Ola Electric losses widen YoY as revenue falls 50%

Electric scooter maker Ola Electric's loss has widened year-on-year for the quarter ended June 2025, as intensifying competition and a post-subsidy slowdown in the EV market halved the company's revenue.

The company’s consolidated net loss widened to Rs 428 crore in the first quarter of FY26, compared with Rs 347 crore a year earlier.

Revenue from operations fell 49.6% year-on-year from Rs 1,644 crore to Rs 828 crore, as deliveries dropped to 68,192 units, down from 1,25,198 units a year ago. However, revenue rose sequentially from Rs 611 crore in the March quarter, suggesting a partial recovery in volume and/or price realisation.

Meanwhile, the Bhavish Aggarwal-led firm managed to cut its losses sharply from the previous quarter, when it posted a loss of Rs 870 crore, reflecting improved cost control and early gains from its turnaround strategy.

Ola’s Gen 3 models—launched to replace earlier variants—now make up 80% of sales, but the company continues to cede ground to rivals such as Bajaj Auto, TVS Motor, and Ather Energy.

At the operating level, EBITDA losses widened to Rs 237 crore, versus Rs 205 crore a year ago. The consolidated EBITDA margin stood at -28.6%, reflecting continued operating stress. However, Ola’s core auto segment turned EBITDA-positive in June—a first for the company. Auto EBITDA margins improved to -11.6%, a marked rebound from -90.6% in the March quarter.

Gross margins also improved to 25.8%, the highest on record, up from 18.4% last year. The gains were driven by lower bill-of-material costs in the Gen 3 scooter lineup and increasing internalisation of key components.

“This is our best gross margin performance to date,” Ola wrote in its shareholder letter, projecting exit FY26 gross margins of 35–40%, bolstered by PLI subsidies amounting to Rs 40,000–Rs 45,000 per vehicle.

As part of its cost rationalisation drive, Ola said Project Lakshya has helped bring monthly auto operating expenses down to Rs 105 crore, from Rs 178 crore in Q3 FY25. Consolidated opex now stands at Rs 150 crore per month, and the company aims to further trim this to Rs 130 crore through the rest of FY26—even as it plans to double vehicle volumes.

Battery bet still bleeding cash

While the core EV business is stabilising, Ola’s new battery cell division remains a drag. The cell segment generated just Rs 3 crore in revenue in the June quarter, but incurred an EBITDA loss of Rs 43 crore, with a whopping margin of -1,579%. Production volumes remain low—only 11,744 cells were produced in the quarter—even as Ola pushes ahead with its Rs 2,800 crore capex plan to build a 5GWh gigafactory.

Ola has already invested Rs 1,500 crore and expects most of the remaining investment to come in FY26. The company's management maintains that the cell unit will turn free cash flow positive by FY27, but investors are likely to remain wary of ballooning losses in a capital-intensive segment that is yet to scale.

MoveOS+, rare earth-free motors add value

In a bright spot, Ola began monetising premium software features through MoveOS+, with nearly half (50%) of customer opting for it—up from just 2% last quarter.

The company also announced progress on its rare-earth-free motor programme, aimed at insulating it from supply chain volatility and long-term input cost risks. "These motors ensure no business continuity risk, are parity in performance and save money as rare earth magnets are costly," said the company.

Warranty headwinds now easing

Ola has also tried to put product reliability concerns behind it. In Q4 FY25, the company took a Rs 250 crore one-time warranty provision to cover faults in its older Gen 1 and Gen 2 scooters.

Ola says Gen 3 fault rates are 60% lower than previous versions, and warranty claims are now trending down. Still, the company acknowledged that chargeback enforcement on suppliers remains weak, and improving it will be a focus area this year.

FY26 outlook: Recovery hinges on execution

Ola Electric expects to deliver 3.25–3.75 lakh vehicles this fiscal, generating Rs 4,200 crore –Rs 4,700 crore in revenue. With PLI benefits flowing in from Q2 and cost structures improving, it hopes for EBITDA margins of above 5% in its auto business for the full year and a positive operating cash flow by the second half.

Despite high investments in its battery venture, Ola ended June with Rs 3,197 crore in cash, and says it is funded for the current fiscal.

Stock nears record low before rebound

Shares of Ola Electric hit a record low of Rs 39.58 ahead of the earnings announcement but later clawed back to gain some ground. The stock remains under pressure as investors balance the promise of improved unit economics against execution risks in both the auto and cell verticals.

(Disclaimer: Shradha Sharma, Founder and CEO of YourStory, is an independent director at Ola Electric.)