The Central Consumer Protection Authority (CCPA) has issued a show-cause notice to Ola Electric Mobility Ltd. for alleged violation of consumer rights, misleading advertisements and unfair trade practices, Ola Electric Mobility said. 

“The CCPA has provided a timeline of 15 days to respond to the show cause notice. The company will respond within the given timeframe with the supporting documents,” Ola Electric informed stock exchanges. 

After falling over 8% on Monday, the company’s stock on Tuesday recovered 5.11% to ₹95.46 after losing ground in early trading, but analysts believe there are tough times ahead for the EV producer. 

“Ola Electric has seen a significant pressure on its market share, as the competition in the electric 2W segment has heated up,” said  Mrunmayee Jogalekar, Auto Research Analyst, Asit C Mehta Investment Interrmediates Ltd.

“The top 4 players (Ola, TVS Motors, Bajaj Auto, and Ather) continue to dominate the segment with a steady combined share of around 83%-84% in CY24. However, Ola’s share has taken a sharp hit in the last three months, coming down from 43% in Jan-Jun 2024 to 33% in the Jul-Sep 2024 period,” she said.

“The biggest chunk of Ola’s share has been taken by Bajaj Auto (13% in Jan-Jun to 19% in Jul-Aug 2024) followed by gains by both TVS and Ather. Increased focus on EVs by these players, driven by new product launches and expansion of distribution network has led to a shift in the market share,” she added. 

Stating that Ola has announced big festive discounts (as much as 33% on its entry-level model) and other offers to attract customers, she said the concerns pertaining to its customer service and product quality, at a time when customers have a range of options to choose from, may have lasting effects on the company’s market share.

Ashwin Patil, Senior Research Analyst - Auto, Auto Parts, Defence & Media, LKP Securities said “Ola, the number one player in 2W EV market is losing its market share to its closest rivals TVS and Bajaj Auto at a good pace.”

“Secondly, it is receiving complains and legal suits against the quality and safety related with its products. Financial performance of the company is not great, with losses at bottomline expected to stay for a while,” he said. 

“Considering this, we remain on sidelines as far as our view on the stock is concerned,” he added.

On the show-cause notice, Ola said it has no impact on financial, operational or other activities of the company. Furthermore, the notice does not impose any penalties or financial fines, it told the exchanges.