Ladies and gentlemen, good day and welcome to Ola Electric Q2 FY25 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Chauhan from Ola Electric Mobility Limited. Thank you, and over to you, Mr. Chauhan. Thank you, and good evening to everyone, and thank you for joining the earnings conference call of Ola Electric Mobility Limited for the second quarter of financial year 2025. To begin with, I would like to request Bhavish Aggarwal, Chairman and Managing Director of Ola, and Harish Abichandani, CFO of the company, to take us through the results. But we will take five minutes before we start, so I will give everyone a heads-up, and then we'll start the call. Good evening once again, and thank you, everyone, for your patience. I hope you've gone through the shareholders' letter. Now, once again, to begin with, I would like to request Bhavish Aggarwal, Chairman and Managing Director of Ola Electric, and Harish Abichandani, CFO of the company, to take you through the results. Over to Bhavish and Harish. All right. Hi, everybody. Good to speak again after a quarter. And this is Harish. So this is practically, I think, our first quarter in the public markets that we are giving you an update on. Before that, actually, in the last quarter, we had done the IPO, and just three days after that, we had the quarterly results. And this time, we've also changed our format of how we are updating all of you. We've also changed the way we are some financial metrics are being told more around how industry standards are on revenue, etc. So I'm assuming most of you would have gone through the shareholders' letter that we've written. We've tried to capture all the financials and some operating commentary also in it. What I'll do is I'll just give you some highlights. My remarks will be very short, and then we'll get into questions directly. This quarter actually has been a good quarter compared to last year. If you see, our revenues have grown about 40% over last year, 38.5%. Deliveries also almost touching [Number]. And gross margin, especially for the auto segment, is 20.6%, which is flat quarter on quarter, whereas year on year, it's about 12 points up. And this is despite much more enhanced competitive dynamics in the industry, which I will talk about in my remarks. So I think the key highlight for us in Q2 has been that we have maintained our market leadership. Market share is around 33%. And this is also a quarter where competitive action got aggressive, and we will comment a bit on that. One key area of focus for us going forward on the market is to expand distribution. We have about 780-odd stores right now, and we are in the process of expanding company-owned stores to about 2,000 by March, which is just about four months away. And in addition, we've also, in September, launched our network partner program, under which third parties like multi-brand outlets, other people who are already in the auto ecosystem from a retail perspective, can also sell our products. We have about 1,000 such partners live with our products now. So the front-end distribution is an important focus. We continue to scale. And as you'll find in the document, for us, each store does almost about 130 sales per quarter, and that's almost 2 to 3x of industry average. So we have much higher productivity per store than the industry, and we are expanding our store network. We actually hope that we will be fairly competitive in terms of depth of distribution with about 2,000 stores of ours. In addition to that, the network partner program will amplify the distribution network. Second, I think more on the industry commentary. For a few quarters, there have been questions that, "How is EV penetration doing?" Now, actually, if you see this quarter and even then after that, October last month, we've seen EV penetration start to hit a bit of an inflection point, especially if you see the scooter EV penetration. Because when you see overall, it kind of gets averaged out due to the motorbikes. But when you see scooter EV penetration, in June to September this year itself, it's gone from 16%-21.5%. And even from September last year to September this year, it's gone from 13.5%-21.5%. Very significant increase in EV penetration despite the FAME subsidies and all tapering off significantly. We believe that the EV scooter penetration is actually at an inflection point now. If you also look at it regionally, many states like Rajasthan, UP, Maharashtra, the big states are around between 30% to 45% EV scooter penetration. In fact, Rajasthan is actually 47%. This shows how, while some states are racing ahead, eventually all states will get here. It's a question of just supplying, adding distribution. That's a very good encouraging sign in the industry. In many ways, while on a daily, monthly level, there's a lot of operating noise, the fundamentals of the EV transition of India remain very strong. As the leader of that transition, we actually feel very confident of this inflection point. Another commentary which played out, another point which played out in this quarter is, as we had launched our mass market portfolio a couple of quarters back, this quarter is where it really came into its own. We were able to supply at almost full demand. Quarter on quarter, our mass market products, the S1 X portfolio, grew 15%, and despite the growth in mass market, our premium market products continue to be a majority of our revenue, so we have a very good balance between the two products, and another point you'll find in our shareholders' letter, as you read deeper, would be that our margin profiles across both mass and premium are actually not very different because it's built off a platform architecture, so we are very easily able to control comp costs as we go down the mass ladder and hence make similar gross margins. Then I want to reiterate our strategy, which we've been consistently following over the last couple of years or ever since we started this company. And every quarter, I would like to give you guys an update on how our strategy is progressing. There are three key elements of our strategy. Firstly is broadening our product portfolio. In the scooter segment, anyways, we have the most largest product portfolio with six scooters from INR 75,000-INR 1.5 lakhs. And in August this year, which is in Q2, we launched our motorbike portfolio, especially the roadster portfolio. And the first bike is on track for deliveries next quarter. So we are on track with our motorcycle launch and execution and delivery roadmap. In addition to just the Roadster series, we also announced a bunch of other motorcycle products, which will come out through the next year or two, as well as the Gen 3 Platform, on top of which more scooter products will be coming. And you'll see a chart in the shareholders' letter where it shows you just a time view on some of these products. There's been some media speculation in the past about us working on three-wheelers. So yes, we are building three-wheelers. The beauty is that it shares the same platform as our S1 in terms of electronics, battery architecture, powertrain. Only the mechanicals are different. So you see the three-wheeler product roadmap also in that chart. So Net net, a very strong product lineup over the next two years, almost 20 plus products to be coming over the next two years, and more than actually one per quarter. We are quite excited. Starting next quarter itself, we will start seeing a lot of product rollouts from us across categories. That's strategy number one, which is broadening our product portfolio so that the EV transition, EV revolution can be more broad-based across the two and three-wheeler industry in India. Second strategy for us is continuing to expand our distribution and service network. Like I mentioned in a previous point today, we're going to 2,000 stores. We already have 1,000 network partner stores, and we will increase that also by March. Net net by March, we'll have more than 3,000 retail points, 2,000 of ours and a minimum of 1,000 of network partners. Now, these stores for us, as you know, are co-located with service infrastructure. As we are expanding our sales network, our service network is also getting expanded. Over the last quarter or so, especially in Q2, we had a bit of a capacity challenge in service. Our sales had expanded much faster than we had expanded our service network, but I would like to inform everybody that almost all of the backlog that was there because of the capacity issue has been solved now, and we've added capacity also, as well as we've, as a one-time, solved almost all of the backlog, more than [Number], and now in service, our T+1 service, which is, let's say, if you give your vehicle to me to service today, either today or next day, I return it to you, is almost 80%, which is more or less at industry standards, but we are continuing to expand both sales and service infrastructure. Our focus is. We've invested very solidly, as well as deeply, into the back end of the business, which is the factories, the manufacturing vertical integration. We are now focused on really expanding our distribution to be as close to the customer in both sales and service as we can be, so that's strategy number two, and in the letter, you will also see some maps and how the network is densifying already. The third and most important, in my view, is a continuing focus on technology, innovation, and vertical integration, so in August this year, again, just two months back, we had announced our Gen 3 Platform. Now, as you all might remember, and since you all track the company closely, Gen 2 over Gen 1 had saved about 20% of BOM cost and hence gross margin for us. Now, Gen 3 over Gen 2 will be a similar saving, and I'm actually very happy to announce that while we had said Gen 3 will come out in August next year, we are now bringing out Gen 3 products two months from now, which is January, so the S1 scooters on the Gen 3 platform will be coming out in January. And then through the year, the whole 20% of margin savings will be step by step coming in, so some savings will come in in January, and then many more every quarter as all of the Gen 3 technologies come into play. So that's a very good highlight. Our engineering teams and the manufacturing teams have really executed well to bring in very significantly, from August to January, our timeline on the Gen 3. So three strategies, like I said, the broad product portfolio, very large distribution, a company-owned as well as partner, and continuing focus on technology, innovation, and vertical integration. And finally, on the vertical integration point, I would like to share with all of you that our cell project continues well on track. There's a program timeline in the shareholders' letter that you can refer to. We are on track for productionizing or starting commercial production in Q1 FY26. This quarter, our testing as well as our trial production continues to be ramping up. We are seeing good improvements in process accuracy, in yields, etc. There is still a journey to go. We are being very rigorous in terms of testing and process quality for the cell. So that's why Q1 is the timeline where it'll get commercial production started. And then there are some images and videos for you to refer to on how the Gigafactory is shaping up, as well as some products that we've announced. Very quick commentary on financials, and then I'll open it up for Q&A. So on financials, you can see year-on-year gross margins have improved significantly. EBITDA margins have improved significantly. Quarter on quarter, our gross margins are flat. Now, we have had a 3 percentage point improvement in gross margins due to BOM cost savings due to our vertical integration and technology. Part of that, which is about 1 percentage point, we've invested back into discounts to grow. And then 1.5 percentage points is actually a one-time timing issue on PLI certification of our new S1 X products. All of it is now done. So this quarter, Q3, we have the full PLI recognition for the S1 X portfolio also. A general commentary I want to give on gross margins looking ahead also is because we've also pulled in Gen 3, and in addition to Gen 3, we've been doing a lot of other technology and manufacturing integration work. We can expect to see almost every quarter a continuous improvement on gross margins. Part of the margins we will keep to improve the bottom line. Part of it, we will invest into growing the market or competing with aggressive competition. Our own estimates, we have a chart there towards page number eight, I think, where you can see how our cost structure in our own estimates versus competition's cost structure. These are two incumbent competitors. We have about a 20% advantage on just BOM cost for a better featured product. Now, this advantage only gets stronger because of our technology and vertical integration. In terms of, just to summarize this point, so in terms of gross margin, we expect about a 20-point improvement as Gen 3 plays out over the next 12 months step by step. And then as our own cell comes in, that's another 7-8 points of gross margin improvement. So you can see a nice table at the end, a nice chart at the end on how, even without incentives, our gross margins are looking like at a target level. That's a steady-state focus. We are building towards that. And every quarter, you can expect to see gross margin improvements from us. Now, in addition to gross margin on financials, I also want to comment on EBITDA a little bit. Now, on EBITDA, there have been some one-off expenses. If you exclude that, our operating expenses are actually flat or slightly 1% lower quarter on quarter. We are focused on some cost efficiencies, and we do expect our operating expenses to actually be flat or maybe slightly lower over the next couple of quarters as we continue to scale distribution and hence revenue, including product portfolio. Revenue keeps growing, and operating expenses will largely be flat or probably even down over the next couple of quarters. We have had, in terms of one-off expenses, there is one warranty expense that we have taken in this quarter. Now, in FY24, our warranty as a percentage of revenue was about 5.5%. Now, for this year, in the last quarter, we are accruing about, I think, 2.5% of revenue as warranty. We're still waiting for our estimation model to stabilize. There are some one-time expenses in the warranty due to this backlog. Over the next couple of quarters, we will stabilize this. And if we need to increase provisions, we will. But broadly through the year, I expect warranty to be at or lower than last year's number of 5.6%. So that's broadly the commentary. And now I will actually let you guys ask your questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Chandramouli Muthiah with Goldman Sachs. Please go ahead. Hi, good evening, and thank you for taking my questions. My first question is just around some of the one-offs that Harish spoke about just now. So there seems to be a pickup in both other expenses and wages quarter on quarter, in spite of having flattish or slightly better gross margin performance quarter on quarter. So just trying to understand around the IPO, were there any flotation costs? Were there any appraisal costs? And also, if you could size out, maybe in rupees gross, what those expenses were? And also just the warranty one-off that you might have taken this quarter, what the size of that could be? Sure, Chandra. I'll take a first attempt, and then maybe Harish can add some specifics. So there were actually two or three one-off costs. Obviously, there was an IPO-linked cost. Then there was this annual launch event that we do. There were some costs linked to that. And then, thirdly, obviously, annual appraisal, which was also put, which happened in this quarter. So all included, I think these three added up to about 30-odd crores, Harish. 36. 36 crores. Then in addition, warranty was the one-off that we did was about 64 crores. And like I said, I think my commentary on that is we are provisioning 2.5% of revenue. Over the next couple of quarters, we will watch that. We do expect last year, like I said, warranty was about 5.6%. We do expect warranty to be lower than last year across this year. If we need to increase our provisions after a quarter or so, we might do that also. Got it. That's helpful. Second question is just around the motorcycle launches. You mentioned we will start next quarter. So just trying to understand, I mean, we've done the launch in August. So do we have any order backlog color or any sort of demand color that we're able to share around the Roadster portfolio, which might start getting delivered in the March quarter? Yeah. No, so the Roadster series has generated a lot of interest. And there are three products there: the Roadster X, the Roadster, and the Roadster Pro. And these three are coming in sequence. The first Roadster X is coming most likely around the March timeline. Then Roadster will happen most likely around the May timeline, and then Roadster Pro towards the end of the year. Now, interest is very high. Today, I won't be sharing any specifics around reservations or orders and all. By the time next call comes around, I will definitely share that. But there has been very significant interest on social media, on our stores, on our website for really understanding about this product, as well as a lot of people booking reservations for it. Got it. That's helpful. And my last question is just around the points that you made around efforts to bridge the service network gaps. So there is a lot of numbers floating around. I think there are some press articles which have spoken about 85,000, 90,000 service requests, incoming service requests per month. I think our installed base of vehicles is close to 800,000, 850,000 vehicles at this stage. So if you could just give us some clarity on what are the run rates that we have on a monthly incoming vehicle service request. Yeah. No, I think there are a lot of numbers floating around. Even if you take the 80,000 number from the press, so if you think of any typical OEM product, it has one to two scheduled maintenance per year. So if you have, let's say, a million install base, that's 2 million, 1.5 to 2 million service touchpoints per year. Now, that makes it about 1.25 lakh a month. These 80,000 are not all complaints or issues with the product. Many of them are regular check-ins, the customer scheduled maintenance. Many of them, more than two-thirds, are actually just minor labor things. Something feels loose or the guy actually doesn't understand how his software works, so he comes in, and then we explain to him. More than two-thirds are actually around these kind of minor issues where no part is actually changed. Then there are some where there are accident cases, which is nothing to do with the product. And then there are some which are product warranty cases. So between these three, an 80,000 number actually is not per month, is not bad for an 8 lakh unit in operation. If you assume a lot of it is just scheduled or minor queries. Got it. That's helpful. Thank you very much and all the best. Thank you. The next question is from the line of Gunjan Prithyani with Bank of America. Please go ahead. Yeah. Hi, team. Thanks for taking my questions. Harish, I just wanted to go back to the points that you made initially, that EVs are at an inflection and market is growing. When I look at the numbers for Ola, of course, this is a business in nascent stages. I would idly think that the base of volume sold every quarter should consistently go up, right? So when I look at the quarter two volumes, clearly, premium is something which is almost halved from last quarter levels. And I'm just trying to understand, is it more to do with our focus on mass expansion? Just the number, quarter one to quarter two volumes going down is something that if you can explain how are we approaching that, because this is an expansion market, right? I mean, it's a very nascent market at this point of time. See, for us, for seasonal as well as some regulatory reasons, Q2 has always been a bit of a dip over Q1. So if you see FY24, also Q2 was a dip over Q1. And FY25, also Q2 is a bit of a dip over Q1. Now, there is a seasonality also in the industry. And also, generally, whatever FAME reductions the government does is around the start of Q1 or the end of Q1. Last two years, that's been happening. So what happened in Q1 FY25 was a lot of the deliveries which were there because March end was the same changeover. So a lot of customers had ordered in March, and the deliveries happened in Q1. But hence, I would actually say you should look at a more broader time horizon where actually our numbers are going up. Just last month, we sold, like we had said, we sold more than 50,000 vehicles in October. Even this month, we are seeing a good growing traction. So I feel, in general, penetration is going up. Our position remains strong. We do have to expand distribution. That's a very clear focus for us. But quarter on quarter, you should see growth over the next few quarters. Q2 over Q1 always is a bit of an outlier. Okay. So, I mean, the better way to look at it is just look at first half over first half. Is that the way, I mean, we should continue to expect at least 25-30% growth on the base of volume? See, my expectation would be about, I think we would year on year aim to grow around 50-odd%. That's our aim. Some quarters it might be more, some quarters it might be less, 50+%. So now, there is obviously a seasonality. So Q3 will always be a good season. Q2 will be a little weaker season. So I'm sure you will apply the seasonality discount whenever you look at it for quarter on quarter. Okay. The other comment, Gunjan, was from you on premium versus mass. So mass has obviously helped increase penetration. Our focus is to let both of our portfolios, premium and mass, grow in the market. We are not really worried about cost cannibalization since gross margins are broadly similar. And premium, like I mentioned, also makes just about 52% of our revenue, I think, overall. So the majority of our revenue comes from premium. Now, looking ahead also, even after Q2 in October, we've had generally similar ratios. The premium continues to also grow, while mass is really the one growing significantly. Okay. Got it. That's useful. The other thing that I wanted to get your thoughts on was these regular schemes. Now, whenever, particularly BOSS, when it got launched, I mean, it just tends to create a lot of nervousness around how you're thinking about the margins because these are clearly very high-discount schemes, right? So, I mean, how should we think about these recurring schemes coming back to the market? And then we sort of getting nervous about, is it chase for market share? How should we think about margin? If you can share your thoughts on this as well, please. Absolutely, Gunjan. So, see, our directional commentary on this is we will balance between growth and profitability. But given the balance, gross margins will continue to improve quarter on quarter because, like you saw, even in Q2 over Q1, despite additional discounts in Q2, we had discounts around our Sankalp event. We had discounts around our IPO period. We had discounts in September a little bit. So despite more discounts in Q2, we still kind of had a flat gross margin. So, like I said, three points went up due to BOM cost reduction, and one point we invested back in addition to into pricing and discounts. Now, in Q3 also, while we are investing into discounts, our general direction would be that quarter on quarter, gross margin will incrementally go up only. So we are seeing BOM cost savings, even while Gen 3 will come in next quarter. There are other a lot of vertical integration activities that are playing out, which continue to, every month, actually keep improving our BOM cost and hence improving gross margins. And then some of that we keep investing into pricing and discounts. Our strategy is to continue to gun for strong penetration and market leadership. And like I said, we have a very significant BOM cost advantage over competition, which is only increasing. So while we are investing from our margins, I think at some point, competition will actually have to see how they invest from balance sheet versus their gross margins from this product. So to summarize, you can expect increasing gross margins despite discounts. And fair to assume that the savings that you'll get from the Gen 3, as well as the battery vertical integration, I mean, roughly around 25% is, I think, what you've quantified. At least 30%-40% of that goes in terms of reinvesting, in terms of making the pricing better, enhancing the adoption. Is that a broader way from a midterm perspective to think of it? See, our focus is to have a gross margin of about 30% plus or minus, right? That's where the ICE industry also broadly operates. So at that level, with a very much more efficient front end due to the B2C nature of it, we actually believe our EBITDA margin will be in the mid-teens at a certain volume scale. Now, we are almost at that volume scale, and that's why quarter on quarter, you see our segment EBITDA in the negative single digits, roughly. So if there is higher competitive intensity in a quarter, we might invest a little bit more, but we will keep focusing on growing the headroom on the gross margin so that we can invest out of gross margin. So that's the overall direction I would share from that. 30 by when, Harish? Is there a timeline around it? No, Gunjan. Not a timeline, but specifically, if you see Gen 3, like I said, is starting January. There will be a full it'll start January. Not all savings will be in January, but as all the ideas on Gen 3 roll out through the next calendar year, we will get about a 20-point saving from today's gross margin. Then on top of that, the cell starts in Q1 FY26. Again, not all of our vehicles will start with our own cell on day one, but there will be a one- to two-year period when step-by-step different vehicles will come onto our own cell. So that's a step-by-step journey. It will take a couple of years, and I'm not giving any time commitment on it. Also, there is an open market dynamic, which, as market competitive dynamics evolve, we have the wherewithal to continue to be aggressive while maintaining a certain level of profitability. Got it. Just last, if I can squeeze in for Harish, I think PLI is what I just want to get a sense on what part of the portfolio got PLI in this quarter. Maybe if you can quantify that as a percentage of revenue in quarter two. Yeah, Gunjan, hi, Harish here. So on the PLI front, last year, we got our S1 Air PLI certified and S1 Pro certified in February. And in this quarter, the entire X portfolio, two, three, four, they all got PLI certified during the course of the quarter. Some few of them happened in August, and one or two happened in September. So as of now, this quarter, we'll have the, obviously, the entire PLI for the full quarter across the portfolio. I think in Q2, there was about a 5% as PLI. Yeah. So PLI is about 5% of revenue, which is accounted for in the gross margins. Around 5. All right. Thank you so much. Thank you. The next question comes from the line of Yogesh Aggarwal from HSBC. Please go ahead. Yeah. Hi, guys. A couple of questions. Harish, firstly on Gen 1 versus Gen 2 and Gen 3, you talk about cost advantage. But what's your views on general quality improvement? Were you negatively surprised with Gen 2 issues, and are there any learnings for when the Gen 3 comes? Are you expecting lower issues? So what are your views on that? So Yogesh, if you think of our product quality, our product quality is actually, in terms of number of defects per 100 vehicles or amount of warranty replacement, etc., broadly in line with EV industry within India and even globally, broadly in line. Gen 2 is actually better than Gen 1. That's why I said in FY24, we had a certain warranty cost. In FY25, we'll have slightly lower than that, and that's because of the Gen 2 transition. Now, in Gen 3, we have also focused on further making many reliability, quality, serviceability improvements in the product, fairly significant ones, actually, and for example, one thing, the hub motor is actually a very higher prone to quality issues, so we're actually in Gen 3 moving to a complete mid-mount motor across the platform, which actually helps reduce cost also, as well as helps improve quality significantly. There's almost a factor of 10 just in the motor quality over there, so many such things which have helped improve quality in Gen 2 and then further in Gen 3, so we do expect further reduction in warranty costs on Gen 3. Okay. Great. And then the other thing is. I was just curious from your views on the long-term brand and the product positioning strategy. The ASPs have been falling, right? And it's probably in line with your calls, but we are still falling last many quarters now. And this is led by all these flash discounting and mass market products. And we have seen in the past, once you go down that curve, it's very tough to upgrade the portfolio as well. So is it something you worry, or volumes and cost are paramount here? See, we think of firstly product and then volumes. And brand is an outcome of product experience of the customer, ownership experience, and obviously at the scale at which you do it. So that's how we think of this. And see, our premium products are holding very good. Our market share in the premium, let's say the S1 Pro or the S1 Air segment, is fairly high, and even the product is much better than what anybody has been able to build so far in competition. And there are very strong loyalist customers. Many of them have brought multiple S1 Pros, S1 Airs, etc. So I personally don't worry about the brand going down. One of the reasons for ASPs going down, and ASP is actually, Yogesh, probably a wrong proxy to think of in terms of brand because ASP is going down for two reasons. One is a mix, which you rightly said. Second is actually just as FAME is reducing over the last two years, that FAME has come out of revenue, right? So for the whole EV industry, FAME would be falling, and hence ASPs would be falling. Very good. Thank you so much, Harish. Yeah. Thank you. The next question is from the line of Rishi Vora with Kotak Securities. Please go ahead. Yeah. Hi. Thank you for the opportunity. Bhavish, just on the mass market portfolio, right? Obviously, on a sequential basis, we have seen a double-digit volume growth. But now, given that wherever pricing is versus the ICE scooters, when will that next leg of growth, as per you, come through? Because I think our models are there in the market for the last two, three quarters. So what is stopping the customers to now shift from ICE to EVs, given that even now the upfront cost is maybe similar or lower in some cases? So Rishi, like I had mentioned in my opening remarks, we actually believe there is an EV penetration inflection that is happening already in the scooter industry. There were two or three key drivers for this, and many of them have come in place over the last couple of quarters, and some still have to be done over the next couple of quarters. Firstly, purchase price parity. Now, that is all done more or less, especially for our portfolio, and a better cost of ownership for EVs with a purchase price parity is a very compelling proposition, and customers are starting to recognize that. Second is distribution penetration. Now, while we have 800 stores or so, competition is now selling in more stores, about 3,000, 4,000 each of them, telling their analyst commentary, but our stores sell much more because we have the best product at the best price. Now, as we expand our stores to 2,000, we actually believe we will be much closer to customers for them to truly experience the best EV product and at the best price and the best overall package. So that's number two. And third is also expansion of the service infrastructure for us. And service infrastructure in EV is also not just an Ola problem. It's an industry problem because training the mechanics in EV, EV battery maintenance, motors, electronics, all these are new things, software. So we are investing effort into doing this, which I believe is probably the last leg of confidence the customer needs. We don't see any major concerns or questions around charging in this ecosystem because two-wheelers are not very dependent on public charging. Now, all of these things are coming together. In many states, for example, I told Rajasthan, actually, Rajasthan has 47% scooter penetration, EV scooter penetration. And this is based on our estimates of the scooterization of the Rajasthan market. UP, Madhya Pradesh are around, I think, 35%. Maharashtra, Karnataka are around 25%-30%. So these are the states which are large enough states and yet have high scooter EV penetration. And this penetration has actually happened in the last six to nine months as our mass market portfolio has come on. And as now we have almost a million units in operations, eight and a half lakh or so, more people are seeing their friends, more people are getting more confident. So it's a matter of, again, just all these things falling in place. And these all different themes actually compound on each other, right? So that's where you are seeing already an inflection in EV penetration. I have a chart in my shareholder letter on page five. If you see, it'll show you how in the last one year we have grown, the industry has grown EV penetration despite in the same time same subsidies falling from almost 60,000 to 10,000. Right? So it just shows how the industry and the penetration has grown. Understood. And just on the premium portfolio, right, I do understand the seasonality part, but even on a YOY basis, our volumes are down 26%. And this is despite, I think, our pricing being lower than what it was a year back. So is there something which we need to be concerned about, or it's something which you think is a very quarterly phenomenon that should start normalizing in the subsequent quarters? This is a quarterly phenomenon. I wouldn't be too concerned about it. There will always be some cannibalization when we launch mass products, which we have. And from our vantage point, like I said, we are not, and my commentary to all of you would also be that don't assume mass products have lower margin. That's why if you see, even though the ratio in Q1 FY25 and Q2 FY25 has changed, yet the gross margin is actually flat. And that's because broadly, the gross margins are in the same zone for us, broadly, a few points here and there. And for us, premium, many customers were buying premium EVs earlier, but they wanted a product for TCO. So now there's mass market products for them. But parallelly, what's also happening is many customers who were buying, let's say, 125 to 150 cc motorbikes, slightly mid-market motorbikes, are actually buying premium EV scooters now because better performance, better torque, better functionality of a scooter versus a motorbike in urban areas. So there are many market dynamics which are very hard to forecast beyond a point. And that's why our strategy and effort is to just let these products be in the market. There will be some cannibalization the premium portfolio will do of motorbikes. Some it'll grow within the premium scooter segment. The mass of scooters will cannibalize our premium, but the mass will also much largely cannibalize the ICE scooter segment. And even actually, the mass is cannibalizing the ICE motorbike segment. We were looking at some data. And just last question on the distribution side, right? Before our IPO, our experience centers were at, I think, around 935. Currently, we are at 782. In our RHP, we had guided that we'll add 300 experience centers by FY26. Why there is a change in strategy is more because of pressures, or is this? See, the 900 to 780 odd was just some real estate which was not performing. We removed that. Then we consolidated our stores into the performing ones. All these stores are performing well. Like I said, the average is about 130 odd per quarter, which is two to three times the industry average. Now, when we were planning our expansion, we actually had initially thought we'll do more incrementally to a few hundred. But we are now seeing that the EV penetration is actually at this inflection point. So we now actually want to go deep into many markets. For example, let's say while in urban centers, we have enough stores, but let's say in a city like Bangalore, we have about 25-30 stores, whereas an incumbent two-wheeler company might have 70, 80, 100 stores. So we will do some densification. We don't need to be one-to-one because our productivity per store is much higher. And then even if you think of other tier two cities, let's take my hometown, Ludhiana, the whole district, we have only about one to two stores in the whole district. And our incumbent ICE company will have about 7-10 stores in the whole district. So there are places where the closest Ola store is about 50-60 kilometers away. Yet these are towns with one to two lakh population. There is enough two-wheeler sales over there. And as our motorbikes are also coming in, we feel we have the product portfolio to now go into upcountry in terms of distribution. So that's the overall thinking, and hence we decided to allocate some more capital to a faster expansion. Understood. Thank you and all the best. Thank you. The next question is from the line of Jinesh Gandhi from Ambit Capital. Please go ahead. Yeah. Hi. A couple of questions from my side. One is you had talked about 20% discount reduction in cost due to Gen 3. Would it be possible to give some breakdown? How do we come to the 20% number? Where are the savings coming from within the BOM cost? Dinesh, there's actually a very nice video in the shareholders' letter, which maybe offline you can see if you haven't seen already. It'll give you a very good conceptual architecture of the Gen 3 Platform. But some highlights are we're doing a re-architecture of the motor platform, which reduces cost, increases power density. We're doing a re-architecture of the electronics platform to lower the number of ECUs into smaller, largely a single board. We're doing some very cool work on batteries as a structure, which takes away some layers of plastic. We're doing some very interesting work on the way the mechanicals, the fabrication of the vehicle happens in the factory, which reduces the manufacturing cost. We're doing more automation in the factory. We're doing more vertical integration, some things which we were outsourced to suppliers. Like for example, the motor Tier 2s, we might bring some of those things also into our own manufacturing because we see a very quick return on capital on those things. So all of these added up gets you the 20% savings. More specifics, we won't be sharing each idea, but you can assume each of these broad categories of mechanicals, electronics, powertrain, etc., all of them add up. Got it. Got it. And effectively, by next quarter, uncertain, our PLI should go up from 5% to 14% given all our products have been approved, which are there in the market today. Is that the right way to think about PLI? Harish. Yeah. It will see the entire quarter, we have PLI approval for all the products in Q3 and Q4. Now, exactly 30% because there are also slabs in PLI that actually can go higher than 13% based on which slab you hit on the top line, etc. So I think minimum 13% on the product is given. Yeah. So we should be getting the full one. Got it. With respect to the cell manufacturing, which will come from 1Q FY27, 1Q FY26, what kind of savings do we expect? I mean, where are we in terms of our current cell cost, which has been imported? And what would be the cost of manufacturing for us for the upcoming cell? Sure. See, on cell, I will actually comment first on the segment P&L because you'll have to look at the cell segment P&L differently and the automotive segment P&L differently at that point. If I give you right now a consolidated number, see, the cell at a gross margin level will be much more profitable on day one versus procuring from outside. There will be some costs we will be incurring for scale, which we will grow into that as the cell production scales. Roughly about 5 gigawatt-hour is when our own cell production will be much cheaper than procuring from outside. And that's the 7-8 points of savings further. So that will happen by the time we get to about between 3-5 gigawatt-hour. Got it. Got it. And lastly, can we talk about the CapEx plan for FY25 and FY26? See, on the CapEx plan, what we have also highlighted in our book and continue to engage on that is that there is a cell project which is currently happening. You note that we have completed one. Phase 1B is in progress. Then that will be followed by scaling up from 5 gigawatt-hour onwards for which around INR 1,200 crore has been already raised in the IPO. See, that's the current roadmap from now for FY25 and FY26, and then beyond five later. The auto side, there is obviously new product launch which are happening, the motorcycles, the three-wheelers we spoke about. That will require a certain level of CapEx, followed by capacity expansion from a current 1 million onwards to 2 million. So these are the largely broad buckets of CapEx is where the investment will go into the coming couple of years. If I add to that, Harish, on the product development CapEx, there are two things. One is the factory expansion, and second is actually the R&D or the investments on the tooling, etc., which is more on the product things. So our factory expansion is limited to the factory is already built out for much larger scale. The factory expansion CapEx will not be similar to what we have done so far. So that will be much more tapered down even as we increase volumes. But for each new product we build, there will be some capital expense across tooling and testing and some homologation, etc., etc. Right. So our CapEx invested roughly about INR 280 crores. So we should be close to INR 800-1,000 crore given that the investment will also culminate in terms of the cash flow side. On the cell side, the rough math is roughly around $45-50 million per gigawatt-hour, but it continues to taper down as we scale up. And in the going up from the 1G project itself, we have got around INR 1,800 crores of debt facility from SBI and already invested our 400-odd crores that takes us to five and then beyond. So that's the rough math on the cell side. Got it. Got it. Great. Thanks and all the best. Thank you. The next question comes from the line of Pramod Amthe with InCred Equities. Please go ahead. Yeah. Hi. Thanks for taking my question. So first question is with regard to your group presence. Looking at your expanding from scooter to motorcycles, and if I look at your peers, where you had an advantage of product launch earlier in scooters versus motorcycles, do you see financing as a big enabler for EVs? And in that context, does it make sense to have a captive financing? See, financing is a very important thing for two-wheeler customers. But even if you look at our scooter financing percentage, it's, I think, in the 60s, early 60s% of products being financed. And so it doesn't feel like it's a constraint for penetration right now. Banks and all are very comfortable lending to EVs now compared to three years ago. And we have our group company, Ola Financial Services, which distributes the loan. We keep a very large part of the margin. So in that sense, we are actually generating margin without leveraging any balance sheet or without using any balance sheet. So we are able to monetize some of the lending and insurance commissions without having to deploy our balance sheet. Okay. And what proportion of your sales are funded through this entity if you can just look or support it? There's no funding of sales. This entity is also just a platform. This entity doesn't take any balance sheet also. It's just banks like IDFC, HDFC, Axis, or other NBFCs which do the loans actually. Sure. Thanks. And the second one is with regard to the pricing action in the EV space. Bhavish, considering that you come from a completely different background as compared to a typical automaker who are very sacrosanct about the selling price and the way the brands are positioned. So how do you look at a product? Is it more like a consumer durable where the price points are varied drastically to make it more affordable at any given point of time? And one, second, where you can play around with a much wider scope of variants and all to keep the consumer excitement alive? Interesting question. See, I think if you look at the game in terms of pricing, right, the way conventional autos are doing, similarly, the Chinese are doing. We think very first principle. Yeah. We think very first principles about these things. So we think of pricing basis whatever is required for penetration as well as whatever our margin structure can afford us. I don't believe the customer, modern customer, really holds a brand and pricing interplay. Brand is built by product, not by pricing. And if you think of current context also with competitive pricing actions, I actually feel these competitors are not going to be able to sustain these deep discounts as the EV industry scales up because they don't have the margin structure. And then you guys are all the smart people on understanding their margins. So I just don't feel they have the vertically integrated manufacturing for EVs or technology capability to truly sustain some of these at scale, whereas we have really deeply invested in those. So that gives us the ability to price aggressively, and we will always continue to be more innovative on pricing. Okay. But do you feel it's more inclined as the EV space evolves in India too, that globally the pricing can't be sacrosanct? Considering the technology curve is very steep, right? See, I don't think pricing and brand are linked. I think product and brand are linked. That's the question. But does the technology also play a substantial role, right, when you look at costing versus pricing? Absolutely. 100%. See, the reason we are able to grow our margins and all the while also pass on some benefit to consumers is because all of this is through technology development. Technology enables better margins because it brings cost down. Sure. And the third question is with regard to the cell plant. What is the update in terms of technology development, dry electrode process, and how far you have gone in terms of stabilization of the same if you can update? Sure. Our cell process has actually evolved a lot. There are two steps in the cell process. First is in the lab. We call that the R&D step. Second is in the factory. We call that the manufacturing process validation step. So our R&D and linked certifications were all done last quarter itself, and since over the last, I think, three to four months, we've been focusing on the factory process stabilization. Now, we actually have developed both wet and dry electrodes. The dry is a bit of a moonshot. We have very good progress on the dry electrode also. The dry electrode will be cheaper than the wet electrode. But our wet electrode also is actually fairly advanced. And if you recall, maybe we've spoken earlier, I would have shared that the first cell, actually the generation one cell that we developed was a wet electrode cell. And then we continued to evolve the wet electrode technology for us, as well as we added a dry electrode as an experiment. So we have both options. The wet is obviously very mature. We have that cell system ready. The Gigafactory is being tested. All production systems, you can see images of all these, the mixing, the electrode formation, the cell assembly and winding, the electrolyte, as well as the formation stage. All of them are going through very rigorous design of experiments. The dry one also, the only thing that changes is the electrode manufacturing. Everything else downstream remains exactly the same. So as we are developing the dry technology, once it matures, we might actually change over to dry. The wet is anyways mature for us. Thank you. Mr. Pramod, may we request that you return to the question queue? There are several participants waiting for their turn. Thank you, sir. The next question comes from Kapil Singh from Nomura. Please go ahead. Yeah. Hi, Bhavish. Just one question. I'm curious to understand some of the states have seen very good EV penetration. Any thoughts you have? What has gone right in these states? What are the enabling factors that are helping much faster EV penetration? See, states which have had a very sharp rise in penetration in the last six to nine months, like Rajasthan, UP, etc., are the states which are actually more price sensitive. So the mass market portfolio has really taken off over there. And now we are also doubling down with increasing our distribution in those states. Our distribution was actually south and west heavy. And now we are increasing in the north as well as the northwest part of India. So we feel as our S1 X product goes even beyond into deeper upcountry, there'll be a very strong demand for it. In the south and west markets also, if you look at urban markets are more penetrated, deeper rural markets need a little bit more distribution access from us, which also over the next two, three months as we add, we feel confident that those markets will also grow. And even the premium portfolio will, I feel that in the south and west in rural areas in these south and west regions, the premium portfolio will also sell them. Okay. Anything on electricity availability as well you feel is making a difference in some of the states? No, I don't think electricity availability is a challenge anywhere. I don't know which states are low on electricity, but I haven't heard that from the ground. Okay. Okay. Just one more question was on cell chemistry. You guys are doing NMC and 4680. Any thoughts whether there will be a need for LFP because some of the OEMs globally as well as in India are also exploring LFP? Just your thoughts on that. We are actually working on both. The first cell that will come out in Q1 FY26 will be an NMC cell. But the same platform of the cell, which is the 4680 platform, can do LFP also. We have an experimental project working on LFP. We have cell systems which are undergoing testing on LFP, although we are still maybe a year and a half or two away from productionizing it. The first step is actually to get the NMC cell up and going. And then in the same cell system, the same manufacturing facility, we can do LFP also. Sure. That's all from my side. Thank you. Wish you all the best. Thank you. Ladies and gentlemen, in the interest of time, that was the last question for today. I now hand the conference over to Abhishek for closing comments. Thank you so much, everyone, for your time and all your questions during the call today. And once again, thank you so much for joining us. And we look forward to meeting you all during our next conference. Thank you. Thank you. On behalf of Ola Electric, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.