IPO-bound Ather Energy expects growth to return in FY25, following subsidy shock in FY24

The electric two-wheeler industry took a hit following the changes, with sales plummeting drastically to 46,000 units in June compared to the 1.04 lakh units retailed in May.

“The industry has practically not grown in FY24. We ended Q4 of FY23 with about 70,000 units a month (of sales) and Q3 in FY24 was also around 70,000-75,000 units a month. So, the industry did not grow at all in FY24 except the last quarter when we will probably see a 15 percent growth,” said Mehta.

To battle the flat sales in FY24, electric two-wheeler companies have undertaken significant price cuts, including Ola Electric, Ather Energy, Okaya EV, and Bajaj Auto-owned Chetak Technology, which is expected to result in a drag on their profitability.

Ola Electric, led by Bhavish Aggarwal, slashed prices by up to Rs 25,000 on its S1 Pro, S1 Air, and S1X+ models, leading to a surge in bookings. Similarly, Ather Energy reduced the price of its 450S model by Rs 20,000, while Bajaj Auto’s Chetak scooter is now available at more competitive price points.

“I think it will take a year or two before you see profits in the sector. Margin structures have been improving at a pretty health pace. I would say in FY26 you will see the first profits come in for most companies,” said Mehta.

Ather’s losses rose nearly 150 percent to Rs 864 crore in FY23.

Mehta said that a bright spot was that 80 percent of customers were subscribing to software products on their electric two-wheelers which could significantly uplift profitability.

“I think it has the potential to be a very large chunk of our gross margin in the future. The physical vehicle servicing revenue loss will be offset by the opportunity to sell some of these software products on top of the vehicle in the coming years,” he said.

In a hypercompetitive market where nearly 170 players are looking at a sizable share of the EV pie, six OEMs continue to be among the top six positions,- Ola Electric, TVS Motor Co, Ather Energy, Bajaj Auto and the Greaves Electric-Ampere Vehicles combine.

Ola Electric retained its top spot with highest registrations at 33,722 units in February 2024, commanding 41.1 percent market share, followed by TVS Motors at 17.7 percent, Bajaj Auto at 14.2 percent, Ather Energy at 11.0 percent, and Greaves Electric (formerly Ampere) at 3.2 percent.

One of the long-term positives for the EV sector is the government’s focus on attracting electronics component makers to the country. While announcing three new semiconductor projects recently, Union Minister Ashwini Vaishnaw said that one of the major consumers of the output from these chip plants will be automotive companies even as vehicles increasingly become ‘computers on wheels’.

“The amount of electronics that goes into an EV is so high that we will eventually need domestic semiconductor manufacturing. I think it is very laudable that the government is trying to bring it to the country. Semiconductors themselves are low-cost but by the time they are packaged and brought to India we see a mark-up in prices,” said Mehta.