Ola Electric, a famous name in India's electric vehicle (EV) world, is reportedly cutting around 500 employees as part of a restructuring push to improve operational efficiency and profitability. This comes as the Bhavish Aggarwal-led company faces growing losses, declining market share, and increased competition.

Why is Ola Electric laying off employees?

According to the reports, the layoff is part of a larger process aimed at removing unnecessary positions and streamlining the operations of the firm. As Inc42 quoted “The aim is to cut expenses to drive profitability and improve margins. There's no set time for the completion of the exercise.” Employees working in several departments will be reportedly affected by the layoffs; however, Ola Electric hasn't spoken about it yet.

Ola Electric was saddled with a net loss of 43% in its Q2 FY25 after the loss amounted to ₹495 crores, compared to ₹347 crores in Q1. Revenue also declined by 26.1% quarter-on-quarter to ₹1,214 crore in Q2 from ₹1,644 crore in Q1 FY25. On a year-on-year basis, the losses did some justice.

Bhavish Aggarwal, during the post-earnings call with the company, said that the expectations were bright with cost-cutting.  “As we continue to scale distribution, revenue will keep growing while the operating expenses are likely to remain flat or even decline over the next few quarters,” Aggarwal said.

Declining Market Share and Customer Complaints

Ola Electric's market share in the two-wheeler electric segment declined sharply - from a level of 49% in Q1 FY25 to 33% in Q2. Experts attribute this decline to growing competition and the challenge of maintaining a strong service network.

Adding to the company’s troubles, several customers have raised complaints about software issues, battery performance, and jammed tires. This has prompted the Central Consumer Protection Authority (CCPA) to launch a detailed probe into Ola Electric’s consumer grievance redressal practices.

Investor sentiment has also taken a hit from the financial woes of Ola Electric. The stock that debuted at ₹76 per share trades near ₹67, much lower than its all-time high of ₹157.40. The company's market value has been eroded by over ₹38,000 crore in the last few months, with its market capitalization now standing at around ₹31,000 crore, down from its peak of ₹69,000 crore.

While Ola Electric has done well in the EV market, recent setbacks require customer support, improved product reliability, and strategies in markets to regain its footing. Increasing competition will be crucial for the coming quarters as the company delivers on its promises and wins back consumer and investor trust.