Ola Electric Mobility Ltd (NSE:OLAELEC) (Q1 2027) Earnings Call Highlights: Deliveries Nearly ...

Negative Points

• The company experienced a sharp sequential decline in average selling price (ASP), which management attributed primarily to product mix.

• Cell production was paused during Q1 to complete the installation of the next phase of capacity, leading to a backlog and temporary supply constraints for 4680 cells.

• The company faced service challenges related to parts availability, partly due to vendor issues and geopolitical factors, though management states these are largely behind them.

• Cell yields were in the high 70s to 80% range when production was paused, with a clear roadmap needed to reach 90% plus after restarting.

• The company did not provide specific volume guidance for the full year, citing a focus on disciplined growth rather than a forecast.

• The NMC-based Shakti product was not scaled up due to higher costs and lower-than-target gross margins, leading to a pivot to LFP-based products.

• The company's operating loss, while improved, remains negative, indicating continued cash burn as it works towards break-even and sustainable profitability.

• The transition to in-house manufactured cells for the entire portfolio lacks a hard timeline, with management only suggesting most vehicles will use them by the end of the year.

• The company's brand has faced challenges in recent quarters, which management acknowledges, though they see a resurgence and strong product portfolio for dealers.

• The expansion to 20GWh cell capacity will require raising separate equity, which could lead to future dilution for shareholders.

Q & A Highlights

Q: What prompted the shift from a company-owned store strategy to a multi-channel dealership model, and what is the expected impact? A: Bhavish Aggarwal (Chairman & Managing Director) explained that while the company-owned model was crucial for the brand's initial growth, the local nuances of auto retail, customer engagement, and service management are better handled by dealers at scale. The company has received overwhelming interest from dealers, with nearly a thousand expressions of interest. The strategy is to evolve company stores into larger experience centers while dealer stores become the backbone for volume, transactions, and service. The first set of dealerships is expected to go live on Janmashtami (September 4), with meaningful scale expected before the Diwali season.

Q: Can you provide details on the recent Axis Energy MoU for the Mahashakti product and the broader energy storage opportunity? A: Bhavish Aggarwal stated that the energy storage opportunity is massive, citing CEA estimates of 400 GWh needed in India over the next 5-6 years. The company's vertically integrated product, leveraging automotive technology for higher round-trip efficiency and safety, gives it a strong competitive advantage. The MoU with Axis Energy is for 20 GWh over the next 5-6 years. He expects to announce more demand pipeline as the product comes online, with early revenue from Mahashakti potentially starting in Q3 or Q4.

Q: What is the timeline for transitioning the entire vehicle portfolio to in-house manufactured cells, and what are the current production yields? A: Bhavish Aggarwal indicated that most vehicles should be on in-house cells by the end of this year. He noted that cell production was paused in Q1 to complete the installation of capacity expansion from 2.5 GWh to 6 GWh, which is expected to be fully commissioned this quarter. Yields were in the high 70s to 80% range when paused, with a clear roadmap to reach 90%+ within a quarter of restarting production later this month.

Q: What is the company's CapEx plan for the foreseeable future? A: Bhavish Aggarwal provided direct guidance that there will be no more significant CapEx for the foreseeable future. The auto business requires hardly any CapEx as the factory is scaled to a million units annually. The cell factory is finishing its CapEx cycle this quarter with 6 GWh installed, and that CapEx is fully funded through debt. Beyond the cell project, CapEx will be minimal, around INR30-50 crores.

Q: What caused the sharp sequential decline in average selling price (ASP), and what is the outlook? A: Bhavish Aggarwal attributed 90% of the ASP decline to product mix. However, he noted that the product mix is already improving as the premium business grows and motorcycle sales increase in the northern plains. He expects the ASP to remain in a similar range but did not provide a specific forecast.

Q: What is the status of the 4680 NMC cell deployment and the transition to LFP cells? A: Bhavish Aggarwal confirmed that 4680 NMC cells are commercially deployed in a few thousand vehicles on the road. The company paused production to complete the installation of the remaining capacity. Going forward, about 20% of the auto portfolio will remain NMC-based for higher-performance segments, while the rest will move to LFP. The 46100 LFP cell is BIS certified and vehicle-ready, and Shakti Gen 2 with LFP cells will be announced on August 15th.

Q: Can you elaborate on the service issues customers have faced and how the new dealer model will address them? A: Bhavish Aggarwal acknowledged that most service challenges are now behind them, with issues largely linked to the availability of critical parts due to vendor and geopolitical challenges. He stated that with the new dealer model, dealers will stock parts on a national basis, which will significantly reduce these challenges. The company is monitoring parts supply closely.

Q: What is the current contribution of the Roadster motorcycle to overall sales, and what is the outlook? A: Bhavish Aggarwal stated that the Roadster is still a small minority of total sales. The company has seen good response, particularly for the higher-range 9.1 kWh variant, but supply has been constrained by the 4680 cell shortage during the installation pause. As cell production ramps up, availability of the higher-range Roadster will increase, which should drive adoption.

Q: What are the plans for scaling cell capacity from 6 GWh to 20 GWh? A: Bhavish Aggarwal explained that the 6 GWh will be cylindrical capacity, while the expansion to 20 GWh will be prismatic. R&D on the prismatic cell is expected to complete by the end of this year. The company plans to raise separate equity for the cell company to fund the expansion from 6 to 20 GWh in 2027, without using parent entity equity.

Q: What is the company's approach to operating expenses and the path to profitability? A: Bhavish Aggarwal highlighted that OpEx has been structurally reduced, from INR428 crores in Q4 to INR333 crores in Q1, despite nearly doubling volumes. Even excluding a one-time reversal of ACC PLI penalties, OpEx was around INR380 crores, significantly lower than Q4. The target is to bring OpEx down to the INR300-325 crore range over the next couple of quarters while maintaining steady-to-growing gross margins and volumes.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .