Ather CEO: Innovation Is What Will Make Us Profitable, Not Just Sales
In the cutthroat world of electric scooters, two philosophies are battling for supremacy. On one side, companies like Ola Electric chase volumes with aggressive pricing and massive scale. On the other, Ather Energy is making a different bet: that technology innovation, not unit sales, will ultimately unlock sustainable profitability.
This strategic divergence has never been more apparent than in 2025, as Ather prepares for its public market debut while maintaining its premium positioning amid intense competition.
The Premium Path Less Travelled
Ather's approach stands in stark contrast to the industry's volume-driven mindset. While competitors slash prices to capture market share, Ather has deliberately stayed away from the sub-₹1 lakh segment, positioning its 450X and 450S models as premium offerings. This isn't mere stubbornness. It's a calculated strategy built on the belief that sustainable profitability comes from creating differentiated value, not racing to the bottom.
The company's CEO Tarun Mehta has been vocal about this philosophy, criticising the aggressive discounting strategies employed by competitors. Talking to LiveMint, he said, "Competing in the mass-market price war would lead to a bloodbath, where profitability, innovation, and service standards would all suffer,". This stance reflects a deeper understanding that the electric vehicle market, still in its infancy, needs companies focused on long-term sustainability rather than short-term gains.
Software: The Hidden Goldmine
Perhaps nowhere is Ather's innovation-first approach more evident than in its software strategy. The company has developed AtherStack, a comprehensive software platform that powers everything from navigation and ride assistance to over-the-air updates. This isn't just a nice-to-have feature. It's becoming a crucial profit driver.
The numbers tell a compelling story. Despite representing only 6% of Ather's revenue, the software business operates at EBITDA margins of 53-56%. The company's Pro Pack, priced between ₹13,000-20,000, includes features like traction control, AutoHold, and theft alerts, and sees adoption rates of 86-89% among customers. This high-margin software revenue stream provides a buffer against the challenging unit economics of hardware manufacturing.
What makes this particularly strategic is that software revenue is largely immune to the volatility of government subsidies that plague the hardware business. As Ather noted, "every additional rupee of software revenue contributes more than two times the profit of a rupee, turning software into a strategic hedge against hardware headwinds."
The R&D Investment Philosophy
Ather's commitment to innovation is perhaps most visible in its research and development spending. The company allocates a staggering 15% of its revenue to R&D, reportedly the highest among its peers. This translates to ₹240 crore as of December 2024, supporting a workforce where nearly 46% of employees are dedicated to R&D activities.
The company's approach to R&D is comprehensive and systematic. Its expanded "Juggernaut" facility in Bengaluru spans 38,692 square feet and houses advanced testing equipment, including a 4DOF Road Simulator that can compress 100,000 km of endurance testing into just 15 days. The facility has conducted 4,535 unique tests to validate its electric scooters, ensuring products meet rigorous quality standards.
This investment in R&D isn't just about current products. It's laying the foundation for future platforms. Ather is developing two new architectures: the EL platform for more affordable scooters and the Zenith platform for electric motorcycles targeting the 125-300cc segments.
Infrastructure as Competitive Moat
While competitors focus primarily on manufacturing, Ather has built what it calls an "ecosystem" approach. The company's Ather Grid charging network now spans over 3,600 fast-charging points across the country. This infrastructure isn't just a customer convenience. It's a strategic moat that creates switching costs and enhances the overall ownership experience.
The charging network serves multiple purposes: it addresses range anxiety, provides a revenue stream, and creates data touchpoints that feed back into product development. The company has even opened its charging connector IP to other manufacturers, positioning itself as an infrastructure leader rather than just a vehicle manufacturer.
The Profitability Puzzle
Despite these strategic advantages, Ather's path to profitability remains challenging. The company posted a net loss of ₹812 crore in FY25, though this represents a 23% improvement from the previous year. More encouraging is the trend in key metrics: adjusted gross margins have improved from 9% to 19%, and EBITDA margins have narrowed from -36% to -23%.
The company's improving unit economics are driven by several factors. Localisation efforts have reduced the bill of materials cost for the 450X by 26% since launch, with electronics costs down 16%, mechanicals down 6%, and battery components down 4%. Additionally, the transition to cheaper LFP batteries and the lower-cost EL platform should further improve margins.
The Market Reality Check
Ather's innovation-first strategy faces real market pressures. The company holds approximately 10-11% market share in the electric two-wheeler segment, significantly behind Ola Electric's 30% share. Volume matters in manufacturing, and scale advantages become crucial for achieving cost competitiveness.
The company's capacity utilisation stands at just 29% of its 4.2 lakh unit capacity, compared to Ola Electric's 49% utilisation. This underutilisation affects fixed cost absorption and overall profitability. However, the launch of the family-oriented Rizta scooter, which contributed 57% of volumes in the latter half of FY25, shows promise for driving scale.
Future Platforms: Expanding the Innovation Bet
Ather's upcoming EL and Zenith platforms represent the next phase of its innovation strategy. The EL platform aims to create more affordable scooters while maintaining the company's technological edge. By incorporating core components from the existing 450 platform, including the battery and AtherStack software, Ather can leverage economies of scale while reducing development costs.
The Zenith platform for electric motorcycles is perhaps even more ambitious. With motorcycles accounting for 63% of two-wheeler volumes and electric penetration expected to reach 10% by 2030, this represents a significant market opportunity. The platform will target performance equivalent to 125-300cc motorcycles, entering a segment with limited competition.
The Sustainability Question
Ather's approach raises a fundamental question about the sustainability of innovation-driven business models in price-sensitive markets. The company's premium positioning and focus on technology differentiation work well in urban markets with higher disposable incomes. However, achieving meaningful scale may require expanding into more price-sensitive segments.
The recent launch of the Rizta, positioned as a family scooter, suggests Ather is already adapting its strategy. The vehicle has been successful, contributing significantly to volumes while maintaining the company's technological edge. This shows that innovation and market expansion aren't mutually exclusive. They can be complementary strategies.
The Long Game
Ather's bet on technology over volumes reflects a long-term vision of the electric mobility market. As the industry matures, sustainable competitive advantages will likely come from differentiated products, superior software, and comprehensive ecosystems rather than just low prices. The company's investments in R&D, charging infrastructure, and software platforms position it well for this future.
However, the immediate challenge remains achieving the scale necessary to support these investments. The company's upcoming IPO and expansion plans suggest confidence in its ability to balance innovation with growth. The success of this strategy will depend on whether customers value the technological differentiation enough to pay premium prices, and whether Ather can maintain its innovation edge while scaling production.
In a market where many players are struggling with unit economics, Ather's focus on building sustainable competitive advantages through technology innovation offers a different path forward. Whether this approach will ultimately deliver better financial returns than volume-focused strategies remains to be seen, but it represents a compelling alternative vision for the future of electric mobility.