Ola Electric Mobility Ltd is dipping into the funds it raised for innovation to pay off its debt, the latest sign of stress for the Indian electric vehicle (EV) maker as it struggles with slumping sales and stalled fundraising efforts.
After a board meeting on Wednesday, the Bengaluru-based company decided to reallocate ₹575 crore, out of ₹1,505 crore it raised for research and development (R&D) during the initial public offering (IPO), to pay debt and fund organic growth activities.
The company’s disclosures showed that ₹475 crore will be used to fund upcoming debt, while ₹100 crore will be used for growth purposes. This is the second time since going public in August 2024 that the company has changed its use of funds, with the first change made in August 2025.
The cut in funds to be used for R&D has come as the company has total debt obligations worth ₹526 crore for financial year 2026 and ₹610 crore for financial year 2027, excluding any other short-term debt.
Subhabrata Sengupta, partner at Avalon Consulting, said that funds required for R&D can change, but such a reallocation isn’t a positive sign.
“How much R&D spend is needed depends on the plan. However, reallocating the R & D budget for debt obligations, which is in effect funding losses as debt has become unsustainable due to losses, is never a good sign,” he said.
Out of the ₹5,275 crore raised in the IPO, ₹3,982 crore has already been utilized across various objectives such as general corporate purpose ( ₹1,142 crore), organic growth activities ( ₹928 crore), research and product development ( ₹810 crore), repayment of Ola Electric Technologies debt ( ₹800 crore), and other debt repayments ( ₹302 crore). As of now, ₹1,293 crore is left to be utilized.
Shares of Ola Electric fell more than 4.8% during trading hours on Thursday after the announcement, while Nifty Auto fell 4.1%.
Put simply, Ola Electric raised ₹5,275 crore in August 2024 during its IPO to fund R&D, to 6.4 GWh, and debt repayment of its main operating subsidiary, Ola Electric Technologies Pvt. Ltd. During the IPO, specific funds were allocated for each of these purposes.
While the company successfully raised the money, the funds to be used for each purpose have changed. In August 2025, the company’s shareholders approved using ₹1,228 crore, originally planned for funding the expansion of the lithium-ion cell gigafactory from 5 GWh to 6.4 GWh, for other purposes such as debt payments and general growth activities.
The original ₹1,600 crore allocation for R&D in the IPO has now been whittled down to ₹930 crore following multiple reallocations. Of this, the company has utilized about ₹810 crore for R&D.
After two changes in the use of IPO funds within the last eight months, the company allocated ₹1,670 crore to debt payments by all Ola Electric-related entities. Of this, ₹1,102 crore has been used while ₹568 crore remains unutilized.
To be sure, reallocation of funds is allowed under Indian regulations. A monitoring agency, such as Icra in Ola Electric’s case, is supposed to monitor how the company is using the funds. The agency has so far not flagged any issues with the company’s utilization of funds. However, none of the other major new-age companies that went public in the last few years, such as Zomato, Paytm and Ather, have reallocated the funds raised in their IPOs.
When , it said it would use ₹800 crore of the total funds raised to repay the debt of one of its subsidiaries. But after two revisions to the plan since listing, the amount has ballooned to ₹1,670 crore, covering the debt of all Ola Electric subsidiaries.
The changes to bolster its balance sheet and pay debt have left it in a comfortable position to fund its debt. Tapping the funds it originally planned to use for growth has come as revenue from its business has fallen sharply over the past few months amid a consistent decline in sales.
The company slightly to ₹487 crore in the third quarter of the financial year 2026, from ₹564 crore in the year-ago period, while its revenue fell 57% to ₹504 crore amid dwindling sales. Sales during the quarter fell 61% to 32,680 units, the lowest quarterly sales since going public.
In the last year, the company has also announced twice that it intends to raise funds. Its board had approved a ₹1,500 crore fundraise through share or securities issuance in October, and the company had announced a ₹1,700 crore non-convertible debenture issue in May. Both have still not seen a formal closure.
The company’s share price has more than halved over the last year as investors remain wary of its prospects amid rising competition from rivals such as Ather Energy, Bajaj Auto, and TVS Motor Co.
