In the most recent fiscal year, Ola Electric’s import rate dropped from roughly 37% to roughly 29%. Under the direction of CEO Bhavish Aggarwal, the company is working to further integrate its manufacturing processes and expand its gigafactory while increasing its local production. Aggarwal stressed the need for the entire electric vehicles business to progress in this area when he revealed these thoughts during a pre-IPO press conference in Mumbai. He pointed out that these activities are supported by government programs such as the Production Linked Incentive (PLI) schemes.
Ola mostly sourced imports, including lithium-ion cells, magnets, amplifiers, and electronic integrated circuits, from nations including China, Singapore, South Korea, Thailand, and Malaysia in the fiscal years 2024, 2023, and 2022, according to its Red Herring Prospectus (RHP). According to the RHP, the cost of materials from China rose dramatically from 7.90% in FY22 to 19.29% in FY23, and finally to 36.86% in FY24 as a percentage of the overall material expenses for EV scooters. On the other hand, the share of imports from South Korea and Malaysia was significantly lower, indicating a change in the sourcing dynamics.
Aggarwal said that even while they import a large amount of goods from outside of China, the total cost of the components may have gone up even though the quantity imported has dropped.
The RHP also pointed out that Ola has previously imported modest amounts of anode active material (AAM) and cathode active material (CAM) from Chinese vendors for use in testing and cell research. Ola’s Gigafactory will begin producing cells internally, and the business intends to keep obtaining these components from China.
The prospectus also included a warning about possible risks, like disruptions in supply and higher expenses as a result of changes to the laws, policies, and regulations of China or India. This might result in increased freight costs, trade taxes, or even a total suspension of imports from China, making it necessary to look for substitute sources elsewhere. There is no assurance that other suppliers that can quickly fulfill the necessary requirements in terms of quality and standards or who can provide competitive pricing will be identified.
