The Central Consumer Protection Authority (CCPA) has issued a showcause notice to Ola Electric, citing potential violations of the Consumer Protection Act, 2019.
Key Highlights
The notice requires Ola Electric to respond within 15 days. The National Consumer Helpline, managed by the Department of Consumer Affairs, has received 10,644 complaints against Ola e-scooters, with 3,389 related to service delays, 1,899 concerning delays in vehicle delivery, and 1,459 involving unfulfilled promised services.
The showcause notice highlights allegations including manufacturing defects, resale of used vehicles, incomplete refunds for cancellations, recurring post-service issues, overcharging, inaccurate billing, as well as multiple battery and component problems. Additionally, complaints also involve claims of unprofessional conduct and inadequate complaint resolutions.
Nidhi Khare, Secretary of the Department of Consumer Affairs, has confirmed that there have been numerous complaints regarding Ola Electric. “The CCPA is currently investigating a significant number of complaints about Ola Electric, primarily concerning service inefficiencies. We are hopeful that the company will promptly address these concerns and resolve the issues faced by consumers.”
The company has not issued a public statement regarding the notice. Nevertheless, there has been a notable response in the stock market, with Ola Electric’s stock declining by almost 9 percent to reach an intra-day low of INR 90.26. Public backlash has been apparent, including a public altercation on social media platform X (formerly Twitter) involving comedian Kunal Kamra and Ola founder Bhavish Aggarwal.
Ola Electric made its market debut on August 9 with a strong start, initially surging and hitting the upper circuit of 20% for three consecutive days. However, the stock price has since dropped by 74% from its peak of INR 157.40. The company raised INR 6,154 crore through its IPO, which was oversubscribed 4.27 times, indicating significant initial investor interest. The IPO price band was set between INR 72 and INR 76 per share.
In the first quarter of the fiscal year 2025, Ola Electric reported a consolidated net loss of INR 347 crore, an increase from the INR 267 crore loss during the same period last year. Despite these losses, the company’s revenue from operations grew by 32.3% year-on-year, reaching INR 1,644 crore for the quarter, compared to INR 1,243 crore the previous year.
The showcause notice issued to Ola Electric by the CCPA raises concerns about potential violations of consumer protection laws. The company must address the complaints promptly to regain consumer trust and mitigate the impact on its stock performance.ELCTRIK Speaks
