Ather Energy credits central India growth, market fit in South for higher EV share
During Ather Energy’s Q2 conference call, CEO and co-founder Tarun Mehta said he's not a fan of giving steep discounts to grow the customer base, maintaining that the market is now maturing.
A day after reporting its Q2 FY26 results, Ather Energy attributed the 54% growth in operational revenue to its expanding distribution network and growing demand in central Indian states.
In a post-earnings call, co-founder and CEO Tarun Mehta said the company, which has established a strong foothold in southern states, turned its attention to states including Chhattisgarh, Gujarat, Maharashtra, Madhya Pradesh, and Odisha, among others, over the past few quarters, and its bet seems to be paying off. “These five states have been a particular focus for us in the last few quarters, from a distribution, marketing, and all perspectives,” he remarked.
In the quarter ended September 2026, the company claimed a 14.6% market share in the electric two-wheeler segment in 'Middle India', up from an 8.8% share in the year-ago period.
Ather Energy noted that Madhya Pradesh has seen widespread electric vehicle adoption and is a growing market for the company.
However, it believes it is still in the early stages of growth in many markets and has taken targeted steps to expand to other regions.
Meanwhile, in markets including Tamil Nadu, Telangana, and Andhra Pradesh, where Ather Energy has a strong presence, Mehta added that it is seeing the emergence of a new product-market fit on the back of steady growth.
“If you've already gotten 20–25% of the scooter buyers, you are now switching target to a more mainstream buyer. And there is a new product-market fit that is emerging, which is why our marketing story, narrative, everything is changing,” he remarked.
Keeping up with retail demand
The company, which has seen a 67% year-on-year jump in vehicle volumes, is currently working to reduce the gap between retail and wholesale demand. Mehta noted that during recent months, the company has seen its retail demand “outstripping” wholesale by a considerable margin.
“We are working hard to fill that gap. While that means we will have a lot of operational work, that's a very strong sign for the business. It underlines a very strong demand across zones,” the CEO noted.
The EV maker ended the recent festive season demand surge with a fairly slim channel inventory, which it hopes to improve over the next few quarters. This is crucial as the firm recently informed the stock exchanges that there was a two-month delay in obtaining an environmental clearance for the commencement of its new manufacturing facility in Maharashtra. The production at the facility will now commence in October 2026, against the previous timeline of July 2026.
However, to ensure the delay does not impact the company’s rollout of its EL, its line-up of next-generation scooters, Ather plans to commence the EV's production out of its existing manufacturing facility in Hosur, Tamil Nadu. Mehta asserted that the company does not expect any impact on volumes due to this decision.
Dealer profitability
Mehta noted that it will typically take dealers between 3–4 quarters to attain store profitability, albeit depending on the variant mix and driven by EC2.0 and EC3.0—the company’s new format stores featuring more space and amenities. They have been the primary drivers for its distribution expansion over the last one and a half years. “These format stores have allowed very good profitability and hence a very strong pull from dealers overall,” he noted.
The company added 173 new experience centres (ECs) in the first half of this financial year, with 78 new ECs during Q2 alone, bringing its total retail presence to 524 ECs across India.
Mehta added that while Ather is seeing very strong pull from dealers, the company prefers its existing partners because it allows for easy expansion. “Frankly, we want them to become larger partners with our business. Very few states will have a challenge.”
Ather EL01 concept built on the new EL platform
Cost reduction and profitability
In Q2, Ather Energy managed to narrow its losses by 21.3% YoY to Rs 156.7 crore. Mehta, during the conference call, noted that the company’s underlying gross margins have also improved, attributing this to the increasing share of LFP (lithium iron phosphate) batteries and cost reduction through research and development.
“While scale plays one set of roles, it largely gives us operating leverage for our fixed costs. Most of our cost reduction has been driven by very strong engineering efforts,” he added.
The company expects this trend to continue with the new EL platform, which is expected to improve its gross margins. Even on the older platform, leveraged to build Ather 450 and Rizta e-scooters, the company is seeing strong cost reduction.
Mehta believes the current operating leverage is strong enough to make the operations sustainable over the coming few quarters. “Even across margins, one thing you will see in our P&L is that we've been extremely disciplined, almost paranoid about adding fixed costs or adding capex that could drag down our profitability.”
During the call, the executive downplayed the phenomenon of offering steep discounts to grow its customer base, maintaining that the market is now maturing.
“I think the entire industry is now calling it out that discounting and selling really low-priced products does not seem to work, and does not seem to get you the right customers. I think the industry is becoming better disciplined,“ he added.
Edited by Kanishk Singh