After spending years chasing scale and cost efficiencies, India’s EV makers are now confronting a fresh challenge. Commodity volatility is resurfacing at a time when margins are finally beginning to turn a corner, forcing companies like Ather Energy to shift into defensive mode.
Speaking during an analyst call held to discuss Ather Energy’ Ltds Q3FY26 performance, Executive Director and Chief Executive Officer Tarun Mehta said the auto industry, and EVs in particular, face potential headwinds from rising commodity prices and uncertainty around subsidies. The company, he said, has been preparing for these risks over the past few quarters by tightening fixed costs and improving operating discipline.
“We've been working hard over the last few quarters, and we've been very disciplined with our fixed costs,” said Mehta. “While unit economics has improved and has been at a great place overall, we've also ensured that our fixed costs have been maintained really well to ensure that our overall EBITDA lands at a better place…This prepares us well for potential headwinds later this year, so that our P&L can be protected even through that time.”
The timing of the commodity stress is significant. EV manufacturers have spent the past two years focused on scale, localisation and cost reduction to narrow losses. At Ather, that effort has translated into sharp margin improvement. The company improved its EBITDA by about 1,300 basis points in FY25, and by another 1,400 basis points in just the first three quarters of FY26. In Q3, its EBITDA losses narrowed to around ₹29 crore, or just under 3%.
But Mehta cautioned that the operating environment could become more challenging in the months ahead. Commodity markets, he said, are behaving in an unprecedented manner, making forecasting difficult.
He noted that while some materials appear to be facing structural demand-supply gaps, others seem driven by speculative or “hype” cycles that can still last several quarters. Either way, EV makers have little choice but to prepare for downside risks.
“I think there will be a few percentage points of risk for the rest of the year, something hopefully we'll be able to work with given our increasing scale. Particularly, EL is a good way to de-risk some of these commodities that are going haywire, particularly things like aluminum. But yes, I think commodities are in a volatile space right now, and we need to be very careful,” he said.
The pressure is not limited to a single input. According to Mehta, commodity stress is spread across both the vehicle and battery sides of the business. While battery-related costs remain relatively manageable, inflation in vehicle-side inputs, particularly metals such as aluminium, has become harder to ignore.
This shift challenges a common assumption in the EV industry that battery costs are the dominant variable. Instead, traditional automotive inputs, along with electronics, are emerging as a renewed source of volatility.
To offset these risks, Ather is leaning on operating leverage and diversification of revenue streams. Non-vehicle revenues, including software sales through ProPacks, rose to 14% of total revenue in Q3, the highest level so far. These revenues typically carry higher margins and offer some insulation against raw material swings.
Mehta said pricing decisions cannot be driven solely by commodity inflation. EV pricing, he argued, needs to balance cost pressures with demand sensitivity in a highly competitive market. While some risks may translate into a few percentage points of cost impact over the rest of the year, Ather believes it can manage the near-term impact through scale, cost control and selective localisation.