Ola Electric to invest Rs 7,614 cr to make cars, lithium-ion cells in Tamil Nadu

Home-grown Ola Electric on Saturday pledged to invest Rs 7,614 crores over the next five years to manufacture cells that go into electric vehicles (EV) and four-wheelers by expanding the Ola Future Factory at Pochampalli in Tamil Nadu’s Krishnagiri district, providing jobs to over 3,000 people.

The fresh commitment by Ola, which has already invested Rs 2,400 crore in the Pochampalli facility that currently rolls out two-wheelers, comes as a major boost to Tamil Nadu, which had earlier this week released an exclusive policy for EVs with a special focus on advanced cell manufacturing with an intention to emerge as India’s EV capital. The state government is also projecting Hosur-Dharmapuri-Krishnagiri (HDK) region as the state’s EV hub.

Cell and car manufacturing units

Of the Rs 7,614 crores, as much as Rs 5,114 crores will go into the cell manufacturing plant as Indian EV manufacturers make a push to reduce their dependence on imports from countries like China. The remaining Rs 2,500 crores will go into the four-wheeler plant with a capacity to manufacture 1.4 lakh units per annum.

DH had reported on January 6 that the Bengaluru-based Ola Electric will invest anywhere between Rs 6,000 crore to Rs 10,000 crore to expand its Pochampalli unit, located just 120 km from Bengaluru. The report had pointed out much of the investment will go into cell manufacturing.

Read | Eye on turning numero uno in EV sector, Tamil Nadu releases fresh policy

Ola Electric Mobility Private Limited and the Tamil Nadu government signed a Memorandum of Understanding on Saturday in the presence of Chief Minister M K Stalin and Bhavish Aggarwal, CEO of Ola Electric at the Secretariat here.

“Ola will set up the world’s largest EV hub with integrated 2W, car and lithium cell Giga factories in Tamil Nadu. Signed MoU with Tamil Nadu today. Thanks to Hon. CM @mkstalin for the support and partnership of the TN govt! Accelerating India’s transition to full electric,” Aggarwal wrote on Twitter.

While Ola Cell Technologies Pvt Ltd (OCT) targets to install a 20 GWH capacity Giga factory inside the Pochampalli facility, Ola Electric Technologies Pvt Ltd (OET) will invest Rs 2,500 crores to set up the car plant. The combined investment will generate jobs for 3,111 persons.

Ola’s application to manufacture EV cells under the production-linked incentive (PLI) scheme for developing advanced cells was approved by the Union Government in 2022, which allotted it 20 GWh capacity. Mass production of lithium-ion batteries, which is critical to electric two-wheelers, is likely to reduce the price of EVs making them affordable for all sections.

‘TN is the EV capital’

“Tamil Nadu is known as the automobile capital of India, and it is only natural that we aim to be the EV capital as well. Ola Electric is one of the big names in the nascent sector and with a huge investment of Rs 7,614 crore, we believe the state is moving in the right direction,” V Vishnu, Managing Director & CEO, Guidance Tamil Nadu, told DH.

Vishnu said Ola's expansion plans and the government’s projection of Hosur-Krishnagiri-Dharmapuri (HDK) region as a hub for EV is also part of the plans to decongest Chennai by taking industries of every kind to other regions of Tamil Nadu.

“Ola will invest the said amount over a period of five years. The government is committed to supporting the EV industry to set up their shops in Tamil Nadu. We want HDK to be the hub for OEMs, components and those involved in setting up charging infrastructure,” Vishnu added.

A government source said Ola Electric will be allotted additional land adjacent to its Pochampalli facility for the expansion plans, adding that the company’s vendors will also set up shop near the plant, forming an ecosystem for the fledgling industry.

The exclusive EV policy

The fresh investment by Ola Electric comes days after the Tamil Nadu government released the EV policy aiming to garner investments worth Rs 50,000 crore in the sector and create 1.5 lakh jobs over a period of five years.

The Tamil Nadu Electric Vehicles Policy 2023, the second in four years, focusses on measures on the supply and demand sides, much-needed charging infrastructure, and building the ecosystem for EVs. It also lays much emphasis on component side, especially cell manufacturing, by offering a special capital subsidy of 20 percent of investment in eligible fixed assets for new and expansion projects in advanced chemistry cells (ACC) manufacturing.

“Our first policy (released in 2019) was aimed at getting an early upstart in the sector. As expected, we received a lot of investments in electric 2 and 3 wheelers. This policy is a maturation to the next stage and looks to leverage the advantage that the state possesses by focusing on enhanced incentives for cell manufacturing,” S Krishnan, Additional Chief Secretary (Industry), had told DH on February 14.

EV industry in TN and Ola’s presence

According to data released by the government, Tamil Nadu accounts for over 34 per cent of total planned investments in the EV sector with not just EV firms but battery manufacturers like BYD, Grinntech, Lucas-TVS, and Li Energy setting up their units in the state. The state believes the new policy will attract more players in the EV sector to set up their units in Tamil Nadu.

Ola has already invested Rs 2,400 crore in the facility, touted to be the world's largest scooter factory employing only women. The unit currently manufactures Ola’s electric two-wheelers, whose sales have picked up in the past few months, especially in December. The company is also looking at investing in setting up a manufacturing unit for four wheelers in the same campus.

Besides Ola, Ather, and TVS Motor Company manufacture electric two-wheelers from their plants in and around Hosur. Simple Energy is building a massive plant including a testing track in Dharmapuri district, while Sri Varu Motors and another start-up Bharat Alt Fuel (BAF) has pledged to invest Rs 250 crore in the region. Ampere has already invested Rs 700 crore in its manufacturing unit in Ranipet in Tamil Nadu.