Weeks after raising funds, Zypp joins Ola Electric in laying off employees

Electric scooter rental startup Zypp Electric has laid off at least 150 employees and introduced pay cuts linked to certain targets in efforts to cut costs, people aware of the developments told Mint.

Zypp’s measures come shortly after it raised about ₹55 crore as part of an ongoing fundraising and amid increasing adoption of electric scooters, although the domestic electric vehicle sector faces multiple challenges.

“The company has been firing people since late February to slash costs, and it’s (the layoffs are) still going on,” said one of the people mentioned above.

The Gurugram-based startup said it cut its employee count by about 150 people as part of a regular efficiency exercise.

“This isn’t about cutting jobs but about building a scalable, high-performing team to boost our company growth and our expansion into new markets…,” a Zypp spokesperson said in response to Mint’s queries. “As part of the routine exercise tied to key performance indicators (KPIs) and key result areas (KRAs), our workforce has naturally adjusted from 1,300 to 1,150 employees.”

Also read | Ola Electric may lose subsidy benefit if e-scooter registration delays spill over to FY26

Founded by Akash Gupta and Rashi Agrawal in 2017, Zypp Electric is a last-mile delivery startup that provides electric vehicle fleets and battery-swapping solutions for e-commerce, grocery, and logistics companies.

The company has raised a total funding of about $80 million from investors including Anthill Ventures and Venture Catalysts, and is valued at about $322 million.

In January, Zypp secured $6.5 million as part of an ongoing Series C fundraising round. It is in advanced talks to raise another $25-30 million from investors led by Nuvama Wealth, according to a recent Economic Times report.

Apart from the layoffs, Zypp has introduced a loss-of-pay policy for team leads, according to two people familiar with the developments.

“As part of this policy, the company gives 3-day targets to team leads and if they are not able to achieve that, it results in loss of pay for one day. The company has also created a dashboard for this,” one of them said.

“During probation, we kick things off with an energizing, target-based onboarding system for the first month—those who shine join our crew and others don’t make it well, while everyone is fairly compensated for their efforts based on achievements,” the Zypp spokesperson explained.

An EV glitch

In a report late last year, global wealth management firm Bernstein highlighted challenges faced by Indian electric vehicle companies in scaling up and achieving profitability. “It is tough to generate sufficient margins and get scale in EVs. Even with hefty incentives, incumbent OEMs (original equipment makers) are still unprofitable,” it said.

While EV adoption is a strategic priority worldwide, profitability remains a challenge. High battery costs and underdeveloped charging infrastructure have dented scalability for venture-backed EV startups, according to Paramdeep Singh, an early investor in EV logistics-focused startups like Zippee and Vidyut Tech.

“These layoffs only reflect how unsustainable cost structures are forcing startups to recalibrate. I foresee the winners to be those driving innovation, route optimization, and cost efficiency. Investor confidence in such resilient, high-utility models remains strong,” Singh said.

Arindam Mukhopadhyay, partner and head of corporate innovation at India Accelerator, said investor sentiment towards India’s electric vehicle sector remains strong.

However, the focus has shifted from early-stage EV brands as venture capital investors are keen to either bet on growth-stage EV brands to support scale and build up capacity or invest in technologies that optimize on-road performance, reliability and quality of electric vehicles, Mukhopadhyay said.

The high cost of lithium-ion batteries and inaccessible charging infrastructure are common challenges the electric vehicle sector faces in India and globally. Earlier this month, Ola Electric Mobility announced its decision to lay off about 1,000 employees in a push towards profitability amid mounting losses.

Also read | 2025 will be the year of EVs for India, say automakers

Zypp’s profitability challenges

Zypp Electric said it is on track to achieve ebitda positivity within two quarters. Earnings before interest, taxes, depreciation, and amortisation is a key measure of operational efficiency and has become a go-to metric for startups yet to become profitable.

“We have partnered with Indofast and Odysse recently to scale our EV strength and our operations are scaling up as we work towards profitability and growth towards 200,000 EVs in the next 24-36 months,” Zypp’s spokesperson said.

Zypp currently has deployed about 20,000 electric scooters.

IndoFast Energy, a joint venture between Indian Oil Corp. Ltd and Sun Mobility, has tied up with Zypp to help the company expand its EV charging infrastructure. Odysse Electric, an electric two-wheeler manufacturer, has been supplying EVs to Zypp as part of an investment deal.

Zypp’s spokesperson also said the company’s revenue so far in FY25 had grown by about 50% over the previous financial year to ₹460 crore. In 2023-24, Zypp’s revenue from operations surged to ₹293 crore from ₹109 crore in FY23, but its losses more than doubled to ₹91 crore from ₹40 crore.

“Over the next 2-3 years, we aim for sustained double-digit growth, fueled by our scalable team, enhanced technology, and investments in AI, expansions in other key cities and growing our three-wheeler business,” Zypp’s spokesperson said.

Also read | Why battery swapping for EVs remains a non-starter in India