Ola Electric plans to fully transition to in-house battery and motor systems across its electric vehicle portfolio, with a phased integration of its rare earth-free motors and 4680-format lithium-ion battery cells. The company expects to utilize its 1.4 GWh cell production capacity by the end of FY26 and expand it to 5 GWh by FY27, which corresponds to an annual vehicle production capacity of approximately 1.2 million units. A total capital expenditure of INR 28 billion has been allocated for the 5 GWh plant, with INR 15 billion already invested.
The company has initiated pilot production of its own battery cells and plans to begin integrating the 4680 v1 cell into vehicles in the second quarter of FY26 (July–September 2025), with deliveries expected around Navratri. The 4680 v2 cell, projected to have 10–15 percent higher energy density, along with a lithium iron phosphate (LFP) variant, is under testing and is expected to be introduced in late FY26. Ola expects in-house cell production costs to be lower than vendor procurement due to its proprietary 4680 process and reduced conversion costs.
To mitigate supply risks related to rare earth magnets, Ola Electric maintains inventory sourced from two countries and retains flexibility to switch suppliers without depending on external motor manufacturers. The company has also developed and productionized rare earth-free motors, which will begin integration into products in the next quarter. All Gen 3 products, including the S1 and Roadster lineups, now use in-house mid-mount motors with integrated controllers.
Ola Electric delivered 68,192 electric two-wheelers in the first quarter of FY26. Nearly 80 percent of these were Gen 3 scooters, which the company reports have contributed to higher gross margins and lower warranty claims. Battery-related claims in Gen 2 products were 50 percent lower than those in Gen 1, with further improvements noted in Gen 3.
The company’s auto business turned EBITDA positive in June and recorded an auto gross margin of 25.6 percent in Q1 FY26, prior to accounting for Production Linked Incentive (PLI) benefits. With PLI incentives expected from Q2 onwards, the company projects gross margins of 35–40 percent by the end of FY26. Operating expenses for the auto segment have been reduced to INR 1.05 billion per month, down from INR 1.78 billion in Q3 FY25. Consolidated monthly expenses stand at approximately INR 1.5 billion, with a target of INR 1.3 billion by the end of FY26.
Capital expenditure for the auto business in FY26 is projected at around INR 3 billion, including capitalized R&D. The cell business will require additional investments of approximately INR 10 billion during the fiscal year, largely financed through an existing term loan. Ola expects the cell segment to become free cash flow positive once the 5 GWh capacity is reached by the end of FY27.
Ola Electric’s direct-to-consumer network, expanded under Project Vistaar, has contributed to lower inventory levels. The company forecasts vehicle volumes of 325,000 to 375,000 units in FY26, with revenue projected in the range of INR 42 to 47 billion. Q2 auto EBITDA is expected to remain positive.
Ola Electric manufactures and sells electric two-wheelers, including the S1 and Roadster models. The company is expanding its in-house battery and motor capabilities as part of its strategy to reduce costs, improve performance, and build a vertically integrated electric vehicle ecosystem.
