Ola Electric Mobility Ltd. is under regulatory scrutiny as transport authorities in different Indian states have raided showrooms, seized vehicles, and sent show cause notices to the company for alleged sale of vehicles in absence of trade certificates.
It has been reported that only about 100 of Ola’s 3,400 showrooms were certified for trade as required, even as the company opened to 4,000 locations. According to India’s Motor Vehicles Act, it is compulsory that any auto showroom that displays unregistered vehicles must have a valid trade certificate.
At least six transport officials have started investigating Ola Electric regarding compliance with the law. The first warnings are from 2023 and the latest notices were issued in March of this year. However, Ola has argued that its experience centres are not involved in sales but in engaging the customer.
When asked about the concerns, an Ola representative denied the claims, labeling them as unjust and prejudicial. The company has pointed out that its distribution centers and warehouses are in compliance with the Motor Vehicles Act and have the required approvals.
However, Ola has occasionally sought trade certificates from some locations after being told by officials or after being raided.
In addition to regulatory issues, Ola Electric has faced quality issues, late product launches, and a decline in market share. It has, recently, been dethroned by Bajaj Auto and TVS Motor Co and is having to lay off more than 1,000 employees.
These challenges have affected Ola’s share prices; the company’s shares have dropped by more than 60 per cent since it made its market debut in August this year. As of 11:15 AM, its shares were trading at ₹54.56 on the Bombay Stock Exchange (BSE), down 3.50% for the day.
