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Ola plans to invest $2 billion in TN two-wheeler factory

K Giriprakash Bengaluru | Updated on March 08, 2021

Bhavish Aggarwal

‘Future Factory’ will be able to produce 10 million electric scooters per year

Tucked away at the foothills of a line-up of rocky hills, after a 150-km drive from Bengaluru towards Chennai, one can spot dozens of bulldozers levelling a 500-acre land where construction workers will soon start building the world’s largest two-wheeler factory.

Once completed, Ola ‘Future Factory,’ the brainchild of Bhavish Aggarwal, the pioneer of the ride-hailing company in India, Ola Mobility, will be able to produce 10 million electric scooters per year. Ola Electric, a sister company of Ola Mobility, expects to invest about $2 billion for the entire project. For the first phase of the project which is expected to be completed by June this year, Ola will invest around ₹2,000 crore. About 2 million scooter units are expected to roll out of the project once the first phase is completed.

“The project will disrupt the industry. Our ambition is to build a global business. We plan to export a lot of vehicles,” Bhavish Aggarwal, Chairman and Group CEO, Ola, said. The factory will be built in four phases and is based in Krishnagiri district in Tamil Nadu, about 150 km from Bengaluru. “We are completely capitalised and well-funded for this project,” Aggarwal said. Aggarwal, a graduate from IIT Bombay, is a first-generation entrepreneur whose venture, Ola Mobility, which allows customers to book a cab through a mobile app, became one of the biggest success stories of the start-up world. He co-founded the company in January 2011 and within a decade, it is seen as the lifeline of millions of office-going executives and call centre employees. By February 2020, Ola Mobility had a network of 25,000 drivers and around the same time, the company launched similar services in the highly competitive markets of London and in a few Australian cities. It later bought another ride-hailing company based out of Bengaluru, taxiforsure, in March 2015. Aggarwal’s ride-hailing company is today worth $6.2 billion with investments from giants such as Softbank Group, Tiger Global, Hyundai Motors and Kia Motors.

Aggarwal believes that the concept of two-wheeler vehicles will completely change once the electric-vehicle revolution is ushered in. “One must understand that we are more of a technology company than an automobile company,” he pointed out while making a detailed presentation of the project during an interaction with a group of visiting journalists.

One scooter every 2 seconds

The company expects to start making electric motorcycles and electric four-wheelers at some point in time in the future. The scale of operations for manufacturing two-wheelers is huge and Aggarwal firmly believes that without thinking big, this project would not have been worth all the hard work. “The only way to do this is through the scale of operations.”

A recent debate on the professional network platform Linkedin clearly indicates that there are many who believe Aggarwal is India’s answer to Elon Musk of Tesla. The US-based company is understood have expressed its interest to set up a factory in India but it remains to be seen whether Ola will race ahead of the former in manufacturing electric passenger cars in India.

The Ola Electric factory is being built on a 500-acre land and will be highly automated with 3,000 robots being deployed to perform critical functions. About 10,000 employees are expected to be hired to work in the factory. Ola’s Future Factory will have a total of 10 production lines at full capacity and will roll out one scooter every two seconds. The project has already received 100 patents with Aggarwal himself owning a few of them.

The integrated manufacturing facility will have a lithium-ion battery making unit with the cells being imported from South Korea initially, a paint shop, general assembly, two supplier parks and facilities to house 50 vendors. There will also be a test track. At least 20 per cent of the factory’s energy requirements will be met through roof-top solar panels.

While the Indian government and the various State governments have rolled out several incentives to encourage entrepreneurs to set up electric vehicle manufacturing units, critics say that price-sensitive consumers may show some resistance to buying them. “But we have an aggressive pricing policy which we will unveil soon. We also expect that the kind of marketing campaign we will mount will, to a large extent, help customers to seamlessly transition from gasoline-based scooters to electric ones,” Aggarwal said.

As per the Research and Markets website in FY 2020, the Indian electric two-wheeler market stood at around 1,52,000 units and is forecast to grow at a CAGR of around 25 per cent during FY 2021.

 

Published on March 07, 2021

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