November 24, 2024 05:41 (IST)
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Ola Electric Ola Electric shares slip 6% following CCPA's show cause notice over surging consumer complaints
Bengaluru/IBNS: Shares of Ola Electric Mobility dropped 6 percent on Tuesday (Oct. 8), hitting a day's low of Rs 85.21 on the BSE, after the Central Consumer Protection Authority (CCPA) issued a show-cause notice to the Bhavish Aggarwal-led EV company, raising concerns over the increasing number of consumer complaints.
Late on Monday (Oct. 7), Ola Electric informed the stock exchange that it had received a show-cause notice from the CCPA and plans to respond within the 15-day deadline.
The company stated that the notice "would not affect its financial, operational, or other business activities."
The CCPA issued the notice after registering 9,948 complaints against Ola Electric on the National Consumer Helpline between September 1, 2023, and August 30, 2024.
These complaints cover a wide range of issues, including delayed deliveries, defective vehicles, misleading advertisements, and poor customer service.
Ola Electric has 15 days to respond, after which regulatory action could be taken if no response is received.
The notice follows a social media altercation between Bhavish Aggarwal, Ola Electric’s founder-CEO, and comedian Kunal Kamra.
Kamra criticized Ola's electric scooters and tagged Union Minister Nitin Gadkari in a post on X (formerly Twitter).
Aggarwal, however, dismissed Kamra’s comments as “paid.”
Ola Electric's shares fell by over 8 percent on Monday, closing at Rs 90.82 per share.
This isn’t the first time the three-year-old company has faced regulatory scrutiny.
Last year, Ola Electric, along with Ather Energy, TVS Motor, and Hero MotoCorp’s Vida, was investigated for violating pricing norms under the second phase of the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme.
These companies were accused of billing chargers separately, thus breaching the Rs 1.5 lakh ex-factory price limit meant to make EVs more affordable.
In response, the companies agreed to reimburse approximately Rs 300 crore to consumers in May 2023, with Ola refunding Rs 130 crore to around 100,000 customers.
The CCPA’s notice points to a series of alleged violations under the Consumer Protection Act, 2019, such as deficiencies in service, unfair trade practices, and misleading advertisements.
The CCPA, under the Ministry of Consumer Affairs, is tasked with protecting consumer rights and enforcing fair trade practices.
Of the nearly 10,000 complaints filed against Ola Electric, 3,364 related to slow repairs and service, 1,899 to delayed deliveries of its electric scooters, and 1,459 to unfulfilled promises regarding product features and services.
Many customers also cited faulty vehicles with manufacturing defects, poor build quality, and recurring technical problems, eroding consumer trust.
Additionally, some consumers accused the company of exaggerated advertisements, claiming that the performance and features of the products were overstated.
Another common complaint involved inadequate customer service, with customers reporting difficulty reaching support, slow response times, and unresolved issues.
In response to the growing dissatisfaction, Aggarwal publicly stated on X that the company is "rapidly expanding the service network" and working to clear service backlogs.
Ola Electric has also faced a sharp drop in sales.
In September, the company's sales declined by 10.6 percent, with only 24,665 units sold, down from 27,589 in August.
Meanwhile, competitors like Bajaj, TVS, and Ather posted sales increases of 13 percent, 2 percent, and 15 percent, respectively, according to data from Vahan, the Ministry of Road Transport and Highways' vehicle registration database.
Ola, which once commanded a dominant 52 percent share of the electric two-wheeler (e2W) market in April, saw its market share plummet to 27 percent by September, indicating a significant shift in the competitive landscape.
On Monday, Ola Electric’s market capitalization fell below $5 billion for the first time since its August listing, closing at $4.7 billion on October 7—a stark drop from its IPO valuation, which peaked above $7 billion with an issue price of Rs 76 per share, according to reports.
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