The expansion of showrooms of electric two-wheeler maker Ola Electric Mobility has run into regulatory trouble. According to a Bloomberg report, in response to customer complaints, transport authorities across India have raided Ola Electric, shut down showrooms, seized vehicles and sent show-cause notices to the company. Bloomberg News has seen internal documents and warning letters from the government.
Ola Electric has expanded its showroom count to 4,000 since 2022. A Bloomberg News investigation found that of the nearly 3,400 showrooms for which data is available, only a little over 100 had the trade certificates required under India's Motor Vehicles Act. This means that more than 95% of the company's showrooms lacked the basic certification required to display, sell, offer test rides or transport unregistered two-wheelers.
The Bloomberg report quoted Hans Kumar, a retired assistant transport commissioner who has worked in Rajasthan, as saying that as per the country's Motor Vehicles Act, every auto showroom, including two-wheeler showrooms, must have a clear trade certificate if they have unregistered vehicles.
Allegations denied by Ola Electric
Transport officials say they are investigating Ola Electric for alleged violations. However, a company spokesperson says the investigation's findings that rules are not being followed are incorrect and biased. According to the spokesperson, Ola's distribution centers and warehouses in several states have an inventory of unregistered vehicles, which fully comply with the guidelines of the Motor Vehicles Act and have the necessary approvals.
The company is facing problems
Ola Electric is facing crises on many fronts. Its shares have fallen more than 25% since its listing in August 2024. The stock has fallen 64 percent from its peak of Rs 157.53. In recent months, it has also faced complaints on quality and service issues, criticism on social media and mounting losses. Ola CEO Bhavish Aggarwal said in a post on X in October 2024 that Ola is expanding its network to address customer complaints.
According to nearly two dozen notices, transport authorities across India have increased scrutiny and often found Ola Electric failing to meet the requirement for trade certificates at the store level. Ola has sporadically applied for and received trade certificates at some locations in response to transport department notices or raids, according to documents seen by Bloomberg News.
