Ola Electric leads EV two-wheeler segment with highest margins: Bernstein

Ola Electric has emerged as the dominant player in the Indian two-wheeler electric vehicle market with industry-leading margins on the back of its focused pricing strategy and scalable operations, global brokerage firm Bernstein said in a report titled India Electric Vehicles: Unit Economics of Electric Bikes. Ola Electric is commanding the electric two wheeler industry with a margin of 18.4 per cent as against TVS’s margin of 14 per cent, Bajaj Auto’s margin of 12.3 per cent and Ather’s margin of 7 per cent.

According to Bernstein, Ola Electric has achieved industry leading margin on the back of its diverse product range, including premium models like the S1 Pro and S1 Air, which generate positive operating profit margin. However, the company faces losses on its mass-market model S1X. Ola Electric’s high localisation rate, in-house manufacturing and lack of dealer margin leakages have helped it maintain highest profitability in the industry.

In comparison, TVS and Bajaj are struggling to generate similar profitability, Bernstein noted. TVS, with an EBITDA loss of 7.5 per cent per vehicle, incurs higher costs despite charging approximately Rs 30,000 more for its iQube S scooter than Ola's S1 Air, due to lower scale and limited backward integration. Bajaj, on the other hand, faces higher costs from outsourcing key components and using a full metal body for its Chetak model.

Bernstein's report added that TVS can improve its margins once it becomes eligible for the government’s Production Linked Incentive (PLI) scheme, however, it will instead opt to lower prices to expand its market share. Meanwhile, Ola's current advantage stems from being eligible for both PLI and FAME subsidies, maintaining lead in the rapidly growing electric two-wheeler market.