Ola Electric Shares Drop 6% Amid Show Cause Notice from Consumer Authority
Ola Electric Mobility shares took a sharp fall on Tuesday following a show cause notice issued by the Central Consumer Protection Authority (CCPA) over alleged violations of consumer rights, misleading advertisements, and unfair trade practices. The stock dropped 6.18% to a low of ₹85.21, marking a steep 46% decline from its recent peak of ₹157.53 reached on August 20.
CCPA Issues Show Cause Notice
The show cause notice from the CCPA has raised concerns about Ola Electric’s compliance with consumer protection regulations. The notice, however, does not currently impact the company’s financial, operational, or other activities, as clarified by Ola Electric. The company stated that it has been given a 15-day timeline to respond and intends to submit the necessary documents within the stipulated timeframe.
Ola Electric further emphasized that the show cause notice does not entail any penalties or financial fines at this stage, and the company will fully cooperate with the regulatory authority.
Consumer Complaints and Stock Impact
The latest regulatory development comes amid a backdrop of increasing consumer complaints related to Ola’s electric scooters. The National Consumer Helpline, operated by the Department of Consumer Affairs, has received a total of 10,644 complaints from September 1, 2023, to August 30, 2024, regarding Ola’s e-scooters. Of these, 3,389 complaints were related to delays in providing service, 1,899 concerned delays in vehicle delivery, and 1,459 complaints were registered for unfulfilled service commitments.
The news of the show cause notice has contributed to the continued decline in Ola Electric’s share price. The stock has been under pressure since reaching its all-time high in August, and Tuesday’s fall marks a significant hit for the recently listed company.
Recent Controversies and Market Sentiment
Ola Electric has been in the news recently due to a public spat between its founder and CEO, Bhavish Aggarwal, and comedian Kunal Kamra on social media platform X (formerly Twitter), revolving around service issues related to Ola’s EV scooters. The exchange highlighted growing concerns among consumers about the quality and after-sales service of Ola’s electric vehicles, further impacting market sentiment.
With the CCPA notice and the rising number of consumer complaints, Ola Electric will need to address these issues effectively to regain investor confidence and stabilize its stock performance.
