Ola Electric to Invest $100 Million in Gigafactory for Lithium-Ion Battery Cells

IPO-Bound Ola Electric Gears Up for Local Battery Cell Production

Ola Electric, on the brink of its initial public offering (IPO), has announced a significant investment of $100 million (approximately Rs 834 crore) in the first phase of building its gigafactory for lithium-ion battery cells. Founder Bhavish Aggarwal revealed this major development on Saturday, highlighting the company’s commitment to enhancing its electric vehicle (EV) offerings with locally-produced battery cells.

Investment Details and Production Plans

The $100 million investment will fund the ‘phase 1A’ of the gigafactory, establishing a 1.5 GWh (gigawatt hour) cell manufacturing capacity. The company aims to expand this capacity to 5 GWh in ‘phase 1B’. Ola Electric has recently received certification from the Bureau of Indian Standards (BIS) for its battery cells, marking a significant milestone in its production journey.

“Early next year, you can expect to see our own cells in our own products… we have some work to do around finalizing the production process and commercialisation, but we are on our way,” Aggarwal stated.

Advanced Battery Technology and Third-Party Supply

Ola Electric is developing the 4680 form of battery cells, which are more energy-dense and advanced compared to the 2170 cells currently used in its electric scooters. This technological advancement is expected to enhance the performance and efficiency of Ola’s EVs.

Aggarwal also mentioned the company’s plans to supply these battery cells to third-party firms, including other electric two-wheeler manufacturers and renewable energy companies. Additionally, Ola Electric is working on developing solid-state batteries, indicating a forward-looking approach to battery technology.

“About 35-40% of the two-wheeler EV cost goes into the battery… there is a fair amount of margin benefit that we will get as we start using our own cells,” Aggarwal explained.

Financial Backing and Future Expansion

Last August, Ola Electric raised $240 million from the State Bank of India as part of a $384 million financing round, which included participation from Singapore’s sovereign fund Temasek. In its draft prospectus with the Securities and Exchange Board of India (Sebi), Ola stated its intention to use Rs 1,226 crore ($147 million) from the IPO proceeds to expand the gigafactory’s capacity from 5 GWh to 6.4 GWh through FY25 and FY26.

Commitment to Workforce Diversity

Ola Electric plans to replicate its policy of employing only female workers on the manufacturing floor at its new battery cell factory, continuing the practice from its scooter assembly factory, the Future Factory. “We have had a great experience with the all-women team and that policy will continue… We don’t have any policies like Foxconn and I don’t want to comment on other company policies,” Aggarwal noted.

Industry Landscape and IPO Plans

Responding to the recent protests by Karnataka lawmakers over the opening of a new factory in Maharashtra by rival Ather Energy, Aggarwal stated that Karnataka has ample supply chain firms to support new factories. He also mentioned that Ola chose Tamil Nadu for its factories initially due to better deals offered by the state at the time.

Ola Electric is preparing for an IPO likely to take place this calendar year. On June 20, it was reported that Ola Electric had secured Sebi approval for the IPO, aiming to raise up to Rs 5,500 crore through a fresh issue and an offer-for-sale (OFS) of 95.2 million shares.