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Ola Electric futurefactory hit major obstacle due to global chip shortage

Ola Electric Mobility Pvt., an Indian startup that claims to be building the world’s largest electric scooter manufacturing facility, is lagging behind in terms of its high ambitions. The mass production of Ola Electric’s e-scooters is expected to be delayed until at least January, according to media reports.

Ola electric scooter displayed during its launch at the Ola headquarters in Bangalore

Courtesy: Manjunath Kiran via Getty Images

Earlier this month, the company delivered around 100 scooters to customers at an event attended by founder and CEO Bhavish Aggarwal amid much excitement and celebration, but the electric scooters are likely to be delayed even further, a Bloomberg report said citing sources familiar with the company’s operations.

According to the report, Ola’s ‘Futurefactory’ is running at significantly less than full capacity due to a global chip shortage as well as an over-reliance on imported components and would face challenges to fulfill the 90,000 orders it has received. The company is struggling with the issues in its production process and can only assemble 150 units per day. Ola’s body shop is operating at half capacity while its paint shop isn’t operational yet, the source added.

Ola is not the only one who is suffering. The global semiconductor shortage is causing havoc in the Indian automotive industry. Customers who are waiting for their e-scooters have already expressed their frustration on social media channels, according to some reports. When Ola began accepting orders in September, it stated that delivery would begin in October, but this was later pushed back to November and eventually to December 15.

They also illustrate the obstacles that India, the world’s third-largest emitter, may encounter as it seeks to achieve net carbon zero-emission by 2070. Ola Electric’s capacity to fulfill its promise, which was recently valued at more than $5 billion in a fundraising round, could reflect out on its parent company, ANI Technologies, as it seeks to attract investors ahead of a potential initial public offering next year.

Varun Dubey, Chief Marketing Officer at Ola Electric Mobility in an email said, the company’s production unit is “functional with automated weld-line, battery line, and general assembly line, as well as an operational paint shop.” Adding further he said, “we had a two-to-four-week delay rather than the far longer delays (months and up to a year) that are normal in the industry,” attributed the delays to the global chip shortage that has affected automakers worldwide. Ola Electric, however, cited confidentiality as a reason for declining to share production figures.

This latest development makes Bajaj MD Rajiv Bajaj appear to be a little of a visionary as the legacy automobile manufacturer had mocked Ola Electric and other EV startups, claiming that legacy manufacturers would eventually prevail over the newbies. Earlier this year Rajiv during the launch of a new Bajaj bike in Pune said, “If we launch a motorcycle in October, you will get it in November. It is not that we will launch in 2021, you have to wait till 2022.”

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