India's Ola Electric has slashed its sales goals for 2023-2025 by more than half and delayed its target of achieving profits by a year, after reduced government incentives pushed up e-scooter prices, according to a document and two sources with direct knowledge of the company's finances.
The scaling back of Ola's targets comes ahead of its $700 million stock market debut plan, even though the SoftBank-backed company, which likens itself to Tesla in the West, continues to lead the small yet fast growing e-scooter market.
In a surprise move in May, India's government cut cash incentives available for e-scooter buyers without giving an explanation. Ola's CEO Bhavish Aggarwal at the time said the reduced incentive would be a "short-term blip" for sales, and the company said the move would "have no impact on volumes".
A document seen by Reuters with Ola's latest financial projections shows it now expects to record 300,000 e-scooter sales in the ongoing fiscal year to March 2024, two-thirds lower than the earlier goal of 882,000 which Reuters reported in July.
The revenue target for the ongoing fiscal year period is now $591 million, versus the earlier goal of $1.55 billion - a cut of about 60%, according to the internal document.
In a statement, Ola did not acknowledge the document or comment on the cuts to internal forecasts. It said future financial targets were "yet to be verified".
"This is completely confidential information of the company," Ola said.
The targets have been lowered because of the government's lower subsidy, said two sources with direct knowledge of the company's finances, who declined to be named citing confidentiality.
"The new numbers have been toned down so the company is able to meet or exceed them ... that is what investors want to see," said one of the sources.
EV goals
While Ola is launching new scooters, parts of its nationwide network of over 400 service hubs which maintain and repair its EVs are showing signs of strain after a surge in sales, Reuters reported last month.
India e-scooters sales nearly tripled to over 700,000 during 2022-23 versus the previous year, with Ola a market leader, but the sales were still a fraction of 15 million plus two-wheelers sold in the country.
Prime Minister Narendra Modi wants 70% of all new two-wheeler sales to be electric by 2030. India now offers 15% of the price before tax as incentives for e-scooters, compared with 40% earlier, leading to higher prices.
Before the government incentive cuts, Ola, still loss-making, was expecting to record its first operating profit of $220 million in the ongoing 2023-24 fiscal year. The revised targets in the document show it will record an operating loss of $92 million this year, and a profit of $111 million next year.
Sales will also rise but at a far slower pace than earlier predicted.
Ola will sell 900,000 units in 2024-25 and 2.3 million units in 2025-26, the new document showed. Those targets are 60% and 21% lower than earlier estimates when incentives were in place.
On Saturday, Ola's Aggarwal slashed prices of his entry-level e-scooter by about 20% to around $1,100 to boost their appeal and bring more people into the EV fold, adding that lower government incentives were not a worry.
"People had feared the e-scooter industry will be hit due to government incentive cuts. Industry has more than recovered," Aggarwal said.
