Ola Electric Faces Multiple Showroom Raids & Ceases By Transport Authority Amid Rapid Expansion

Bhavish Aggarwal’s electric scooter manufacturer Ola Electric Mobility is going through severe regulatory issues amid its rapid expansion into physical showrooms.

The Bengaluru-based company was earlier more keen on following a digital-only sales model. However, since 2022, it quickly scaled up to 4,000 brick-and-mortar locations.

Also read: Ajay Devgn Launches AI-Driven Media Company ‘Prismix’ To Revolutionise Storytelling (startuppedia.in)

The report against Ola electric

According to a Bloomberg report, out of 3,400 showrooms with available data, only around 100 had the trade certificates required under India’s Motor Vehicles Act. This means that over 95 per cent of the stores lacked the necessary certification to display, sell, offer test rides, or transport unregistered two-wheelers.

In a recent interview with Bloomberg News, at least six local transport officials confirmed they are investigating Ola for potential violations, and the company's aggressive expansion.

However, an Ola spokesperson stated in an emailed response to Bloomberg: "Your ‘investigation’ findings that there is non-compliance are misplaced and prejudiced.”

He further stressed that Ola maintains an inventory of unregistered vehicles at its distribution centres and warehouses across India complying with the Motor Vehicles Act and has the required approvals.

However, he did not disclose whether its public-facing stores had the necessary trade certificates or if the company had been subject to raids and seizures by local transport regulators.

India's Motor Vehicles Act states that all auto showrooms, including those selling two-wheelers, should prominently display a trade certificate if they keep unregistered vehicles.

Ola Electric saw two high-profile exits last December as its Chief Technology Officer and Chief Product Officer resigned simultaneously.

After rising to levels of Rs. 150 per share, currently, its stock is stumbling to trade at Rs. 56. 

Now, with its offline expansion running into regulatory issues with government raids, Ola’s path in the Indian electric two-wheeler space is going through a rough patch.

Also read: “Don’t Like The Term Unicorn, It's A Mythical Creature”: Kunal Bahl (startuppedia.in)