Hyundai Exits Ola Electric, Sells Stake for ₹552 Cr

Prime Highlights :

Hyundai Motor defies the Ola Electric trend with a selling of its holding in 2.47% for ₹552 crore, a strategic sale.
The holding in Kia Corporation is also sold, and total disposals amount to nearly ₹690 crore.

Key Facts :

Hyundai has sold its holding at ₹50.70 per share, while the shares in Kia were sold at ₹50.55 per share.
The sale of stakes collectively affected the share price of Ola Electric by almost 8%.

Key Background :

Hyundai Motor and Kia Corporation also jointly invested $300 million in Ola Electric in 2019 to collaborate on electric cars and charging stations for India’s emerging EV market. The two automakers were likely to make such a partnership as a strategic investment in order to further solidify their hold in the Indian market using Ola Electric’s future-ready EV platform.

But the company has fought tooth and nail in the past two years against contrary winds. While it’s a pioneer and market leader in electric two-wheelers, the company has been reeling from shrinking sales, growing competition from mainstream two-wheeler players shifting towards electric versions, and product quality and customer satisfaction concerns. These swamped investor interest and placed the company’s finances into a spin.

Ola Electric losses are mounting, and revenue losses will be witnessed in the subsequent quarters. This is also mounting pressure on the financial well-being of the company and making it challenging to ensure its long-term survival and create space for expansion with more competition.

Meanwhile, Hyundai Motor is recalibrating its EV strategy in India, reportedly exploring partnerships for developing electric three-wheelers, including talks with TVS Motor. This strategic pivot highlights Hyundai’s intent to focus on more localized and collaborative approaches to capture emerging segments within India’s electric mobility landscape.

The Hyundai and Kia withdrawal is thus a sudden change of investment direction, triggered by altered priorities because the Indian EV market remains nascent and competition is mounting.