Ola Electric whose percentage of imports have come down to about 29% in the latest fiscal year from around 37% earlier, plans to further increase its localization levels as it builds its gigafactory and increasingly integrates its manufacturing ecosystem, Bhavish Aggarwal, the CEO of the company, stated.
"So overall, it is really coming down," Aggarwal remarked. He spoke during the pre-IPO conference with the media in Mumbai on Monday. The top executive emphasized that it is not just Ola Elecric, but rather the entire EV industry that needs to do more towards it. He added that the government's schemes, like production linked incentives (PLI), do help in that direction.
In its Red Herring Prospectus (RHP) stated that in Fiscals 2024, 2023 and 2022, Ola largely imported supplies such as lithium-ion cell, magnets, amplifier, electronic integrated circuits, from China, Singapore, South Korea, Thailand and Malaysia. Further, elaborating on it, the RHP highlights that as the cost of materials from China as a percentage of the total cost of materials consumed for EV scooters stood at 36.86% in FY24, up from 19.29% in FY23 and 7.90% in FY22. In comparison, it was just 0.01% for South Korea in FY24, down from 11.65% in FY23 and 18.61% in FY22. Likewise, for Malaysia, it was 0.02% in FY24 up from 0.08% in FY23 and nil imports in FY22. When it comes to Singapore, it comes to 0.05% in FY24, 0.04% in FY23 and 0.04% in FY22.
Aggarwal explained that a large part of their imports do not come from China, suggesting that the total number of component import numbers may have gone down, even though in terms of price value it may have gone higher.
Additionally, RHP noted that in the past Ola imported a small quantity of cathode active material (CAM) and anode active material (AAM) from suppliers in China for purposes of cell research, experimentation and testing on a purchase order basis. Upon commencement of in-house cell manufacturing at Ola Gigafactory, the companys plan to continue to source such raw materials from suppliers in China.
"As such, we may be exposed to the possibility of product supply disruption and increased costs in the event of changes in the policies, rules and regulations of the Indian or Chinese government, including as a result of any political tensions, which could result in trade tariffs, increased freight charges or prices of CAM and AAM, or a complete halt on imports from China" the RHP reads. " In such case, we could experience supply disruptions or delays, and would need to seek alternative suppliers in other countries. There is no assurance that we will be able to find alternative suppliers on a timely basis that are able to provide us with these raw materials in sufficient quantities or to our required specifications and quality levels or at attractive prices" it added.