Ather Energy Revisited

I revisited Ather Energy after more than a year and the story has become even more interesting.

Ather instead of slowing down as it matures doubled its revenue growth in FY2026 to 63% from 29% in FY2025.

This time I found some intersting tits and bits in the industry:

1. Service Centres are the real moat - this is the reason why TVS and Bajaj became the top 2, they have an already established base; the reason why Ola lost >50% of their volume in a year; also the reason why ather has expanded its stores from 351 to 700 in a year.

The product has almost became a commodity already like other 2 wheelers, the moat is after sales service.

2. More than half the market is unserved - More than 50% of Indian 2 wheelers market is motorcycles, with rarely any good EV 2W Motorcycle in the market - there's a gap, a huge one.

3. Import dependence - EVs though solving the environment problem, are not solving our import dependence problem - we are still dependent on China for Cells (>95% imported). 

And our own PLI scheme for cell manufacturing has failed badly, with very slow execution.

However one interesting bit to note - there's an oversupply in the market and have kept the prices on the lower side at around $108/Kwh.

Just for context - Batteries are the single most expensive raw material that goes into an EV-2W amounting to 35-40% of cost.

4. Mandate vs Subsidy - these were the 2 routes used by govts. to push the industry.

Vietnam followed the mandate route and restricted ICE (petrol/diesel) 2Ws in their cities, thier penetration levels have doubled to around 22% from ~10% last year.

India on the other hand followed the subsidy route - by providing FAME 1 and 2, and then PM-Edrive. The penetration level has reached 6.5% at Pan India level.

Some may say that both demographies are different and can't follow the same routes, then just to note Delhi has already started to shift on the mandate route by restrciting registrations of ICE 2Ws.

5. Policy Contradiction - Even though govt. is pushing EVs, thus GST has been kept at 5%. But in latest reforms the GST on ICE 2Ws have reduced from 28% to 18% making them more affordable and increasing the price gap by ~7000. And each policy push to ICE is a pull back for Evs. 

6. Geographic Concentration - At pan India level it has hit 6.5%, but region wise there's a stark difference; North at around 11% and South at around 40%. This shows a major gap in the market from both Supplier and Buyers side. Legacy players have an edge while pushing there sales in north because of already established network which Ather needs to establish.

7. Non-Vehicle Revenue - Ather built a recurring revenue layer, a software subscription which shifts the revenue further to ownership stage. This contributes to 13-14% of their revenue yielding an EBITDA% of >50%. A truly differentiated asset.

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Will work on valuing the company now, including new data points.

Till then, tell me what do you think are the risks which Ather may face?

I will start - the industry is extremely fragile, take example of Ola, once the market leader - it has lost >50% of its volume to other players, chasing growth ignoring after sales.

Your turn!