Ola Electric, Indian electric vehicle (EV) firm, has scheduled a board meeting on May 22, 2024 to discuss fundraising through a private placement of non-convertible debentures (NCDs) or other securities, according to a filing with the stock exchange.

This decision follows a downgrade in the company’s ratings by credit rating agency ICRA, which raised concerns about low sales volumes and sustained cash burn.

ICRA indicated that additional fundraising may be necessary within the next 12 to 24 months. The agency also noted challenges in Ola Electric’s capital expenditure, particularly in its battery cell manufacturing project.

This project faces risks related to execution, demand, supply chain, and technological advancements.

🔗 Source: YourStory

🧠 Food for thought

1️⃣ The funding journey from unicorn to cash crunch reflects EV sector capital intensity

Ola Electric’s current fundraising efforts through non-convertible debentures illustrate the capital-intensive nature of the EV manufacturing business, despite impressive early funding success.

The company’s journey shows stark contrasts in capital stages, from achieving unicorn status in July 2019 with a $250 million SoftBank investment that valued it at over US$1 billion, to now facing cash concerns just five years later despite having raised approximately $1.2 billion in total funding12.

Battery cell manufacturing specifically represents a critical capital challenge for EV makers. ICRA highlighted this area as particularly problematic, requiring significant investment while facing “risks of timely execution, demand, supply chain, and technological obsolescence”3.

This pattern reflects challenges faced by many EV manufacturers globally, where the transition from fundraising success to sustainable manufacturing at scale requires substantially more capital than initially anticipated, especially for vertical integration of battery production.

Initial investor enthusiasm often provides companies with unicorn status before they’ve proven their manufacturing capabilities or achieved profitability, creating tension between valuation expectations and operational realities.

2️⃣ India’s EV market shows robust growth amid shifting competitive landscape

While Ola Electric faces individual challenges, the broader Indian EV market continues to expand rapidly, with April 2025 setting record sales of 167,629 units, marking a 44.62% year-on-year increase4.

The electric two-wheeler segment, where Ola operates, sold 91,860 units in April 2025, showing 40% growth compared to the previous year4, suggesting strong sector fundamentals despite Ola’s declining market position.

The competitive landscape is clearly shifting, as evidenced by TVS Motor overtaking Ola Electric as India’s largest electric two-wheeler manufacturer in April, followed by Bajaj Auto closing the gap45.