Ola Electric has just announced its Q2 FY 26 results. Since the company’s vehicle sales have crashed in the last few months, we were expecting a sharp decline in revenue.
The Numbers
During the quarter, Ola registered 52,666 E2Ws. These included 13,418 units of what Ola calls its Premium range (S1 pro) and 39,248 units of its mass-market range (S1X, S1X+). Overall, vehicle sales have declined by 46.6% on a year-on-year basis, from 98,619 units in Q2 FY 25.
Ola Electric reported revenues from operations of INR 6,880 million (USD 78 million), a decline of 43.3% from revenues of INR 12,140 million in Q2 FY 25.
Within the same period, Operating Expenses declined from INR 4800 million to INR 2580 million, representing a 46.3% decline. With expenses falling faster than revenue, the company managed to improve its gross margin percentage from 18.5% to 30.7%.
The Operating EBITDA, the real metric to watch, has improved significantly. From an operating loss of INR 2550 million, the company’s loss improved to INR 470 million in Q2 FY 26.
The above numbers are only for the automotive segment. Ola reports its Cell Factory numbers separately as it remains a cost centre. The company has started recording the number of cells its gigafactory is producing. Last quarter, Ola produced 11,744 cells, and this quarter the number has improved to 38,080 cells.
Key Problem Areas
For Ola, the narrative is important. Last quarter, the narrative to shareholders was about the motorcycle. This quarter, that has changed to Ola Shakti, the company’s planned home energy storage system.
The Ola motorcycle has been received poorly. As per the company, 15% of the current sales come from motorcycle sales. This puts the monthly sales at less than 2000 units. For a new model from an established brand in a market with a 12 million TAM, that is not impressive.
Ola is killing sales to improve margins. On a d/dx–> infinity basis of this logic, they can shutter the factory, let go of everyone, and have a positive EBITDA because of the interest earnings from money in the bank. Businesses don’t win by not doing things. They do by doing them well.
Within the sales numbers, the share of Premium Scooters to Mass Market scooters has rapidly declined. A year back, it was at 0.74. Now it is down to 0.34, indicating that for every premium scooter, the company is selling three mass-market scooters, which can go at up to 45% lower prices than the premium scooters. In the midst of these worsening sales, Ola ran a festive offer selling some model variants at INR 49,999. In comparison, the premium scooters sell at INR 154,999.
However, even with lower-priced products and massive discounts, the sales numbers have stayed dismal.
This is more indicative of a company struggling to sell than one trying to control costs.
The company has also significantly reduced the guidance. This was their guidance given at the time of Q1 FY 26 financials.
At about 350,000 vehicles in the year, Ola needed to sell about 30,000 vehicles per month. The actual sales numbers have been nowhere close to that.
So, in Q2, Ola has come out with a new guidance.
The BESS Foray
Ola Electric now wants to be an energy player. The company plans to increase its cell gigafactory capacity to 5.9 GWh by March 2026 from the current installed 2.5 GWh. The production ramp-up is in early stages, and Ola produced only 38,080 cells in this quarter.
We expect the ramp-up to be fast after this, except that Ola does not have the product sales to use the cells. Earlier, the company had announced two product variants that will use the new 4680 cells. This is reasonable as we cannot expect all products and variants to move to Ola’s own cells immediately. The first product was the Ola S1 Pro 5.2 kWh, and the other product was the Roadster X+ 9.1 kWh. Of these, the company has recently received homologation approval for the 5.2 kWh pack.
At the current run-rate and assuming all model variants would move to the 4680 cells, we estimate that Ola would only be using 20% of its planned cell capacity. This leaves a big problem for the company, and it is trying to tackle that by foraying into the home energy systems market. The company launched the Ola Shakti range of home inverter/power backup systems in October 2025. This was only a product unveiling, and the company is planning to start deliveries next year.
Except, using a brand new NMC 4680 cell in a home inverter is overkill. It is like bringing an RPG to a knife fight in a bathroom. Explosive, yet pointless. The Indian energy storage system market is headed for strong growth. However, the potential competitors would plan their systems around LFP prismatic cells, more stable and with much higher cycle life.
Disclaimer: Deepesh Rathore, the Founder of InsightEV, was the Head of Product Strategy at Ola Electric till February 2025.
No coverage of Ola Electric, or any competitor, on InsightEV uses any privileged information.
