Increased reliance on China: Ola Electric’s imports from China surged from 19% in FY23 to 37% in FY24, despite government incentives for local manufacturing.Ola Electric, preparing for an initial public offering (IPO), experienced a notable increase in its import costs from China during the financial year 2023-24. This rise occurred despite the company receiving financial incentives from the Indian government to boost local manufacturing of electric vehicles and battery cells.
Significant import cost: Imports from China amounted to Rs 1,624 crore in FY24, constituting a major portion of the company’s total material cost of Rs 4,390 crore.According to Ola Electric’s Red Herring Prospectus (RHP), imports from China accounted for 37 percent of the total cost of materials consumed in FY24, a significant jump from 19 percent in the previous year. This underscores the Bengaluru-based EV maker’s reliance on Chinese suppliers for essential raw materials.
Key imports: The RHP indicates that lithium-ion cells, magnets, amplifiers, and electronic integrated circuits were primarily imported from China, Singapore, South Korea, Thailand, and Malaysia.
Implications:
Contradiction with government policy: Ola Electric’s increased reliance on China contradicts the government’s push for local EV manufacturing and battery production.
Potential risks:
Dependence on a single country for critical components can expose the company to supply chain disruptions and price fluctuations.The company’s total cost of materials consumed in FY24 was approximately Rs 4,390 crore, marking a 75 percent increase from FY23. Out of this, imports from China amounted to Rs 1,624 crore. In detail, imported supplies made up 37.03 percent of the cost of materials consumed, while domestic supplies constituted 62.97 percent.
Image impact: This development might negatively impact Ola Electric’s brand image as a proponent of ‘Make in India’.
