Ola Electric Misses Deadline To Start Cell Manufacturing At Gigafactory

Ola Electric Mobility Ltd. has purportedly failed to start cell manufacturing at its Gigafactory on time, adding to the troubles of the firm led by Bhavish Aggarwal.

"We would like to inform you that we are in receipt of a letter dated 3 March 2025 from IFCI Ltd. 'Subject Non-Achievement of Milestone-1' according to Schedule M of the Programme Agreement dated 28 July 2022," the company said in an exchange filing on Tuesday. "The company is actively engaged with the relevant authorities in this regard and is in the process of filing an appropriate response."

IFCI is the project management agency for the production-linked incentive scheme for advanced chemistry cells. Ola Electric's subsidiary — Ola Cell Technologies Pvt. — is a beneficiary of the PLI scheme.

While it was not immediately clear what 'Milestone - 1' was, people aware of the matter said on the condition of anonymity that Ola Electric essentially missed the deadline to start operations at its Gigafactory. Similar letters have been sent to Reliance New Energy Pvt. and Rajesh Exports Ltd. — the two other beneficiaries of the PLI scheme.

On Oct 26, 2023, Ola Electric became the first company to win approval under the PLI scheme for localised cell manufacturing. It was awarded the maximum capacity of 20 GwH for its bid. Construction of the Gigafactory started in June 2023.

During the company's third-quarter earnings call, Aggarwal indicated that the Gigafactory would go onstream in the first quarter of fiscal 2026. The plan was to achieve a production capacity of 5 GWh in the first year itself, and 20 GWh by 2027. A 4,680 NMC cell will be produced first, followed by LFP cells in the next couple of years. Ola Electric has invested Rs 1,200 crore in the Gigafactory so far.

Margin Benefits

Ola Electric is the only Indian EV maker that plans to make its own cells—the most expensive component in an electric vehicle. The firm aims to power its Gen 3 scooters and Roadster X motorcycle with in-house battery cells from FY26. That is margin accretive, especially for a firm that is chasing profitability.

"In terms of gross margin, we expect a 20-point improvement as Gen 3 plays out over the next 12 months, step by step," Aggarwal had said during the earnings call last month. "And then as our cell comes in, that's another 78 points of gross margin improvement."

In October-December 2024, Ola Electric's gross margin from scooter sales stood at 20.6% — up 12 points as compared to the year-ago period but it was flattish sequentially.

But operational profitability, or earnings before income, taxes, depreciation and amortisation, ballooned in the third quarter. The Ebitda loss stood at Rs 460 crore as against Rs 301 crore in the year-ago period. It stood at Rs 379 crore in the second quarter and Rs 354 crore in the first quarter of the ongoing fiscal.

Shares of Ola Electric closed 1.4% higher at Rs 55.95 apiece on the BSE on Tuesday, compared to a 0.13% decline in the benchmark Sensex.