Ola Electric Mobility Ltd is planning to lay off over 1,000 employees and contract workers as the company looks to reduce its growing losses, according to a report by Bloomberg.
The job cuts will affect multiple departments, including procurement, fulfilment, customer relations, and charging infrastructure. People familiar with the matter said that the layoffs are part of Ola Electric’s efforts to control costs. The company, backed by SoftBank Group Corp., has been struggling with financial losses and regulatory scrutiny.
Ola Electric shares also fell 5% to hit its 52-week low of Rs 54 after the layoff news.
This is the second round of layoffs in less than five months. In November 2023, Ola Electric had reportedly laid off around 500 employees. The latest round of job cuts accounts for over a quarter of Ola Electric’s workforce of 4,000 as of March 2024. However, since contract workers are not included in the company’s public disclosures, the exact impact remains unclear.
AUTOMATION AND COST-CUTTING MEASURES
As part of the restructuring, Ola Electric is automating some parts of its customer service operations, according to sources. This move aims to improve efficiency, reduce costs, and enhance customer experience.
In response to the report, an Ola spokesperson said, “We have restructured and automated our front-end operations, delivering improved margins, reduced cost, and enhanced customer experience while eliminating redundant roles for better productivity.” However, the company did not confirm the number of workers affected by the layoffs.
Sources also revealed that the company is letting go of sales, service, and warehouse employees at its showrooms and service centres. The Bengaluru-based firm is changing its logistics and delivery strategies to cut expenses.
LOSSES AND MARKET CHALLENGES
Ola Electric went public in August 2023 but has faced multiple challenges since then. The company reported a 50% rise in losses for the December quarter, adding pressure on its finances.
Ola Electric’s stock has fallen over 60% from its peak after its strong IPO debut. The company has also faced criticism from customers, social media backlash, and increasing competition from rival companies.
On March 1, Ola Electric informed Indian stock exchanges that it had sold over 25,000 electric scooters in February, securing a 28% market share. However, this is far below the 50,000-unit monthly sales target that CEO Bhavish Aggarwal mentioned during a 7 February earnings call as the threshold for achieving Ebitda breakeven.
EBITDA refers to earnings before interest, tax, depreciation, and amortisation.
Once the leading electric two-wheeler manufacturer in India, Ola Electric has been losing ground to competitors.
In December, Bajaj Auto Ltd overtook Ola Electric as the top-selling electric scooter brand, pushing it to third place behind TVS Motor Co. Government data on vehicle registrations showed that Ola Electric had lost its leadership position in nine of India’s top 10 EV markets by the end of 2023.
