affect Ola and its investors?
Intro:
On the morning trading session of October 14, the shares of Ola slip 3.2%, hitting an intraday low of Rs 87.34 per share. The largest electric two-wheeler manufacturer in India came under fire after the Automotive Research Association of India (ARAI) raised concerns about the company’s recent pricing practices. Let’s conduct a deep analysis of the continuously falling marketing valuation of Ola!
Ola_India’s Largest EV Manufacturer:
Ola Electric has become popular in many countries especially India for its electric vehicles (EVs) and innovative mobility solutions. It aims to reduce fuel consumption by adopting EVs to sustain a healthy environment. Alongside this, due to government initiatives and increasing environmental awareness, investors are taking more interest in Ola.
In January 2022, the company was valued at $5 billion after raising over $200 million in a funding round. However, its valuation has decreased since then, and the concerns raised by ARAI have proved to be the final blow.
Ola’s Recent Share Decline:
On October 14, 2024, Ola Electric’s shares fell as much as 3% to INR 87.34 during intraday trading on the BSE due to regulatory scrutiny from the ARAI on its recent pricing practices. At around 10:58 AM, the stock was trading at INR 87.50, down 2.68% from its previous close of INR 90.19, marking the third consecutive day of decline. By contrast, the BSE Sensex was up 0.56% at 81,836.98. The same day, 400,695 shares were traded, and OLA’s market capitalization was around INR 38,608 Cr or $4.6 billion by the end of the session.
ARAI Concerns:
This issue arose when ARAI asked Ola for clarification about a price reduction for its S1 X 2 kWh model in its recently announced sale. According to a report of Business Standard, ARAI, which is responsible for automotive research and testing has asked Ola Electric to explain why it did not notify it of a price drop for its S1X 2kWh model prior to the start of the “BOSS” promotion.
The report stated that Ola Electric may be subject to legal action and might lose the subsidies for which its electric vehicles qualified under the PM Electric DRIVE Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) program if it is determined that the firm has broken the established rules.
A senior official of the development said that:
“Clarification has been requested. If any violations are found, action will be taken in accordance with the law and the scheme guidelines”.
Additionally, ARAI was recently asked by the Ministry of Heavy Industries (MHI) to verify if Ola Electric is keeping up with necessary service centers and satisfying warranty commitments. Furthermore, the notice from the consumer rights regulator CCPA after the National Consumer Helpline received more than 10,000 complaints over the past year related to the quality and after-sales service of the Ola vehicles turned out to be a decisive setback for Ola.
Conclusion:
In conclusion, the ARAI investigation could be a decisive step in finalizing the future prices of EVs in India. For Ola, transparency is the key to flourishing in the rapidly growing Electric vehicle market and sustaining the confidence of investors.