Ola Electric Q3 Review: Management Guides Ebitda Breakeven At 50,000 Units Per Month

Ola Electric Mobility Ltd. shares were under pressure on Monday, as its loss widened in the third quarter of fiscal 2025. Brokerages cut their target prices on the stock.

In its post result conference call, the company addressed some of the concerns, but said it expects some warranty cost pressure in fourth quarter as well.

Despite this, one of the biggest updates was the company’s guidance of Ebitda breakeven for the automotive segment. Management expects the auto segment to breakeven at 50,000 units per month of sales, which is double of what they sold in the month of January 2025.

One of the most startling and key numbers the management guided for was the automotive segment, expecting an Ebitda breakeven would require sales of roughly 50,000 units per month.

The company sold roughly 25,000 units in January 2025 and could take more than a few quarters to get to a monthly sale of 50,000 units.

The management reiterated that the new Gen 3 scooters, along with new product addition such as the electric bike and electric three-wheeler, will also be included in this target of 50,000 units a month.

Ola Electric’s management expects the penetration in motorcycle in terms of electric powertrain to get to a 20% penetration at half the time than it did for electric scooters.

Over the last 3.5 years the electric scooter penetration has reached 20% of the overall scooters sold in the country. Essentially, one in five scooters sold in India is now electric. To reach this stage, the industry has taken close to 14-15 quarters or 3.5 years.

The management expects to reach this kind of penetration in motorcycles at half the time, essentially trying to make the 50,000 vehicles per month target not audacious.

Ola Electric reported a 19% fall in revenue in the third quarter, led by fall in volumes compared to last year. In terms of numbers, the Ebitda Loss for the automotive business grew 82% year-on-year at Rs 309 crore.

This is a key negative, given the company had started off with automotive business' Ebitda margins at -3.8% in Q1 FY25, which has now increased to -28%.

One of the key reasons for widening Ebitda loss was warranty expenses. This quarter, the company reported Rs 120 crore in warranty expenses, led by the service related issue over the last two quarters.

The company expects warranty expenses to be higher in fourth quarter, as well, but expects the new Gen 3 scooters to offset higher warranty costs.

Chairman and MD Bhavish Aggarwal detailed the new in-house engineering adopted in the new Gen 3 scooters, which gives more control to the company in terms of repairs. It expects the overall warranty costs to come down from 6% of overall sales to 2% post Gen 3. With Gen 3, service turnaround time is expected to be reduced to 1.1 days, compared to 2.5 days in September 2024.

Deliveries for EV Bike Roadster X are expected to start from March 2025 and first few months will be key. Ola Electric has essentially been a category creator in electric scooter segment and is looking to replicate the success in electric motorbike as well. This will also challenge the incumbents like TVS Motor Co. and Bajaj Auto Ltd. to take up this challenge.

The New FAME Scheme is expected to reduce the incentives further from April 2025 to Rs 5,000 per vehicle from Rs 10,000 currently. If this has an impact on overall volumes for the industry, time will tell.