Ola Electric Responds to Regulatory Concerns Over Discounts

In recent developments, Ola Electric (BSE: OLAELEC ) has found itself at the center of increased regulatory scrutiny following its ‘Buy Online, Skip the Showroom' (BOSS) sale discounts. The company was compelled to issue a formal response to the Bombay Stock Exchange (BSE) regarding concerns that had arisen over the sale.

Ola Electric, which is the leading electric two-wheeler maker in India, had its share price experience a significant dip. From its peak at Rs 157 in August, the share price plummeted to Rs 87.46 by October 14th – a striking 44.48% drop. This decline in the share price can be correlated with the reduced sales, flawed after-sales service, and a string of consumer complaints that have marred the company's reputation.

Amid this financial turbulence, Ola Electric introduced the ‘BOSS’ offer, which made headlines for the pricing of the S1 X 2kWh model at Rs 49,999. This price point was considerably lower than the ex-factory price. Such a steep discount prompted scrutiny from the Automotive Research Association of India (ARAI), which raised questions about whether the electric scooters sold under these terms were still eligible for government subsidies.

Another point of contention was that the reduced pricing offered under the ‘BOSS’ promotional scheme was not communicated in advance to ARAI. This omission has raised several questions regarding regulatory compliance and adherence to guidelines set forth for the electric vehicle industry.

In its clarification, Ola Electric stated that the reduced pricing was, in fact, part of a limited-time festive campaign aimed at boosting sales. The company highlighted that there were two tiers of discounts – a general discount of Rs 5,000 for all customers, and a further discount of Rs 25,000 for select customers on limited inventory.

Furthermore, Ola Electric is confronting backlash precipitated by various operational challenges. The National Consumer Helpline portal recorded over 10,000 complaints concerning Ola Electric, which included issues spanning from delivery delays to poor performance and service woes.

To address these myriad concerns, Ola Electric has announced a commitment to implementing stringent measures. This includes the expansion of service networks, the introduction of AI-based maintenance programs, and the augmentation of training for service personnel.

The company also reported a sales de-growth of 10.31% in September 2024, a figure that stands in stark contrast to the increasing demand observed in competitors like Bajaj, TVS, and Ather.

Ola Electric's proactive steps in addressing the critical issues at hand reflect the company's commitment to maintaining its position in the market and reassuring stakeholders of its potential to overcome current adversities. As Ola Electric navigates through the scrutiny and works towards remedying its operational deficiencies, the market will closely observe the outcomes.