Ola Electric: Ola Electric slapped with show cause notice over consumer complaints and service deficiencies

The central government has intervened to address consumer complaints about service deficiencies at e-scooter manufacturer Ola Electric. The Central Consumer Protection Authority (CCPA) issued a showcause notice to Ola Electric on October 3, citing potential violations of the Consumer Protection Act, 2019. Ola Electric is being called to respond within 15 days, a business daily reported.

The National Consumer Helpline, managed by the Department of Consumer Affairs, has documented 10,644 complaints against Ola e-scooters from September 1, 2023, to August 30, 2024. Of these, 3,389 relate to service delays, 1,899 pertain to delays in the delivery of new vehicles, and 1,459 involve unfulfilled promised services. The showcause notice points to allegations such as manufacturing defects, sales of second-hand vehicles, incomplete refunds on cancellations, recurring issues post-servicing, overcharging, inaccurate billing, and multiple battery and component problems. Moreover, complaints also include accusations of unprofessional behavior and improper complaint resolutions.

Nidhi Khare, Secretary of the Department of Consumer Affairs, confirmed the extent of complaints related to Ola Electric. “The CCPA is looking into a large number of complaints about Ola Electric, mainly related to service inefficiencies. We hope the company addresses these concerns promptly and resolves the issues faced by consumers.”

The company has yet to publicly comment on the notice. However, the stock market has reacted, with Ola Electric’s stock falling nearly 9 per cent to an intra-day low of INR 90.26. Public criticism has been evident, including a public dispute on social media platform X (formerly Twitter) between comedian Kunal Kamra and Ola founder Bhavish Aggarwal.

Ola Electric’s shares entered the market on August 9 with a stable start but initially surged, hitting the upper circuit of 20 per cent for three consecutive days. The stock price has since plunged 74 per cent from its peak of INR 157.40. The company raised INR 6,154 crore through its IPO, which had been subscribed 4.27 times, indicating strong initial investor interest. The IPO price band was set between INR 72 and INR 76 per share.

Ola Electric reported a consolidated net loss of INR 347 crore in the first quarter of the fiscal year 2025, an increase compared to the INR 267 crore loss during the same period last year. Despite these losses, the company’s revenue from operations grew by 32.3 per cent year-on-year, reaching INR 1,644 crore for the quarter, compared to INR 1,243 crore the previous year.

Source: Business Today