In a calculated move to strengthen its financial core, Ola Electric’s manufacturing and technology arm, Ola Electric Technologies (OET), has received approval to raise ₹878.64 crore. The funding will be routed through an intra-group transaction, with another wholly-owned subsidiary, Ola Cell Technologies (OCT), subscribing to Series A Optionally Convertible Redeemable Preference Shares (OCRPS). This strategic decision provides Ola with crucial capital while navigating a challenging market landscape, marked by a recent dip in its electric two-wheeler market share from 18.7% in August to 13.2% in September.
A Flexible Financing Instrument
The choice of OCRPS as the funding instrument is significant. Unlike traditional debt, these preference shares offer greater financial flexibility. They carry a nominal dividend rate of just 0.001%, minimizing the immediate financial burden on OET. The “optionally convertible” nature allows these shares to be converted into equity at a later stage, depending on the company’s strategic needs. This structure provides the benefits of capital infusion without the rigid repayment schedules of debt, a crucial advantage for a company in a high-growth, capital-intensive phase.
The announcement had an immediate positive impact on investor sentiment, with Ola Electric’s stock hitting its 5% upper circuit limit on heavy trading volumes. This rally provided a much-needed boost to the stock, which had seen considerable volatility and a significant decline over the past year.
A Pivot in Capital Allocation Strategy
This internal fundraising marks a departure from the company’s initial IPO fund allocation strategy. Originally, Ola Electric had earmarked ₹1,228 crore from its August 2024 IPO specifically for its cell manufacturing subsidiary, OCT. However, following shareholder approval at its first post-listing AGM in August 2025, the company reallocated the IPO proceeds to prioritize research and development, organic growth, and debt repayment.
This latest ₹878 crore infusion into OET, funded by OCT, realigns the company’s internal capital flows. It effectively channels resources back into the core manufacturing and technology operations, reinforcing Ola’s long-term vision of achieving vertical integration. By developing and manufacturing its own battery cells through OCT, Ola aims to reduce its dependence on imported components, control costs, and drive innovation from the ground up.
Navigating Headwinds and Looking Ahead
The fundraising comes at a critical juncture. Despite a recent decline in market share and a challenging first quarter in FY26, which saw revenues halve and losses widen, Ola Electric has also had significant wins. The company recently secured compliance certification for its Gen 3 scooter range under the government’s Production Linked Incentive (PLI) scheme. This certification, which qualifies Ola for substantial incentives, has been a key driver of positive stock performance.
By using a flexible, intra-group financing mechanism, Ola Electric is shoring up its operational and manufacturing capabilities. This move allows it to continue investing in its core technology and production ecosystem, even as it navigates the short-term pressures of a competitive market. It is a clear signal that the company is playing a long game, focused on building a resilient and vertically integrated business that can lead India’s EV transition.
