The central government has served Ola Electric with a show cause notice due to numerous customer grievances. The complaints include service delays, deceptive advertising, and unethical practices. Ola Electric is required to provide a response within 15 days. Today, the company’s share price dropped by nearly 9%. Despite an increase in revenue, the company recorded a substantial net loss.
The central government has taken action in response to numerous customer complaints targeting Ola Electric, a leading e-scooter manufacturer. The Central Consumer Protection Authority (CCPA) issued a show cause notice on October 3 to Ola Electric, citing suspected breaches of the Consumer Protection Act 2019. A business news outlet reported that the company has been given 15 days to respond to these allegations.
From September 1, 2023, to August 30, 2024, the National Consumer Helpline, managed by the Department of Consumer Affairs, recorded 10,644 complaints against Ola e-scooters. These complaints included 3,389 related to service delays, 1,899 concerning delays in delivering new vehicles, and 1,459 regarding the non-fulfilment of promised services. The show cause notice highlights various allegations such as manufacturing defects, sale of second-hand vehicles, incomplete refunds upon cancellations, recurring problems after servicing, overcharging, billing inaccuracies, and numerous issues with batteries and other components. Additionally, there are complaints of unprofessional conduct and unsatisfactory resolution of issues by the company.
Nidhi Khare, Secretary of the Department of Consumer Affairs, confirmed the substantial number of complaints regarding Ola Electric, primarily associated with service inefficiencies. Khare stated that the CCPA is reviewing numerous complaints against Ola Electric, mainly concerning service deficiencies. He expressed optimism that the company would quickly address and resolve these consumer issues.
Ola Electric has not yet made a public statement regarding the notice. However, the stock market has shown a response, with Ola Electric’s shares declining nearly 9% to an intra-day low of INR 90.26. Public discontent has also been visible, including a notable dispute on the social media platform X (formerly Twitter) involving comedian Kunal Kamra and Ola founder Bhavish Aggarwal.
After a stable debut on August 9, Ola Electric’s stock initially soared, hitting the upper circuit limit of 20% for three consecutive days. Since then, the share price has plummeted by 74% from its peak of INR 157.40. The company’s initial public offering (IPO) raised INR 6,154 crore, with the issue being oversubscribed by 4.27 times, reflecting significant initial investor interest. The IPO was priced between INR 72 and INR 76 per share.
For the first fiscal quarter of 2025, Ola Electric reported a consolidated net loss of INR 347 crore, a rise from the INR 267 crore loss reported in the corresponding period last year. Despite these financial setbacks, the company experienced a 32.3% year-on-year increase in revenue from operations, totalling INR 1,644 crore for the quarter, up from INR 1,243 crore in the previous year.
