The company's ambitious goal to transition from a mere cab service to a comprehensive consumer brand has brought about significant change and challenges. During this transformation, several areas are experiencing slow growth, with Rapido emerging as a strong competitor in the ride service sector.
In addition, the electric vehicle segment is grappling with a surge in complaints. Despite the initial excitement and attractive discounts, investments in trending ventures such as Krutrim AI and Ola Food for ONDC have not delivered the expected growth. As if that wasn't enough, government intervention is urgently needed to overhaul the support system for consumers dealing with faulty scooters.
How did Ola end up here?
For a long time, Ola was primarily a ride-hailing service, attracting new users and showing healthy growth reports as a major player in a duopoly sector alongside Uber. However, the company eventually seemed to be stuck as a stale 'ride-hailing SAAS'. Unhappy with this, Ola began expanding into software by cloning and joining trending sectors to maintain Monthly Active Users (MAU) and increase Average Revenue Per User (ARPU). Ola Foods and Ola Money were successful ventures, with the Money segment bringing in significant revenue for the company. Everything was going well until the company ventured into the hardware segment with electric vehicles (EVs).
Ola's entry into the mess
Logistically, both segments work differently. Software tends to be fixed once and updated for all, while hardware requires manual intervention for each physical fix. Ola underestimated this by being bullish on Ola OS and Ola Maps, forgetting that hardware operates differently and cannot be regulated for risk-free operation. Ola started off well with strong sales and recommendations, positioning itself as a major player in promoting EV trust and adoption.
EV stands for Exclusive Viable
Ola cannot be solely blamed for this, as EVs in general are in the growth stage and have limited reach, making it difficult to be repaired at local shops and obtain generic parts. Additionally, range anxiety and battery safety are major concerns for everyday safety. Ather is commended for its dedication to Battery Management System (BMS), with very few Ather vehicles catching fire due to battery issues. However, the same cannot be said for other players, especially rapidly growing ones like Okinawa and Pure EV.
Ola's EV ride to the test
Ola's performance is a test for a software company's adoption rather than Ola's survival to maintain its market share. Software companies tend to think that hardware adoption is smoother, but human involvement and physical mishaps are major factors causing chaos for physical (hardware) products. Every other software company tends to think they can outdo physical competitors for mass adoption, but one thing different for Ola compared to Amazon and Netflix is that Ola is a software-to-product adapter, while the other two are software-for-service.
To ensure quality and quantity, a product may require premiumization. Ola, however, seems to prioritize high quality over general availability, and with EVs being a new territory, many are clueless about them. As a result, even minor hurdles lead Ola scooters to the service center. With complaints ranging from minor to major, the number of complaints keeps rising, compounded by limited staffing and parts availability.
Ola's overhaul for smoothness
Ola may be ambitious about its future goals, but its existing portfolio is causing damage to its brand, with other players gaining market share. Resolving this issue may be a long road, especially considering that its two main sectors (ride-hailing and finance) also face competition. Ola is restricting new customer registrations, delaying the opening of new branches, and postponing the launch of new products as part of its premiumization efforts, with a greater focus on battery cells and charging. As other players capitalize on the damaged market share during the festive season, Ola is looking to rework and polish its image and enter the bikes and autos market to capture new opportunities.
Ola has experienced a larger brain drain than the industry average, and its PR stunt has garnered much negative attention, making it difficult to compete against Bajaj's Chetak and TVS iQube, who have already established strong reputations. Ola now finds itself competing with Bajaj and TVS in the newly overhauled autos and premium bike sector, with both of them having a strong market presence and distribution channels. This will be a testing phase for Ola.
