The shift is expected to enhance the company's EBITDA margins by nearly 10 percentage points, streamline inventory management, and accelerate customer deliveries, according to sources familiar with the development.
As part of its profitability push, India's largest electric two-wheeler manufacturer aims to save approximately ₹30 crore per month by optimizing its distribution network and refining the vehicle registration process.
Additionally, Ola Electric has renegotiated agreements with vehicle registration agencies to further cut costs. While this temporary adjustment impacted the company’s registration figures on the VAHAN portal in February, the company clarified in a stock exchange filing that actual sales remained unaffected.
Operational Efficiencies and Faster Deliveries
An internal source confirmed that Ola Electric is on track to sell over 25,000 units in February, reinforcing its dominance in the electric two-wheeler market."The front-end network redesign represents a fundamental rethinking of how we manage inventory and serve customers," said a senior company executive. "While our initial distribution model was effective in our early growth phase, the company’s rapid expansion required a more efficient system."
With the new distribution model, inventory will now be maintained at retail stores, eliminating an entire supply chain layer and reducing last-mile delivery costs. The transition has also led to:
- Inventory pipeline reduction from 30 days to 15 days
- Delivery timeline improvement from 10 days to 4-5 days
Strategic Focus on Profitability
The company’s restructuring comes at a time when India’s EV market is witnessing strong double-digit growth, fueled by rising fuel prices and increased adoption in Tier 3 and Tier 4 cities.Industry analysts believe that sustainable business models will determine long-term winners in the competitive EV sector.
Ola Electric is expected to release its official sales update next week, as the company finalizes its front-end distribution transition and automates parts of the vehicle registration process. However, some sales data may take additional time to reflect on the VAHAN portal due to these operational shifts.