Olectra Greentech Faces Setback as EV Safety Norm Delays Impact Q4 Sales

Key Highlights:
• Olectra Greentech's Q4FY24 sales hit by delays in EV battery safety certification.
• India's lack of testing facilities led to unsuccessful online testing in China.
• New safety norms mandated stringent checks, impacting the certification timeline.
• Despite completing trials, two quarters were lost, affecting Q4 and full-year sales.
• Q1FY25 expected subdued; FY25-FY27 targets significant sales growth.

Olectra Greentech Ltd.'s Q4FY24 sales were impacted by delays in getting testing and compliance certification for the new electric vehicle (EV) battery safety standards released in late 2022. Due to a lack of suitable testing facilities in India, the company opted for online testing in China. However, this technique was ineffective in obtaining timely certification.

The deadline for certification was originally set for April 1, 2023, however it was later extended to October 1st due to industry-wide issues in completing the requirements.

The new standards, enforced by the Ministry of Heavy Industries, involve thorough checks at various levels—cell, battery management system (BMS), and full battery pack—to address passenger safety concerns following a series of EV fire accidents in India a few years ago.

During the recent post-result analyst call, the company's CFO, B Sharat Chandra, stated, "I would like to elaborate that the Government of India has introduced safety norms for the battery where testing and compliance certification are required. Because the facilities were unavailable in India, the testing had to be conducted online in China. It took longer, and it was beyond our control and capacity."

"We completed all of the testing and acquired the necessary certificates, but in the meantime, we lost around two quarters and post-certifications. The manufacturers and vendors faced constraints when ramping up production. So that is one reason why the fourth quarter and the full year were impacted," he explained.

"This quarter (Q1FY25) will be modest because we are in the process of transitioning. We're expecting for figures that are comparable to or somewhat better than those from the fourth quarter. We are aiming for 150-200," Chandra said.

Sales of Olectra Greeentech

Olectra Greeentech sold approximately 541 e-buses in FY24, compared to 580 units registered in FY23. During Q4FY24, the company sold approximately 131 units. 

With the transfer to its new facility well underway, the company expects to sell 2000 units in FY25, 5,000 in FY26, and 10,000 in FY27, when its existing orders will be finished, according to top executives.

The company's product portfolio includes 7 metre, 9 metre, and 12 metre electric AC buses, with an order book of 10,969 units. The company also has testing grounds for its 6x4 electric tipper trucks.

Also Read: Olectra and EVEY Secure Multi-Million Dollar Contract with BEST for Electric Bus

CMV360 Says

Olectra Greentech Ltd. faced setbacks in Q4FY24 sales due to delays in obtaining certification for new electric vehicle battery safety norms. Despite completing online testing in China, the company experienced production constraints, resulting in lower sales figures compared to the previous fiscal year. 

With a substantial orderbook and ongoing transition to a new plant, the company aims for a resurgence in sales in the upcoming fiscal years, targeting ambitious unit sales by FY27.