However, ICRA reaffirmed its rating on Ola Electric's cell subsidiary Ola Cell Technologies Pvt Ltd (OCT).

Speaking about OET first, the rating agency said it considered a consolidated view of the EV company and its subsidiary for the rating downgrade. It said that the "material underperformance" in the company's sales volumes and revenues relative to earlier expectations have extended the timeline for profitability and impacted near-term financial flexibility.

"While ICRA recognises the recent improvements made by the company in improving unit economics and controlling costs, its interplay with volume growth and market share recovery will be a crucial factor for supporting the credit profile," ICRA added.

It also said that intensified competition from legacy OEMs such as TVS Motor and Bajaj Auto has affected Ola Electric's market share. It highlighted that the Bhavish Aggarwal-led company's market share in the two-wheeler EV market declined to low double digits in FY26 from 30% in FY25.

"This contraction reflects both external pressures, including intensified competition and subsidy rationalisation, as well as company-specific factors such as weakened brand perception arising from service execution issues and adverse media coverage," the rating agency added.

Notably, after months of decline in its registrations, the company's EV registrations more than doubled to 9,496 units in March 2026 from 3,973 units in February, as per Vahan data.

In a statement, the company claimed its registrations crossed 1,000 units per day in the last week of March on the back of unveiling a campaign to offer discounts of up to ₹50K across its portfolio and offering some variants for as low as ₹49,999.

Taking this into consideration, ICRA said that the company's management implemented corrective actions and service metrics improved "meaningfully" in 2026 and the key operating metrics are stabilising. However, the recovery in brand perception and walk-in demand has lagged operational improvements, it added.

ICRA Positive On Battery Subsidiary

ICRA also called Ola Electric's entry in the battery energy storage segment as "strategically positive" but added that it would add to execution and funding risks in the near to medium term, given limited monetisation visibility at this stage.

"The entity is, however, likely to have the ability to mobilise funding for cell manufacturing, supported by investor interest in innovative, next-generation technologies that contribute to reducing import dependence. The funds, if mobilised, will aid stabilisation and prospects of the battery cell business of the Ola Group," it added.

On the other hand, for OCT, the rating agency said it took a standalone view for the cell subsidiary as the parent entity is likely to offer extended financial and operation support due to the strategic importance of the battery cell project.

"The battery cell manufacturing project remains integral to the Group's long-term strategy of achieving vertical integration, enhancing cost competitiveness, and reducing dependency on imports," the agency added.

It further said that OCT's standalone project execution has progressed. However, its credit profile is linked to the financial strength, liquidity position and execution capability of the Ola Electric Group, as far as the subsidiary is in its plant ramp-up phase. This segment is also likely to witness the heat from increasing competition, both from imports as well as domestic players setting up lithium-ion cell manufacturing capacity.

Earlier this year, Ola expanded its in-house 4680 Bharat Cell and battery pack beyond EVs, opening sales for enterprises across energy, healthcare, defence and robotics.

Notably, Ola Electric is looking to raise up to ₹2,000 Cr by selling a portion of stake in Ola Cell Technologies. In March, Ola Cell Technologies' board approved the investment by way of subscription of 87.76 Lakh non-cumulative and non-participating 0.001% Series A optionally convertible redeemable preference shares of Ola Electric Technologies.

While Ola Electric is yet to disclose its financial results for the last quarter of FY26, it managed to trim its net loss for the December 2025 quarter by 14% to ₹487 Cr from ₹564 Cr in the year-ago quarter. However, its revenue plunged 55% YoY and 32% QoQ to ₹470 Cr. Including other income of ₹33 Cr, total income for the quarter stood at ₹504 Cr.

Shares of Ola Electric were trading 0.83% lower at ₹36.01 on the BSE at 13:25 IST.