Ather Energy Adds Capacity to Recover Lost EV Sales

Ather Energy Expands Production Capacity to Address Supply Constraints

Ather Energy is expanding its manufacturing capacity after estimating that production constraints are limiting potential retail sales by 18,000–20,000 electric two-wheelers per month. The Bengaluru-based manufacturer plans to add 2.25 lakh units of annual production capacity across its Hosur and Chhatrapati Sambhajinagar facilities by the second quarter of FY28, taking combined installed capacity to approximately 11.4 lakh units. The expansion requires an additional investment of Rs 122 crore. The move comes as customer pre-orders have more than doubled and demand has increased, while the company's domestic market share has declined amid faster growth across India's electric two-wheeler industry.

Pre-Orders Outpace Current Monthly Production

Customer pre-orders reached approximately 1.80 lakh units during Q2 FY27, equivalent to around 60,000 units per month, compared with average monthly production of approximately 33,000 units, according to Ather Energy's latest investor presentation. Executive Director and CEO Tarun Mehta said the company's internal estimate indicated that it was missing approximately 20,000 monthly retail sales based on demand from its existing stores. The estimate highlights the difference between customer demand and the manufacturer's current ability to supply vehicles. However, the figures represent the company's assessment of unrealized retail potential and should not be interpreted as confirmed orders that will automatically convert into completed sales.

Sales Grow as India's Electric Two-Wheeler Market Expands

Ather reported wholesale volumes of 93,211 units during the September quarter, a 42% year-over-year increase. Registrations, including international dispatches as reported by the company, rose 60% to 92,589 units. Customer enquiries increased 109% to approximately 10 lakh, while pre-orders grew 108% compared with the same period a year earlier. Despite these gains, the company's domestic electric two-wheeler market share declined to 15.1% in Q2 FY27 from 17.2% in the corresponding quarter last year, according to VAHAN data. The figures indicate that Ather's sales and registrations increased, but its growth was slower than that of the broader domestic market.

Industry Growth Accelerates Faster Than Ather's Expansion

India's electric two-wheeler market recorded approximately 6 lakh registrations during the September quarter, representing year-over-year growth of around 82%. Electric two-wheeler penetration increased to 11.2% from 7.8% a year earlier. Against this backdrop, Ather's declining domestic market share reflects its slower growth relative to the overall industry, despite higher registrations. The company has identified supply constraints as a factor limiting its ability to fulfill demand, but it has not quantified how much of the market-share decline resulted directly from production shortages. The distinction matters because the available figures establish a relative growth gap without proving that manufacturing constraints alone caused the entire decline.

Hosur Capacity Expansion Targets December 2026

Ather plans to increase annual production capacity at its existing Hosur manufacturing facility from 4.2 lakh to 4.95 lakh units by December 2026, adding 75,000 units of annual capacity. The company reported that the facility operated at 98% capacity utilization during peak production in Q2 FY27, indicating limited headroom to increase output using its existing installed capacity. The planned expansion forms part of the wider effort to address supply shortages and support retail demand. The additional Hosur capacity is expected to contribute to the company's overall production increase, although installed capacity should not be confused with actual production, which also depends on operational execution and demand.

AURIC Facility to Increase Manufacturing Capacity

Ather's new AURIC manufacturing facility in Chhatrapati Sambhajinagar is scheduled to begin commercial production in phases from December 2026, with an initial annual capacity of 5 lakh units. The company plans to add another 1.5 lakh units of annual capacity at the facility by Q2 FY28, bringing its total planned capacity there to 6.5 lakh units. Combined with the planned increase at Hosur, the two facilities are expected to provide approximately 11.4 lakh units of installed annual capacity by Q2 FY28. Of the total Rs 122 crore investment, Rs 58 crore is allocated to Hosur and Rs 64 crore to AURIC, distributing the planned expenditure across both manufacturing sites.

Production Constraints Slow Experience Center Expansion

Supply limitations have also affected Ather's retail network strategy. Mehta said the company had held back hundreds of dealer letters of intent over the preceding months because it could not guarantee adequate vehicle supplies to new outlets. Ather deliberately slowed its network expansion to avoid opening dealerships that might lack inventory. It added fewer than 50 experience centers over the past two quarters and now plans to resume expansion as manufacturing capacity improves. More noticeable additions are expected from Q4 FY27. This approach links the pace of retail expansion to vehicle availability, reflecting the company's decision to prioritize the ability to supply dealers rather than expanding its physical network without sufficient inventory.

Konarc Scooter Launch Follows a Phased Market Strategy

Ather has adopted a phased rollout strategy for its new Konarc electric scooter, initially concentrating on markets including Uttar Pradesh and Rajasthan before expanding into additional states. The company has also prioritized mid-range variants over the entry-level version while production remains constrained. Mehta said this decision was intended to avoid affecting sales of higher-margin products. The rollout strategy therefore combines geographic sequencing with a choice about which variants to supply first. The source does not specify the number of scooters allocated to individual states, the full rollout schedule, or when the entry-level version will receive broader availability. Those details remain unconfirmed as the company works to improve supply.

Revenue Rises as Ather Reports Quarterly Net Profit

Ather's production expansion follows a strong financial performance in the September quarter. Consolidated revenue from operations increased 63% year over year to Rs 1,464.24 crore. The company also reported a net profit of Rs 1.26 crore, compared with a net loss of Rs 154.07 crore in the corresponding period a year earlier. These results provide financial context for the planned manufacturing investment, which is intended to increase output as demand grows. However, the reported quarterly profit and revenue growth do not by themselves establish the future financial returns of the capacity expansion. The commercial outcome will depend on execution, production, customer demand, and the company's ability to convert available supply into retail sales.

Industry Impact & Outlook

Ather's planned capacity expansion could help the company compete more effectively in India's rapidly growing electric two-wheeler market by reducing the gap between customer demand and available vehicles. Improved supply could also support the reopening of delayed dealership plans and a wider rollout of the Konarc scooter. The key execution challenge will be translating installed capacity into actual deliveries while maintaining the product mix and retail strategy the company has chosen. Competitors may continue to benefit if Ather's production growth fails to keep pace with industry demand. The planned milestones through FY28 will therefore be important indicators of whether the investment can address supply constraints, support market-share recovery, and sustain the company's recent financial improvement.

Frequently Asked Questions

Why is Ather Energy expanding its manufacturing capacity?
Ather Energy is expanding manufacturing because it estimates that production constraints are limiting potential retail sales by approximately 18,000–20,000 electric two-wheelers each month. Customer pre-orders reached around 1.80 lakh units during Q2 FY27, while average monthly production stood at approximately 33,000 units. The company plans to add 2.25 lakh units of annual capacity across Hosur and AURIC by Q2 FY28. The expansion requires Rs 122 crore in additional investment and is intended to improve the company's ability to meet demand as India's electric two-wheeler market continues to grow.

What will Ather Energy's total annual production capacity be by Q2 FY28?
Ather Energy expects its combined installed annual manufacturing capacity to reach approximately 11.4 lakh units by Q2 FY28 after planned expansions at Hosur and AURIC. Hosur's capacity is scheduled to rise from 4.2 lakh to 4.95 lakh units by December 2026. The AURIC facility is expected to begin phased commercial production from December 2026 with an initial annual capacity of 5 lakh units, increasing to 6.5 lakh units by Q2 FY28. These figures represent installed capacity targets, not a guarantee that actual production or retail sales will reach the same levels.

How much is Ather Energy investing in its capacity expansion?
Ather Energy plans to invest an additional Rs 122 crore to expand annual manufacturing capacity across its Hosur and AURIC facilities. Of this amount, Rs 58 crore is allocated to Hosur and Rs 64 crore to AURIC in Chhatrapati Sambhajinagar. The investment supports the planned addition of 2.25 lakh units of annual capacity by Q2 FY28. The company expects the combined installed capacity of both facilities to reach approximately 11.4 lakh units annually. The announced allocation identifies the planned expenditure at each site but does not establish the final realized cost or financial returns of the expansion.

Why did Ather Energy lose electric two-wheeler market share?
Ather Energy's domestic electric two-wheeler market share declined to 15.1% in Q2 FY27 from 17.2% a year earlier, as the overall market expanded faster than the company. Industry registrations rose approximately 82% year over year to nearly 6 lakh units during the September quarter, while Ather's wholesale volumes increased 42% to 93,211 units. The company has cited supply constraints as one factor limiting its ability to meet demand. However, it has not quantified the precise contribution of production shortages to its market-share decline, so the entire decrease cannot be attributed to supply limitations alone.

How will production constraints affect Ather's retail expansion and Konarc rollout?
Ather slowed its experience center expansion because it could not guarantee adequate vehicle inventory for new dealers, holding back hundreds of dealer letters of intent. The company added fewer than 50 experience centers over two quarters and expects more noticeable network additions from Q4 FY27 as manufacturing capacity improves. It is also rolling out the Konarc electric scooter in phases, initially focusing on Uttar Pradesh and Rajasthan. Ather has prioritized mid-range variants over the entry-level model to avoid affecting higher-margin product sales while supply remains constrained. The timing of broader availability depends on its rollout and production plans.