Ola Electric Becomes First Indian EV Company To Get PLI Nod

India’s electric vehicle (EV) landscape is witnessing a groundbreaking development as Ola Electric, the IPO-bound electric scooter company, secures eligibility for the government’s Production-Linked Incentive (PLI) scheme. This achievement positions Ola Electric as a key player in the push towards sustainable transportation.

PLI Scheme Approval

In a recent report by ET Auto, it has been disclosed that Ola Electric successfully met the stringent eligibility criteria outlined in the PLI scheme, including a minimum of 50% domestic value addition to its electric vehicles (e2W). This accomplishment makes Ola Electric the first Indian e-scooter company to gain approval, paving the way for potential financial benefits ranging from INR 15,000 to 18,000 per unit.

Potential Impact on Affordability and EV Penetration

Industry experts quoted in the report suggest that the PLI certification is poised to enhance the affordability of electric vehicles, potentially accelerating the adoption of EVs across the country. The Ministry of Heavy Industries’ approval, following a four-month evaluation process, is a testament to Ola Electric’s commitment to meeting the government’s criteria for boosting domestic manufacturing.

Competition in the PLI Arena

While Ola Electric celebrates its achievement, it’s essential to note that other major players in the Indian automotive industry, including Hero MotoCorp, TVS Motor Company, and Bajaj Auto, have also applied for the PLI scheme. To qualify, e-scooter startups are required to invest a minimum of Rs 1,000 crore, indicating a substantial commitment to advancing electric mobility.

Overview of the PLI-Auto Scheme

The PLI-Auto Scheme, approved by the Centre in 2021 with an outlay of Rs 25,938 crore over five years, aims to boost domestic manufacturing of Advanced Automotive Technology products. These include electric vehicles and their components, offering financial incentives of up to 18% of eligible sales for electric vehicles and related components. This initiative aligns with India’s broader goals of promoting sustainable and eco-friendly transportation solutions.

IPO Filing and Future Plans

In parallel with its PLI achievement, Ola Electric has recently taken a significant step towards its Initial Public Offering (IPO) by filing its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). The IPO, a historic event for the Indian EV sector, is expected to consist of a fresh issue component of Rs 5,500 crore, along with an offer for sale (OFS) category of around Rs 1,750 crore. Ola Electric’s ambitious plans include expanding its EV business and establishing a facility for manufacturing lithium-ion cells.

Financial Performance Concerns

Amidst these milestones, it’s crucial to acknowledge the financial challenges faced by Ola Electric. The company reported a significant increase in net loss in the fiscal year 2022-23, reaching Rs 1,472 crore—almost double the previous year’s loss. With an EBITDA loss of Rs 1,318 crore and total expenses of Rs 3,383 crore, effectively managing expenses becomes paramount for the company’s long-term sustainability.