Ola Electric served notice over alleged consumer rights violation
India's Central Consumer Protection Authority (CCPA) has served a show-cause notice to Ola Electric over violations of consumer rights. This spells growing trouble for the leading electric vehicle maker, as its shares plunged over 9% on Monday, following CEO Bhavish Aggarwal's spat with comedian Kunal Kamra. The Bengaluru-based electric vehicle maker has been given 15 days to reply to the allegations, which include misleading advertisements and unfair trade practices. Ola Electric revealed the development in a regulatory filing on Monday.
Response to CCPA notice
In response to the CCPA notice, Ola Electric has confirmed its receipt and expressed commitment toward addressing consumer concerns. The company also said it would provide a response to the CCPA within the stipulated timeframe, along with supporting documents. "The Company will respond to the Central Consumer Protection Authority within the given timeframe with the supporting documents," Ola Electric CFO Harish Abichandani wrote in a regulatory filing.
Mounting customer complaints
The CCPA notice comes at a time when customer complaints about Ola's scooters and service quality have surged. According to a Mint report, the company receives over 80,000 customer complaints every month. HSBC analysts, who visited some Ola Electric service centers last month, found that "most service centers appeared overwhelmed by service requests and were struggling to provide adequate service quality (as expected from an Auto OEM in India)."
Market capitalization dips below $4.75 billion
The regulatory scrutiny has taken a toll on Ola Electric's stock performance. Shares fell 9.1% to ₹89.14 on Monday. Today, at the time of writing, the stock was down over 2%. This week's drop has taken its market capitalization below $4.75 billion for the first time since its August IPO, marking a more than 40% drop from its peak of ₹157.
CCPA notice details consumer complaints against Ola Electric
The CCPA notice was based on 9,948 consumer complaints on the National Consumer Helpline between September 2023 and August 2024. The complaints include delayed deliveries and faulty vehicles, poor customer service, and misleading advertisements. Of these, 1,899 complaints were related to delays in receiving ordered electric scooters while the highest number of complaints (3,364) were related to delays in service and repairs. Many consumers also complained about manufacturing defects, poor build quality, and recurring technical issues with their Ola scooters.
