MotoPOV | Ather Energy > Ola Electric, Already

This week: Ather Energy vs Ola Electric, Tesla’s India plans come a cropper.

This week: Ather Energy vs Ola Electric, Tesla’s India plans come a cropper.

While one “got going”, there were doubts on the other as a “going concern”. That’s how disparate the fortunes of Ather Energy and Ola Electric are.

In its first quarterly results since listing almost a month ago, Ather Energy Ltd. earned Rs 65 crore more than Ola Electric Mobility Ltd., despite selling 12,504 fewer scooters. Losses too narrowed for the Rizta but doubled for the Roadster.

That doesn’t really add up, until you consider the unit economics—and the fact that Ola Electric’s business model is fundamentally flawed.

Ather Energy’s dealership network is a tenth of that of Ola Electric but each of them earn 11 times as much, a reading of the quarterly results show. Combine that with a higher average selling price—an Ather scooter is costlier by Rs 40,000 or so—the math automatically starts mathing in favour of Ather Energy.

Ola Electric, which operates on a direct-to-customer business model, expanded its sales network more than five-fold in December at its own cost to stem its service problem (more on that later). On top of that, the company chose to play the discount game to shore up volumes—just for the bragging rights of India’s No.1 electric two-wheeler maker.

On the flip side, Tarun Mehta—the cofounder and chief executive at Ather Energy—doesn’t believe in a sub-Rs 1 lakh electric scooter. He is choosing to ride the premiumisation wave that’s sweeping the world’s largest two-wheeler market, so much so that his company has decided to do without benefits under a production-linked incentive scheme.

Meanwhile, Ola Electric has dropped plans to make cheap gig scooters.

In the run-up to Ather Energy’s IPO, the profitability question was a given in every interview that Mehta chose to participate in. And his response was equally constant—it’s a factor of disciplined unit economics, cost efficiencies and margin levers—but didn’t give a timeline.  

“I think markets don’t like growth that comes at the expense of profitability,” Mehta had told NDTV Profit before the IPO. “It does not mean that you have to be profitable today, but you have to be on the journey to profitability…not just ‘show me the path’ but also ‘move on the path’, while growing the topline.”

Ather Energy has made significant strides in cost reduction—bill of materials has reduced by a third by way of R&D, as has warranty costs—even as it has the Ather Propack as a unique margin lever in play.

On the flip side, Ola Electric claimed it would achieve Ebitda breakeven in April-June, but has now kicked the can down the road to some time later in FY26.

The company has now embarked on ‘Project Lakshya’ and ‘Project Vistaar’ to shore up profitability. Additionally, it has set aside Rs 250 crore as provisions against warranty cost, and is now offering some MoveOS features as an optional extra—essentially, a page out of Ather Energy’s Propack playbook.

Sure, Ola Electric’s strategy of vertical integration can pay off in the long run, but it has delayed production of in-house cells to focus on fixing the automotive business first.

In Q4 FY25, Ola Electric clocked a negative Ebitda margin of more than 100%. It aims to first clock a gross margin of 28-30% from Q2 FY26 itself, from 19% or so currently, that too seems like a tall order.

An Ebitda breakeven could arrive at 25,000 units per month, down from 50,000 units per month specified in February, but the company didn’t explain the math behind that revised estimate.

Ola Electric’s founder billionaire Bhavish Aggarwal has claimed that its regulatory issues— missing trade certificates and sales mismatch—as well as service-related issues are now a thing of the past. The company believes it can grow its revenue to Rs 800-850 crore at a gross margin of 28-30% in Q1 FY26, by way of 65,000 unit sales.

On the flip side, Ather Energy is set to open a new plant in Maharashtra and developing two new, cost-effective platforms for electric motorcycles and scooters.

To be sure, scale alone cannot guarantee profitability. It’s a balancing act between value and volume. Ather Energy has scored on value, while Ola Electric has faltered in volumes.

“We have learnt the lesson that life as a listed company comes with some operational risks, which we have overcome now,” Aggarwal said.

Still, these are early days for arguably the poster boys of India's EV ecosystem. Their progress, or lack thereof, will be keenly watched hereon.

E2W Sales At A Record: TVS Motor has emerged as India’s largest electric two-wheeler maker for a second straight month, even as the wider industry grew by a third. That outperformance, however, could scupper in just two months’ time due to a China threat.

China Magnet Curbs: India’s EV production can potentially stall in a couple of months if China doesn’t resume shipments of rare earth magnets. That’s according to Bajaj Auto, which makes India’s best-selling electric scooter Chetak.

Tesla To Stock, Sell, Service In India: Tesla India Motor & Energy Pvt. has signed a so-called leave and licence agreement with Lodha Group’s Bellissimo in City FC Mumbai Pvt. to rent the 24,500 sq ft space in Lodha Logistics Park in Mumbai’s Kurla West, according to documents sourced by CRE Matrix—a real estate data analytics firm.

The central government has notified final guidelines of its flagship EV policy to attract global carmakers to make in India for the world, but Tesla Inc. isn't likely to be one of them.

“Mercedes-Benz, Volkswagen-Skoda and Hyundai Motor Co. have already shown interest,” Heavy Industries Minister HD Kumaraswamy said during a press conference on Monday. “Tesla, we are not actually expecting (interest) from them…They are not interested in manufacturing in India,” the minister said. “As from what we know, Tesla plans to open showrooms in India to sell cars.”

Skoda Auto Volkswagen India Pvt. said it was closely monitoring developments related to the EV policy in India and was “thoroughly assessing their implications”. “Based on this, we will define the appropriate next steps in line with our long-term strategy,” a company spokesperson said in a statement.

Mercedes-Benz refused to comment on the matter. An email sent to Hyundai Motor India Ltd. remained unanswered.

Announced on March 15, 2024, the ‘Scheme to Promote Manufacturing of Electric Cars in India’ offers to slash import duty to 15% on electric cars priced at least $35,000 if their maker invests at least $500 million to set up a local plant within three years. Up to 8,000 cars can be imported annually at this reduced rate for five years.

The key guidelines of India’s flagship EV policy can be found here.

On June 4, 1896, Henry Ford test-drove his Quadricycle, his first gasoline-powered automobile, marking a significant moment in automotive history.

He successfully experimented with this four-wheel self-propelled vehicle, which was his first automobile design and drive. Ford Corporate notes that the Quadricycle was a crucial step in Ford's journey towards developing the Model T, his mass-produced vehicle. 

That’s all from us this week. Watch this space for more. Read more at ndtvprofit.com/auto.

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