Ola Electric, once the poster child for the country’s electric vehicle (EV) revolution, now seems to be at a crossroads. With operating revenue down by more than 60% in the January-March quarter, net losses surging past Rs 870 crore and a new Rs 1,700-crore debt raise, the company’s financial health has entered a worrying phase. To make matters worse, auditors have flagged grave concerns over the company’s cash flow, calling into question its ability to continue as a going concern.
Auditor BSR & Co LLP issued an unqualified opinion on Ola’s FY25 financials, but raised a red flag over its future viability, citing a massive Rs 2,391-crore negative operating cash flow, up sharply from Rs 633 crore a year earlier, combined with persistent losses and underwhelming sales. These conditions, the auditor noted, necessitate urgent mitigating actions to support operations and meet obligations.
While Ola Electric had raised Rs 5,275 crore through its high-profile IPO less than a year ago, around Rs 2,823 crore remains unutilised, with Rs 2,775 crore parked in fixed deposits. This has raised questions about the company’s cash burn rate and liquidity planning amid escalating losses.
Despite the troubling outlook, Ola’s management insists the company will continue as a going concern. Their confidence stems from expectations of improved cash flows from new product launches, better operational efficiency, and expanding gross margins. They also point to internal cash reserves, access to credit lines, and reduced delivery times through a revamped retail model under Project Vistaar.
However, public markets and analysts remain unconvinced. Shares of Ola Electric closed 4.49% lower at Rs 50.85 on the NSE on Friday, down 68% from their all-time high of Rs 157.40 in August 2024. Kotak Institutional Equities downgraded the stock to “sell,” slashing its target price to Rs 30. The brokerage cited execution delays, especially in the electric motorcycle segment, and weaker-than-expected demand as major concerns. Kotak also cut Ola’s FY26-27 volume estimates by 32-34%, warning that the company must scale up quickly to avoid a cash crunch.
In the January-March quarter, Ola reported a 41% quarter-on-quarter and 62% year-on-year drop in revenue to Rs 611 crore. Net loss ballooned 54% over the previous quarter and 109% year-on-year to Rs 870 crore. Deliveries dropped to 51,375 units in the quarter from over 115,000 a year ago. The first two months of FY26 have not offered a rebound, with fewer than 36,500 units sold, putting Ola behind competitors such as TVS Motor and Bajaj Auto.
Although the company recorded a full-year sale of 359,221 units in FY25, slightly higher than 329,549 in FY24, it failed to arrest the slide in market share. Ola, which once commanded over 50% of the electric two-wheeler market, now shares the top tier with more established players. In comparison, Ather Energy reported a 26% rise in Q4 revenue and an 18% reduction in losses, underlining Ola’s competitive and operational challenges.
Ola’s move to raise Rs 1,700 crore via non-convertible debentures has intensified investor scrutiny. The choice of debt over equity, especially when existing fundamentals are deteriorating, has raised concerns. Experts caution that leveraging the balance sheet in such a vulnerable state could trap the company in a cycle of borrowing just to service previous obligations.
During the fourth quarter earnings call, chairman and MD Bhavish Aggarwal acknowledged the pressure. He admitted that the company’s market dominance has waned, but remained optimistic, projecting improved margins and a more efficient cost structure. Under Project Lakshya, Ola has brought down operating costs in its auto segment to Rs 121 crore in April and aims to cut that further to Rs 110 crore by June. He also guided for Q1FY26 sales of 65,000 vehicles, revenue of Rs 800-850 crore, and gross margins of 28-30%, up from 19.2% in Q4.
Aggarwal also revised Ola’s breakeven volume target from 50,000 to 25,000-30,000 units per month, expressing confidence that the company would break even by Q2FY26. Yet, given three consecutive quarters of falling revenue and expanding losses, this goal appears increasingly ambitious.
According to analysts, what was once envisioned as a defining chapter in the EV journey now risks becoming a cautionary tale of aggressive expansion, financial overreach, and the unforgiving dynamics of a highly competitive market. In this scenario, experts say that the next few quarters will be decisive for the company, whether it stabilises and delivers a turnaround or risks joining the list of high-profile startups that couldn’t sustain their momentum.