Hyundai, Kia Cause Ola Electric Shares To Crash By 7 %: We Explain

Ola Electric’s stock faced a sharp correction this week, falling over 7 percent in a single day, after Hyundai and Kia sold off a substantial portion of their holdings in the company. The move came through large block deals that raised a total of ₹690 crore, triggering fresh questions about the company's performance and future prospects in an increasingly competitive EV market.

Hyundai and Kia Exit

Hyundai held a 2.47 percent stake in Ola Electric, while Kia had a smaller 0.6 percent holding. Both companies offloaded their shares at a discount to the prevailing market price. Hyundai’s share sale brought in ₹552 crore, with the shares priced at ₹50.70 apiece.

Kia’s sale was valued at ₹138 crore, at ₹50.55 per share. These deals were priced roughly six percent below the previous closing price, and the impact on the market was immediate.

One of the major buyers in these block deals was Citigroup Global Markets Mauritius, which picked up shares worth ₹435 crore. The rest of the buyers have not been publicly disclosed.

Financial Performance Under Pressure

Ola Electric has struggled to maintain the growth momentum it once promised. The company’s fourth-quarter financials paint a worrying picture. Net losses for the period widened to ₹870 crore, more than double the ₹416 crore loss reported in the same quarter a year earlier. Revenue fell by 62 percent to ₹611 crore. These figures reflect the combined pressure of rising costs, declining deliveries, and slowing demand.

Since its stock market debut in August 2024, Ola Electric’s share price has fallen by nearly 46 percent. This sustained decline in value has made investors increasingly cautious about the company’s ability to meet its long-term goals.

Regulatory and Operational Headwinds

Ola Electric is also under scrutiny from regulatory bodies for alleged discrepancies in sales reporting and disclosure practices. Investigations are underway related to the company’s claim on government subsidies, which could potentially have financial and reputational implications.

Beyond regulatory concerns, the company has lost significant market share in recent months. From dominating the electric scooter market with nearly 50 percent share, Ola Electric now holds just about 20 percent.

Competitors such as TVS Motor, Bajaj Auto, and Ather Energy have ramped up their offerings and are gaining traction. Even newer players, including international entrants, are chipping away at Ola’s earlier dominance.

Stake Sale Signals Shift in Confidence

The exit of Hyundai and Kia, who were seen as long-term strategic partners, has added to the perception that confidence in Ola Electric’s trajectory is weakening. Although large stake sales are not uncommon in public companies, the timing and discounting involved in this case have sent a strong message to the market.

Hyundai and Kia had initially invested in Ola Electric as part of a broader partnership strategy. Their exit could indicate a realignment of focus or concerns around Ola’s performance and strategic clarity. In contrast, Ola is now navigating not only the pressures of scaling up production and improving margins, but also the need to win back investor trust.

Path Ahead

While the company continues to operate in a segment with significant long-term potential, the immediate path ahead is challenging. With declining revenues, increasing competition, and investor exits, Ola Electric will need more than just ambition to regain its lost ground. The next few quarters will be crucial in determining whether it can reverse the slide or continue to lose momentum in India’s evolving EV landscape.