Electric Ambitions
Forbes India|April 9, 2021
Bhavish Aggarwal’s Ola Electric is setting up a two-wheeler manufacturing facility in Tamil Nadu to herald an EV revolution that is likely to make it a frontrunner in the segment
MANU BALACHANDRAN

Bhavish Aggarwal is in a hurry. A sort of mad rush. What else perhaps explains the last few months at Ola Electric, one of India’s fastest unicorns and part of the larger Ola group founded by Aggarwal? The Ola group comprises a mobility business, Ola Cabs and Ola Electric, the electric vehicle arm.

In December 2020, as India’s economy began swinging back to normalcy after months of a nationwide lockdown, Aggarwal and his team at Ola Electric signed a memorandum of understanding with the government of Tamil Nadu to set up a manufacturing plant in the state to produce electric vehicles (EV). It was only a month before that, in November, that the company had signed off on the budget to set up a manufacturing facility.

Then, in January 2021, the company identified a 500-acre plot in Krishnagiri, a tiny hamlet in Tamil Nadu, also known as the mango capital of India, before conducting its groundbreaking ceremony on February 7. A month since, the company has been working at breakneck speed, including replanting trees and excavating land, to turn the land into what will be the world’s largest two-wheeler factory.

Once completed, at 10 million units a year, the company will account for 15 percent of the global two-wheeler market in the world.

Even Hero MotoCorp, the world’s largest two-wheeler maker, doesn’t boast a manufacturing facility of this scale. In comparison, across its six manufacturing facilities in India, Hero MotoCorp manufactures 11.6 million units a year, a tad higher than Ola’s proposed facility.

By June, the company will complete the first phase of its manufacturing facility that will be capable of manufacturing some two million two-wheelers. A year from then, the company intends to work at full capacity, capable of manufacturing 10 million units of two-wheelers a year, or one two-wheeler every two seconds. All that means some 10 million man-hours have been planned to bring the factory up in record time, and by next year, the company will be ready with over 10 million units of its electric two-wheeler.

“Is there any other way?” Aggarwal, chairman and group CEO of Ola, quips about the pace at which the company is planning its EV foray. “In the EV space, the only way we can create impact is to play the scale game. We have to build this business at scale. That’s the only way the adoption of EVs will be faster. Because, unless we build at scale, you can’t bring the cost down enough, and you can’t get consumers excited.”

Getting customers excited, Aggarwal knows, is certainly the only way out. For years now, India’s consumers have been rather wary about embracing EVs despite a mammoth push from the government. India is a signatory to the Paris Climate Agreement, which means that the country needs to reduce its carbon emissions by some 35 percent of its 2005 levels by 2030 and the government has tried everything—from tax cuts to manufacturing incentives in the automobile sector—to kickstart an EV revolution in the country.

Yet, despite all the narrative around EVs, there haven’t been substantial gains. Last year, India sold some 156,000 units of EVs in the country, of which 126,000 were two-wheelers. In contrast, over 21 million vehicles that run on internal combustion engines (ICE) were sold in FY20, of which 17 million were two-wheelers. China sold some 1.3 million EVs in 2020, according to Singapore-based market research firm Canalys, in a year marked by a pandemic, accounting for over 40 percent of the global EV sales.

Aggarwal wants to change all that and sees a massive opportunity. Not that he doesn’t have the necessary credentials to bring about a transformation. After all, he changed India’s mobility scenario with the launch of Ola, the ride-hailing service that became a mainstay for shared mobility in the country. “Our vision from the start has been to completely transform all mobility to electric and to do that we have to build a very large integrated manufacturing facility,” says Aggarwal, who co-founded Ola Cabs in 2010.

That’s precisely why Ola Electric has decided to take to manufacturing at such a scale. Within its manufacturing facility is planned a massive supplier park, a battery manufacturing facility, a welding, and general assembly unit, and a test track among others.

“The need to transform mobility to electric is there, and we can see what’s happening with pollution, so we have to build for the future paradigm, we have to build for future technology, and in mobility, it has to be electric,” Aggarwal says. “It absolutely has to be done as fast as we can.” Perhaps, it’s that commitment to the environment that has also led Aggarwal to set up some 100 acres of forest within the manufacturing facility.

THE BIG PLAN

For now, as much as 90 percent of the components required to manufacture the two-wheeler will be built at the facility in Tamil Nadu. The new facility includes a mega block that’s as big as 150 Olympic-sized swimming pools or the combined size of the T2 terminal at the Mumbai airport and the T3 terminal at Delhi airport.

Barring the battery cells, which the company is importing from South Korea, the rest of the components that go into manufacturing the bike will be sourced from the company’s massive supplier park being built along with the facility. Battery packs are made up of many smaller cells, mostly lithium-ion cells, connected into a battery module, which when wired together determine the final capacity of the battery.

“The cells are coming from outside, but we are making the battery ourselves, including the battery management system,” Aggarwal says. “We want to bring that manufacturing (of cells) to India also.” While there is no definite timeline to when cells will be manufactured in India, it is crucial to do so in India as it can bring down costs even further in the future. Already, the government has announced a production linked incentive (PLI) scheme to provide financial incentives to manufacturers in the country.

Among others, South Korea, China and Japan account for over 85 percent of the global cell production, and companies such as LG Chemicals, Panasonic, BAK Group and Samsung are the frontrunners in manufacturing them. Lithium-ion batteries can be recharged and have a longer lifecycle with lower maintenance.

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