Ola Electric is set to invest a little over 7,600 crore ($918 million) to set up plants in Tamil Nadu to manufacture electric vehicles (EVs), including cars, and batteries over the next five years, a state government official told ET on Saturday. The Bhavish Aggarwal-led company said Saturday that it had signed a memorandum of understanding (MoU) with the government of Tamil Nadu to this effect.

Ola Electric declined to provide details on its investment.

While an advanced cell chemistry plant to make batteries will cost about 5,100 crore, the four-wheeler plant will cost about 2,500 crore, the state government official said on condition of anonymity.

“Both will be in the same place that their current two-wheeler plant is. We’ve already allotted land to them for both. The cell manufacturing should start immediately as they have deadlines to meet while the four-wheeler EV facility should start slightly later,” the official added.

Ola said it will be setting up an EV Hub to house advanced cell and EV manufacturing facilities as well as vendor and supplier parks as part of a larger ancillary ecosystem at a single location.

The hub, located in Krishnagiri and Dharmapuri districts of the southern Indian state, will be built on 2,000 acres, the statement added. Ola currently manufactures its two-wheelers at its Future Factory in Krishnagiri, Hosur.

“At Ola, our aim is to localise all critical elements of the EV value chain. Ola’s EV Hub would bring the entire EV ecosystem under one roof making us a much stronger vertically integrated mobility company across 2Ws, 4Ws and cells,” Ola CEO Bhavish Aggarwal said in the company’s statement.Ola Electric monthly sales have climbed consistently since September last year. From delivering only 3,863 vehicles in July, Ola Electric sales went up to more than 17,279 units in December 2022, almost double the next biggest player TVS Motors, which shipped 9,317 units, according to data sourced from Vahan, compiled by Elara Capital.

Last year, Ola unveiled its first lithium-ion cell, NMC 2170, built at its Battery Innovation Centre (BIC) in Bengaluru that had an investment of $500 million. The facility is engaged in cell-related research and development, ranging from battery pack design to fabrication and testing.

Ola said it plans to begin mass production of cells from its upcoming EV Hub by 2023, adding that it will focus on building local supply chains for new materials and components. These include motors, rare-earth magnets, power electronics, semiconductors, lithium processing, and electrode production from materials such as graphite and nickel.

It was reported last month that Ola Electric was set to acquire about 1,500 acres of land in Tamil Nadu to set up an EV factory. In August last year, Aggarwal had announced plans to build an electric car with a 500-km range on a single charge by 2024. It set an ambitious target of selling 1 million electric cars by 2026-2027.

Earlier this month, the company delayed deliveries of its cheapest scooter, the S1 Air, by three months to July, due to the time taken to “accommodate” new variants and changes to the original battery size of the S1 Air.

Amid a funding crunch, Ola Electric had undertaken a cost-cutting exercise, culling 200 jobs across software development roles. However, the company also said it planned to hire about 3,000 people to focus on non-software engineering domains.

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