Ather Energy Ltd. is set to break ground for its new plant in Maharashtra immediately after listing, in an attempt to redraw its growth curve.
Ather Energy Ltd. is set to break ground for its new plant in Maharashtra immediately after listing, in an attempt to redraw its growth curve.
After the groundbreaking ceremony in May, the Rizta maker will commission the first phase of its third facility in Chhatrapati Sambhaji Nagar by July 2026 to produce 5 lakh units annually, according to the company's red herring prospectus.
Ather will channel nearly Rs 1,000 crore from the initial-public-offering proceeds towards this endeavour. The production capacity will double to 1 million units in the second phase of the Rs 2,000-crore project. A timeline for the same was not immediately available. The pureplay EV maker will debut its new vehicle platforms in the facility.
The cost-effective EL platform for scooters is in advanced stages of development. It will feature a new powertrain, electronics and chassis and incorporate the battery pack and Atherstack from the Ather 450 X. The Zenith platform is aimed at the 125–350 cc segment of motorcycles.
Volume Play
Ather Energy, at present, operates two plants in Hosur, Tamil Nadu, with an annual installed capacity of 4.2 lakh electric two-wheelers and approximately 3.8 lakh battery packs with a capacity utilisation of 39% and 41% respectively. An additional 1 million units on cost-effective platforms can potentially swing unit economics, so much so that every 100 basis points of fixed-cost absorption trims Ebitda burn by Rs 55 crore, according to the RHP.
The Sambhaji Nagar facility has an incremental revenue potential of Rs 4,500 crore once production stabilises in the first phase. That can accelerate the timeline to Ebitda breakeven by 12–18 months, according to analysts.
If the management executes (successfully), Sambhaji Nagar can cut logistics costs per EV by Rs 1,500–2,000 and lift gross margin by 150 basis points, according to a Mumbai-based EV fund manager.
Cost efficiencies are already in play, by way of research and development.
Ather Energy has improved its adjusted gross margin to 19% in the nine months ended Dec. 31, 2024, from 9% in the year-ago period, according to its RHP. That came on the back of a 31% reduction in bill-of-material cost — 18 percentage points in electronics, six points in mechanicals and seven points in battery components. That warranty costs have reduced by 32% at the same time is indicative of product quality. And then there is the impact of the Ather Propack, which enjoys a 53% Ebitda margin.
Ather Energy now seems ready to extend its R&D rigour to manufacturing as well. But why in Maharashtra? Because of five reasons.
Logistics: Sambhaji Nagar is on the Delhi-Mumbai Industrial Corridor and Samruddhi Mahamarg connecting Mumbai and Nagpur. That opens up the large EV markets of Delhi, Gujarat and Maharashtra. A scooter can be shipped to these locations in under 24 hours as compared to more than 72 hours from Hosur.
Supply Chain: The presence of Bajaj Auto Ltd. in Chakan, Pune, has spawned an auto components ecosystem in Waluj and Shendra. It has matured to such an extent that nearly all EV components — including chassis, wiring harness and plastic parts — can be sourced in 50–100 km radius of Pune. Ather Energy designs 80% of its components in-house. Their manufacturing can now be outsourced to the local supply chain.
Diversified Production: A twin-hub model — Sambhaji Nagar and Hosur — cushions Ather Energy against potential regional shutdowns — natural or man-made.
Maha EV Policy: Maharashtra’s EV policy includes a 100% SGST refund on EV output, single-window clearance, and concessional land and plug-and-play utilities in Aurangabad Industrial City special economic zone.
Exports: Hosur is landlocked, but Sambhaji Nagar has relatively easy access to India's busiest container gateway at Jawaharlal Nehru Port Trust for exports. A CKD unit can leave the port for Africa, the Middle East or Latin America in the same week as it rolls out of the production line.
Risk Factors
Ather Energy designs 80% of its EV components in-house, but except the battery pack, manufacturing of every other component is outsourced and then assembled on to the scooter. That exposes the company to supply chain overtures.
"If our suppliers fail to deliver components used in our electric two-wheelers in accordance with agreed volumes and schedules or increase prices, we may face delays in delivery and manufacturing timelines or be required to increase retail price of our electric two-wheelers." the RHP stated.
Secondly, even as Ather Energy readies to expand production to Sambhaji Nagar, its Hosur factory remains underutilised. That can limit the company's ability to leverage economies of scale.
Thirdly, Ather Energy has warned of delays, disruptions or cost overruns in the construction of the Sambhaji Nagar plant, which "could adversely affect business prospects, financial condition and results of operation".
If the risks play out, Ather Energy's sales will remain geographically concentrated in South India. The "Factory 3.0", then, is perhaps the most important pivot for the company that rolled out its first scooter from Hosur more than five years ago.
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