Ola Electric shares fall nearly 70% from all-time high; here's why stock is reeling under selling pressure

Ola Electric shares have so far this year collapsed 40.52%, massively underperforming the NIFTY Midcap 100 index, which is down 12.70% year-to-date.

Here are the key reasons why Ola Electric Mobility shares are on a downward spiral.

One of the key flashpoints triggering the stock’s freefall is a controversy surrounding the company's sales data for February. Ola Electric reported that it sold 25,000 in February. However, data from the government's VAHAN portal reflected that it had 8,652 vehicle registrations during the same period.

This discrepancy led to the Ministry of Heavy Industries seeking a formal clarification from the company. In its defence, Ola Electric stated that the sales data represented paid and confirmed customer orders and not mere pre-bookings and that a transition in the vehicle registration process to an in-house system caused a temporary backlog in registrations. The company highlighted that nearly 90% of the reported orders were paid in full and included sales of newly launched models like the Gen 3 and Roadster X.

Despite the clarification, investor scepticism has persisted, especially given the regulatory spotlight. Industry experts have pointed out that while delayed registrations may occur during process transitions, the scale of the discrepancy raised valid questions about transparency and reporting standards.

Legal headwinds: Insolvency petition against subsidiary

Rosmerta Digital Services, its vehicle registration service provider, filed an insolvency petition against Ola Electric Technologies, a subsidiary of the company, last month. The petition alleged payment defaults and reignited concerns about the financial health of the company.

The legal battle has added to an already growing atmosphere of uncertainty.

Weak financials

In the quarter ended December 2024, Ola Electric’s net loss widened to ₹564 crore from ₹376 crore in the same period last year on the back of falling revenues and ballooning operational costs. The steep loss prompted analysts to question the company’s path to profitability.

Layoffs and restructuring

In an attempt to streamline its operations and contain losses, media reports suggested that Ola Electric last month fired over 1,000 employees and contract workers across various departments. The restructuring was part of a broader initiative to pivot towards profitability.

However, the layoffs sparked concerns about internal stability and long-term strategy. Employees affected by the cuts expressed disappointment, while investors viewed the move as a reactive measure rather than part of a well-articulated turnaround plan.

Service quality concerns

Customer trust has also taken a hit. Ola Electric is currently facing an audit of its service centres ordered by the Ministry of Heavy Industries, following around 10,000 complaints from customers regarding delays and substandard service.

Ola Electric shares ended 0.28% lower at ₹50.69, underperforming the NIFTY Midcap 100 index, which rose 2.11%.