Wider ICE-EV Price Gap after GST 2.0 Not Impacting e-2W Market: Ather Energy

It was a case of no news is good news for Electric Vehicles (EV) across segments, on the exclusion of the industry in the GST reforms announced in September. However, the reduction of GST, and abolition of cess in ICE vehicles enhanced the price parity challenge for EVs, as the price difference between the fossil fuel vehicles and the battery powered ones increased.
     
GST on two-wheelers below 350cc dropped from 28 per cent to 18 per cent, leading to a price drop of ₹5,000 to ₹20,000 or more. 

“That should have been a really scary moment for our (EV) industry,” says Tarun Mehta, Co-founder and CEO, Ather Energy, during an Earnings Call. 

“Crazy discounting”, “serious volume drop” could have happened, but in contrast the electric two-wheeler segment in October saw “material growth over last October”.

Last month, 1.43 lakh electric two-wheelers were sold to customers, according to FADA (Federation of Automobile Dealers Associations) Research, collating data from 1,400 out of 1,458 Regional Transport Offices in India. Electric two-wheeler retail sales grew 2.6 per cent YoY, and 38 per cent MoM in October.

The market performance may have been better as “most players” in the electric two-wheeler industry are said to have faced supply crunch, with the rare earth magnet challenge continuing to affect production to some degree.

“Despite a GST change, despite the rare earth crisis, the (EV) industry's delivered growth. I think the underlying demand is strong,” says Mehta. He expects the demand trend to be more visible in the coming quarters. Ather Energy saw its best-ever quarterly performance in Q2 in terms of revenue. Its EBITDA margin and EBITDA loss saw improvement during the quarter.   

Logic Prevails, Some Concerns Remain    

EV penetration in the domestic two-wheeler segment has reached nearly 20 per cent. The market may have crossed the stage when the lion’s share of demand comes from ‘early adopters’, and it is now targeting tto go mainstream. According to Mehta, the “early majority” and a large group of 125cc scooter buyers do not need any convincing to buy an electric scooter.

What Ather Energy is trying to convince is the set of 110cc scooter customers, and some part of the 125cc scooter buyer segment. And the problem for them is not logic. “They are worried about the social proof of buying an electric. They're more afraid about things that they don't know,” says Mehta. The concerns of these customers are mainly around topics like resale value, battery longevity.

Ather Energy is taking a different approach in its marketing strategy to address these concerns. The Ather Advantage package for customers also tries to offer them peace of mind. The package offers an 8-year battery warranty with an assured battery health of 70 per cent or more, and also buy back the e-scooter at the end of 3 years, for up to 60 per cent of its ex-showroom price if the customer wishes to dispose of it. Battery as a Service (BaaS) was also launched with an aim of “giving comfort” to the fence-sitting customers.

“We are seeing in our marketing research every quarter a very strong growth in awareness, interest, and intent to buy electric. But we are also seeing a lot of the consumers are at the fence, waiting,” says Mehta. 

He expects that in many of these markets the switch of mainstream consumers buying electric “will be very sudden and very rapid”. “And when that happens, (8:03) that'll present a very strong growth opportunity,” says Mehta. Multiple OEMs are drawing up their strategies to tap the future growth opportunities. For Ather Energy, it will be the EL platform, the first product on which is scheduled for launch in the 2026 festive season, which is aimed to play the larger volume game.    

In terms of volumes, Ather has retailed 132,196 units during the April-October ‘25 period, leading to a claimed 20.1 per cent share in the electric scooter market. For the same period, Karnataka (27,668 units), Maharashtra (16,761 units), and Tamil Nadu (14,114 units) were the top 3 states in terms of sales for brand Ather. Mehta is “bullish” on states like Madhya Pradesh, Punjab, Kerala, and Rajasthan to grow as healthy electric two-wheeler markets.    

Product quality and technology are the key pitches for the EV customer. “We've always been a big believer that electric is going to be ultimately driven by product and aspiration,” says Mehta, who also adds that “most of the industry is starting to migrate into beyond one lakh rupee price points”. The sub-one lakh rupee category will remain, but Ather Energy sees “very strong signs” of that market shrinking.

As the EV trend progresses, Ather Energy expects the electric scooter market to grow at 2-2.5X the overall scooter market, which in turn could translate to 4-5 times the growth of the overall two-wheeler industry.