According to the IESA (India Energy Storage Alliance), the electric vehicle (EV) market in India is expected to hit the over-63 lakh unit mark per annum by 2027. Today, that number is around 1,50,000 EVs.
This provides a massive opportunity for India, the largest two-wheeler market in the world, to pivot into a cleaner and more affordable mobility option—and new-age players like Ola Electric are making the most of it.
The Bengaluru-based unicorn, with its ambitious plan of building the world's largest two-wheeler factory with 10 million annual capacity, is already at the forefront of the paradigm shift that Ola's chairman and group CEO Bhavish Aggarwal, 35, feels has the potential to put India on the global map.
This 500-acre integrated manufacturing facility in Krishnagiri district, Tamil Nadu, will have everything from a battery manufacturing unit to supplier parks and even a test track inside the factory itself. Ola says that Phase 1 will be ready with initial annual capacity of 2 million by June 2021.
In a virtual discussion with Fortune India, Aggarwal explained his vision of disruption at scale, Ola's pilot project in Nagpur, and India's role in the future of electric mobility.
How did the idea of getting into EVs germinate in your head?
We started off as a ride-hailing company in 2010 and we’ve built one of the world’s top five ride-hailing companies. We’re a leader in India and also a strong player in the commonwealth—the UK, Australia, New Zealand, etc. The mission for us is to transform mobility for the future. When we started, that meant to help people access mobility in a convenient way which is what our ride-hailing business is, and we’ve continued to scale that. Somewhere around 2017, we realised the need for transitioning mobility for a more sustainable future and we did a pilot in Nagpur. The objective of that pilot was to learn about what will be needed to drive electric transition in India. The insight was that pollution due to mobility needs to change and sustainability can be driven by electrification and the technology is getting to an inflection point. This fit into our mission well. After our pilot we realised that the technology was not ready for India and the products were not ready for India. None of the projects that were deployed in the pilot have ended up scaling in India. We actually took a call to then make our own products. We started off early enough before the hype. When we looked at the opportunity we realised that the only way to play the game is at scale because you can’t produce EVs at low cost unless you play at scale.
When we started off with electric mobility, we had two choices to make: do we play incremental and small or do we play disruptive and big? We chose to play disruptive and big and that comes with its own challenges of the scale of thinking, execution and resources required. That’s why we have put out a vision and are executing fast for our factory. It will be the largest two-wheeler factory in the world at 500 acres and in addition to that it will be producing 10 million units a year. It’s a big project. That’s why we played at scale so that we can price it aggressively and not just our manufacturing but so that even our suppliers can bring down their costs. The second thing we did was to control the key technologies in house unlike most OEMs in India who are assemblers. We are not assemblers, we are actually designing, engineering and manufacturing key components ourselves, for example battery packs, the motor, the vehicle computer and battery management systems, the software.
Ultimately the thinking is of a technology company, isn't it?
The global leaders in this play a technology game and not a distribution game. We have to play a technology game to compete with them on a global stage. Our ambition is to be one of the world’s leading electric vehicle companies. Ultimately, the thought is of a technology or a consumer internet company. We’re bringing that ethos into everything that we do in the automotive domain also and it will be very disruptive to the traditional business models. They might say what we’re doing is not the industry norm, but that’s the whole point.
If you look at Tesla or some of the Chinese companies, most of them are building products that are large premium luxury vehicle products. But the majority of the world uses what I call the urban mobility vehicles. These could be a company like Maruti, the products they make. Mostly vehicles that fit in the range of Rs 15 lakh or below. They are relevant, high-margin products but not really a E-class or an S-class. These vehicles essentially help you get around the city. So, our focus is that.
When we started off with electric mobility, we had two choices to make: do we play incremental and small or do we play disruptive and big? We chose to play disruptive and big and that comes with its own challenges of the scale of thinking, execution and resources required. That’s why we have put out a vision and are executing fast for our factory. It will be the largest two-wheeler factory in the world at 500 acres and in addition to that it will be producing 10 million units a year. It’s a big project. That’s why we played at scale so that we can price it aggressively and not just our manufacturing but so that even our suppliers can bring down their costs. The second thing we did was to control the key technologies in house unlike most OEMs in India who are assemblers. We are not assemblers, we are actually designing, engineering and manufacturing key components ourselves, for example battery packs, the motor, the vehicle computer and battery management systems, the software.Bhavish Aggarwal, chairman and group CEO, Ola.
Are you trying to do what Tesla did but in a more affordable way?
It’s simplistic to say that Ola is India’s Uber or India’s Tesla. But we’re not. Neither are we the Uber of India nor the Tesla of India. We are the Ola of the world. Like in the ride-hailing business, the world has recognised us as a different proposition; that’s why we have survived and grown and led the market. Similarly in EVs, our focus is different, our technologies are different, our approach to business is a uniquely different approach.
Where do you see India on the global map when it comes to EV adoption?
India has a very strong role to play in the future of electric. Today the incumbent players are not really putting India on the world stage. India has a strong role to play because of three key reasons: Firstly, India is a large urban mobility market already, the world's largest two-wheeler market and a very large four-wheeler market also. India is also a world hub for R&D talent. Much more than even developed countries today. India has a decent ecosystem for manufacturing although that needs to be moved into the future with Industry 4.0 etc. And fourthly, I feel the Indian youth is full of energy. And they just need a platform to define the narrative on the global stage. It is incumbent upon us as a company or an entrepreneurial ecosystem to really push India on the global stage in this very necessary technology of the future.
What keeps you going as an entrepreneur?
As an entrepreneur one is always optimistic, one is always ambitious and energetic to drive a certain vision. I believe it’s very important for entrepreneurs to have a big vision and play the big game because the opportunity is there, the resources are there and if you’re spending your life doing it you'd rather try something big. We started when we scaled up our ride-hailing business to a certain level. We realised that another massive disruption required in mobility is actually making it sustainable. In 2017 I started thinking about it. We thought about what kind of business model to build. Should we build a charging network, or battery swapping or vehicles... then we decided the best way to accelerate this is to control the technology ourselves and build the end product that the consumer wants and that’s when we started down this path, and here we are.
And you'll obviously raise more money going forward...
This business will take more capital and we will raise more money as we go along. We have enough capital ight now. We have a strong balance sheet but as we go along we will keep raising more money. [We will access] public markets not in the short-term, but definitely in the mid- long run.
Will you be focussing on exports as well?
We will definitely export a lot of our products from this plant. Almost 30%-40% of our product will be earmarked for export from this plant. Our ambition is to be a world leader, so we will definitely have some production capability outside India as well, especially in some key strategic markets like Europe, South East Asia, China etc.
The lack of charging network is another big issue. How will you tackle that?
We’re going to build a charging network across the country and we’ll be announcing more on that soon, but one of the main problems for consumers to solve is range anxiety. Many consumers in India don’t have parking spots at their homes. So, having this network is going to be important and we’re accelerating that.
(For a detailed story on the battle in India's electric scooter market read the April 2021 issue of Fortune India.)