Ola Electric's Gigafactory misses cell manufacturing deadline

Ola Electric has missed its cell manufacturing deadline at its Gigafactory. Amidst a series of challenges, including job cuts, the company has been unable to initiate cell manufacturing operations as planned. The company's inability to meet the deadline was revealed in a stock exchange filing. The filing stated, We would like to inform you that we are in receipt of a letter dated 3 March 2025 from IFCI Ltd. 'Subject Non-Achievement of Milestone-1' according to Schedule M of the Programme Agreement dated 28 July 2022.

The company is actively engaged with the relevant authorities in this regard and is in the process of filing an appropriate response. IFCI Ltd., the project management agency for the production-linked incentive (PLI) scheme for advanced chemistry cells (ACCs), has been overseeing the project. Ola Electric's subsidiary, Ola Cell Technologies Pvt Ltd, is a beneficiary of the PLI scheme.

However, according to industry sources, Ola Electric has essentially missed the deadline to start cell manufacturing operations at its Gigafactory. This situation is not unique to Ola Electric. Similar letters have been sent to Reliance New Energy Pvt. and Rajesh Exports Ltd, the two other beneficiaries of the PLI scheme. This indicates a broader challenge in the industry in meeting the ambitious timelines set for advanced cell manufacturing.

Ola Electric, under the leadership of Bhavish Aggarwal, became the first company to win approval under the PLI scheme for localized cell manufacturing in October 2023. The company was awarded the maximum capacity of 20 GwH for its bid and began the construction of the Gigafactory thereafter. During the third-quarter earnings call, Aggarwal indicated that the Gigafactory would go onstream in the first quarter of fiscal 2026. The plan was to achieve a production capacity of 5 GWh in the first year itself, and 20 GWh by 2027. The first product to be manufactured would be a 4,680 NMC cell, followed by LFP cells in the next couple of years. To date, Ola Electric has invested Rs 1,200 crore in the Gigafactory. However, the company's financial performance has been less than stellar. Ola Electric reported a massive net loss of Rs 564 crore in the third quarter (Q3 FY25), an increase of 13.94 per cent compared to a net loss of Rs 495 crore in the previous quarter (Q2 FY25).

In addition to the financial challenges, Ola Electric is reportedly laying off more than 1,000 employees and contract workers in its second round of job cuts within months. This adds to the company's woes as it struggles to meet its ambitious goals. The situation at Ola Electric is reminiscent of similar challenges faced by other companies in the past. For instance, Tesla, the American electric vehicle and clean energy company, faced significant production delays and financial challenges in its early years. However, with strategic planning and execution, the company managed to overcome these hurdles and is now a global leader in the electric vehicle industry.