Ola Electric Risk Mein! ₹100 Cr Penalty Aur Battery Plant Ka Bura Haal?

Ola Electric Halts 20 GWh Battery Expansion, May Faces ₹100 Cr PLI Penalty – What It Means for India’s EV Push

In a surprising strategic pivot, Ola Electric has announced it will limit its battery cell production to 5 GWh till FY2029, shelving its earlier promise of reaching 20 GWh capacity by mid-2026 under India’s PLI (Production Linked Incentive) scheme. This delay now puts the EV startup at risk of incurring penalties up to ₹100 crore.

“The EV market hasn’t grown as fast as expected. We’ll hold at 5 GWh capacity till 2029,” said Bhavish Aggarwal, Founder and MD, Ola Electric.

This update comes barely a year after Ola’s much-hyped IPO, where the company had committed to aggressively scaling up its Krishnagiri gigafactory in Tamil Nadu — a crucial piece in India’s EV self-reliance roadmap.

From 20 GWh to 5 GWh: Ola Hits the Brakes on Its Battery Ambitions

Original Plan:

• Phase 1: 1.4 GWh by October 2024 (Funded via internal accruals)
• Phase 2: 20 GWh by June 2026 (Funded partially by ₹1,228 Cr from IPO)

Revised Plan:

• 1.4 GWh by FY26
• Ramp-up to 5 GWh only by FY27
• No plans to scale beyond 5 GWh till FY29

As a result, Ola will miss key milestones set under the government’s ₹18,100 crore PLI scheme for advanced cell manufacturing — a move that not only triggers financial penalties but could also set back India’s localization targets for EV components.

 Financial Fallout: IPO Funds May Be Reallocated

Ola had raised ₹5,275 crore during its IPO, earmarking ₹1,228 crore for Phase 2 of the gigafactory. However, with the scale-back, the company is now considering redeploying this capital into other “productive” uses, such as:

• R&D for Gen 3 scooters
• New product verticals like the Ola Roadster
• Optimization of existing manufacturing and supply chain

“We’re already accruing the PLI penalty in our quarterly P&L,” said Aggarwal, acknowledging the ₹100 crore maximum penalty.

Ola’s Cell Tech Still Moving Forward

While capacity expansion is on hold, Ola has begun manufacturing its proprietary 4680-format cells, and plans to use them in its scooters starting this festive season.

• The full shift from supplier cells to Ola’s own cells will be phased through FY26.
• By end of FY26: Full use of 1.4 GWh capacity
• FY27: Ramp-up to 5 GWh consumption

Aggarwal emphasized that Ola remains the only Indian EV startup with a functioning, productive cell plant, despite missing PLI targets.

Ola’s Broader Challenges: Slowing Sales & Shrinking Market Share

This announcement follows a flat sales and revenue outlook for FY26, with projected volumes between 3.25–3.75 lakh vehicles, barely improving on FY25’s 3.59 lakh.

Ola’s market share has slipped from 34.8% in FY24 to 29.9% in FY25, with competitors like TVS, Bajaj, and Ather catching up rapidly.

EVINDIA Insight: Does This Set a Dangerous Precedent?

While Ola’s pragmatic pause reflects broader EV adoption bottlenecks in India, it also raises serious concerns over execution credibility, especially for startups relying on government incentives and public funding.

With global cell makers like Reliance and Rajesh Exports still on track for their PLI targets, Ola’s rollback could tilt future PLI consideration in favor of legacy firms.

Will the government revise timelines? Will other PLI winners follow suit?

Only time will tell — but Ola’s strategy shift could shape India’s EV battery roadmap for years to come.

Final Verdict

Ola’s decision to limit battery capacity expansion is a major inflection point for the Indian EV ecosystem. With ₹100 crore on the line, the spotlight is now firmly on whether this is a temporary adjustment or long-term retreat.

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