Since 2022, Ola Electric has aggressively expanded its physical presence, opening 4,000 locations across India. However, a Bloomberg News investigation found that out of 3,400 showrooms for which data was available, only around 100 had the required trade certificates under India’s Motor Vehicles Act. This suggests that over 95% of Ola’s showrooms lacked the necessary certification to legally display, sell, or offer test rides for unregistered two-wheelers.
Government Raids and Legal Issues
In response to customer complaints, transport authorities across multiple states have conducted raids, closed showrooms, and seized vehicles. They have also issued show-cause notices to Ola Electric, questioning the legality of its operations. According to internal documents and government warning letters obtained by Bloomberg News, the company has been under regulatory scrutiny for failing to comply with basic legal requirements.
Under India’s Motor Vehicles Act, every showroom dealing in unregistered vehicles must possess a valid trade certificate. Hans Kumar, a retired assistant transport commissioner, emphasized that non-compliance with this requirement is a serious legal violation. Several local transport officials have confirmed ongoing investigations into Ola Electric’s operations.
Ola’s Response to Allegations
Ola Electric has refuted claims of non-compliance, stating that the investigation’s findings are “misplaced and prejudiced.” The company asserts that its inventory of unregistered vehicles is stored at distribution centers and warehouses that fully comply with the Motor Vehicles Act. However, Ola has not directly addressed whether its showrooms possess the required trade certificates or acknowledged the reported raids and vehicle seizures.
Mounting Challenges for Ola
Apart from regulatory challenges, Ola Electric is facing multiple crises:
- Plummeting Share Price: Since its public listing in August, Ola’s share value has dropped by over 60% from its peak.
- Customer Complaints: Widespread criticism regarding vehicle quality, service issues, and delayed deliveries has resulted in backlash on social media.
- Operational Layoffs: Ola has laid off over a thousand employees and contract workers in an effort to cut costs and restructure its operations.
- Delayed E-Motorcycle Launch: The company had initially planned to launch its electric motorcycles in January 2025, but the project remains stalled.
Regulatory Actions and Compliance Gaps
State transport authorities have sent Ola nearly two dozen notices since 2023, with the latest warning issued in March 2025. In response to government scrutiny, Ola has sporadically applied for trade certificates in certain locations. Despite these efforts, most of the company’s showrooms continue to operate without the necessary approvals.
In December 2024, Ola announced a massive store expansion, adding over 3,200 new locations overnight. However, reports indicate that the majority of these stores also lack trade certificates. While Ola has maintained that its “experience centers” focus on customer engagement rather than direct sales, regulatory authorities remain unconvinced.
Discrepancies in Sales and Registration Figures
Ola’s reported sales figures have also raised concerns. On February 28, 2025, the company claimed to have sold over 25,000 vehicles that month. However, government data from the VAHAN portal showed only 8,600 registered vehicles. Under Indian law, customers cannot receive unregistered vehicles, making the discrepancy a potential compliance red flag.
In a statement, Ola attributed the registration delay to renegotiations with agencies handling vehicle registrations. The company assured that all February sales figures would be updated on the VAHAN portal in the coming weeks.
Market Position and Future Outlook
Ola Electric, once India’s leading electric scooter manufacturer, has lost significant market share to competitors like Bajaj Auto Ltd. and TVS Motor Co. Despite these challenges, CEO Bhavish Aggarwal remains optimistic, stating that the company aims to break even in its auto segment by reaching 50,000 monthly sales. He expressed confidence that this target could be achieved within the next few quarters.
As Ola navigates increasing regulatory scrutiny, declining investor confidence, and stiff competition, its ability to address compliance issues and rebuild trust with customers and authorities will be crucial to its long-term success.
