CCPA showcause notice won't impact activities, says Ola Electric

Won't impact operations or finance, says company after founder's social media spat with stand-up comedian

Ola Electric has said that the show-cause notice from the Central Consumer Protection Authority (CCPA) “would not impact” its activities and that the company will file a response to the notice within the 15-day deadline.

The company late night on Monday told the stock exchange it had received a show-cause notice from the CCPA. Its stock closed at Rs 95.41 on Tuesday, recovering around 11 per cent from the day’s low.

The company said the notice “wouldn’t impact its financial, operational, or other business activities.”

The CCPA cited 9,948 grievances against the company at the National Consumer Helpline between September 1, 2023 and August 30, 2024. The complaints range from delayed delivery and faulty vehicles to misleading advertisements and poor customer service. The CCPA has given Ola Electric 15 days to respond to the notice, failing which it could take regulatory action.

 

This notice comes after a social media spat between Bhavish Aggarwal, Ola Electric’s founder, and stand-up comedian Kunal Kamra, who had criticised Ola Electric scooters and tagged Union Minister Nitin Gadkari in his post on X (formerly Twitter). Aggarwal hit back by dismissing Kamra’s remarks as “paid” comments.

Ola Electric shares tumbled more than 8 per cent on Monday to close at Rs 90.82 per share. The company’s market capitalisation fell below $5 billion for the first time since its August listing, closing at $4.7 billion on October 7. This is a stark contrast to its IPO valuation, which soared above $7 billion at an issue price of Rs 76.

Not the first speed bump for Ola

This is not the first time three-year-old Ola Electric has found itself in a regulatory crosshair. Last year, the company along with Ather Energy, TVS Motor, and Hero MotoCorp’s Vida faced regulatory scrutiny for violating ex-factory pricing norms under the second phase of Faster Adoption and Manufacturing of Electric Vehicles scheme.

The companies allegedly billed chargers separately, breaching the maximum ex-factory price limit of Rs 1.5 lakh — meant to make EVs more affordable.

The companies agreed to reimburse around Rs 300 crore to consumers in May 2023, with Ola returning around Rs 130 crore to about 100,000 people.

The CCPA’s notice highlights a pattern of alleged violations under the Consumer Protection Act, 2019, including service deficiencies, unfair trade practices, and misleading advertisements. The CCPA comes under the Ministry of Consumer Affairs to safeguard consumer rights and enforce fair trade practices as per the Consumer Protection Act, 2019.

Of the 9,948 complaints filed, 3,364 were related to slow service and repairs, 1,899 about delayed deliveries of Ola’s electric scooters, and 1,459 highlighted promised services that were not fulfilled, resulting in widespread frustration. Many customers also reported faulty vehicles, citing manufacturing defects, poor build quality, and recurring technical issues, which have undermined consumer trust, the notice said. Business Standard has reviewed a copy of the notice.

Additionally, some complaints accused the company of misleading advertisements that exaggerated the performance, features and availability of its products. Dissatisfaction with customer support also emerged as a common theme, with complaints about difficulties in reaching support, delayed responses, and inadequate resolutions.

Aggarwal has made public efforts to address the situation, saying on X: “We’re expanding the service network fast and backlogs will be cleared soon.”

His Bengaluru-based company is also facing a significant dip in sales. In September, Ola’s month-on-month sales plummeted by 10.6 per cent, dropping to 24,665 units from 27,589 units in August.

While Ola struggled, its competitors — Bajaj, TVS, and Ather— increased sales by 13 per cent, 2 per cent and 15 per cent, respectively, according to Vahan data from the Ministry of Road Transport and Highways.

Once commanding over half of the e2W market with a dominant 52 per cent share in April, Ola’s grip has significantly weakened, now down to just 27 per cent by September — a clear signal of a shifting competitive landscape.