Ola To Foray Into Vehicle Manufacturing: Plans To Setup World’s Largest e-Scooter Manufacturing Facility

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India’s largest taxi-aggregator Ola is planning to jump into the business of vehicle manufacturing, keeping an eye on the future prospects of electric vehicles. The company has reportedly engaged the government of multiple states with a proposal of setting up the world’s largest vehicle manufacturing facility.

According to the latest media reports, Ola is seeking 100 acres of unencumbered land to build its vehicle manufacturing unit. While the company is yet to release any statement on such media reports, sources in the know have revealed that the startup unicorn of India is primarily focusing on manufacturing electric scooters in the planned manufacturing facility to make the most of growing demand of eScooters in India.

The news hasn’t surprised many as the company has been making moves towards the direction of venturing in the business of electric vehicle for some time. The recent acquisition of Etergo, the electric scooter manufacturing startup based in Netherland, hinted at the future roadmap of Ola.

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As future road is out in open, it will put Ola in the direct competition to Bajaj Auto, TVs and Hero MotoCop backed Ather Energy.

Ola itself is backed by Hyundai which is reportedly mentoring the ride-hailing app-based startup to pave the way into the fast emerging electric vehicle market.

The planned facility is capable of producing 2 million electric scooters, revealed by the people familiar with the development.

The Indian government has announced various benefits and incentives for companies operating or have planned to operate in the electric vehicle space. Quite recently, the government has announced a $4.6 billion incentive scheme for companies. Besides, to make the electric scooters more affordable and attractive for consumers, the government is offering a rebate up to Rs 1.5 lakh on interest paid on loan to buy an electric vehicle.

The government is committed to reduce its dependency on oil and to cut down pollution. As electric vehicles satisfy the government objective on both count, the government is pushing existing manufacturers to setup their electric vehicle manufacturing plants in India itself.

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Despite all such efforts, the adoption of electric vehicle in slow in India, so far. One of the major hurdles for consumers is the unavailability of infrastructure that is required to make electric scooter an eyepopping proposition.

In FY’20, the sales of electric scooters and motorcycles in India reached 152,000 units, recording 20% YoY growth. The sales of electric cars In India was not so encouraging as well. Just 3,400 electric cars were sold during the same financial year in India. Just to put things in context, 1.7 million passenger cars were sold in India during the same period.

In the first two quarters of FY’21, just 7,552 electric scooters were sold in the world’s second-most populous nation compared to 1.3 million conventional scooters sold in the same period.

Despite all challenges, industry experts believe that the future is owned by electric vehicles and this is the right time for existing vehicle manufacturers to put their bets. While traditional vehicle manufacturers will leave no stone unturned, it would be interesting to see how the new-age startups like Ola would compete with companies that are in this market for decades.

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