Ola Electric Secures Govt Nod For In-House Rare-Earth Free Motor — Here's What It Means

Ola Electric Mobility Ltd. has received government certification for its in-house developed ferrite motor, thus becoming the first Indian automotive original equipment manufacturer (OEM) to achieve approval for a rare-earth free electric motor, the company said in an exchange filing on Monday.

The certification was granted by the Global Automotive Research Centre (GARC) in Tamil Nadu after going through mandatory performance and power verification tests under AIS 041, which serves as the testing standard notified by the Ministry of Road Transport.

The company confirmed in the exchange filing that the test results of the ferrite motor matched the performance of a rare-earth permanent magnet motor in 7kW and 11kW variants.

The successful testing and certification of the ferrite motor could be a big development for Ola Electric as it would reduce the dependency on rare earth elements, which are an essential element in high-performance electric vehicles.

India relies heavily on imports from China when it comes to sourcing these rare earth materials. Therefore, the certification of the ferrite motor and a potential widespread implementation of the product, starting from Ola Electric vehicles, could significantly ease cost and mitigate any supply chain risks.

Ola Electric is India’s largest pure-play EV company by volume and currently runs a direct-to-customer network of more than 4,000 stores across the country.

The Bhavish Aggarwal-led company even operates a manufacturing facility in Tamil Nadu, where its electric vehicles and their components are produced.

The shares of Ola Electric, though, have faced immense pressure in trade since its listing. The stock is down more than 46% over a 12-month period and has corrected 37% since the turn of the year.

Two out of the seven analysts tracking the company have a 'buy' rating on the stock, two recommend a 'hold' and three suggest a 'sell', according to Bloomberg data. The 12-month analysts' consensus target price on the stock is Rs 49, implying a downside of 7% from current levels.