Is Ola Electric Really Worth the Hype?

Ola Electric’s buzz is everywhere lately, from social media to the stock market, with an ambitious vision, big valuations, and a lot of eyes on its initial public offering (IPO). Founded as an extension of Ola Cabs, the EV company has promised a sustainable mobility future for India. Yet, despite the noise, there are lingering questions about whether this excitement matches Ola Electric’s actual value. Is Ola Electric a sound investment or more of a high-risk gamble?

Many investors are wondering if this sky-high valuation and IPO are more smoke and mirrors than substance. Here’s a look at why some are concerned Ola Electric might be more risky investment than a revolutionary company.

Ola’s Valuation: Impressive Numbers, But What’s the Real Value?

Ola Electric’s valuation journey has been a rollercoaster, with it’s current share price of ₹75.20 dipping below the issue price, and the valuation falling down 52% from their record high. Ola Electric had went public with high expectations, and investors flocked to the IPO with dreams of future profitability. At the time of the IPO, it held a pre-IPO net worth around ₹2,000 crore, but after raising funds, that valuation catapulted to ₹33,000 crore—a jaw-dropping leap. While hefty valuations aren’t uncommon in the tech world, they’re typically backed by substantial assets, steady revenue streams, or loyal customer bases. The valuations based solely on growth promises can be misleading, especially in an industry like EVs, where profitability isn’t guaranteed. For Ola Electric, the valuation seems to rest heavily on ambition rather than established growth.

For many young investors, it’s tempting to view valuation as a marker of success. After all, high numbers signal big potential, right? Not always. In fact, Ola Electric’s numbers could reflect speculative interest rather than realistic growth expectations. When it comes to investments, understanding what truly drives a company’s valuation is critical. Many investors have started to question whether Ola Electric’s skyrocketing valuation is backed by actual growth or if it’s just another bubble waiting to pop. The company’s assets and revenue do not fully justify its current market cap, prompting concerns that investors may be gambling on hype rather than a well-grounded business model.

A Closer Look at Ola’s Product Quality (and Why It Matters)

Ola Electric scooters may look sleek and futuristic, but user reviews tell a different story. Complaints around maintenance issues, lackluster customer service, and durability problems are becoming more common, and the last thing a growing EV company needs is a reputation for subpar products. In an industry where customer satisfaction directly influences brand loyalty, these problems could become big obstacles for Ola Electric.

This isn’t just a minor issue for investors, either. If customers aren’t satisfied with their experience, they’ll likely turn to other brands, impacting Ola’s growth potential. A sustainable business must win over customer trust to build loyalty—a concept Ola seems to be grappling with. EV competitors like Ather and traditional players entering the electric space have focused on product quality as a foundational element. If Ola Electric doesn’t prioritize improving customer satisfaction, any investment could be at risk. Tesla’s success in the EV space is a case in point, as it focused on quality and customer experience to build a loyal following. This loyalty has translated to profitability and growth, which Ola seems to be struggling with.

The Hidden Costs of Ola Electric’s Corporate Structure

Ola Electric is more than just a standalone company under Bhavish Aggarwal’s leadership; it’s part of a complex network of entities, including Ola Cabs, Ola Maps, and Ola Krutrim, an AI division. This fragmented structure raises red flags because it opens doors for potential conflicts of interest. For example, Ola Maps and Ola Krutrim are owned separately by Aggarwal, so future costs for Ola Electric’s use of these services could result in money flowing back to Aggarwal’s pockets instead of benefiting the company’s broader investor base.

This model contrasts sharply with companies like Reliance where all subsidiaries contribute to a unified vision. Mukesh Ambani included Jio under the parent company Reliance Industries, offering investors direct returns from every success.

In Ola Electric’s case, this fragmented structure apparently gives Aggarwal control across different revenue streams, often with little benefit to shareholders. This structure could be interpreted as Aggarwal’s attempt to maintain maximum control while minimizing risks to himself. While it’s common for startups to have intricate structures, transparency matters, and investors need to know how much of their investment will actually support Ola Electric’s growth versus lining the founder’s interests.

Many investors see this structure as a red flag. When a founder creates multiple entities with overlapping interests, there’s often a risk that profit from one business will be siphoned to benefit another, often under the founder’s private control. For Ola’s shareholders, this could mean lower returns and a diluted ownership in the company they invested in. This setup feels more self-serving than investor-focused, sparking concern that Ola’s growth might primarily benefit Aggarwal’s personal wealth rather than shared value.

What Reliance’s Jio Taught Us About Building Investor Trust

Mukesh Ambani’s Reliance Industries provides a striking contrast. Jio’s journey from a stealth startup to a telecommunications giant was built on transparency and integration. When Reliance invested in telecom, it could have kept Jio separate to maintain control, but instead, it launched under Reliance, letting existing shareholders benefit from Jio’s immense success.

Jio is often lauded for its customer-centric approach, from accessible telecom services to high-speed data and beyond. When Ambani launched Jio, he took a huge risk by making it part of Reliance Industries, allowing existing shareholders to benefit from Jio’s monumental growth. This move showed a level of trust and loyalty that resonates with long-term investors. Ambani didn’t just prioritize Jio’s success; he ensured that every Reliance shareholder would gain from it.

The thing is that it was illegal for Reliance to start a telecom business for xx years with their non-compete agreement with Anil Ambani’s Reliance Communications, which happened as the aftermath of their family partition. During this same period India’s 4G spectrum auction was going on, and if Mukesh Ambani had any ambitions of wanting to start his own Telecom in the future, he needed to have this spectrum. Allegedly this is when a mysterious unlisted small broadband company no one had heard of called Infotel Broadband bought the spectrum in all 22 zones of India for some ₹12,000 crore, outbidding Tata, Airtel, Vodafone, RelianceComm and BSNL. It ended up as the only company to have 20Mhz of spectrum across India.

Later in 2010, within a month of the non-compete expiring, Reliance industries apparently bought 95% stake in Infotel for ₹4,800 crore. This went on to become JIO in 2015. Now, shareholders wont even understand what all happened behind the scenes, but the thing is that it did end up benefiting all shareholders. Instead of going through all these channels, couldn’t Ambani have kept the spectrum license for himself as a private company, and let Reliance Industries invest in building JIO, and then eventually charge a hefty fee to use the spectrum?

A good founder takes everyone who invested in them up with them, while a bad one takes themselves along, even at the cost of others. The reason Reliance has become so big is also because of this same trust, that any normal person with no exact knowledge of stocks or business can also invest in Reliance and see their investment grow big with time. This is what works in the long term. Ambani had every excuse to start it separately, including the non-compete clause, yet he didn’t, as he understands, investor’s trust is everything.

Ola Electric’s approach, however, doesn’t offer the same level of investor confidence. With its separate entities and complex revenue channels, it’s hard for an average investor to understand where their investment will go and how much they’ll actually benefit. Ambani’s approach worked because he valued investor trust—a quality that could be lacking in Ola’s leadership.

Are Investors Just Buying the Buzz?

The hype around Ola Electric’s IPO has undoubtedly drawn in many young investors. But investing in a company just because it’s popular or “trending” isn’t always the smartest strategy. While high valuations can attract attention, it’s crucial to look beyond the buzz.

Ola Electric’s IPO rollout led to confusion, with some investors assuming they were buying into Ola Cabs, only to realize they had invested in the electric vehicle company instead. This miscommunication, coupled with the high IPO price, raises questions about whether Aggarwal was prioritizing cash flow over investor clarity. The elevated IPO valuation might have enticed uninformed investors, but it could also mean that Ola’s shares are significantly overvalued. Consider whether Ola Electric’s growth potential actually supports its lofty price tag or if investors are simply paying for an over-inflated idea.

Ola Electric has marketed itself as the face of India’s EV future, but that narrative won’t drive long-term value if it’s not backed by substance. For those new to investing, it’s easy to mistake hype for genuine opportunity. But as countless market bubbles have shown, what goes up fast can come down even faster.

Profitability Challenges in the EV Market

Electric vehicles are undeniably the future, but it’s a competitive landscape. The Indian EV market, while promising, is far from profitable. According to reports, Ola Electric and competitors like Ather lose tens of thousands of rupees on each scooter sold. According to recent reports, Ola Electric loses around ₹75,000 for each scooter it sells. This loss-per-unit model may be fine for now, but it’s unsustainable if competitors roll out more efficient, cost-effective models. For now, government subsidies keep prices low, but as these incentives wane, companies may struggle to remain competitive.

Established automakers who have deep pockets, brand loyalty, and the resources to launch high-quality EVs can afford to wait for the EV market to stabilize before jumping in, allowing them to develop a profitable model while early startups like Ola burn through cash. They don’t face the same urgency as startups like Ola Electric, which are already losing money on each scooter sold.

Major automakers with a focus on customer satisfaction and product reliability are likely to dominate the space in future, once they’re fully invested in the EV market.

Trust in Leadership: Why It’s Make or Break

One of the most important aspects of a successful company is trust in its leadership. Investors need to feel confident that a CEO will prioritize company growth over personal gains. Bhavish Aggarwal’s approach, however, has some investors raising eyebrows. Allegations about Aggarwal prioritizing personal interests—such as setting up separate companies under his ownership to benefit from Ola’s operations, and the way he has been taking feedback about the service issues of his vehicles—have raised concerns.

In the world of startups, transparency and listening to feedback is everything. For many young investors, the idea of supporting a startup with integrity is crucial, as they want to back a business that aligns with their values. If Ola’s leadership doesn’t inspire trust, this could have a ripple effect on investor interest.

Should You Invest in Ola Electric?

If you’re in it for the long haul, Ola Electric’s hype-heavy valuation may be less appealing. Long-term investors focus on companies that offer consistent growth, transparent leadership, and a clear path to profitability. Given Ola’s shaky reputation and Aggarwal’s tendency to prioritize his ventures, some investors may find it tough to imagine long-term returns.

For those contemplating an investment in Ola Electric, a few considerations stand out. First, assess whether the current market cap aligns with the company’s tangible assets, customer satisfaction levels, and profitability. Second, scrutinize the corporate structure to determine whether the founder’s financial interests align with investor returns. Finally, consider the sustainability of the EV sector in India and the company’s ability to stay competitive as subsidies decrease and competition increases.

Long-term investing is less about finding the next big thing and more about identifying companies with stability, quality products, and ethical leadership. Without these pillars, Ola Electric might struggle to hold investor interest over time.

For Ola Electric, a shift toward a more inclusive, customer-centric approach could make all the difference, bridging the gap between hype and genuine value.

The Final Take: Think Before You Buy the Hype

When it comes to investing, good investors have shown a remarkable ability to spot genuine innovation and separate it from mere buzz. Ola Electric might seem like an appealing investment, especially for those passionate about sustainable tech, but it’s essential to look beyond the glossy pitch decks and think critically about what you’re really buying.

Consider the risks involved, from questionable leadership practices to product quality concerns and the looming threat of established competitors. Ultimately, Ola Electric could either be a stepping stone in India’s EV journey or just another name in a long list of failed startups. Long-term investors are known for being savvy and discerning. So, before you jump on the Ola Electric hype train, make sure it’s a ride worth taking.

Disclaimer: This article reflects the author’s opinions and analysis, which are based on publicly available information and personal insights. It does not constitute financial advice, and readers should conduct their own research or consult a financial advisor before making investment decisions. The risks and uncertainties discussed are based on current market observations and may not reflect future outcomes. Neither the author nor the publication assumes responsibility for any financial losses or gains related to investment choices inspired by this content.