Ola Electric leads Indian EV two-wheeler market with highest margins, nearing profitability: Report

A new report by global brokerage Bernstein has revealed that Ola Electric is leading the Indian electric two-wheeler (EV 2W) market in terms of margins and is on a strong path to profitability. The report, which analysed the margin profiles of leading EV manufacturers in India for Q1 FY2025 (except for Ather, which is for FY2024), highlights Ola Electric's impressive financial performance.

Ola Electric's Margin Advantage

According to Bernstein's analysis, Ola Electric achieved a gross margin of 18.4% during the analysed period, surpassing competitors like TVS (14%), Bajaj (12.3%), and Ather (7%).

The report attributes Ola Electric's strong margin performance to several factors:

Aggressive Localisation and Vertical Integration: Ola Electric's focus on local sourcing and in-house manufacturing has helped reduce costs.

Direct-to-Consumer (D2C) Business Model: By selling directly to consumers, Ola Electric eliminates intermediary costs and gains greater control over pricing.

Access to Government Subsidies: Ola Electric benefits from both the Production Linked Incentive (PLI) scheme and the Faster Adoption and Manufacturing of Electric Vehicles (FAME) subsidies.

Path to Profitability

Bernstein's report also reveals that Ola Electric is nearing EBITDA-level profitability, achieving an EBITDA margin of -2% in the analysed quarter. This puts them ahead of competitors like TVS (-7.9%), Bajaj (-10.4%), and Ather (-37%).

"EV manufacturing is drastically different from traditional automobile manufacturing. Technology and vertical integration plays a crucial role in the path to profitability in EVs and Ola Electric has advantage in both," the report notes.

Positive Outlook from Investment Banks

Last week, both Goldman Sachs and Bank of America initiated coverage on Ola Electric shares with a 'buy' rating. Goldman Sachs set a price target of Rs. 160 per share, while Bank of America has a target of Rs. 145 per share.

Goldman Sachs believes that Ola Electric is well-positioned for substantial growth, citing favourable long-term trends in the Indian EV market. Bank of America highlights Ola Electric's technological advancements and cost leadership as key drivers for success.