Ola Electric raises $100-million long-term debt to build mega factory

Ola Electric and Bank of Baroda on Monday signed the biggest long-term debt financing agreement in the Indian electric vehicle (EV) space. This 10-year debt of $100 million is towards funding and financial closure of phase 1 of the Ola Futurefactory, Ola’s global manufacturing hub for its electric two-wheelers.

Ola had announced in December 2020 that it will be investing Rs 2,400 crore for setting up phase 1 of the factory.

“Today’s (Monday’s) agreement for long-term debt financing between Ola and Bank of Baroda signals the confidence of the institutional lenders in our plans to build the world’s largest two-wheeler factory in record time,” said Bhavish Aggarwal, chairman and group CEO, Ola. He added, “We are committed to accelerating the transition to sustainable mobility and manufacture made in India EVs for the world. We are happy that Bank of Baroda has joined us in our journey.”

The Ola Futurefactory is coming up on a 500-acre site in Tamil Nadu. At full capacity of 10 million vehicles annually, it will be the world’s largest two-wheeler factory.

The first phase of Ola Futurefactory is nearing completion, following which production trials of the much-awaited Ola Scooter will commence. The Ola Futurefactory will also serve as the global EV hub for Ola for its range of scooters and other two-wheelers. “The government has brought in several policies to incentivise make in India and enable India to become a global EV leader,” said Sanjiv Chadha, managing director (MD) and CEO, Bank of Baroda. He added, “Ola is leading from the front and we are delighted to partner it for its EV business. The Ola Futurefactory will put India on the global EV map and we are proud to be associated with it.” 

In July 2019, Ola Electric Mobility (Ola Electric), the ride-hailing firm’s electric vehicle arm, raised $250 million from Masayoshi Son’s SoftBank. It was just a two-year-old firm at that time. The investment made the fledgling venture a “unicorn”, that is, a start-up valued at more than $1 billion.