PLI auto scheme for e2Ws needs to be revisited: Ather Energy cofounder

PLI should've been directed at startups - the real pushers of innovation, Tarun Mehta said

Months after Ather Energy’s initial public offering (IPO), cofounder & chief executive officer (CEO) Tarun Mehta discusses policy hurdles, why premium electric vehicles are the future, and how the company is gearing up for the next phase of expansion, in an interview with Surajeet Das Gupta in Bengaluru.

 

Ather has been operating at a disadvantage by not qualifying for the government’s PLI scheme, which offers incentives of 13–16 per cent. How do you cope with what you’ve called a ‘non-level playing field’? 

 

The production-linked incentive (PLI) auto scheme had gaps that excluded promising players like us from applying, and that needs to be fixed. We’re the only startup in India to build an electric vehicle (EV), achieve scale, and acquire our technology — yet we don’t qualify for it. That’s a missed opportunity. Ather continues to work under this disadvantage, but the policy needs to be revisited.

 

Even legacy auto players with large cash reserves were given PLI benefits. Is that how the policy should work? 

 

Legacy players have crores to invest in EVs. They would have done it anyway when a challenger enters the space. PLI should’ve been directed at startups — the real pushers of innovation. Today, PLI is like a wall that new EV players climb to push larger players with more money to build electric. We are pushing back the country’s electrification efforts by not supporting true startups that have invested in R&D and product development, and are unable to benefit from this scheme.

Have you raised these concerns with the government?

 

Yes, we’ve spoken with them, and they’ve been receptive. They understand that the PLI scheme missed an important opportunity. But these are large, complex issues and take time to resolve. That’s why we continue to engage with them constructively. The electric two-wheeler space hasn’t grown as fast as expected. 

 

Are customers looking for cheaper EVs?

 

I don’t believe the future lies in cheap scooters. India is an aspirational market —people want better products. Affordability is important, but it shouldn’t come at the cost of quality. That was a mistake made last year — some tried to make EVs cheaper than petrol vehicles, but the quality dipped. EVs must be an upgrade first, and affordable second. Unfortunately, that order got reversed by some players.

 

What’s your outlook for FY2026?

 

I’m bullish. In 2023, growth was driven by early adopters. Now we’re entering a more mainstream market where factors like resale value and range matter more. The last few months suggest the industry is correcting itself. We expect strong growth ahead.

 

What is the next big plan for Ather?

 

A major chunk of our growth will come from a new platform launching in a year or two. It’s cost-effective, scalable, and deeply vertically integrated. Our new Aurangabad plant will be central to this. The platform will help us reach a broader market, expand our portfolio, and lower prices — all while maintaining quality.

 

Will Ather continue to avoid the sub ₹1 lakh mass market where some competitors are aggressively playing?  

 

Yes. Five years ago, 125cc scooters made up 19 per cent of the market. Last year, it was 47 per cent — and likely over 50 per cent now. That’s premiumisation. In electric, the split is about 50-50 between above and below ₹1 lakh. We’re betting on the premium wave, which increasingly represents the bulk of the market. Viability matters — you have to price right to sustain the business. 

Do you expect scooters to overtake motorcycles in the EV transition?

 

Absolutely. Scooters are more family-friendly, have better storage, and are perceived as safer. A lot of people buy motorcycles today simply because they’re cheaper. But with electric, running costs level the field. Scooters already account for around 38 per cent of the two-wheeler market and are growing twice as fast as motorcycles. That trend won’t reverse.

 

What’s Ather’s plan for electric motorcycles?

 

We're working on it, but it's still early. Our focus is first on building a robust scooter portfolio across segments. Once that’s done, we’ll shift to motorcycles. In auto, it’s always the best product that wins — not necessarily the first mover.

 

Are you prepared for a zero-subsidy regime starting April next year?

 

We’re ready. Of course, no one wants to lose ₹5,000 per unit. But if subsidies continue for 2–3 more years, we’d see stronger EV adoption. That’s a policy decision the government has to make.

 

With the rare earth magnet supply crisis, is it time to rethink the China-dependent supply chain?

 

Absolutely. Ideally, a single efficient source is best. But that’s no longer reliable in today’s volatile world. We now need parallel supply chains, potential Indian manufacturing, and strategic backups. That’s the new normal.

 

Are magnet-less motors a viable alternative, and when might we see them?

 

There’s potential, but they’re not yet on a par with rare-earth-based motors in terms of performance. Still, startups in India are doing impressive work. It’s something every OEM should be exploring right now. A definitive timeline is hard to give, but we’re optimistic.