Electric two-wheeler manufacturer Ather Energy estimates that production constraints are limiting its potential retail sales by 18,000-20,000 units a month, prompting the company to expand manufacturing capacity even as its share of India's growing electric two-wheeler market declined during the September quarter.
The Bengaluru-based company 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 its combined installed capacity to approximately 11.4 lakh units. The expansion will involve an additional investment of Rs 122 crore.
The planned increase comes as customer pre-orders more than doubled to approximately 1.80 lakh units during Q2 FY27, equivalent to around 60,000 a month, against average monthly production of approximately 33,000 units, according to the company's latest investor presentation.
"On current demand trajectory from the current stores, our team's internal estimate is that we have roughly about 20,000 units per month of unrealized retail that we are not tapping into yet," Tarun Mehta, Executive Director and CEO of Ather Energy, said during an analyst call on Monday.
The company reported a 42% year-on-year increase in wholesale volumes to 93,211 units during the September quarter, while registrations, including international dispatches, rose 60% to 92,589 units. Customer enquiries increased 109% to around 10 lakh, while pre-orders grew 108% over the previous year.
However, Ather's domestic electric two-wheeler market share declined to 15.1% in Q2 FY27 from 17.2% in the corresponding period last year, according to VAHAN data. The decline came as the wider electric two-wheeler market grew faster than Ather. Industry registrations increased approximately 82% year on year to nearly 6 lakh units during the September quarter, while electric two-wheeler penetration rose to 11.2% from 7.8% a year earlier.
Although Ather's registrations increased, its slower growth compared with the overall industry meant it lost market share. The company has cited supply constraints as a factor limiting its ability to meet demand, although it has not quantified how much of the market-share decline was directly attributable to production shortages.
To address the supply gap, Ather will increase annual capacity at its existing Hosur facility from 4.2 lakh to 4.95 lakh units by December 2026, adding 75,000 units. The company said Hosur was operating at 98% capacity utilisation during peak production in Q2 FY27.
Its 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. Ather plans to add another 1.5 lakh units to the facility by Q2 FY28, taking its annual capacity to 6.5 lakh units.
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Together, the two facilities will have an installed annual capacity of approximately 11.4 lakh units by Q2 FY28. Of the proposed Rs 122 crore investment, Rs 58 crore will be spent at Hosur and Rs 64 crore at AURIC.
The supply constraints have also affected Ather's retail network expansion. Mehta said the company had held back hundreds of dealer letters of intent over the past few months because it could not guarantee sufficient vehicle supplies to new outlets.
"We took a conscious call to slow down network expansion because we do not want dealers to sit on without inventory," he said.
Ather added fewer than 50 experience centres over the past two quarters and now plans to resume network expansion, with more noticeable additions expected from Q4 FY27 as manufacturing capacity improves.
The company has also adopted a phased rollout for its new Konarc electric scooter, initially focusing on markets such as Uttar Pradesh and Rajasthan before expanding to other states. Mehta said the company had prioritised mid-range variants over the entry-level model to avoid affecting sales of higher-margin products while supply remained constrained.
The production expansion follows a strong September-quarter financial performance. Ather's consolidated revenue from operations increased 63% year on year to Rs 1,464.24 crore, while the company reported a net profit of Rs 1.26 crore against a loss of Rs 154.07 crore a year earlier.