Ola Electric Mobility Limited

Ola Electric reported a transformative Q1 FY26, marked by a strategic shift towards balanced profitable growth. The Auto segment achieved EBITDA positive status for the month of June, a first for the company. This was driven by improved gross margins from the Gen 3 platform and significant OpEx reductions through Project Lakshya. The company also achieved near-neutral operational cash flows for the quarter, reflecting structural improvements.

Management emphasized a transition from aggressive penetration to profitable growth, consolidating operations in a maturing EV market. Gross margins reached 26% overall, and over 22% without incentives, reflecting strong performance. The cost per vehicle decreased from ₹100,000 to ₹90,000, with gross profit per vehicle at ₹31,000. Further OpEx reductions of 10-15% are targeted over the next one to two quarters, aiming for continued efficiency.

The Gen 3 product, which constitutes almost 80% of overall sales, demonstrated improved performance, gross margins, and quality, leading to lower warranty claims. Ola Electric is addressing macro risks like rare-earth magnets by developing a rare-earth free motor, expected next quarter. The company is also ready with its in-house ABS solution, which will further save margins and provide a product differential. Penetration of MoveOS+ software features is currently around 70% and is expected to rise to 80-85% this quarter, contributing to ASP.

The Cell Gigafactory is ramping up production, with 4680 cell vehicles slated for customer delivery by Navratri. The total budget for the 5 GWh plant is ₹2,800 crores, with ₹1,500 crores already invested and the remaining ₹1,200 crores to be spent over this year and next. The cell business is expected to break even at a free cash flow level at 5 GWh, and management aims to ramp up production to 1.4 GWh first, then to 5 GWh.

The Auto business is expected to become operationally cash positive in the near term and free cash positive by the end of FY26, requiring only ₹400-500 crores of incremental cash. The Cell business will require approximately ₹1,000 crores in CapEx this year, funded by an SBI consortium term loan and existing term loans. The company holds ₹3,200 crores in cash on its balance sheet and plans to refinance corporate debt taken before its IPO with fresh NCDs.

While the EV two-wheeler industry still grows 3x faster than ICE (20% vs 6-7%), it has entered a consolidation phase after aggressive growth. This reset is attributed to reduced government incentives and the transition from early adopters to more cautious middle-segment customers. Management expects the S-curve to play out with a period of consolidation followed by another aggressive growth phase, especially as new products and D2C network expansion mature.

Motorcycle deliveries began in early June and are ramping up, with the goal of reaching most stores by Navratri. The ASP for motorcycles (Roadster X and X+) is around ₹115,000, slightly higher than S1X/X+ scooters. Feedback has been overwhelmingly positive, and bikes are expected to contribute 15-20% of the targeted 3.25-3.75 lakh vehicle sales for FY26. The company is taking a calibrated approach to scaling to ensure manufacturing quality and manage warranties.