Ola Electric Positions for Scale-Up with 1 Million Unit Capacity and 6 GWh Gigafactory Expansion

Ola Electric Positions for Scale-Up with 1 Million Unit Capacity and 6 GWh Gigafactory Expansion

-Ola Electric Strengthens Fundamentals in FY26; Q4 Gross Margin Rises to 38.5%, Targets Volume Rebound in FY27

The Electrical Post

At the Q4 FY26 conference call, Mr. Bhavish Aggarwal, Founder, Chairman and Managing Director of Ola Electric Mobility Limited, said that although FY26 volumes were below expectations, the year marked a significant strengthening of the company's fundamentals. He highlighted that Ola Electric exited the year with industry-leading gross margins, a substantially lower cost base, improved execution metrics, enhanced product quality, its first operating cash flow positive quarter, and a Gigafactory entering the scale-up phase.

Aggarwal stated that India is entering a transformative period driven by two major structural shifts—mobility transitioning from internal combustion engine (ICE) vehicles to electric vehicles, and energy shifting from imported fuels to locally manufactured batteries. Ola Electric, he said, is strategically positioned across both transitions through its integrated platform spanning electric mobility, cell manufacturing and energy storage.

For Q4 FY26, Ola Electric reported consolidated gross margins of 38.5%, compared with 34.3% in Q3 FY26 and 13.7% in the corresponding quarter last year. Excluding Production Linked Incentive (PLI) benefits, gross margins stood at 33.5%. Aggarwal emphasized that the company has achieved an industry-leading margin profile, surpassing many traditional two-wheeler manufacturers, including established ICE players.

According to him, the margin expansion reflects structural advantages developed over recent years, including vertical integration, maturity of the Gen 3 platform, advancements in vehicle architecture, control over downstream operations and growing integration of internally manufactured battery cells.

Aggarwal noted that gross margin improvement has been a consistent focus over recent quarters and demonstrates the effectiveness of the company's vertically integrated business model encompassing manufacturing, supply chain and customer-facing operations. Addressing concerns regarding sustainability, he clarified that strong margins are not solely dependent on incentives, highlighting that even without PLI support, margins remain robust.

He expressed confidence that gross margins would continue to serve as a structural advantage as sales volumes recover. While acknowledging potential short-term pressures arising from commodity fluctuations and investments aimed at accelerating growth, he indicated that margins are expected to remain healthy and gradually improve further over the long term.

For FY26, Ola Electric reported consolidated revenue of Rs. 2,253 crore with deliveries of 173,794 units. Consolidated gross margins improved to 30.6%, underscoring the resilience of the company's product economics and operating model despite lower annual volumes.

A key milestone during the quarter was the achievement of the company's first operating cash flow positive quarter. Consolidated cash flow from operations (CFO) reached Rs. 91 crore in Q4, supported by higher gross margins, PLI inflows, lower operating expenses and disciplined working capital management.

The Auto business generated Rs. 213 crore in cash flow from operations and Rs. 173 crore in free cash flow during Q4 FY26. Aggarwal described this achievement as an important transition point, indicating that the company is moving beyond an intensive investment and build-out phase towards disciplined scaling and operational efficiency.

He pointed out that revenues during Q4 remained subdued due to lower deliveries, but stressed that the company's gross margin leadership and cost optimization initiatives have reached a new phase. Operating expenses have reduced significantly, with total OpEx, including store lease rentals, nearly halving compared with the same quarter last year.

Aggarwal added that Ola Electric aims to further reduce operating expenses to approximately Rs. 100–120 crore per month over the next few quarters, even as business volumes recover.

The company’s vertically integrated business model also offers a significant operating leverage advantage. Aggarwal said that more than 90% of operating expenses are fixed in nature, enabling higher profitability as volumes increase. Efficiency improvements and reduced operating costs are expected to translate directly into stronger net margins as sales rebound.

Within the company's business segments, the Auto division is nearing sustained free cash flow generation. Aggarwal indicated that a modest increase in volumes during the current recovery period could enable the company to generate meaningful and sustained free cash flows. Meanwhile, the Cell business remains in the investment phase but is expected to witness revenue growth during the current financial year before progressing toward cash flow generation over time.

Providing a broader market perspective, Aggarwal observed that demand for electric vehicles has strengthened significantly in recent weeks. He stated that while competitors may require additional capital expenditure and new product introductions, Ola Electric has already completed major investments in both automotive manufacturing and Gigafactory infrastructure.

The company currently possesses manufacturing capacity to scale production up to one million units annually without requiring further capital investments. Aggarwal noted that inventory levels across the network have declined sharply due to strong demand, with inventory days currently standing at only three to four days.

He revealed that the company is witnessing order backlogs and is actively working to accelerate supply chain capabilities to meet demand. According to Aggarwal, improvements in delivery timelines could result in a further 10–20% increase in volumes in the near term.

The company also highlighted the benefits of its operational reset. Existing Auto manufacturing capacity can support annual production of up to one million units, while Phase 1 of the Gigafactory is designed for scaling up to 6 GWh. Together, these assets can support annual revenues of approximately Rs. 15,000–20,000 crore across the Auto and Cell businesses without significant incremental capital expenditure.

Management indicated that, with the current cost structure and gross margin profile, adjusted operating EBITDA breakeven could be achieved at monthly sales volumes of around 20,000–25,000 units, subject to product mix and commodity price conditions.

Aggarwal further emphasized substantial improvements in product quality, citing a sharp decline in warranty expenses. Warranty costs reduced from more than Rs. 500 crore in FY25 to only Rs. 59 crore in FY26, reflecting the improved reliability and performance of the company's Gen 3 platform.

Looking ahead to Q1 FY27, Ola Electric expects order volumes of 40,000–45,000 units and consolidated revenue in the range of ₹500–550 crore, nearly double the revenue recorded during Q4 FY26. As volumes continue to recover, the company anticipates that its Auto business will progress toward adjusted operating EBITDA profitability and sustained cash flow positivity through FY27.
 

Published at : Sep 27, 2026 07:08 AM (IST)

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