₹500 crore Electric Mobility Promotion Scheme (EMPS) 2024 to encourage the purchase of electric two- and three-wheelers, a measure expected to support companies including Ola Electric. However, despite EMPS extending subsidy benefits for four months, the quantum of subsidy per vehicle has been lowered, noted Rohan Kanwar Gupta, vice president, ICRA. "Accordingly, a reduction in the subsidy benefit is a short-term impediment and will impact demand/realizations to an extent.
Notwithstanding the same, OEMs will continue to strive to offer competitive products by leveraging their cost structure through localization of key components and value engineering capabilities. In addition, softening in battery cells prices (which accounts for almost 40% of vehicle cost) will also help them offset the impact of lower subsidies to some extent," Gupta added. "While the industry is likely to witness an exponential rise in volumes over the medium term, the road to profitability for the industry remains long; thus, a timely fund-raising to support the capital structure/competitiveness of start-up players would be key.
The same assumes even greater importance, given the ever-increasing competitiveness in the EV segment, with incumbent OEMs also ramping up their presence in the segment," Gupta of ICRA added. Founder Aggarwal plans to sell up to 47.4 million shares in the Ola Electric IPO, while the company will look to raise ₹5,500 crore by selling new shares. Ola Electric was said to seek a valuation of at least $10 billion when it floated its IPO plans in the first half of 2023.
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