New Delhi: Ola Electric Mobility has reportedly laid off more than 1,000 employees and contract workers, marking its second major round of job cuts within just months. This decision arises as the SoftBank-backed company struggles to address its growing financial losses.
The layoffs are impacting various departments, including procurement, fulfillment, customer relations, and charging infrastructure. This recent downsizing follows the termination of around 500 employees back in November 2023. After this latest cut, more than 25% of Ola's total workforce, which stood at approximately 4,000 as of March 2024, has been affected. Notably, contract workers, who are not included in the company's public employment figures, are also part of this reduction.
To streamline its operations, Ola Electric is implementing automation processes within its customer relations departments. The company is also reducing the number of staff across its showrooms and service centers, particularly affecting front-end sales, service, and warehouse roles to optimize logistics and delivery systems. Reports indicate the layoff numbers may vary depending on the company's shifting business requirements.
Financially, Ola Electric has been under heavy pressure. The company saw its losses increase by 50% for the December quarter (Q3) of 2024 and has garnered scrutiny from India's market regulator and consumer protection authorities. Since its Initial Public Offering (IPO) debut last August, Ola Electric's stock has plummeted by over 60% from its all-time highs.
Despite registering sales of over 25,000 electric scooters last month, capturing 28% of the market share, concerns loom over the actual vehicle registrations. Data from the government’s VAHAN portal reveals only one out of three Ola Electric scooters sold during this time have been officially registered. The firm has attributed this delay to negotiations with two vendors, aimed at reducing costs and enhancing operational efficiency.
Ola Electric's spokesperson stated, “We have restructured and automated our front-end operations delivering improved margins, reduced cost, and enhanced customer experience, all the whilst eliminating redundant roles for higher productivity.” This restructuring is not merely about job cuts and includes the elimination of regional warehouses across India. The company plans to leverage its network of 4,000 retail stores to manage vehicle inventory, spare parts, accessories, and last-mile deliveries, which is anticipated to bring about nearly 10 percentage points improvement to the EBITDA margins.
After being overtaken by Bajaj Auto as the market leader in electric two-wheelers (E2W) for the first time, Ola Electric seems to have regained its top position. The competitive atmosphere within the EV sector continues to intensify, as established players and new arrivals vie for market share.
Investors and industry experts will be keeping a close watch on Ola Electric's strategies as the company navigates its financial hurdles and considers future opportunities. With financial challenges mounting and restructuring efforts underway, the way forward for Ola Electric remains uncertain but necessary for its survival and growth within the burgeoning electric vehicle market.