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Ola Electric‘s AprilJune quarter performance may have led to fresh investor enthusiasm, but deeper concerns continue to cloud the EV maker’s future. The Bhavish Aggarwalled company reported improved margins and narrowed losses for the quarter, pushing its stock up 20% on July 14. However, analysts warn that the financial turnaround masks stagnating volumes, increasing debt, and unresolved product issues that threaten longterm sustainability.

The company’s stock, which had been in a monthlong decline, reacted sharply after Aggarwal promised to make Ola free cash flow positive by the end of FY26. Ola also posted its firstever monthly Ebitda profit in the quarter and claimed a margin boost from its transition to a new, highermargin Gen3 platform. Gross margin per vehicle rose to Rs 31,000, a 72% jump compared to the average from the past six quarters. June quarter losses of Rs 428 crore were below expectations, down 51% sequentially, though still up 23% yearonyear.

Cost Optimisation vs Volume Slump

Aggarwal attributed the margin improvement to reduced provisioning for warranty claims under the Gen3 lineup. The company had taken a Rs 250 crore onetime hit in the March quarter due to warranty issues with Gen1 products, plagued by battery fires and mechanical failures. Ola claims warrantyrelated costs have dropped by 72% for Gen3, with 70% of the Gen1 vehicles now out of warranty coverage.

Analysts acknowledged the improved numbers but remained cautious. HSBC Global Research noted that Ola delivered an “11% cost savings from the Gen3 platform” that drove the margin beat and predicted further expansion in the current quarter. However, Kotak Institutional Equities revised down its FY26–28 volume forecasts by 12–16%, citing lowerthanexpected sales and growing competition.

Despite the upbeat earnings call, ground realities aren’t that encouraging. From an average of 30,000 monthly units in FY25, sales have slipped to just 19,500 per month so far in FY26. The company’s guidance for FY26 forecasts flat growth, targeting between 325,000 and 375,000 units, down from 359,221 in FY25. This would mark Ola’s slowest growth since its market debut in 2021.

Market Pressure

Market share erosion has added to the woes. Ola’s share dropped to around 19% in June from nearly 46% a year earlier, as legacy players TVS Motor and Bajaj Auto overtook it with their iQube and Chetak offerings, together capturing 46% of the electric twowheeler segment. Even aggressive pricing strategies, such as the Rs 60,000 S1 Z model, have failed to reverse the trend.

Meanwhile, the company’s financial position remains fragile. Ola reported a cash burn of Rs 564 crore in Q1 and is planning to raise additional debt of up to Rs 1,700 crore, which could push its total borrowings to around Rs 5,000 crore. Analysts also flagged the company’s dependence on unutilised IPO funds and questioned its ability to meet upcoming capex of Rs 1,800 crore for the year.

Equally damaging is the loss of consumer confidence. More than a dozen reports of scooters catching fire between October 2024 and June 2025 have surfaced. Incidents involving Gen1 models have prompted complaints of poor service and lack of accountability, further undermining the brand’s image.