Ola Electric Mobility Ltd (NSE: OLAELEC) Q4 2025 Earnings Call dated May. 29, 2025
Corporate Participants:
Bhavish Aggarwal — Chairman and Managing Director
Unidentified Speaker
Analysts:
Chandramouli Muthaiya — Analyst
Vipul Agarwal — Analyst
Ajox Fredrick — Analyst
Arun Kejriwal — Analyst
Siddhant — Analyst
Jinesh Gandhi — Analyst
Unidentified Participant
Presentation:
Operator
Good evening. Hi Good evening ladies and gentlemen. Good day and welcome to Ola Electric Q4 and FY 2025 earnings conference call. As a reminder, all participants will be on listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. Before we begin, a few quick announcements for the attendees. Anything said on the call which reflects our outlook for the future or which could be construed as a forward looking statement 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 Bhavish Agrawal, Chairman and Managing Director of Ola Electrek, Harish Abhichandani, CFO of the company and Ankur Agrawal, VPN Head of Business Finance to take you through the results.
Bhavish Aggarwal — Chairman and Managing Director
Thank you. Abhishek. Hello everybody. Good to see everybody. This quarter is a little interesting and as well as fairly nuanced and detailed. So this is Bhavish, by the way. I am not going to make very detailed opening remarks because I’m assuming there will be a lot of questions amongst the audience about different things. So I want to leave enough time for Q and A. And we’ve also published our shareholders letter for Q4. I’m assuming most of you would have gone through it, but in a headline. It has been a quarter of major transformation for us at Ola Electric. Obviously if you see at a headline level revenue and margins as we’ve. Mentioned in our shareholders letter came in at about 649 crores adjusted revenue as well as 19.2% auto gross margin. Now these numbers were impacted by a one time issue with our registration process which we had highlighted during the course of the quarter itself and that subsequently got resolved in Q1 which is this quarter. So the revenue, as we all know we book only when we deliver, not when we sell. So while sales were higher, deliveries were Lower and in Q1 as a result some of that catch up has been completed. But as that may be, revenue came in where it came in this time for our results as a one time activity we are also giving a bit of an outlook for Q1 because firstly like I said, Q4 has been a bit of a complex quarter with a lot of moving parts. So hence you know, we know that people have many questions. And secondly, given that we are at the end of May, Q1 has anyways majorly been completed. So we have a very fair understanding of where Q1 is ending up. And if you look at our Q1 outlook, we are sharing a revenue forecast of about 850 crores, about 65,000 deliveries and a gross margin of about 28 to 30% which is much higher than Q4. So as we have been saying in our previous quarterly calls, our gross margin is trending upwards especially with the introduction of our Gen 3 platform. And that is one of the highlights that we will talk about on our call today. Now in you know, just to highlight a few things in the shareholders letter, we have also given a detailed operational commentary on on a few key topics. There are two important projects that we’ve been executing as part of our work over the last couple of quarters. One has been the scale up of our network. We call that Project Vistar. So it is obviously scaling up our network but also improving cost efficiencies as well as customer experience across the front end touch points of sales, service, registration, delivery for the consumer, for the customer and on that front while in the last two quarters we have had a bit of operational challenges first with service and then with registrations. But we’ve also significantly improved the bar on both on service. For example, we have now brought our service stat down to 1.1 days which is industry leading as well as on deliveries. Once the registration process was brought in house, our delivery timelines have significantly reduced. In addition we have expanded to about a total of 3200 odd company owned stores and a total of 4000 stores where we sell. Our focus now is to increase productivity, sales productivity as well as sales per store of these stores that we have opened up. That is the focus for this quarter Q1 as well as the next couple of quarters. And this becomes increasingly relevant as the key highlight for us in this quarter which is our bike comes into the market and as we get our bikes into stores we are seeing a lot of interest in the bikes from everybody. So that’s one of the key projects which we will be happy to answer about, which is Project Vistar. Then the second point again in the last quarter we spoke a little bit about is our Project Lakshya which is our cost reduction project. Now on cost reduction we have been, we had last quarter given a walk of where our cost will be and then I think mid maybe a couple of months back we had also shared an interim update in some context with with the stream. We are largely on track for all those cost reductions as you can see in the chart in that section and that savings, that benefit is already hence accruing to us in our Q1 outlook as we have shared with you. So cost savings are on track. And as a result of both cost savings as well as our network Project Vistar, both together, our breakeven point of our auto business segment EBITDA has now come down to almost 25,000 units from earlier what we had communicated to you and this is because the gross margin is expanding on one one side and then our cost is reducing on the other side. So those are two important highlights. Another point I want to just call out is in Q4 as a one time activity we have increased our warranty provisions. Now there’s detail in that section over there for those of you who want to read the details. But at a headline level, you know our Gen1 and Gen2 products, especially Gen1 products, had higher warranty costs because that was the first generation of our platform and we were in the in the last financial year FY25 adding every quarter some kind of exceptional one time costs. Now to do away with that every quarter exceptional cost, we have taken a one time warranty provision of 250 crores in Q4 that will provide for all the warranty needs for our existing Gen 1 and Gen 2 vehicles for their warranty lifetime remaining. So we don’t expect to have any one time exceptional costs added going ahead in the future quarters. That said, there’s also another positive highlight in that that our Gen 2 warranty costs are roughly half of Gen 1 and our Gen 3 warranty cost and failure rates are roughly half of Gen 2. So we are seeing every subsequent iteration of our platform getting significantly better on quality and hence warranty. And on Gen 3, we actually feel our quality. Metrics are by far industry leading and you know, when we compare it to our own previous generations, they are like I said, half of Gen 2 and Gen 2 was half of Gen 1. So. So that’s another important highlight that we wanted to share on the operating level to summarize, Project Vistar, which is to really bring the benefit of our direct to customer business model for customers as well as for our capital. Second is to really focus on getting to profitability sooner, which your company is close to achieving. And thirdly, just as a calling out of the warranty treatment now, while Q4 has been a tough quarter, it has been a quarter where we have had higher losses due to this one time provisioning as well as due to lower revenues. The company’s strategy and the company’s fundamentals remain very, very strong. Our strategy of focusing on vertical integration remains consistent and we very strongly believe this is the winning strategy given that globally the only EV companies who make money, Tesla and byd, follow a very strong vertical integration strategy. And in the shareholders letter we’ve actually given some metrics for those of you interested to understand our vertical integration. So if you see the value addition on in house engineering is now almost 90% in the Gen 3 platform that includes our own 4680 cell. Even if you see without that it’s almost 65, 66%. So very strong in house value addition on engineering as well as more and more in house manufacturing of key differentiated proprietary components. And that leads to a very strong gross margin advantage to us as well as a very strong product differentiation product features advantage. So our fundamentals on strategy remain strong. We are focused on the three core strategies like I said. Firstly, vertical integration second is continuing to build strong product franchisees. We have communicated our product roadmap to the street in the last few quarters and you see a nice image there in our shareholders letter also of the future products we are envisioning. But what we have done is we have actually decided to sequence out product launches to give every new product time to breathe and to grow in the market. So over the last three years we have built a very strong S1 franchise. Even till date we have sold almost equal to the next two OEMs put together in terms of EV scooters. S1 is maybe in this quarter we will touch almost a millions ones delivered to customers. The next two put together is equal to us. So that shows a very strong consumer franchise of S1 which is now in the third generation. Customers are loving the experience of Gen3, very strong feedback of Gen3, and as a result, the franchise has broadened from three years ago. When it was just one product to now where within Gen 3 we have the Pro plus which is a premium product, the Pro, then the X Plus and the X we have four tiers of the product now available and Gen 3 is now selling majority of our volumes and we still have gen 2 live for those customers who see a more value proposition. So S1’s franchise has been established strongly with our Project Vistar. As our network productivity, sales productivity improves, we do feel very confident of continuing to hold and gain market share. In the last quarter or two we have lost market share as market penetration grew slower than we expected and competitive intensity increased significantly across all levers of distribution, product and pricing. But industry today at a state where roughly the top three players are equal, give or take here and there a little bit. And now I believe the industry, the scooter EV industry is going to enter a phase where genuine product and innovation will start winning as well as balancing on profitability and growth. And we feel we are very strongly positioned on that front with the S1 franchise and our technology capabilities. The next phase for our company is to really build the Roadster franchise and we’re all very excited. The bike started getting delivered late last week. The, you know, we’ve seen very strong interest levels. You have some data on how many social media interest and the kind of impressions and the kind of engagement our content on Roadster is getting. We have a lot of queries, a lot of walk ins in our 4,000 plus sales touch points. People are loving the product. You know, if I may say so myself, it looks quite good. You can see it on the, on the COVID of the shareholder letter. So the Roadster franchise is our next big focus. And the Roadster franchise starts with the Roadster X which is the mass market variant, the Roadster as well as two more products, the Sportster and the Arrowhead are all built on the same platform. These will come sequentially as each one gets established and scaled up in the market. So that’s the big focus for the company ahead in the coming quarters and we will keep sharing updates frequently on that. Finally, in the strategic priorities comes the Cell project. Now again here we’ve added some more operating KPIs on yields. That’s been one of the questions you all have asked us. So if you see our yields have continued to improve and these are commercial production yields, we had said that we will bring the Cell into our vehicles this quarter. Now we have delayed that a few months because while our vehicles are ready with our own cells, we want to stabilize the roadster as well as the Gen 3 platform in the market and then also in that period, get the. Sell commercial production yields from 60 odd percent to 80 odd percent. And as we get there, sometime in the next few months we will start a transition of moving our own vehicles onto the 4680 cell. So to summarize on that point, the cell is coming along well. The product is very stable, the vehicle is tested with our own cell. The transition to our own cell will be over the next few months. So we are delaying it a bit just to make sure the operating risk or the operating profile of the auto business is first prioritized and then we add on the cell integration to that. Finally you have a section in the shareholders letter on path to profitability. In that you will see two main themes. Firstly, gross margin. And as we’ve been highlighting, our gross margin has been going up. Q4 was roughly flat over Q3 but Q1 is looking much better already. Our outlook is about 28 to 30% of gross gross margin. And interestingly you will note in Q1 PLI contribution is very low because for Gen3 products PLI is still awaited. It will come most likely in July. So in Q2 of this year our gross margin will further increase as we get the PLI benefit. So as you can see a lot of our advantage of vertical integration is starting to play out in our gross margin already from Q1 onwards and hence what we had shared that we expect to get to auto segment EBITDA positive within some time in Q1 we are more or less on track on that. Maybe June, July sometime there we will have a. You know our auto segment EBITDA will be positive. So that’s what we are tracking towards. And just a final comment on auto capex. You know in FY25 our auto capex which includes both manufacturing as well as R D which is capitalized was about 400 OD crores. Yes. Now for, for this financial year we don’t expect any material capex in the auto business since the factory as well as the network, distribution network is all built out now as well as on R D we are, we have the S1 Gen 3 as well as the roadster platforms all engineered. So the capex will be more, you know maybe between 150 to 200 crores only for the whole FY26 which includes both manufacturing as well as R and D capex for the auto segment. So in that sense the auto segment should see as volumes reach the 25,000 levels with the bike as well as the network scale up we should see profitability first and then strong operating cash flows in the auto segment. With that I will pause and open up to questions.
Questions and Answers:
Operator
Thank you so much. Ravish. We will now begin with the question and answer session. Anyone who wishes to ask a question may use Ray’s hand option. If you wish to remove yourself from the question. Queue, you may press the raise hand option. Once again, participants are requested to unmute themselves before asking the question. We will now wait for a moment while the questions queue assembles. Now we take the first question from Chandra Molly Mutheya of Goldman Sachs. Please unmute yourself and ask your question.
Chandramouli Muthaiya
Hi, good evening and thank you for taking my questions. My first question is just on the motorcycle deliveries which have started late last week. So just trying to understand is this going to be a phased delivery ramp up and I think you’ve shared some data points on social media engagement and so on. Is there similar to the kind of guidance you’ve given us for one Q Is there sort of a order backlog that you’re able to share on the motorcycles? Just first to get some idea as to how much of a market share booster this could be in the coming months for the company.
Bhavish Aggarwal
Chandrug hi, this is Bhavish. So there is a bit of a phased rollout. Yes, you’re correct. We’re starting with the we have two models which have the Roadster X and the Roadster X plus. The Roadster X plus has begun deliveries. Roadster X will begin maybe in a week or so. And even geographically we are taking it in a, in a sequential way because we are making sure the production and the quality ramp up is in sync with a high bar on quality and you know, just the level of quality the customer expects.
So we are making sure the ramp up remains high quality. So hence it will be a little phased. There is a very strong interest levels. We will not be sharing the backlog of bookings but as we are delivering the vehicles to customers there has been very positive feedback, very strong level of interest and frankly a very significant increase in the walk ins coming to the stores where the vehicles have already reached. So on a day on day basis we’ve actually been seeing a very significant part of our overall sales volumes becoming Motorbike.
As the motorbike gets to newer and newer parts of the geography, we’re also expecting the Motorbike to really give us significant benefit from smaller towns and rural areas. That’s where we had expanded our network to in the last quarter. So with that network expansion, primarily the Motorbike is the product which will be sold in those new stores which are in the smaller towns. And as we all know, the Motorbike is very relevant for upcountry markets. So already the sales of motorbikes are much higher in up. Be for us than in Bangalore for example. Hi, are we audible?
Chandramouli Muthaiya
Yeah, yeah, thanks for that. I think I was just struggling to re unmute myself so that’s helpful. My second question is just on the warranty costs. So after this one time 250 crore warranty cost that you’ve taken for 4Q just want to understand what would be the rough FY25 warranty cost as a percentage of revenue on the backward looking basis for Gen1 and Gen2 and on a forward looking basis for FY26. What do you anticipate the warranty cost is likely to be after this upward shift that you’ve taken in your warranty policy on the Gen 3 and Gen 2 sales that are likely in FY26?
Bhavish Aggarwal
See Chandru, we won’t be calling out the specific generation wise percentage of revenue as warranty costs because the current cost as you would imagine is a blend of everything. But like I said, Gen 3 is roughly half of Gen 2 and Gen 2 is roughly half of Gen 1 in terms of warranty costs as a percentage of revenue. So and Gen 1 as you can imagine now is also coming out of the warranty period. It’s a three year warranty period and the first products we sold were in 2022 beginning.
So increasingly Gen 1 will get phased out in terms of the warranty that we are carrying and Gen 2 and Gen 3 will remain and the sales are increasingly Gen 3. So we don’t expect any more provisions to be created for Gen1 and Gen2 warranties going forward. So you can do a calculation of the revenue sold and the warranty provisioned and you know from the past history. So it’ll give you a, let’s say a high single digit percentage of revenue as a combination of Gen1 and Gen2. Gen3 is looking significantly better. Yet still we have increased the provisioning for Gen3 also just to be a little conservative on warranty going forward.
Chandramouli Muthaiya
Got it. That’s helpful. And my last question is just around the EBITDA breakeven guidance for the auto business. I think earlier we thought it would be a 1Q event. I think when I just do the quick math on the numbers you’ve shared for 1Q directionally it looks like it might be on a full quarter basis. More like a 2Q FY26 event. Maybe one month in 1Q or you know the first month of 2Q is when you hit EBITDA break even on the automotive business. Just want to understand if that understanding is fair or if there’s anything else that you’d like to add there?
Bhavish Aggarwal
Yes. See, we, you know, the kind of the variables that are easier for us to forecast are gross margins and our operating costs volumes are a function of market. And the market has a lot of macro as well as competitive variables which are. Are not in a stable normalized state right now. So that’s why we are giving not a time horizon, let’s say 2/4, 1 year, etc. But a volume horizon to the break even which is roughly 25,000 for EBITDA and Q1 as a whole quarter. You’ve seen our outlook. It is going to be around a negative 10% auto EBITDA margin. And like we said, Q1 has very little amount of PLI because the Gen 3 doesn’t have PLI. Q2 gets the PLI as well as the pipe volumes get added. So it looks likely that we will cross that threshold of volumes in Q2.
Chandramouli Muthaiya
Got it. That’s helpful. Thank you very much and all the best.
Operator
Thank you. Now we’ll take the next question from Mr. Vipul Nagrawal of HSBC. Please unmute yourself and ask a question.
Vipul Agarwal
Yeah, thank you for taking my question. So first question on the like back to motorcycle thing. So given the use case for motorcycle and scooters is different, how are electric bikes are different from this from the scooter technically? Second is how is the robustness of a E bike as compared to ICE motorcycle? Well, like you are focusing on the rural area most. So if you can talk about that.
Bhavish Aggarwal
Actually to begin with I would suggest, I’m assuming you live in Mumbai. So if you go to one of our stores, you will get to test ride our vehicle, our bike, and firsthand you will be able to experience the robustness as well as the the strength the rider perceives when he rides the vehicle, the center of gravity, the handling, the dynamics, etc.
The engineering answer to this is actually a EV motorbike is much more stable, much more robust than a ICE motorbike because you don’t have the body has much stronger mass centered around the battery and the powertrain, unlike a ICE motorbike which has the engine, a lot of empty space below where the passenger sits, etc.
So it handles better, it has better vehicle dynamics as well as from a robustness perspective, our engineering has been very, very thorough. We’ve actually crash tested our vehicle in all kinds of scenarios. We’ve driven it across all kinds of roads and surfaces, especially the ones that come across in rural areas.
And it performs actually better than ICE vehicles. And in terms of range, which is one of the key criteria for a motorbike customer, a motorbike customer wants two things. He wants range and he wants total cost of ownership even more than the scooter customer. So on both on total cost of ownership, definitely EV beats size. And on range, if you see, our vehicles have actually at the top end, 500 km of range, which we were able to engineer because of the technical capabilities of our team. So at the upper end, 500. But even in the 4.5 kilowatt hour, which is the medium selling product, we have almost 250 kilometers of rated range.
Vipul Agarwal
Yeah, so. So basically like from like from a rural perspective, normally this is the case. Normally people, the roads are not that great. So when you pick up, you are riding on a fourth gear, suddenly you see a speed pick or something, you slow down the speed, then you pick up like three guys sitting over there, you pick up in second gear and then you can go away with. Do away with the ice bike. So how it will happen in an ev, like do you have a gear systems over there? I’m sorry, I’m not aware of.
Bhavish Aggarwal
On EVs the torque is higher, much higher. Again, I would suggest experience it for yourself. But torque is much higher and hence you can actually. And there are no gears. You don’t need gears because normally in an ice bike you need gears because at low RPMs you need higher torque and the only way to get that is gears. Right. On an EV you actually have high torque up front. So customers never complain of needing a lower gear for higher torque. To get out of a pothole or to get out of mud or anything, you will actually have too much talk.
Vipul Agarwal
Understood. Under. Thanks for that. A couple of. Sorry, one more question before that. On financing side, is there any subvention on interest rate given by the company?
Bhavish Aggarwal
The company does not give subvention on the. To the lenders. I presume you’re talking about to the financers.
Vipul Agarwal
Yes,
Bhavish Aggarwal
We don’t give any subvention.
Vipul Agarwal
No, I mean. Okay, just a housekeeping question then. Like what was the share of Gen 3 vehicles sold in 4th quarter? And when are you expecting PLI for Gen 3 vehicles?
Bhavish Aggarwal
So Gen 3 delivery started towards the end of Q4. So in Q4 largely it was Gen 2 by deliveries, by orders. Gen 3 was already majority in the month of March, I think. And Q1 almost 2/3 I guess is now Gen 3.
Vipul Agarwal
And when are you expecting the PLI?
Bhavish Aggarwal
PLI will come likely in the month of July. Could move up a few weeks here and there depending on government bandwidth.
Vipul Agarwal
Thanks for that.
Bhavish Aggarwal
Thank you for your questions.
Operator
Now we’ll take the next question from Ajax Frederick from Sundaram Mutual Fund.
Ajox Fredrick
Hi. Hi. Hi sir. Thanks for the opportunity. My questions are on battery. So we are delaying batteries to get better yields. Right? That’s the objective for delaying the batteries for our vehicles.
Bhavish Aggarwal
Ajax, good question. So we, we. If you see the yield number, we are above 60 already now. So we can use. We can scale up production now, but that will mean more yield losses. But the 60 cells that are produced are fully usable commercially sellable cells. But we. What we are doing with the cells that we are producing, is using them for rigorous testing in our vehicles. And we’ve gotten we’ve done a lot of testing with our S1 Pro, with our motorcycles, etc, with the 4680. We can, if we want, put our 4680 cell into our vehicles, but we are delaying it a little bit because of the yields. You. You said correctly. But also because you know the company is also right now focused on just establishing roadster in the market and establishing Gen 3 in the market. So we don’t want to add another change in the in the vehicle engineering by changing the cell right now. Next quarter once the auto roadmap is stabilized then we will add the 4680 cell in some of the vehicle variants.
Ajox Fredrick
Very helpful sir. And on the cost savings we’ll get when our sales come in, that will be on top of this 30% gross margins, right?
Bhavish Aggarwal
Absolutely. This is just auto gross margin. It doesn’t include whatever gross margin there is in cell. So it’s auto segment gross margin. But I would like to also highlight that the net benefit of the cell will not come from day one because we have a lower scale. The benefit, net benefit on gross margin will start coming in once we hit a 5 GWh scale scale of cell manufacturing which we will get to roughly, you know, F early FY27.
Ajox Fredrick
Got it sir. Got it. And how much capex are we planning for the cell this year?
Bhavish Aggarwal
So for the cell there is going to be a total capex of about 1600 crores out of which about you can say 1100 crore is debt financed through existing lines already and 400 crores or so is equity financed. And the capex will largely go for expanding from 1.5 GWh currently to 5 GWh. We have also not yet kicked off this capex cycle on the cell yet because we are just waiting for stabilizing yields in the 1.5 gigawatt hour. So whether we do it full fledged action this quarter, next quarter there’s a little. We’re just waiting for the final decision to kick off the full 1600 crore capex on this. Okay. Okay. So it might be. So that this might be lower than the number I’m telling you.
Ajox Fredrick
Okay. Okay. So at least this year we may get a deferred implementation of this capex. Yes, at least.
Bhavish Aggarwal
Because our approach on cell is to get the 1.5 gigawatt hours into production first, which is where we are, get them into our vehicles, second step and then after that get the vehicles on the road and then scale up to five, it’s going to be in that sequence.
Ajox Fredrick
Okay, okay. And what’s the targeted roc? I think it’s too soon for that. Or you guys have internal.
Bhavish Aggarwal
I’m assuming you’re asking for the cell.
Ajox Fredrick
Yes, yes, yes, yes.
Bhavish Aggarwal
Give us a quarter or so maybe I can give you a number. But I would like to have much more like operational depth on that when I answer you.
Ajox Fredrick
Perfect.
Bhavish Aggarwal
If I give you a slightly different perspective on that. How much capital will we spend on the cell before we start making let’s say net margin break benefit to the company, to the consolidated company. This 15, 1600 crore capex is the limit of what we will spend because that will take us to 5 gigawatt hours at which point. Making our own cell is cheaper than buying the cell from outside.
Ajox Fredrick
Okay, very clear. Just a final question on the vehicles for the quarter. Sir, if I do the math on premium to mass vehicles right, the mix has probably dropped from 35 odd to 31%. However the ASP dip or the average selling price dip has been much more sharper. So what’s causing this Q decline in the average selling price of the vehicle?
Bhavish Aggarwal
See, the volume share of premium versus mass like you said is about close to 30 odd percent. Yeah. And the guidance we want to share with everybody there is that we will broadly reflect the industry structure there because we want to play across all the segments of EV play premium mass scooter bike. Right now pricing in Q4 is a little bit of a outlier because of the deliveries versus orders. So the deliveries are more of Gen 2 vehicles in Q4 which were generally lower priced in Gen 3 vehicle.
Ajox Fredrick
Oh, okay, okay, okay. Very helpful sir. And all the best for your F. Thank you. Thank you. Thank you so much for your questions.
Operator
Now we take the next question from Mr. Arun Kewal of KAL Consultancy. Please unmute yourself and ask a question.
Arun Kejriwal
Thanks Bhavish for giving me this chance. Very interesting set of observations that you have made. The first question is that Q4 we had a lot of issues regulatory regarding our store launches, point of sales, etc. Is it fair to assume that whatever issues we had are now done and dusted as Q4 results are reported or we still have some issues pending?
Bhavish Aggarwal
No sir, thank you for that question. You are correct. Q4 had a bunch of these issues around regulatory things. Now those are now behind us the network expansion. We had to have trade certificates in some areas. We are now fully in touch with all agencies, all state level RTOs to make sure we are either compliant or have already filed for the compliant whatever we need as well as there was one theme around our February sales numbers which had made many people confused there.
Also with all regulatory agencies we have been properly in touch with as well as sharing all the data. So we, you know from our side we are very fully engaged as well as given whatever requests have come, there might be some further queries or news as they close their final whatever request for information etc follow ups with us. But largely from our side we don’t see any major risk to the. Business on these regulatory aspects. But I would also like to add that last quarter has also been a quarter of important learning and introspection for us that we, you know, we, as we have transitioned from a private to a public company, we have to also manage operating risk in a slightly more mature way. So that lesson has been well learned by everybody at Ola Electric. And going forward, hence you will see us be much more deeper as well as thoughtful about capital allocation and operating risk. So. And as a result we’ve actually sequenced our capital allocation into new products as well as focus a lot more on institutionalization of operating processes, especially in the front end and the compliance and risk aspect of the business.
Arun Kejriwal
Right. The second question is on the new number that you have given us, Bhavesh, about the breakeven factor. It’s a very interesting number and if I do simple maths, last year, full year, we’ve done 3,59,000 scooters which means we’ve crossed that threshold number of 25k that would get us to 300. Leaving aside the first quarter, is it fair to assume that we hitting in the remaining 9 months 8 times out of 9 this 25k? We should end the year on a positive note,
Bhavish Aggarwal
Sir. Absolutely. I think last year when we were doing 3 lakh plus orders, the cost structure of the company both on gross margin as well as on operating expenses was higher. So as a result our gross margin was in the high teens or maximum 20%. And as well as our operating expenses as you see in the shareholders letter was almost 170 odd crores a month. Now on both gross margin as well as operating expenses, the company has made significant progress. And as our volumes along with especially with the bike coming in scale up beyond the 25,000 numbers that we have already achieved multiple times in the last couple of years, we expect that to translate into strong profitability.
Arun Kejriwal
So thanks for that Bhavish. Wishing you all the best and hoping that next quarter we have the positive news. Thank you.
Bhavish Aggarwal
Thank you so much.
Operator
Thank you. The next question we take from Mr. Siddhant, if you could just unmute yourself and ask a question.
Siddhant
Yeah, hi, sorry. My question was, you know we are the only leading EV scooter in the Indian market with a chain drive. So how much has it reduced our breakdowns and does it add any cost benefit and any competitor.
Bhavish Aggarwal
Siddhant, very interesting question. Looks like you’ve been studying our product very closely. That’s a very good catch. Chain drive has had a very positive response from customers. You know, one would assume such a simple thing will not have a very meaningful change in or a very meaningful mind share in customer.
But customers in India really prefer the chain drive because it adds durability. And we have also engineered the chain drive in a way that the noise from the chain drive, which is the con of a chain drive noise versus a belt, we have really engineered the noise to a very bare minimum. So if you ride our gen 3 vehicle versus if you ride any other EV vehicle with a belt drive, our noise is actually lesser.
So as a result customers are loving the chain drive, the durability as well as the good experience on low noise. So we get a lot of positive feedback from customers on that. And in terms of absolute kilometers of durability, I. I don’t want to hazard a guess, but I think it’s definitely two to three times.
Siddhant
Okay, that’s great. My second question is regarding the attrition at OLA in this quarter and for the year
Bhavish Aggarwal
On attrition data. Siddhant. I don’t have it handy per se, but in general if I give you a thematic answer to that I’m sure we will parry to our filings. But generally our attrition at a management level, core corporate and engineering levels is low. We have a vertically integrated business model, especially on the front end network etc. So as well as on our factories where a lot of junior staff work. So attrition over there gets counted in our overall attrition percentages. And it’s not a very like to like comparison when you compare us to any other automotive company which doesn’t have a vertically integrated business model.
Siddhant
Okay, thank you.
Operator
Thank you. We’ll take the next question from Mr. Jinesh Gandhi from Ambitious.
Jinesh Gandhi
Yeah, hi, sorry, yeah, sorry, I’m with Oakland Capital. Some mistake there. But quickly on two questions from my side. One is you have given delivery guidance of 65,000 for 1Q this number, is it conservative considering that we have addressed issues of fourth quarter as well as we’ll start deliveries of motorcycle. So how should we think about steady state deliveries? I mean ignoring the fourth quarter which was aberration.
Bhavish Aggarwal
So Janesh, we are new to giving this outlook stuff so we are just getting started on this. So you can say it’s sort of conservative but I would call it a median outlook. If we surprise on the upside you can give us a pat on the back.
Jinesh Gandhi
Sure. And sorry, miss, I joined in late by. When are we starting e motorcycle deliveries?
Bhavish Aggarwal
Delivery started late last week, Ginesh.
Jinesh Gandhi
Okay. And how has been the response for electric motorcycles?
Unidentified Speaker
Given that it is first of its kind, if I ignore the earlier Chinese made products which have been there in the market. So Janesh, the response has been overwhelmingly positive this gen. There’s a very large amount of interest if you see the number of media we’ve earned with our motorbikes and we don’t do advertising, so we don’t do paid media, it’s all free media. So very large amount of visibility across social media and any other modern media. Customers walking in have had a lot of queries on the motorbike. We so far have not been able to have the vehicles in the stores for them to test ride because the vehicles were still in manufacturing and homologation.
Now that that is done, the vehicles are getting to the stores and the customers are. The customer feedback is overwhelmingly positive. And you said it correctly, this is the first major OEM electric bike. There have been a few startups here and there, a few Chinese kit importers here and there, but the first major OEM electric bike. So in that sense the interest from the customers is very high. Got it, got it. And last question on cell manufacturing.
So we are indicating 5Ghz will come by early FY27. This seems to be much delayed as compared to the timelines as indicated in pli. So do you expect any issues on our PLI incentives for SIL because of this? Yeah. So Ginesh, you are right. From the timelines that we had given in our original PLI submission a few years back, this is roughly, I would say one year or so. One year or something like five quarters maybe.
We are being very methodical and calibrated with our cell project. Methodical on capital investment also phase by phase. We want to make sure the first phase which we have done, which is 1.5 succeeds and then expand to 5 GWh as well as on this is India’s first gigahertry. We should all remember this is nobody in India has done this before.
So in that sense we also want to be very calibrated in making sure the product comes out with high amount of testing and high amount of rigorous vehicle and cell level testing both. So as far as the government is concerned, frankly we’re the only one in that PLI scheme who is doing it. There were three other people, none of them have done it. They’ve not even probably laid a brick of their construction. So the government actually looking at us as the bright spot of this. There was some news on a penalty last quarter, but the government in our private conversations has also been very open to understand.
They’re very empathetic to the fact that it’s a, it’s a more complex endeavor and they might be willing to manage the penalties to a minimum. And penalties also in this is not very, it’s not a very onerous penalty clause. It’s, you know, few tens of crores. And that’s not a very onerous penalty clause also. So. But the headline there is the government is fairly empathetic to the fact that we have invested so much, we have constructed.
Bhavish Aggarwal
We are producing, we are improving our yields and we are bringing it into our vehicles. It’s just that it’s taking a little longer than initially planned.
Unidentified Participant
Got it, got it. Sorry. And lastly, what is our CapEx guidance for FY26 including auto and sell? Sell. We indicated 1600 if we.
Bhavish Aggarwal
So I would say auto and sell both included will be between 17 to 1800 and this includes both R D that we capitalize as well as manufacturing capex. So if I separate out the R D and manufacturing. Just hold on, I will tell you guys. Yeah, so I would say. Yeah, so about 80 to 85% of that 1700 will be manufacturing and the remaining will be capitalized RD.
Unidentified Participant
Got it. Soto would be very low in RSS.
Bhavish Aggarwal
Yeah,
Unidentified Participant
Got it, got it. Great, thanks. And all the best.
Operator
Thank you so much, Mr. Gandhi and apologies for the mix up. Now we’ll take the next question from.
Unidentified Participant
Yeah, hi, thanks for taking my questions and apologies if I’m repetitive because I was a little late to the call. I just want to revisit this break even volume number. You know, there’s been a sharp reduction in that in the from the last guidance you gave. So can you just talk us through what are the real drivers? I mean, can there be that significant gross margin difference? What’s led to that? And from a product mix perspective also, as bikes come through, how should we think about the margin? My guess would be bike would be at the lower margin initially. Right. So some thoughts on what, what’s behind this break even volume reduction?
Bhavish Aggarwal
Gujan, two things you mentioned gross margin. So if you look at Figure 8 in the shareholders letter, we have given you the gross margin movement and we’ve had significant gross margin movement like I said, thanks to the Gen3 platform. Now the bike, while it’s a new category, it’s built on the Gen 3 platform. So it has all the cost savings of the Gen 3 platform. In fact, it goes one level further on the Gen 3 platform with something
So I would call it the Gen 3.5. So all the bike starts with a very similar gross margin as where our scooters are today with the Gen 3 platform. So our gross margins have gone up significantly from Q4 which was 19%. In Q1 it’s about 28 to 30%. And Q2, once the PLI comes in, we’ll add another 5, 7 points of margin. So all that accounted for brings the operating breakeven EBITDA breakeven point closer. That said, we’ve also reduced our operating expenses. So it’s. It’s a twin impact of gross margin improvement, significant gross margin improvement as well as auto as well as operating cost reduction which also you know, as we call it Project Luxure. We’ve been working on it and we’ve spoke about it in the previous quarter also briefly we’ve had significant savings across all aspects of our business over the last quarter or so.
Unidentified Participant
Okay, and how would warranty fare in that context?
Bhavish Aggarwal
Like you know versus full of last year to this year. Any guidance you want to lay on that how directionally as a percentage of sales that comes down, see Gunjan, we covered warranty but very quickly for your benefit, I’ll do it again. Warranty what we have provisioned for in Q4 as a one time activity will make sure we don’t have to do any more provisions for our Gen 1 and Gen 2 vehicles that we’ve sold so far because all of that will either already have been provisioned before or with this 250crores will be accounted for for the remaining life of Warranty going ahead.
Gen 3 products, which is largely what we are selling and motorcycle is also based on the Gen 3 platform is seeing a much lower warranty requirement because of multiple things. One like one gen Siddharth I think said the chain drive and that in itself reduces warranty cost. No hub motor reduces warranty cost because it’s only a mid drive motor across all our products now much more integrated electronics reduces warranty costs.
So very significant engineering things which have reduced component failures and much more vertical integration which reduces component failures. As a result warranty costs, warranty issues or quality issues have come down significantly in Gen 3. But that said we have still increased our provision that we provision for in in our books for Gen 3 products compared to what we were doing for Gen 1 and Gen 2 in the past. Right. Gen 1 and Gen 2 was about 3250 rupees in the past Gen 3.
We won’t share the exact number but we have increased it from that and we expect no one time quarterly exceptional charges on either earlier products or Gen 3 products going forward. Okay, got it. And lastly, just your thoughts on this whole LFP versus nmc. I think NMC has generally been predominant. You know the predominant in two wheelers. Do you see merit in lfp? And you know, is that something that’s part of the agenda for future product especially as we are also you know sort of working with the battery.
So you know, keen to hear your thoughts on that. Absolutely. Gunjan. LFP is on our roadmap. What we are doing is the 4680 cell is going to be both NMC and LFP compliant. So we are starting with the 4680 NMC, but soon enough with the same manufacturing, we can actually do 4680 LFP also. So from an engineering perspective, LFP will be a drop replacement of our 4680 NMC cell. So in that sense, as, as and when we stabilize 4680 NMC, we will bring our own 4680.
Unidentified Speaker
LFP into our own vehicles. And that could mean what, 15, 20% reduction in the, in the cost and is it stable for like, is there any issue in terms of integrating that into wheelers? Because you know, in past NMC has generally been preferred. So there is no engineering issue in integrating that. There is some trade off in vehicle dynamics and weight versus power and weight versus range.
But that said, in some segments of the portfolio you can do it especially for lower range products. So our higher range products will continue to be NMC because you need that volume efficiency which NMC brings. But on the lower side, the 3 kilowatt hour product, the 2 kilowatt hour product would move to LFP as we bring our 4680 LFP cells. Okay, got it. Thank you so much. I’ll join back with you. Thank you. We’ll take the next question from Mr. Arvind.
Yeah. Hi. Hi. Thanks for taking my question. First question would be on the gross margin difference between mass and premium vehicles once everything is stabilized. So what be the difference out there? Arvind? There is, there is a difference obviously in mass and premium, but it is in the, you know, single digits in terms of gross margin. It’s not a very materially stark difference. And from our business strategy perspective, we are fairly agnostic to whether we’re selling a premium product or a mass product because we want to build a franchise across both.
So in the end the gross margin profile will be an outcome of whatever ratio we sell. And it’s not very different across both levels. Thanks. Thanks Abhish. I do want to add though, by the way, on that note, Arvind, sorry. We have recently in Q4, by the way, you would have seen in the summary, we have started actually monetizing software with our Move OS plus that actually adds much more margins on the premium products.
So whenever a customer buys a vehicle, he can choose to buy the Move OS plus which brings a lot of additional features which don’t come with the standard vehicle software pack which is free. And we have very high, almost 58% of all our vehicles now are sold with a Move OS plus pack. And it’s almost like 100 gross margin products. And on the premium side, almost 70% of the vehicles are sold with a Move OS plus and this number is only going up.
Got it. Thanks. Thanks Bhavish for that. Also, could you throw some light on the GIG vehicles? How has the reception been and is it something that is contributing effectively to the volumes? Arvind, the GIG vehicle is not yet released or launched and also, like I said in today’s commentary, we are going to face.
Unidentified Speaker
Out new products now in towards a more longer period. So our focus right now is the Roadster platform which is Roadster X X plus and then the Roadster itself, Oster and Arrowhead. The gig, GIG plus Z as well as the three wheeler platforms will be a little later. And the disruption that we saw in February, is it possible to share the cancellations if any on account of that? Yes, I thought this question will come up. So I have a bit of a walk of number that I’ll walk you all through. So I know that you know I think the February numbers created some confusion. We thought we were actually being transparent with everybody but it looks like it added more questions.
So if I just give, I’ll take a minute and just walk through some of the numbers. So total orders we received. And by the way I want to just clarify for Everybody there are three different KPIs here. Orders slash sales is when we receive the full amount or almost the full amount of the, of the vehicle. You know, customer goes into our store and says I’m buying this vehicle. Here is the money or here is my loan. And he gets a loan signed off by. He puts the down payment and gets a loan. That’s what an order is. It’s not a, it’s not just a thousand rupee booking or a 5,000 rupee booking.
An order is a largely a proper sale. So that’s 25207 25,000 orders we got out of them till date we have had about 3,000 cancellations. We have about 2,000 products for which we got orders but we haven’t yet started deliveries like the S1 Pro plus with the 4680 cell or the Roadster series which is now just starting, starting to get delivered this week onwards. So about 2,000 orders of such products and almost the remaining vehicles have been registered. So that’s the Feb thing which created a little bit of confusion is all behind us now. There has been 25,000 overall orders, 3,000 odd cancellations, 2,000 odd orders for which deliveries have yet to start or have just started this week. And the remaining have all been largely registered. Arvind, does that clarify for you? I think you’re on mute.
Yeah, yeah, it clarifies. Thank you so much for the answering the question. Thank you so much. Thank you. Now we’ll take the last question from Mr. Raghavendra Goyal. Please unmute yourself and ask a question. Yeah. Hi. Thanks for the opportunity. I just wanted to know if you can up guide directionally the stores that we have opened. During 3Q? What would be the cost approximate sitting in our balance sheet for those stores? Additional stores, 3,000 stores that we have opened.
Unidentified Speaker
Any ballpark number if you can guide in that sense. So I’m assuming Raghavindra you’re talking about the capex that went into the stores. So in total we opened about 2400 stores. New stores, our own stores 800 we had 3200 we went to and 800 is non company stores 4000. So for these 2400 ballpark I would say reached about 120 crores or so or lesser. Lesser than that. It’s very efficient because our store design and the approach is very lead very efficient that way. So it’s it will be around 12 to 100 crores not even 120. Okay, thanks for that. Thank you. Now with this we will have to conclude the session here. To all of you, we appreciate the time and all of your horrific 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. Thank you for joining us. And now you may log out from the conference call. Have a good evening. The recording has stopped.