Ather Energy says tech innovation, not sales volume, will win profitability race

Instead, it is investments in technology with a focus on improving processes that could help two-wheeler EV makers achieve better margins, according to the Bengaluru-based company’s co-founder and chief executive Tarun Mehta.

“There’s an incorrect assessment of the automotive industry that whoever produces more will have a better margin,” Mehta told Mint.

“Volume has played a minimal role in unit economics over the years. There’s a ton of value engineering. There’s a lot of process optimisation, and then there’s a lot of technology improvement to bring in, which improves cost structures. Engineering is the superpower.”

Break-even still eludes

The comments from the co-founder of the country’s fourth-largest electric two-wheeler company come at a time when its legacy and new-age rivals are looking to scale up their overall sales in the segment. Currently, no electric two-wheeler company has achieved a break-even point for its EV business.

However, Ola Electric, Bajaj Auto and Hero have charted a path to profitability at a time when the top five electric two-wheeler companies have taken nearly 90% of the overall market share.

In FY25, the country sold 1.15 million electric two-wheelers, a 21% increase over the previous financial year.

All these companies are lining up new launches and looking to scale up sales. Hero MotoCorp, the largest shareholder in Ather, noted in its earnings call for the January to March period that it aims to scale up its monthly volumes to 25,000-30,000 units over the next two years, up from an average of 4,000 units in the last fiscal year.

Ola Electric, Ather’s start-up rival, is targeting 25,000 sales per month to achieve Ebitda-level break-even.

Meanwhile, legacy players TVS and Bajaj have also seen growth in their EV sales, with both surpassing 230,000 units in the financial year 2025. In FY26, both TVS and Bajaj have taken the lead as sales pick up.

Not concerned by sales gap

However, Mehta is not concerned about the sales gap with legacy players.

“Everybody’s betting on growth. Cost structures are similar at the buy level. So the difference between us and competitors is not an earth-shattering number,” Mehta opined.

“Your cost differences don’t come about as much from scale. Scale has an impact, but a much larger impact is in engineering and design, which is why we are choosing to focus so heavily on these areas. The real race is between whether the competition can catch up on tech first or whether we can catch up on distribution first,” Mehta said.

With a focus on technology, Ather is also planning to double its distribution network from 351 stores in FY25 to 700 by the end of the current financial year.

Ather counts Bajaj, TVS and Ola Electric Ltd as its rivals.

In FY25, Ather Energy posted a ₹812 crore loss, reducing from ₹1,060 crore in the year prior. The operating profit margin of the company has also improved to -26% from -39% in the last financial year.

The company sold 130,944 vehicles in the last financial year.

Analysts suggest that the push for profitability must consider both volume and improvements in efficiency through technology-related enhancements.

“It has to be a mix of both. Supply chain initiatives must support volume growth. If you look at the gross margin, ICE players are in the 35-40% range, while Ola and Ather had a margin of 18-20% last year. So margins have to be improved through technological advancement in the supply chain, but volumes also have to grow,” Subhabrata Sengupta, partner, Avalon Consulting.

Since listing in May, Ather’s share price has increased by 10%, while the Nifty Auto index has risen by 3%.