Ola's electric dreams: CEO Bhavish Aggarwal on EVs, Ola's first electric car and future of ride-hailing services

Bhavish Aggarwal, 37, the aggressive, straight-talking Co-founder & CEO of Ola, is currently a man on a mission: to make India a global leader in electric mobility. Two of his companies—ride-hailing venture Ola and electric mobility company Ola Electric—are in the midst of rapid scaling up. But EV two-wheeler market leader Ola Electric, with a range of scooters, an upcoming motorcycle range and plans for a car launch by next year, is where the bulk of the action is. In a freewheeling conversation with Business Today’s Sourav Majumdar, Aggarwal talks about his vision for the EV sector, his plans for the ride-hailing venture, and more. Edited excerpts:

Q: Bhavish, to start off, give us an overview of where Ola stands at this point.

A: I am very optimistic about India in general and about technology and, obviously, about our company. Let me share a bit with you about how Ola is growing. [The] Ola group is now three companies. Ola, which is my consumer company, where ride-hailing was my main business, is profitable and is growing well. You will see us do a few very interesting AI applications in Ola. And I will talk about that more as the conversation progresses. We are the No. 1 firm by ride-hailing market share.

Q: What is the current market share?

A: There are different numbers, but 60 per cent is more or less the media- and third-party number.

Q: What is the status of your IPO plans for Ola?

A: We tried to list it last year, but we didn’t do it. We will do it soon. Then, Ola Electric is now India’s No. 1 EV company by revenue—even bigger than the four-wheeler EV companies by revenue—and last year we scaled up manufacturing, our front-end [and] back-end. In January last year, we started selling. Last year was a very action-filled year for us at Ola Electric. It’s a massive undertaking and it was very exciting. I have been very optimistic... not just optimistic but very aggressive about India’s need to lead the world in electrification.

Q: That has been the broad vision for Ola Electric, right?

A: EV, sustainability, climate change, etc., are all important global themes now and to truly take sustainability and the EV mission to humanity scale, India needs to be electrified, because whatever companies like Tesla, etc. are doing in the West are for the western audience. The majority of the world doesn’t use those products. And India is a great microcosm of the rest of the world.

Q: The government is also giving a big push to electrification…

A: Yes, the government is very supportive. It is an opportunity for an Indian company to build products that Indians want and scale them beyond India—also because there are many large geographies that will use these kinds of products. That’s been our vision from Day One in Ola Electric, so we have been focussed on building three pillars of our strategy. It is building a spectrum of two-wheelers, building cars, and the third pillar has been vertically integrating into cell technology. All three pillars of our strategy are very fast in motion. In two-wheelers we are the leaders in India—we also teased our motorcycles a few weeks ago. Motorcycles will be launched this year and next year we will launch a bunch of motorcycles. Towards the end of the next year, our car will also be launched.

Q: Talking about the range of products, you are now going to get into the mass market in scooters—the Activa segment. Then there are motorcycles, that is the Hero segment; and then premium motorcycles, that is, the Bajaj and Royal Enfield segment. You are already the leader in premium scooters, where you started. Would you not be better off consolidating there and establishing leadership by far rather than doing all these things at this juncture?

A: Great question. And this movement in the automotive industry is very different from any other new entrant coming in. This is a technology shift. In a technology shift, every technology has an ‘S’ curve, for maturity, adoption, and value creation. And technologies shake up industry structure. You have seen 4G, there are so many examples. The way the internet shook up [things]. In the Silicon Valley, Microsoft and Apple used to dominate, then Google emerged, Amazon emerged and others emerged. So, technology shakes up everything. It shakes up what the consumer proposition is, what the industry structure is, it shakes up business models and, hence, I don’t see the two-wheeler market as premium scooter, mass-market scooter, premium motorbike, mass-market motorbike. The future of EV is going to be technology-led and there are two or three major technologies that will define that. One is software and the other is energy and cell. I have expertise in both. So, once we master these technologies and build a platform, we can easily build different product segments on it. And once my supply chains are at scale built out on these core technologies, it will be very hard for anybody to compete.

Q: And the third company you spoke about?

A: It is the subsidiary of Ola Electric, it is the cell one. Software is Ola’s DNA, the others don’t have that strength. [Our] competitors may be of the view that Ola is only assembling now [and] will do so in the future. That’s not the game right now. The game right now is to control the technologies that are defining the disruption to differentiate a product better, to control your costs better, and to control your speed to market better.

Q: All the segments will be under Ola Electric?

A: Yes, we are not splitting [them].

Q: Management bandwidth for each of these will be different, right? In an earlier interview to us, you said legacy players will be surprised. We also did a story recently on Honda motorcycles and how they and Hero are challenging each other. Now, you are getting into their territory.

A: Actually, technology is getting into their territories, not me. I am just a representative of technology. If not me, someone else will enter these territories.

Q: Do you think you have an advantage in terms of scale?

A: We started only two years ago. Yeah, we attacked it with scale. And see how many scooter variants we have launched this year—S1 Air, S1 [and] S1’s multiple battery sizes. We are able to do so many fast iterations because we control our technology.

Q: TVS has also entered the arena in a big way...

A: They are a credible company. They have a good product. It is good to have competition. My vision for the Indian industry is to be world leaders in this electrification journey. And it can’t just be Ola. The whole ecosystem has to move along. Other OEMs should be building world-class products, Tier I [firms] should be building world-class components and technologies for the EV future. And that will make our ecosystem stronger. We will benefit as Ola and India will benefit, the ecosystem will benefit, and the consumer will benefit.

Q: What are the key challenges as you scale up?

A: We started our first product on August 15, 2021. It’s been one and a half years. Even then, I was told that the market is not ready. But I have a different perspective. Consumers are the smartest people, they know what they want. And when they see something, they can feel what they want. It is more a supply side thing that companies were not building good enough products for consumers. Now see how EV penetration [has] scaled up since our product launch. In the premium scooter segment, the EV penetration is 90 per cent from 25 per cent before our launch, in one year. Once our S1 Air and one or two products come out at mass price points, the penetration will shoot up in one/one and a half years.

When the chip shortage happened, because I built my own software, I was able to replace the chip with whatever was available and recreate my software for that in, like, a week. We never got impacted by chip shortage. Everybody else... OEMs... got impacted by the chip shortage... We had our share of challenges last year primarily around the front-end of the business—the distribution, because we were doing a new model there as well.

Q: Online...

A: Not online but D2C, which has both online and offline. It is company-owned, direct to customers.

Q: When we spoke last, you said you thought that it (D2C) would be only online. Have you veered towards omni-channel now?

A: People were saying things wouldn’t happen without dealerships. My model has proven D2C is better. The cost of distribution is much lower in D2C. Feedback comes directly, I engage with the customers directly. My cost is lower.

Q: So, all your offline stores are yours. There is no dealership.

A: Yes. In a couple months, I’ll have 500 stores.

Q: The car, too, won’t have dealerships?

A: The same model—D2C, omni-channel. We have partnered with the Tamil Nadu government for acquiring more land—almost 2,000 acres. We are building three factories there—the two-wheeler factory, the car factory, and the cell factory. And it will be the world’s largest EV manufacturing site in one location when it is fully completed. Our suppliers are co-locating with us in that area; it will become bigger than any other ecosystem in the world. That’s our vision.

Q: In India, every new technology leapfrogs. AI is the next one, right?

A: I will [tell you] what we are doing in AI. In the electric segment, we are working on autonomous vehicles. Applications of AI will be across my businesses. [There are] two things I believe in and you’ll see me building my company with those foundational beliefs. One, technologies are accelerating and converging at the same time, which means that electrification is having an accelerated impact than it is expected to have, digitisation is having an accelerated impact, AI will have an accelerated impact. Material technology, space technology, etc., are not only standalone technologies, it’s all a convergence. Automotive is a great example of convergence. It includes AI, software, electronics, digitisation, etc. As a firm, we are very technology centric—we started that way. But we did not limit ourselves only to digital technology. We broadened our spectrum significantly: cell technology, energy technology, vehicle & engineering, material science, etc. In the group now, we have around 200 people across the spectrum doing a lot of IP creations for us. That is one core belief on which I’m building my company.

The second belief is that this is India and my generation’s destiny is to build a future. What the technology acceleration in India allows us to do is leapfrog, like you said. Also, I believe, the old paradigm of GDP growth of 6-7 per cent will all be changed by technology. If you think of AI, AI can make us so much more productive. If as an ecosystem we adopt AI, GDP growth will be much stronger. The future is of acceleration. India is young, the government is progressive.

Q: There’s this view that because you are so obsessed with electric and so much work needs to be done there, you’ve shifted focus from ride-hailing.

A: Ola is an emerging group and my journey has been slightly different from my other internet peers, in the sense that I didn’t sell my company or never focussed on selling... rather, I focussed on building institutions. I’m still in the middle of this journey and people ask me this question [where is my focus?]. This is because we are still in the middle of our journey to establish ourselves as an institutionalised group. But, if you look at our company, we are a very strong team. We have solid teams across Ola, Ola Electric, Ola Cell. My and Ola’s journey is to build the future here for India and ourselves, and it is not going to be an easy journey. That’s my philosophy.

We are scaling up our ride-hailing business. It will see a focus on electrification. There have been post-Covid-19 challenges of customer experience because of lower supply, so we are solving that aggressively. My attention has been on both businesses. My passion is my work.

Q: What is the next step for ride-hailing?

A: The future of ride-hailing is going to be electric and it benefits everybody in the ecosystem—the consumer, society because it is green, but most importantly [it] benefits the driver because it’s cheaper to operate an electric car and the driver can earn more money. As a result, more drivers will be pulled into the industry and the drivers will be more incentivised and will be able to deliver a better customer experience. Our big focus now is on electrification. We announced a plan a few months ago about adding electric cars. You will see some major announcements in due course.

Q: What is your fund-raising plan at Ola Electric?

A: We are investing aggressively and at the right time we will raise more capital. As of now, our balance sheet is very strong.

Q: Do you think battery swapping is the solution or is it creating charging stations?

A: All these questions are part of the debate we need to get through, as a part of the stakeholder group, to understand the paradigm of the future of EVs in India. Is it hydrogen or lithium, is it swapping or charging stations, etc.? The anxiety around charging comes from an old mindset—what if the charge of the vehicle gets over? Even with countries where there is high EV adoption, it’s not that they have an equal number of charging stations. We are now expanding our charging network but we have almost 200,000 electric vehicles already on roads [and customers] have been charging them at home.

Q: Some EV players are under the government’s lens for misusing the FAME subsidy...

A: Some players did not do the right thing in spirit as many people were getting things from China; from Day One we have manufactured everything in India—in our factories mostly, and through Indian suppliers. People often say to me, ‘Why are you making everything?’ So, my thing is, if you are getting things from China, then it should have its own repercussions. We should create the Indian ecosystem. But now we are thinking beyond FAME. We are building our cost structures, our supply chain, scale… My view is FAME should fade out once EV penetration is 10 per cent, which will happen this year.

Q: What will your car be called?

A: [We] have not given it a name yet.

Q: Where do you see Ola as an ecosystem by 2025 or 2026?

A: As a group, our ambition is to be significantly impactful in a few major technology themes of our era. One technology theme is consumer tech, where we are one of the leading companies in India through ride-hailing and AI. The second technology theme is electrification, converting our transportation to clean [energy]. And the third technology theme is new energy. And in these three technologies, we will be the leaders here. That’s our ambition in two to three years. Today, we are already leaders in different ways across these three themes. And you will see us double down and become even stronger leaders because we are building technology.

Many people ask me sometimes that technology also changes fast. Isn’t it a risk that I am taking? That question is from a mindset of consumption of technology, not creation of technology. When you are creating technology, you do your own generational advancements. You are at the cutting edge, so that’s how big technology companies have been built. They have not been built by consuming technologies—they have created the road map of technology and influenced it and taken the right strategic calls in technology. That’s what we are doing. When it comes to specifically electric, our goal has been for two-wheelers to be fully electric in India by 2025-end. I still stand by that and I feel optimistic that the Indian industry will hit that [figure]. In three years, we can make all two-wheeler vehicles sold in India electric.

Our car will be out next year. We will be building a few cars over the course of the next three to four years. We aim to be leaders in that space. Today, all the four-wheeler EVs that exist in India are largely ICE vehicle platforms converted into EVs, which are not efficient. And ours will be a greenfield EV platform, riding on technology.

@TheSouravM