Ola Electric is setting up a two-wheeler manufacturing facility in Tamil Nadu with 10 million-a-year capacity to herald an EV revolution that is likely to make it a frontrunner in the segment
Bhavish Aggarwal is in a hurry. A sort of mad rush. What else perhaps explains the last few months at Ola Electric, one of India’s fastest unicorns and part of the larger Ola group founded by Aggarwal. The Ola group comprises a mobility business, Ola Cabs and Ola Electric, the electric vehicle arm. In December 2020, as India’s economy began swinging back to normalcy after months of a nationwide lockdown, Aggarwal and his team at Ola Electric signed a memorandum of understanding with the government of Tamil Nadu to set up a manufacturing plant in the state to produce electric vehicles (EV). It was only a month before that, in November, that the company had signed off on the budget to set up a manufacturing facility. Then, in January 2021, the company identified a 500-acre plot in Krishnagiri, a tiny hamlet in Tamil Nadu, also known as the mango capital of India, before conducting its ground-breaking ceremony on February 7. A month since, the company has been working at breakneck speed, including replanting trees and excavating land, to turn that barren land into what will be the world’s largest two-wheeler factory. Once completed, at 10 million units a year, the company will account for 15 percent of the global two-wheeler market in the world. Even Hero MotoCorp, the world’s largest two-wheeler maker, doesn’t boast a manufacturing facility of this scale. In comparison, across its six manufacturing facilities in India, Hero MotoCorp manufactures 11.6 million units a year, a tad higher than Ola’s proposed facility. By June, the company will complete the first phase of its manufacturing facility that’s capable of manufacturing some two million two-wheelers. A year from then, the company intends to work at full capacity, capable of manufacturing 10 million units of two-wheelers a year, or one two-wheeler every two seconds. All that means, some 10 million man-hours have been planned to bring the factory up in record time, and by next year, the company will be ready with over 10 million units of its electric two-wheeler. “Is there any other way?” Aggarwal, chairman and group CEO of Ola, quips about the pace at which the company is planning its EV foray. “In the EV space, the only way we can create impact is to play the scale game. We have to build this business at scale. That’s the only way the adoption of EVs will be faster. Because, unless we build at scale, you can't bring the cost down enough, and you can't get consumers excited.” Getting customers excited, Aggarwal knows, is certainly the only way out. For years now, India’s consumers have been rather wary about embracing EVs despite a mammoth push from the government. India is a signatory to the Paris Climate Agreement, which means that the country needs to reduce its carbon emissions by some 35 percent of its 2005 levels by 2030 and the government has tried everything—from tax cuts to manufacturing incentives in the automobile sector—to kickstart an EV revolution in the country. Yet, despite all the narrative around EVs, there haven’t been substantial gains. Last year, India sold some 156,000 units of EVs in the country, of which 126,000 were two-wheelers. In contrast, over 21 million vehicles that run on internal combustion engines (ICE) were sold in FY20, of which 17 million were two-wheelers. China sold some 1.3 million EVs in 2020, according to Singapore-based market research firm Canalys, in a year marked by a pandemic, accounting for over 40 percent of the global EV sales. Aggarwal wants to change all that and sees a massive opportunity. Not that, he doesn’t have the necessary credentials to bring about a transformation. After all, he changed India’s mobility forever with the launch of Ola, the ride-hailing service that had become the mainstay for shared mobility in the country. “Our vision from the start has been to completely transform all mobility to electric and to do that we have to build a very large integrated manufacturing facility,” says Aggarwal, who co-founded Ola Cabs in 2011. That’s precisely why Ola Electric has decided to take to manufacturing at such a scale. Within its manufacturing facility is a massive supplier park, a battery manufacturing facility, a welding, and general assembly unit, and a test track among others. The company will invest Rs 2,400 crore towards the first phase of the factory with two million annual capacity, that will be ready this summer. “The need to transform mobility to electric is there, and we can see what's happening with pollution, so we have to build for the future paradigm, we have to build for future technology, and in mobility, it has to be electric,” Aggarwal says. “It absolutely has to be done as fast as we can.” Perhaps, it’s that commitment to the environment that has also led Aggarwal to set up some 100 acres of forest within the manufacturing facility. An artist impression of Ola's EV facility when completed The Big Plan