Ola Electric, the electric vehicle (EV) arm of ride-hailing major Ola, said it has received USD 100 million from Bank of Baroda as a ten-year-long debt to complete setting up the first phase of its EV manufacturing factory in the southern Indian state of Tamil Nadu.
Last December, the SoftBank-backed firm announced that it would invest INR 2,400 crore (USD 320 million) to complete the construction of phase one of its manufacturing unit, which will take about 18 months to complete. The factory, it said, will cater to customers across India, Europe, Asia, Latin America, and other regions. In its first year of production, Ola aims to sell around 1 million vehicles, a report by local media Mint said, citing Ola’s executives.
“Today’s agreement for long-term debt financing between Ola and Bank of Baroda signals the confidence of the institutional lenders in our plans to build the world’s largest two-wheeler factory in record time,” Bhavish Aggarwal, chairman and group CEO of Ola, said in a statement.
This round of investment comes days after Ola raised USD 500 million in a secondary share sale from Warburg Pincus and Temasek as it gears towards going public. However, due to multiple pandemic-induced lockdowns in 2020 and 2021, coupled with employees continuing to work from home, its ride-hailing business has taken a hit.
A RedSeer Consulting report released in May this year said mobility companies garnered 78 million rides in March as cab-hailing businesses showed a swift comeback when lockdowns in different states were either completely lifted or relaxed. However, that didn’t last long, as the second wave of the pandemic earlier in April and May again muted the demand. To add to its woes, US-based investment firm Vanguard Group, which owns a less than 1% stake in Ola, slashed its valuation by half to USD 3 billion in March from around USD 6.5 million in 2019.
Since the fall in the number of rides last year, the company has been focusing on getting its EV business up and running as soon as possible. Its 500-acre manufacturing site in Tamil Nadu is expected to churn out up to 10 million units by mid-2022. It is also working on creating a network of more than 100,000 two-wheeler charging stations by the end of this year.
