A few days ago, home-grown ride hailing startup Ola announced that the production of its first electric-powered scooters is all set to go into production soon. And now, Ola Electric, the branch of the firm dealing in its electric vehicle ambitions, has struck up what it claims to be the largest long-term debt financing agreement that the EV industry in India has ever seen, in collaboration with Bank of Baroda.
The deal is worth $100 million, and has been granted as a debt to Ola Electric for a period of 10 years, in order to help the startup fund its Phase 1 of the Ola Futurefactory, which is the name that has been given to the manufacturing unit that will facilitate the production of electric two-wheelers.
Last year in December, Ola had announced that an investment of a whopping ₹2,400 crore will be going into setting up the Phase 1 of its manufacturing unit, which is apparently set to be the biggest two-wheeler factory in the world. The unit is currently under construction in Tamil Nadu, and once complete, will span an expansive space of 500 acres with a possible annual capacity of 10 million vehicles. Once the first phase of the factory’s development is complete, production trials for Ola Scooters will begin.
Bhavish Aggarwal, Chairman and Group CEO at Ola, expressed his excitement at the team-up, saying, “Today’s agreement for long term debt financing between Ola and Bank of Baroda signals the confidence of the institutional lenders in our plans to build the world’s largest two-wheeler factory in record time. We are committed to accelerating the transition to sustainable mobility and manufacture made in India EVs for the world and we are happy that Bank of Baroda has joined us in our journey.”
Through the factory, which gets closer to completion with each passing day, Ola plans to serve a global market of electric vehicles, especially in the United Kingdom, Europe, and Latin America, in addition to home ground India.
While still under the larger banner of the ride service, Ola Electric has established itself as a separate entity in its own right, and as of 2019, earned the prestigious reputation of a unicorn, following an infusion of $250 million by investment giant SoftBank. Other backers include Tiger Global and Temasek. The latter led an investment in the firm just last week, along with Plum Wood Investment. The fundraiser saw Ola Electric raking in as much $500 million.
Sanjiv Chadha, Managing Director and CEO at Bank of Baroda, too, shared his own views on the deal, saying, “The government has brought in several policies to incentivise make-in-India and to enable India to become a global EV leader. Ola is leading from the front and we are delighted to partner with them for their EV business. The Ola Futurefactory will put India on the global EV map and we are proud to be associated with them.”
All in all, with the new boost that this debt is bound to bring to the production, Ola is moving closer towards fulfilling “its motto of “transitioning the world to sustainable mobility and making the world better than we found it.”
