EV penetration in domestic 2W market can rise to 40% by FY31: Ather Energy

In FY25, the company said EV penetration in two-wheelers reached 5.8 percent, up from 5.1 percent in FY24.

Electric two-wheeler penetration could rise to about 40 per cent by FY31 in an 'optimistic scenario' when the overall two-wheeler industry in India touches 3-3.1 crore units annually, growing at 8 percent CAGR, according to Ather Energy Ltd.

The growth is expected to be driven by increased EV launches, strong government support, rapid infrastructure development, reduced battery prices, and a faster consumer shift, the company said in its annual report for 2024-25.

In its management discussion and analysis, Ather Energy said the rapidly expanding EV market, propelled by legacy players increasing their EV portfolios and new entrants expanding capacity, is accelerating growth.

The entry of established brands into the EV market is expected to provide significant momentum. The expansion of distribution in the E2W (electric two-wheeler) market is also expected to fuel the sector's growth, it said.

"Overall, two-wheeler sales are projected to grow at 7 percent CAGR, reaching 29-30 million units by FY31," the company said.

The electric two-wheeler (E2W) market is expected to grow at a 41 percent CAGR, while the internal combustion engine (ICE) market will see a moderate growth of 2 percent CAGR. By FY31, E2Ws are anticipated to account for 35 percent of overall two-wheeler sales, it added.

"In an optimistic scenario, driven by increased EV launches, strong government support, rapid infrastructure development, reduced battery prices, and a faster consumer shift toward electrification, industry sales could grow at 8 percent CAGR, reaching 30-31 million units by FY31," Ather Energy said.

In this scenario, the company said, "EV penetration may rise to 40 percent, compared to the 35 percent projected in the base case."

Citing VAHAN and SIAM data, the company said, "India has established itself as one of the largest motorised two-wheeler markets in the world by volume, with domestic sales reaching 20 million units in FY25."

In their message to the shareholders, Ather Energy Founders Tarun Sanjay Mehta and Swapnil Babanlal Jain said electric vehicle penetration in scooters touched 16 per cent in FY25.

"We anticipate this growth to continue, and scooters to power this growth. By FY31, an estimated 70-75 percent of scooters will be electric, and we are well-positioned to capitalise on this growth," they said.

In FY25, the company said EV penetration in two-wheelers reached 5.8 per cent, up from 5.1 per cent in FY24. Scooters continued to lead electrification with approximately 15.7 per cent of scooters in FY25 being electric.

Scooters are expected to lead the electrification in 2W. E2W penetration in scooters is expected to be as high as 70 percent in FY31, and in motorcycles, it is projected to be 10 percent by FY31, it added.

Sharing an update on its third plant at Chhatrapati Sambhajinagar (formerly Aurangabad) in Maharashtra, Ather Energy said, "The first phase of the facility, work for which has already begun, is planned to commence production in phases during FY27." It will add 5 lakh E2Ws of installed annual production capacity and upon completion of construction for both phases, the company's total installed capacity, including from the Hosur Factory, is expected to reach a total of 14.2 lakh E2Ws per year.