Global research firm Bernstein took a deeper look at Ola Electric‘s lead in the electric vehicle (EV) market in its latest research note on the two-wheeler industry. The brokerage has not initiated coverage on the stock.

What Happened: Bernstein’s assessment places Ola Electric at the forefront of margin performance among competitors like TVS, Bajaj and Ather, despite the entire electric vehicle sector currently being unprofitable.

Margins range from -2% to over -35% across original equipment manufacturers, but Ola Electric leads the pack with an adjusted margin of a little over 2% for some of its premium models, driven by several strategic advantages. These include an early start in the market, aggressive localisation and a strong focus on cost structures.

Ola’s direct-to-consumer (D2C) distribution model and focus on advanced technology features, superior design and performance help attract urban, tech-savvy and cost-conscious customers, according to the research firm. This focus has enabled the EV major to achieve industry-leading volumes in the electric scooter market, the brokerage firm said.

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The Bhavish Aggarwal-led EV giant benefits from both the production-linked incentive (PLI) scheme and Faster Adoption and Manufacturing of Electric Vehicles (FAME) subsidies. These subsidies allow the company to maintain aggressive pricing while sustaining margins, the analysts noted.

In contrast, TVS has yet to receive its PLI benefits, and Ather faces challenges due to its ineligibility for PLI subsidies, weakening its overall margin profile. Bajaj's Chetak faces higher losses than TVS's iQube as it offers better specifications at a lower price point, making it more dependent on outsourcing.

The brokerage noted that Ola's broad product portfolio, ranging from premium to mass-market scooters, plays a crucial role in balancing profitability. Losses from affordable models are mitigated by gains from premium products.

The company also benefits from its vertical integration in critical components such as cells, motors and battery packs, which reduces costs and reliance on third-party suppliers, it added.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.