Ola Electric plans to lay off around 500 employees to reduce costs ahead of IPO, says Report

Bengaluru-based electric vehicle maker Ola Electric is reportedly planning to lay off 400-500 employees in the coming weeks. The company aims to cut operating costs ahead of the initial public offering (IPO).

According to an ET report, the exact number of layoffs is yet to be decided by the company's leadership team.

In late April 2024, Moneycontrol reported that Ola Cabs is expected to lay off 10% of its total workforce as a part of a ‘restructuring exercise’.

At the same time, the report said that Hemant Bakshi, CEO of Ola Cabs, who joined the ride-hailing company earlier this year, resigned from the company. 

Layoffs expected to affect various verticals

The report said that the layoffs are expected to affect various verticals within the organization. Some impacted employees could potentially be replaced by new hires at a lower cost, although the overall headcount is expected to shrink.

“Inside, they (Ola Electric team) are finalizing the list across different teams. Three-four teams have already finalized the numbers, but the cuts would be across the organization,” a the source told The Economic Times.

How has Ola Electric performed financially?

Ola Electric reported a net loss of Rs 1,472 crore in FY23 on operating revenue of Rs 2,631 crore. For the first quarter of FY24, the company posted a net loss of Rs 267 crore on operating revenue of Rs 1,243 crore.

When it filed its draft IPO papers in December, Ola Electric had 3,733 employees as of October 2023, with an employee attrition rate of 47.48% in FY23.

Ola Electric’s rising competition

Despite the layoffs, Ola Electric remains a leader in India's electric scooter market. In May, the company sold over 37,000 scooters, capturing a 50% market share.

However, the electric scooter market is seeing increased competition, with legacy players like TVS Motors and Bajaj Auto expanding their market shares. The company is also facing a recent downturn in demand for electric two-wheelers, impacting most players in the sector.

Last week, Entrackr reported that Ather Energy, Ola Electric's top competitor, raised Rs 286 crore or about $34 million through a mix of debt and equity.

New Delhi-based venture debt firm Stride Ventures invested close to Rs 200 crore via debentures, while the company's co-founders, Tarun Sanjay Mehta and Swapnil Jain, each contributed Rs 43.28 crore via Series F preference shares.