Ola Electric Mobility Ltd (NSE: OLAELEC) Q1 2026 Earnings Call dated Jul. 14, 2025
Corporate Participants:
Bhavish Aggarwal — Chairman and Managing Director
Analysts:
Chandramouli Muthiah — Analyst
Arvind Sharma — Analyst
Gunjan Prithyani — Analyst
Rishi Vora — Analyst
Arun Kejriwal — Analyst
Vipul Agrawal — Analyst
Amyn Pirani — Analyst
Unidentified Participant
Pramod Amthe — Analyst
Presentation:
Operator
Hi good day and welcome to the OLE Electric Q1 FY26 earnings conference call. As a reminder all participants will be on the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is is being recorded. Before we begin a few quick announcements for the attendees. Anything said on this call which reflects our outlook for the future or which could be construed as a forward looking statement, it may involve risks and uncertainties. Such statements or comments are not a guarantee of future performance and actual results may differ from those statements. To begin with I would like to request Agrawal Chairman and Managing Director of Ola Electric, Harish Abhichandani, CFO and Ankur Agarwal, VP Business Finance of the Company to take you through the results.
Bhavish Aggarwal — Chairman and Managing Director
Thank you Abhishek hi everybody this is Bhavish. Well this time we have shared a fairly detailed shareholders letter so I hope all of you had have. Had time to read through it, look at it. You know, one of the things we realized over the last couple of earnings calls was that we had to share a little bit more depth of our business details with all of you so that you can understand our business better. And obviously those who are modeling it can model it better. So a few highlights that I will just talk you through in the report and then I’ll try and leave more time for Q and A because this time I’m assuming there’ll be a lot of questions from all of you and I hope there are a lot of good questions from the audience. So this has been in many ways a transformative quarter for us. As we write in the note, we have over the last couple of quarters transitioned our strategy from aggressive penetration to a more balanced, profitable growth strategy. And given where the industry also is after the initial hyper growth phase, industry is steady and consolidating and there will be another growth phase in the next near future. But till then, it’s time for players to actually consolidate their operations. And we believe we have a very strong competitive advantage in consolidating our, our approach on profitable growth. And as you can see, our gross margins this quarter have been quite, quite good. And as you can read in the Note, this quarter’s gross margins are largely without any incentive. So very strong performance from the team on delivering these gross margins. Our auto segment was actually EBITDA positive for the month of June. I think this is the first time we’ve ever hit this milestone. And this was delivered by a bunch of factors, all of which we’ve actually been highlighting in the last couple of calls. Improved gross margin, which was as a result of our Gen3 platform and also the project Lakshya which helped us reduce our OPEX significantly. Now, in addition to this EBITDA performance for the whole quarter and specifically in June when we turned positive this time, we’ve also broken out our cash flows for all of you by the segment and consolidated because, You know, we felt it was important for you to understand how because the auto business and the cell business are in different phases of investment and the auto business, as you can now see, is actually getting to a reasonable level of maturity on both profitability as well as cash. And in the near term, we expect the auto business to be operationally cash positive and also by the end of FY26 to be free cash positive. So, so that’s important highlight. In fact, in this quarter we were almost neutral on operational cash flows. So that, and then, you know, this is because of structural improvements that we’ve made, which we’ve called out in the report. Things like working capital, inventory management, warranty claims management, all of that detail. Is there in the report? Another highlight I want to point out is this was the first quarter, first full quarter of our Gen 3 product in the market. And even the Gen 3 product is still ramping up in terms of presence across all our distribution stores, but it still accounts for almost 80% of our overall sales. It is a much better product in performance, in gross margins as well as in quality and hence warranty claims. Consumers have absolutely loved the product and we’re getting very good traction. Gen 2 still exists in the market and we’re using it as a dual strategy between Gen 2 and Gen 3 for penetration and for performance. Our bikes have been generating a lot of interest on the ground, a lot of social media interest and visibility. We are, as we’ve guided before, we’ve been more calibrated about our bike. So scale up. The bike is now almost in 200 odd stores and through the course of this quarter, by the time Navratri comes, we will have our bike in almost all of the stores across the country and we’re getting very good feedback. A couple of other important strategic points I want to highlight for all of you. There have been a couple of macro risks in the industry, specifically on rare earth magnets and the ABS mandate. Now on both we have our own unique solution because the company is vertically integrated and does all of its technology development in house. So on rare earths we actually have a dual strategy of managing through alternate suppliers for magnets and also coming out with a rare earth 3 motor which is in the next quarter. It will be delivered to customers in the next quarter. And you know, we’ve been working on these technologies for the last year or two. Some of you who visited our factories would have even remembered some of seen this on display at the time of our roadshows. And finally the highlight, which is I’m sure highly anticipated, is this quarter we will deliver our 4,680 cell vehicles to customers by Navratri. And we’ll share more details on the 15 August event, which is our annual product event, but our cell gigafactory is cranking up now. We are ramping up. We are producing cells to be used in our vehicles already. It’s not just test cells anymore and through this quarter we will see a ramp up of that. So those are some highlights. A few more things that I will just talk you through is, you know, in this report we have spoken about how our free cash flows in our automotive business are also stabilizing. Operating cash flows are already getting to neutral and our Capex plans For this year FY26 are are not very large in the automotive business. In fact later in the graphs you will see a lot of our Capex is actually R D which is. Which is capitalized. We don’t expect any major manufacturing Capex in this year for the automotive business. There will be some for let’s say our rare earth 3 magnet etc but beyond that we don’t expect any major manufacturing or growth capex for the automotive business. So the automotive business to get to free cash positive by the end of this year which is what we are giving the outlook we do expect it to consume only about 4,500crores of incremental cash from from here even at a console level you can see our cash flows improving significantly and profitability also improving significantly and this trajectory will continue through the course of this year. By for the whole year of FY26 we are we are targeting to get to around 3.25 lakh to 3.75 lakh vehicle sales driven by the festive season coming up and our plans on our Gen 3 and our bike products through the course of this year. For our cell business there will be capex. We already have done the CapEx of 1.4 GWh and we will be completing the 5 GWh capacity that we have planned for for which capital is already lined up through a term loan facility with the SPI consortium. Now after that most of the payments of that will also happen in this year and some will flow into next year. We don’t foresee the need to expend expand cell gigafactory capacity beyond 5 gigawatt hours for the next three to four years. And you know there’s a rule of thumb calculation also here that 5 gigawatt hour means almost million to 1.2 million units. So we’ll make that installation of capacity this year FY26 and grow into it over the next couple of years. That said there is some more detail on warranty here because warranty has been one of the talking points in the last quarter we took a one time provision of 250 crores. What I would like to highlight to all of you is every generation has kept on getting better for us in terms of quality and all trades. Gen 3 is in fact the best ever for us and by our own estimates the best in the industry. And this benefit obviously flows into the EBITDA by lower provisioning for Gen 3 on claims. Also Gen 1 claims have been higher than Gen 2 claims and that is higher than Gen 3 at a similar aging. So Gen 3 claims are actually looking fairly good and in Gen 3 over Gen 2 itself. One of the major areas we have improved the product design and hence quality is the hub motor. The motor controller which were in Gen 2 supplier procured and in Gen 3 are all in house and our in house motor which was in Gen 2 in the S1 Pro had a 90% lower failure rate than the hub motor. So all of this is adding up to a very good profile on warranty. And a final point I want to highlight, there is. Our Gen1 products are already 70% out of the warranty life so that’s also reducing the claims on a monthly level as more and more of the claims outstanding or the warranty outstanding is on Gen 2 and Gen 3. So we don’t expect any more major one time warranty provisions. So you know we’re still there might be some minor learnings as we go along but nothing major expected over the next year or two on warranty provisions. Then in the note we highlight some beyond just operational commentary. We give you progress on key strategic priorities and as we’ve always communicated to you we you know our strategic our strategy in this business has been to build more manufacturing vertical integration, do more in house technology development and build a direct to customer channel for customer engagement with the brand directly. And on all these three we believe we keep compounding our competitive advantage as incumbents only continue building traditional auto business models and that competitive advantage can be seen in the balance of volumes and profitability that we are now able to deliver. And then we talk about the Rare Earth Magnet which I commented on so I’ll skip that on abs. Also we are ready. We’re the only EV company which has an ABS product on sale in the market and by the mandate timeline we will be ready with our own in house ABS solution further saving margins as well as giving consumers a product differential on the gigafactory. Like I said more details on the 15th of August but our first products will be in customers hands by the festive season. The full budget for a 5 gigawatt of plant is 2,800 crores including for the capex as well as some pre operative costs. Now out of this we have already invested about 1500 crores and the remaining 1200 odd crores will go in over the course of this year and some into next year that will complete the 5 gigawatt hour. And like I said for this we already have the SBI facility, SBA Consortium facility which we are drawing down on in terms of unit economics. The cell business at a free cash flow level breaks even for us at 5 gigawatt hours and at a consolidated level it is cheaper for us to manufacture our own cells than procure from outside at the 5 gigawatt hour level. So that’s a very important milestone as we scale our cell business through this year. Now starting this quarter we are going to keep ramping up gradually the cell production to grow into the 1.4 first and then grow into the 5 gigawatt hour after that. There are there’s some commentary on. You know, for those of you who don’t fully understand the cell, The technology and the cell cost structures. There’s some commentary here to for you to appreciate how the cell cost leadership works and it’s very directly linked to technology, not just supply scale. On product roadmap, again we highlight here our competitive advantage with a very broad product portfolio which is ready very mature stage of development for the product portfolio. But that said, we are not allocating manufacturing capex to all these products. We are going to be sequential cap in capital allocation. We’re letting our current products scale and mature in the market and then one by one allocating manufacturing capital for new products. But from an R and D basis we have many of these products under advanced stages of development. So in that sense, as our distribution network stabilizes, as the new products step by step scale up in the market, and as the EV industry again inflects with the next next level of customers coming in, we will again accelerate our product launch roadmap. Finally, in strategic priorities on our D2C network, we have expanded our presence but there’s a lot more work to be done to institutionalize operations, consolidate operations and deliver a good customer experience and a high productivity. We are already seeing gains from inventory reduction in the network and you see that in the working capital movement in Q1 over Q4. And we will continue to see incremental gains on this going forward. But there’s more work to be done to institutionalize the operations in the front end and that’s a core management focus for the remainder of this year too. And finally, we have a little bit of a note on financial planning. There have been some questions to us in the past on how are we, what is our cash allocation, capital allocation for different aspects of the business. So for the auto business, like we said, Nothing major on CapEx planned. We expect about 4,500crores of free cash flow requirement for the remainder course of this year, at which point free cash flow should turn positive. For our cell business, there will be a capex of about 1000 odd crores in this year and some more in next year. And 70% of that or roughly 2/3, 70% of that is funded through the existing term loan that we have and the remainder through equity. The sell business will have some operational cash flow requirements till we achieve a certain steady production rate, but in the hundreds of crores. So for the business on a consolidated level, we don’t foresee the need for any more cash than we have. We have about 3200 crores on the balance sheet as the as of end of quarter we do have some debt obligations. Again, we have shown that in a graph in the. In the note we will be refinancing Some of that debt, not the term loans, but some of the corporate debt that we had taken before our ipo. And we have already taken a board approval for issuing fresh entities to refinance that debt. I guess that’s it. There are some very interesting graphs in the note. Also a couple of things. If I highlight on graph 3 and 4, if you see our ASPs are flat, but our gross profit per vehicle is continuing to grow. You know, this quarter it got to 31,000 rupees, which, which means in graph five you see our gross margins, auto gross margins with all incentives and without incentives. And you can see this quarter actually we had very minimal incentives. So the business, the product, the gross margin profile all looking strong. And I will pause here and leave enough time for questions from all of you.
Operator
Thank you so much. Bhavish.
Questions and Answers:
Operator
We will now begin with the question and answer session. Anyone who wishes to ask the question may use raise hand option. If you wish to remove yourself from the question queue, you may press the option again. Participants are requested to unmute themselves before asking the questions. And before asking a question, we also request you to introduce yourself, your name and your organization. We’ll take a minute and then we’ll open the floor of a Q and A.
We’ll take the first question from Mr. Chandrali Muthaya of Goldman Sachs. You may unmute yourself and ask a question.
Chandramouli Muthiah
Hi, good afternoon and thank you for taking my questions. My first question is just on the volumes for the quarter, the 68,000 volume. Could you help us understand what the split is between the electric scooters and electric motorcycles as well as also the rs121,000 ASP. Where would the motorcycle ASP compare versus the scooter aspect?
Bhavish Aggarwal
Chandra? The split is still largely scooters because motorcycle deliveries only started happening early June. So almost all of it is still scooters. The motorcycle deliveries are ramping up in June and now going forward. Also in terms of ASP, the Roadster X and X Plus ASPs are broadly in the range of the S1X and X Plus ASPs maybe 5% higher, 5 to 10% higher.
So it’ll be one level lower than the S1 Pro and Pro Plus. But in that S1X and X Plus range. So in terms of how it looks like against the 1.2 lakh, it might be 1.15 lakh as an aspect.
Chandramouli Muthiah
Got it. That’s helpful. My second question is just around the ABS norms which have been proposed by the government of India. So I understand you have ABS on some of your premium electric scooters as things stand, but if you could just give us some color on what the negotiations seem to be with the government and what the industry representations are. Is this something that’s a done deal for January 2026 or is it still sort of fluid? If you could give us some color on that,
Bhavish Aggarwal
Chandra, Our stance is that sooner the better, you know, we should not compromise with the customer safety.
Chandramouli Muthiah
Got it. And just the additional cost here, what is your estimate of additional cost? You did mention that you are looking to do an ABS kit in house. So if you could just give us some color on what your estimates are on additional cost.
Bhavish Aggarwal
See, for us, let’s say for industry, when they do ABs, anywhere between three to five thousand rupees they incur in terms of BOM cost, depending on what kind of ABs, etc. For us it will be a small fraction, it’ll be a fraction of that. Because these ABS products, as you can imagine, are high margin products for whoever is selling them, Bosch or Conti or whichever supplier is selling them. And we have our own engineering capability.
In fact, the way we have built the ABS is that our electronics are all combined into the same central electronics. So a lot of software defined functionality. So in that sense the content itself is lower in our abs. And obviously,y we saved all the cross margins. This is, you know, actually, Chandra, I would want to use this to highlight an important theme about our company which while we’ve been executing on it, maybe it might not have been fully appreciated by this, by, by all the people observing us that as we keep doing each of these critical components in house, be it the motor, be it the abs, electronics, software, cell, one by one, each of these things add a lot of gross margin benefit, which is what you see in the end.
Today our gross margin is about 26% and without any incentive, also 22 plus percent despite not charging 20% higher than market. Right. So, and this is a journey, it’s only going to keep improving for us. For example, I was, you know, one of my finance team members pointed out to me that the largest motor supplier in India actually has a gross margin of 60%.
Now we make our own motors. That’s a clear saving of, you know, a large high single digit thousand rupees over there for us. Same will happen in abs, same happens for us in electronics. And it’s not just saving from off the shelf parts, we are able to combine parts better and hence actually reduce content itself. For example, in abs, the electronics will actually be combined with our central electronics.
Chandramouli Muthiah
Got it, got it. That’s helpful. And lastly, if I can squeeze in, just wanted to State of the Union update on net debt. So you did mention that you’ve got. Cash of about 3200 crores. I can see that the graphs talk about debt repayment obligations. But if you could just give us what the gross debt number also is just in the context of what your quarterly cash investments are.
Bhavish Aggarwal
Sure. I think excluding short term debt, which is largely working capital. Ankur, to about 2000 crores. Yeah, 2000 crores. And it’s getting paid down over the next two years. All the corporate debt is getting paid down. Term loans will continue locked.
Chandramouli Muthiah
Got it. Thank you very much and all the best.
Operator
Thank you. We’ll take the next question from Mr. Arvind Sharma of Citibank. You may unmute yourself and ask the question please.
Arvind Sharma
Yeah. Hi. Hi. Thanks for taking my question and thanks for sharing the guidance for FY26. In the overall guidance for FY26, what would be the exit rate? Because one QB already know the numbers but it’s a pretty steep jump from here on. So what would be the drivers for these volumes going forward?
Bhavish Aggarwal
Okay, Arvind, thank you for your question. And I’ll start with a small nuance. It’s more an outlook than a hard guidance. What we want to start doing is also giving all of you a little bit of an outlook into what we see ahead for us and also call out the risks that exist to achieve that outlook. Because there is a macro environment which is sort of moving parts, supply chains etc,
So there are enough things we need to navigate still through the year. But we’ll keep updating every quarter now the key levers to deliver these volumes. Actually if you see this quarter, we delivered 68, 000 now the next, this quarter is actually probably one of the lowest quarters in the year on festive and just volumes.
We expect a, you know, industry bump up on festive about 50%, 40, 50%, whatever the. This meeting is being archived. Industry itself is growing at about. Yeah. So hold on. I don’t know what happened here.
Yeah, I hope. Arvind, you can still hear me? Arvind, can you hear me? Is the meeting still on? Can anybody hear me?
Arvind Sharma
Yes, we can hear you.
Bhavish Aggarwal
Okay. Okay. Okay. So I guess the meeting I hope is still on. So I’ll complete Arvind’s answer. I don’t know why Arvind dropped off till then. We’re going to check if some other people can hear me beyond Harish also. So. So just to complete the point, we expect seasonal uplift in general, industry is going to grow at 20%.
And now given that a lot of the competitive intensity has already been played out we do expect us to grow at or above industry rates. We also expect our bike volumes to increase. Through the year and a few more initiatives we are doing on the productivity of our front end. All these added up should get us to those volumes and but there are some macro risks which we will navigate and keep sharing updates.
Operator
Thank you. Now we’ll take the next question from Gunjan Prithiani of Bank of America. You may unmute yourself and ask a question please.
Gunjan Prithyani
Can you hear me now?
Bhavish Aggarwal
Yes, Gunjan, we can hear you.
Gunjan Prithyani
Okay, thanks for taking my question. And really, you know, good to see the significant improvement in the gross margins. Couple of questions from my side, I think firstly on the gross margin, I, I just wanted to understand on the Gen 3 are all the cost savings fully realized on the 80% transition that you saw in this quarter? I’m just trying to understand the roadmap of this 25% to 35 to 40% that you’ve called out in your update.
Bhavish Aggarwal
Yeah, some of the gross margins are still to be realized, Gunjan. There is an incremental goodness on some of the Gen 3 margins that will come through this financial year. And on top of that, 25% gross margin this quarter didn’t have any PLI. So PLI, whatever you guys model will also come on top.
Gunjan Prithyani
Okay. And this, this doesn’t capture any of the savings from the captive, which you know, of course is more going to be a F27 cell, you mean? Yes.
Bhavish Aggarwal
No, this doesn’t capture the cell. The cell will ramp up through this year. They’ll have a small component of cell in gross margin, but the real cell savings at scale will be in FY27. Okay. And the other expenses should more or less sustain at these levels. Now we’ve gotten to a level of stabilization with the cuts that we took over the last couple of quarters. Yes. OPEX is now stable. In fact, incrementally there will be some more opportunities for efficiency and productivity through the year. But 100 odd crores of auto opex and 150 odd crores of total consolidated opex right now over the next quarter or two quarters, we should be further able to reduce another 10 to 15% of opex at a similar volume levels.
As volume grows, some of the OPEX will grow with volume.
Gunjan Prithyani
Okay, got it. And the second question, a little bit on the, you know, the pivot that you called out that we’re moving from, you know, aggressive penetration to a balanced, profitable growth. You know, it just sounds to me that there has been a reset in the EV penetration expectation itself. Right. I mean, if you can like sort of share your thoughts on how do you? We then think of EV adoption at an industry level. And why do you think that there has been this reset of expectation? Because prices if at all have only come down and it’s got a lot more competitive in terms of value proposition to the customer when you compare with ICE as well. So why the reset in industry adoption levels?
Bhavish Aggarwal
See firstly Gunjan, if you see EV2 Wheeler industry growth versus ICE2 Wheeler industry growth, EV is still 3x of ICE, right? So in that sense ICE is growing at 6, 7%. EV is growing at 20 odd percent give or take a few here and there. So EV is still growing very much faster than ice. It has definitely come down from the absolute aggressive growth in FY23, FY24 and early part of FY25. A couple of reasons for that. Firstly, government incentives have also come down.
So that definitely has made manufacturers as well as some customers think about their choices in terms of pricing as well as in terms of purchase for the customer. Second, also the early adopters have now largely adopted EVs. The S curve of the penetration will go through the S curve. So there’ll be an aggressive growth, then there’ll be a consolidation phase and then there’ll be an aggressive growth again.
So the middle customer is now considering EVs actively. In our own surveys, brand surveys that we do, consideration for EVs is very very high. But they’re probably waiting for their friends and all to live with one generation of their TEV products or waiting for some of the anxieties around range etc resale value.
All of these are anecdotal things but and actually many of them are not true. It’s not like two Wheeler EVs have range anxiety. It’s not true that there is a two on resale value if you see resale values are reasonable in the market. But it’s more just an overall feeling that the cautious customer has now that let me just wait it out another six months, one year till my friends who were the early adopters have been through their full cycle experience and we see that now slowly also turning in bigger cities. There are some pockets of increasing growth again but it’s early.
So we do expect the S curve to play out first high, then consolidating around 20, 25% a year and then maybe next year onwards another aggressive growth.
Gunjan Prithyani
Okay, got it. Just last question, if I can just get your thoughts on the battery plans as well. You know we are now sort of limiting to 5 gigawatt if you can just sort of share what is, what does it mean in terms of the government PLI scheme? What does it do to the captive cause benefit that we were thinking about? Because a lot of those captive cost savings were also premised on yields and scale that you get on that battery plant, cell plant. So if you can share, what does it mean for the overall cost improvement and PLI scheme?
Bhavish Aggarwal
So, Gunjan, at 5 gigawatt hour we will. Already be saving money versus procuring from outside. At 1.4 gigawatt hour we will be saving money at a gross margin level. But the opex of the cell plant will not be fully leveraged for the scale that it is built to. And the unit that we had designed was the 5 GWh unit for ourselves. 5 GWh is one unit. So at 5 GWh unit we. We will be saving money versus procuring cell from outside. So we don’t need to go to 20 gigawatt hour for that. In terms of PLI. Yes, definitely. This will mean an implication on PLI. The government PLIs are our timelines on 20 were what they were and we will not meet those timelines. But in our profitability case we have not built any benefit from pli. If there is any, it will be goodness on top. That said Gunjan, we’re also the only company that has really put up a cell plant and made it productive. So we are and we will engage with the government to probably relook at some of these timelines and in the broader interest and encouraging encouragement to industry. Probably look at those timelines and there’s no penalty we need to be really worried about in that context. Right. If there’s a change there is a maximum of about 100 odd crores of penalty. And we are actually accruing that every quarter in our P and L already.
Gunjan Prithyani
Okay, got it. All right, thank you. Thank you so much. I’ll join back the queue.
Operator
Thank you. We’ll take the next question from Rishi Vora of Kotak. Please unmute yourself and ask the question please.
Rishi Vora
Yeah, hi, I hope you can hear me.
Bhavish Aggarwal
Hi Rishi.
Rishi Vora
Hi. Hi. Hi Bhavish. Congratulations on sharp improvement in profitability.
Bhavish Aggarwal
I’m waiting to read your report.
Rishi Vora
Yeah, just a follow up on gigafactory. Right. One of the premises for us to set up a gigafactory was also a PLI incentives. If I remember it correctly, our expectation was through the course of going till FY29 the capital employed will become half because 50% of us of it we were expecting it to come from PLI. So if, let’s say if you’re not able to get a PLI then does it make a sense for us to set up our own gigafactory Given that tomorrow the technology might evolve, we might be little slow versus the global giants. So does it merit to have a gigafactory on our own given that if plis.
Bhavish Aggarwal
Yeah. So Rishi, the reason to set up a gigafactory is strategic and long term. Our reason to set it up was never pli. In fact, we actually started our gigafactory before the PLI scheme came in. And that’s the reason we came into the scheme because we’re the only ones who started before the scheme even was conceptualized.
Now the reason is threefold, Rishi, and you actually see a version of that playing out with the Rare Earth Singh in Supply Chain Risk. So first reason is long term strategic business continuity and control of your supply chains. That’s not just an opportunity for us at Ola Electric, but also an opportunity for. For us to play into in the broader India context as India’s cell lithium cell needs scale up. So in that sense it’s a long term strategic bet. Second, cell is not a commodity. Rishi. Cell is a technology component and I write about that in the note also you can see that paragraph. A lot of the cost benefit is driven through technology, not through just supply glut coming from another country. Unlike solar cells or other components where manufacturing conversion costs are a majority of the cost of the overall component itself, cell is not like that. And our technology leadership is actually now well established. The first product is 4680 cell. And we also write about our cell technology roadmap where we are leading already beyond the version one of the cell. We already have version two and LFP versions already under development. All of that will come in step by step. And we now Rishi have already proven this business model in our auto EV business look at our gross margins versus look at all other companies gross margins and that’s a function of technology and manufacturing vertical integration. So those are the three reasons it makes long term strategic sense to do the cell in house in terms of capital returns purely also you know at 5 gigawatt hours itself it will be a reasonable return. But as we scale higher the return will only keep getting better. And the scale can be from our own internal requirements. The scale can be potentially from export opportunities that our 4680 cell opens up. The scale can be from bess opportunities in the future that we might get into in different business strategies. And in none of those cases do you need PLI to make the business worthwhile. All of this is worthwhile if you have a strong technology leadership in the cell and if you are building a long term Indian supply chain because the Indian market long term is only going to grow. So we take a very long term lens on the strategic benefit and optionality of our cell business.
Rishi Vora
Yeah, thanks for that. Just on the provisions, right. Can you just give us the absolute amount of provisions which we took in 4Q and what would be that in the first quarter?
Bhavish Aggarwal
Provisions for warranty.
Rishi Vora
Yeah
Bhavish Aggarwal
So in fourth year we had called that out. 250 crores of one time provisions. We won’t be, we can’t share with you exactly how much we do quarter on quarter on warranty provisions. But as a one time thing, last quarter was 250 crores.
Rishi Vora
Understood. And just lastly on the motorcycle launch, right. Can you just give us, you know how has been the feedback and I think somewhere I read that we have just started with around 200 touch points. So is there a thought process of when we’ll be scaling it up to all the touch points which we have at this point in time?
Bhavish Aggarwal
So, Rishi, the feedback has been overwhelmingly positive. You can yourself. On social media and just search for roadster feedback you will get all the views, all the kind of feedback. Very, very positive. Customers are loving the bike. I myself by the way I ride around Bangalore in the, in the. On the roadster X plus that’s become instead of a car that’s become my major commute vehicle. Almost always on a signal I get stopped and asked sir and I’ve done some sales also by the way on the roadside. But that said see the reason we are scaling up a little more in a calibrated way is because it’s a new category. We want to make sure manufacturing, quality, warranties, all of those are in check as we scale and hence our production ramp has been more calibrated and gradual. We expect by Navratri to hit majority of our stores and that’s when the bike volumes will also be starting to spike.
Rishi Vora
And just one last question. On a sequential basis, ASPs have gone up by 2%. And this is despite the mass market scooter mix going up. So is there a portion of non vehicle mix that has gone up which is driving the ASP increase?
Bhavish Aggarwal
It’s a mix of two things Rishi. Gen 3 mix has gone up. If you remember last quarter Gen 3 was very small and Gen 3 is priced slightly higher. Gen 2 is priced slightly lower. And second obviously move OS plus which also we comment on has been increasing in penetration. In fact I actually want to use this opportunity to underline and highlight Move OS plus.
So a bunch of our software features are especially the premium software features which frankly we have the best in the industry given that we do our electronics, hardware and software together in sync. A bunch of those we productize into Move OS plus and that became a subscription for customers.
And the penetration rates of that is now actually on a run rate basis almost 70%. And we expect through this quarter for that to rise to 80, 80, 85%. So almost everybody is buying the Move OS plus subscription be it for premium or for mass scooters. And that also brings in a certain advantage on ASPs.
Rishi Vora
Understood. Thank you and all the best.
Operator
Thank you. We’ll take the next question from Mr. Arun Kejriwal of Kejriwal Consultancy. Please unmute yourself and ask the question.
Arun Kejriwal
Thanks Bhavesh for giving me a chance to ask you questions at the.
Operator
Out in the middle. Sir, can you just resell?
Arun Kejriwal
Yeah, I’ll repeat it. So I said thanks Bhavesh for giving me the opportunity to ask you some questions. Questions. And at the outset let me congratulate you on a set of numbers which has caught quite a few of us by surprise. The turnaround witnessed has been phenomenal, to say at the least. My question is. Sir, one of the objects of the issue was to increase the gigafactory capacity from 5 gigawatt to 6.4. Now that we are scaling down the expectation of the gigafactory to around 5 which would take care of about 1.2 million scooters, what would be the change in our fundraise that we have done? Would the objects of the issue be sort of tweaked re changed and the funds deployed additionally or what?
Bhavish Aggarwal
Sure. Mr. Kejriwal, thank you for your comments and for your recognition of the numbers. It’s been a definitely a important quarter for us. And sir, like you say, it’s like we gave in our commentary. 5 gigawatt hour is what we feel will be enough through FY29. That covers roughly 1.2 million vehicles and that should be enough for us or even if we have some non ola customers eventually that we are selling ourselves to. So we don’t foresee the need to expand beyond 5 gigawatt hours over the next three years at least.
And you are right, we had raised some money to in anticipation of this expansion from 5 beyond 5 gigawatt hours in our IPO. As we go along, we might look to redeploy that capital into other productive uses.
Arun Kejriwal
Right. So just a related question to this. Considering the fact that we are now sort of scaling our target for sales of vehicles, I’m not saying you’ve said that in as many words, but 1.2 million is what you believe is where we could be say till FY29. Is there a change in the company or your thinking of EV penetration going forward? Is there some rethink on the way penetration is happening? Somebody earlier had also asked that prices are softening. Are customers a bit reluctant to buy EV or what?
Bhavish Aggarwal
So Mr. Kel, like I had mentioned in the in the opening commentary, also the industry is entering a different phase now. Prices are softening a bit. But if you see our ASP’s for example, it is flat over the last four quarters. So industry is also recalibrating a little. Customers are also recalibrating.
The early adopters have already adopted EV in full confidence. And now the middle mass, what we call of customers which are a little more cautious about new technology, they are starting to consider EVs. Their consideration cycles are a little longer. They are looking at their friends who have already bought EVs and increasingly so they’re also getting converted. That’s why the EV industry is still growing at three times the growth rate of the ICE industry. But. But we do expect this next few quarters to be a little bit more steady in EV penetration growth and then maybe another acceleration will happen as new products come in, as some of these next set of customers finally take decisions at scale to buy EVs as our own distribution network becomes more productive in the smaller towns of India, specifically on the bike, as that unlocks a new category. So all of these levers will be playing a part in the next phase of growth. And for now the industry is in a steady growth phase. It’s still growing 3x of the ice industry. But hence we’ve also taken up sort of a maneuvering to consolidate our product, our business, our operations to be to get ready for the next phase of growth.
Arun Kejriwal
So thanks Bhavesh for that. Wish you all the best and hope we have some more promising news when we meet next quarter. Thanks.
Bhavish Aggarwal
Thank you Mr. Ke.
Operator
Thank you. We’ll take the next question from Mr. Vipul Agrawal of HSBC.
Vipul Agrawal
Yeah, thank you. Thank you for taking my question. So first of all congratulations like you delivered what you said about 68,000 unit in first quarter and the cost saving, that’s pretty commendable. So my first question is on the Cox site on the like the as the cost per vehicle is down from almost 1 lakh rupees to 90,000 rupees now the difference is around 10,000. Can you pinpoint certain parts and related cost saving?
Bhavish Aggarwal
So Vipul, I can give you general direction on that. So Gen3 as a platform has definitely helped Gen3 and we had shared even in August when we had launched Gen3 that it’ll be a major change in the cost structure and that is what has happened. This was the first real quarter of full gen 3 and that has led to improvements in the in the BOM cost then item by item.
Also you know our motor for example is now in house. The motor controller is within the motor itself. All of these things save money. In the bike for example, the wiring harness is the flat wiring harness which is a unique innovation by us. Our electronics are more centralized, saving some number of ECUs. So all the regular things which I keep saying every time I meet you guys and all of those things have kept on incrementally adding benefit to us in the gross margin.
Vipul Agrawal
Sure, thanks for that. One related question would be like on the buying side like how are you saving? Like is the tech which is globally not available or is it something new which you have developed on that front, how does it work?
Bhavish Aggarwal
So Vipul, it is our own in house IP and We actually had shared it in our bike launch event in February. You can see the video reference it there. But it’s a much lighter, much more lower cost to manufacture wiring harness technology, which we’ve developed in house and Normally, again, I will reiterate this to everybody. Sometimes, you know, we, we can assume that suppliers will have better technology. But almost always suppliers never have the leading technology, especially in cutting edge areas like EVS. It is OEMs which have the leading edge technologies which over time suppliers build slowly, slowly because they, the incentive to build technology is always with the oem, not with the supplier. For the supplier, it’s the incentive to continue old processes because they’re not customer facing. The OEM is customer facing. Now that said, as a result, we keep doing our own R and D, be it wiring, be it motors. For example, our Rare Earth 3 motor is something we’ve started developing more than a year or two back. And some of you who visited our factory a year ago would have seen this. We were quite transparent about it. And I think the things which we keep doing on R and D and step by step, they keep coming into our products. So actually internally in terms of process, we have a very rigorous process of two parallel roadmaps. One is a product roadmap and one is a technology roadmap. And as technologies go above the technology maturity ladder, we keep bringing them into our product roadmap. So, so it’s a very rigorous process that we run within the company of two parallel road road maps. Understood. So like you mentioned, like OEMs have a cutting edge technology. I agree to that point.
Vipul Agrawal
So like coming to the cell business on the same front, like you will be increasing from 1.4 gigawatt to 5 gigawatt now and globally. On the cell manufacturer they are hard, like it’s tough for them to cross 15% EBITDA margin level. Even for the small players it is less than it is high single digit, double digit. So how do you see profitability on your business? Like maybe when you go from 1.4 to 5 or next 2 to 3 years. So how will cash burn will go down? Maybe. Or maybe if you can talk, touch a bit on technical part of it. How are you different from the Chinese cell manufacturers or Korean manufacturers? If you can touch a bit on that,
Bhavish Aggarwal
See Vipul firstly, small correction there. It’s gigawatt hour, not gigawatt. Sorry, I just want us to be technically correct. Yes. So on, on the cell. See, firstly, I would like all of you to look at us as a vertically integrated cell manufacturer, not a standalone cell manufacturer. That makes a world of difference in business model and cost structures.
Firstly, I have to only build one or two cell platforms. If you think of a standalone cell company, they build multiple cell platforms. For multiple customers, whereas I am only building the 4680 platform. Hence my manufacturing is linked to that. My R and D is linked to that. Now I’m building a platform which can be used in my products and global products also because it’s a fairly standard, industry standard platform.
But I’m not building pouch cells, I’m not building prismatic cells, I’m not building 21. 170 I’m not building 18665. I’m not building some other concept. I’m only building a future industry standard cell platform and hence that limits my manufacturing and R D requirements. Second, since I’m vertically integrated I have a large anchor customer. I have less SGNA costs as well as a immediate benefit on springing up my production basis. My internal customer. And the same cell will go into other non automotive products also like home energy storage, etc. In the future. There are other verticals where we can get I would say revenue without having to build new cell platforms. So that is the essence. Vipul, what differentiates us versus a standalone cell company? And good cell companies have mid teens EBITDA margins. Our cost structure will actually over time get better than them on opex, on gross margins and BOM cost. Large cell companies will have an advantage over us till we become large enough. But there’s also an arbitrage on duties etc. On bringing these cells into India. So all of that balances out into a balanced business model opportunity for us.
Vipul Agrawal
Thanks. Just last one question on the yield part. So how has your yield improved over last six months? And second would be what what would be the select you are already importing sales from the suppliers so what would and when you are producing by yourself so what sort of breakeven you would have at the cost like what kind of yield you would need at Ola’s plant and what kind of production you would need at Ola’s plant to break even with the cost of import at this point in time. Any math you have done around that?
Bhavish Aggarwal
Yes, absolutely. Good question. Our yields right now are in the 60 odd percent range which is what I’ve shared about a month and a half ago. We are ramping up with a balance of two KPIs. One is yield and one is output. The scale of output because both have to go up in hand and we are in that ramp up phase through this year.
We are going to be in that ramp up phase, the break even on consolidated operational costs of building our own cell, putting it in our vehicle versus buying the cell from outside. The break even point is around 3.5 to 4 gigawatt hours at about low 80s of yield. That’s the break even point. So at 5 we’ll actually be slightly more than just break even.
Vipul Agrawal
Understood. That’s really helpful. Thanks.
Operator
Thank you. We’ll take the next question from Amin Birani of JP Morgan and chairs Amin Pirani.
Amyn Pirani
Amin Prani.
Operator
I’m sorry you might unmute yourself and ask a question.
Amyn Pirani
Yes, hi, thanks for the opportunity and congrats on the strong sequential improvement in line with what you highlighted in the last quarter. I had a question on the abs. You know, interesting comments from you, so just want to understand. So right now are you saying that you will be asking. Assembling the abs, are you, you know, making some of the sub components? And the related question would be that even right now for the CBS that goes into most of the scooters, are you also doing it, a lot of it in house? Some, some, some color on that will be helpful. S
Bhavish Aggarwal
So I mean the CBS is a simple component. We probably do portion of the engineering of that in house and some of it must be bought out by other, by suppliers. But for the ABs, what we’re doing is we are engineering the whole thing in house. Okay. And we will work with some suppliers to build some components of it and some we will build in house.
Right. Because we are, as you know, we don’t manufacture everything in house. Some of the more traditional processes like fabrication, castings or others, machining, etc. We don’t do those things in house, but we’ll definitely design the whole thing. Electronics, software, these are the more critical components over there, which is what we will be integrating largely in house.
Amyn Pirani
Okay? Okay, Understood, understood. And secondly, just, you know, slightly on the numbers thing, I think last quarter obviously there was this challenge of, you know, Wahan registration not reflecting, you know, entirely with, you know, what your numbers were this quarter also, and please correct me if I’m wrong, it seems that there is some difference. So if you can explain the difference in your deliveries number between and between what we can see on Wahan and the related question is if you actually take your deliveries number and the industry number that you have on your shareholders letter, your market share actually should be much higher.
So just trying to understand if there is still any lead lag into the deliveries and the registration number.
Bhavish Aggarwal
Good question. I’ll take a minute and explain this in 2, 3 levels. See firstly, last quarter we had a lag on deliveries and higher bang. Yeah. Hence our revenue was lower, Bahan was higher. That delta is almost the same delta in the opposite direction this quarter. So we have a slightly higher delivery number and a slightly lower Bahaan number than delivery number.
Amyn Pirani
Okay.
Bhavish Aggarwal
So, so that’s because of the covering up of last quarter in this quarter. Right. So Feb, March, April were the impacted months. And April onward we had started covering up that delivery gap.
Amyn Pirani
Okay.
Bhavish Aggarwal
Market share, you know, you can say is it a function of registrations or is it a function of deliveries? Both are different definitions. So I will leave the share question out of this. In the end, roughly our market in the high teens or 20 percentage thereabouts right now. So let’s, let’s leave it there. Specifically on our delivery backlogs, see our business model has traditionally in the last two, three years, run a backlog on deliveries, whereas a business model automotive dealership will not run a very large backlog. They will finish off all the deliveries in three to four days. Whenever a customer this is an order.
The order to delivery cycle is three to five days. For us, even now it is higher than that and. That is actually a room for improvement to drive more volumes itself because some of the customers we lose because they say so. We are focused on improving that through this quarter and next. And as we improve we do expect some incremental demand goodness also.
Amyn Pirani
Okay, great. Thank you. Thanks for the opportunity.
Bhavish Aggarwal
Thank you. By the way, since this time there is, it seems to be there are more questions. So we would be happy to stretch another 15 minutes if anybody would have any questions. So up to, up to the audience. If you want to ask me questions, we are here.
Operator
Thank you. Babish. We’ll take the next question from Mr. Raghavin Goyal of Ambit. You may unmute yourself and ask the question.
Unidentified Participant
Thank you. Thank you so much for the opportunity and congrats for the great set of numbers. Just could you be a little louder please? Raghavendra hello. Yeah, is it better now?
Bhavish Aggarwal
Better, yeah.
Unidentified Participant
So I just wanted some sense of for sale business. So we’ll be, you know, commercializing it fully next year. So at least for next one or two odd year we can assume we won’t be, you know, selling it to any third party or any third OEMs. In that sense we won’t be looking at that direction. Right. Raghavindra we are not right now focusing on selling our cell to other OEMs. But what we are exploring on a little bit of R and D stage is definitely using our cell to build battery storage for homes and for grid.
Bhavish Aggarwal
So not that we are doing any capital allocation to that as a business opportunity, but as a R and D we are definitely exploring that over the next few quarters as our cell operations scale up and stabilize we will definitely look to enter into those dimensions before we actually go to other OEMs.
Unidentified Participant
Okay, sure, sure. And second thing on justly, if you can give a quick brief about who all would be our customers for bike. I mean if we have gotten any interest. So are these the one who were, you know, preferring a pure 100cc motorcycles or they were evaluating EV scooters and then shifted to bike? So any sense on cannibalization of our existing products? Any qualitative cannibalization of our scooters?
Bhavish Aggarwal
We are not seeing because as you can imagine, two very different audiences. In fact we are seeing a lot of interest from semi urban or smaller towns also for this bike. So you know what that would mean is we would be starting to get consideration in the customer cohort which is the 100-125cc range, 110cc more so but it’s still early.
Over the course of this quarter, we will actually see how it plays out.
Unidentified Participant
Sure. Thank you. That was all from my side.
Operator
Thank you. We’ll take the next question from Mr. Pramod Amte of Inted. You may unmute yourself and ask the question.
Pramod Amthe
Yeah, hi, thanks. Am I audible?
Bhavish Aggarwal
Yes.
Pramod Amthe
Yeah, yeah. Thanks for the opportunity. Two questions on gross margin. If I had to look at your gross margin versus the other two wheeler conventional makers or ice OEMs and it looks very near to them and if I add on to the PLI benefit as and when you claim you seems to be much nearer into the same in that context.
Wanted to understand your thought process. How do you see the pli? Do you see it retaining with yourself or to drive your ambitious volume guidance you think you need to pass it on to the consumer first? Yeah, sorry, let me answer your first question and then I’ll go to the next.
Bhavish Aggarwal
No, that’s a good question. Promod. Firstly, you know, good that you recognized how our gross margins have improved. And like we said, we are going to actually further see improvement even before the PLI improvement on top of that PLI will come in. So our gross margins for EVs will actually get very competitive with ICE over the next year or two.
And we’ve been saying this for the last year that as our vertical integration strategy scales, as our subsequent generations of products keep coming in, we will keep getting benefit on gross margins. So that story will keep playing out for us. Secondly on pli, see the way we look at our margins is, you know, we will maneuver around industry dynamics as in how they evolve and use our margins accordingly. So there’s nothing that I want to share today in terms of pricing strategy but as the industry maneuvers around it, we will definitely maneuver around it too.
Pramod Amthe
Because the reason to ask that is also if you have seen in case of some of the electronic products, the PLI is already passed on in the highly competitive environment. So you once the leader and there is a possibility to come back to a leadership considering your advantage. So that’s the reason to ask you.
Second one is with regard to the motorcycles versus scooters, how do you see the gross margin profile emerging as we progress couple of quarters down the line as the as the EV penetration in motorcycles may also start improving, the gross
Bhavish Aggarwal
Margin profile for scooters and bikes for us will be very similar. And the reason is the bikes are also built on the Gen 3 platform. So in that sense the components, the engineering and the supply chain is all the same and in fact the manufacturing lines are also the same. So we don’t feel any major difference in the gross margin profiles on motorcycles.
The area we are focused on a lot as a management team is making sure the product quality in the ramp up phase remains high quality. So that potential warranty risks don’t happen because it’s the first generation, it’s the first product in motorbikes. We want to make sure that’s where the reason we are being a little more calibrated in the. Ramp up. And that calibration strategy seems to be paying off for us in terms of product quality of the bike. But and you see the end product pricing situation is different in case of motorcycles versus the scooter, what it brought into the table as a value proposition, the pricing is largely similar. Pramod, the end the motorbikes for a start at 99,999 for a 2.5 kilowatt hour product. I think the S1 starts at 2 kilowatts hours. So each motorbike variant has a little bit higher battery for us versus the equivalent scooter variant. So that is the real price differential. 5,000 10,000 rupees over the scooter variant. I appreciate the pricing points which are well discovered. I was looking at more from a competitive dynamics of ICE versus enhance your capability to get the pricing. Yeah. Yes. No. So Pramod, our ability to lead with pricing is a function of our margin profile. And the margin profile in bikes will be the same as scooters. So in that sense, as market evolves for EV bikes, we will definitely be competitive and aggressive even vis a vis ICE bikes. Our EV pricing is already reasonably close. It’s not exactly the same, but reasonably close. And with maybe another generation of bikes next year onwards, we’ll actually be equal to or lower than ICE bikes also in pricing for the equivalent product.
Pramod Amthe
Sure. And second one is. Or the third one is with regard to the cell, as you are almost about to commercially productionize the cell and I hope you are already testing it on your vehicle, what to look forward as a customer benefit other than as a. As we are looking from an investor to change the product positioning much better in the marketplace.
Bhavish Aggarwal
Pramod, the great point again, you’ve asked some very relevant questions. So the customer benefit of the cell is two, three things. Firstly, it’ll have a very different charging performance because it is a bigger cell, more capable cell. Second, it’ll allow you to pack more energy. So for example, the first products in which the cell is coming is the 9.1 kilowatt hour Roadster X and the 5.3 kilowatt hour S1 Pro.
And these are really high range vehicles which for some customer makes a lot of difference. And thirdly for us, the benefit obviously is that the cost of using these cells keeps coming down. And now once this 4680 platform is established, then every year as our cell technology improves, we keep improving the energy density and hence cost without making any changes to our manufacturing process. So that’s a very meaningful point for us and for the customer.
So imagine today, the 4680 gives you 5 kilowatt hour range. One year from now, the same pack will give you 5.5 kilowatt hour of range without anything changed from our manufacturing. Because it’s just the technology recipe in the cell that we will change. The speed at which which we can bring these iterations in the market is much better than competition relying on vendor cells.
Pramod Amthe
Thanks Indolibus.
Operator
We’ll now take the last question from Mr. Ajax Vetrick. You may unmute yourself and ask the question please.
Unidentified Participant
Hi, thanks again for taking the question. Sir, my question is from a near term perspective of this 325k vehicles which we aspire to sell for the year, how much are we penciling in for the bikes or in that range? Just a broader stroke would give us some clarity.
Bhavish Aggarwal
Sorry Ajax, could you repeat? We lost you in the middle.
Unidentified Participant
So I wanted to understand how much of this aspired 325k or 350k vehicles for the year?
Bhavish Aggarwal
Yes.
Unidentified Participant
Are we penciling in for the bikes?
Bhavish Aggarwal
So Ajax, today we’re not sharing that specific guidance but we do expect, you know, 15, 20% should be a reasonable target of this for bikes.
Unidentified Participant
Okay. Okay. Got it sir. So 30k per month is more driven by the industry itself picking up and the festive also helping us. So. Got it. Yes. Yeah. And secondly sir, on the revenue front, 4200 crores. How much of that is battery in that or do we not add battery in that guidance?
Bhavish Aggarwal
That’s consolidated revenue. A job. So battery. Since we are only selling it to ourselves. There’s an arm’s length transaction but consolidated all of that.
Unidentified Participant
Got it. Got it. Got it sir. That’s just a couple of clarifications from my end. Thank you.
Operator
Thank you. We’ll take the next question from Mr. Udit Jaiswal. If you can unmute yourself and ask the question.
Unidentified Participant
Congratulations Bhavish on. Great result. I just.
Bhavish Aggarwal
Are you the same guy who messaged me on social media?
Unidentified Participant
I think so.
Bhavish Aggarwal
Okay, go ahead, ask your question.
Unidentified Participant
I just have a quick question about battery as a service which your competitions have started to offer. Is there any plan for Ola Electric on that front?
Bhavish Aggarwal
No. We have a product on the removable battery which is the GIG and the GIG plus. But as of now we have not kicked off the manufacturing of that. We will do that as the market matures. O
Unidentified Participant
Okay. That was my question I think. Thank you. All the questions already covered. Thank you so much for. For taking up. Thank you.
Operator
Thank you so much. With this we. We will have to end our session here. We really appreciate your time and all of your questions during the call today. Thank you so much for joining us, and we look forward to meeting you all during our next earnings conference. Have a good day. The recording has stopped.