Ather Energy Says Staying Outside PLI Makes Business More Resilient

Electric two-wheeler maker Ather Energy sees the absence of Production Linked Incentive (PLI) benefits for the company as a long-term structural advantage, with CEO Tarun Mehta arguing that operating without policy-linked subsidies allows it to build a more robust pricing and profitability framework. According to him, operating outside the PLI framework has forced Ather to take pricing decisions proactively, rather than deferring them in anticipation of incentives, as some peers do.

“Us not having PLI is actually one of the strongest and one of the biggest reasons to be optimistic about us in the mid-term, because we are already operating on the cleanest pricing principle,” Mehta told investors after announcing the third-quarter results. He said the lack of PLI support, though a short-term challenge, reduces business risk over time by insulating the company from future policy shifts.

The government’s Production Linked Incentive (PLI) scheme for the auto sector, announced in 2021, set eligibility criteria based on scale, allowing participation only for automakers with global group revenues exceeding Rs 10,000 crore. For new, non-automotive investors, eligibility was determined by a minimum global net worth of Rs 1,000 crore as of March 31, 2021, without a revenue threshold.

While Ola Electric, led by Bhavish Aggarwal, qualified under the latter category, established automakers such as Tata Motors, Mahindra & Mahindra, Bajaj Auto, Hyundai Motor India and TVS Motor Company were eligible under the revenue-based criteria.

The application window for the PLI-Auto scheme closed on March 31, 2021, when several electric vehicle startups were still at an early stage of scale. The one-time application structure limited the entry of newer companies, resulting in firms such as Ather Energy being excluded from the scheme despite being among the earliest manufacturers of locally developed electric vehicles.

Mehta noted that incentive-linked pricing can distort business models and create uncertainty when policy support tapers off. “PLI is not a 10-year policy. We don’t have the risk of PLI changing our pricing architecture completely a few years later,” Mehta said.

He noted that because Ather does not rely on PLI incentives, the company makes pricing choices based on market reality rather than waiting for subsidies. The company believes that this sets them apart from rivals who often hold off on decisions until government support kicks in.

At the start of the January–March quarter, the company announced a Rs 3,000 price hike across select models to offset rising commodity costs affecting vehicle and battery components.

Mehta said Ather’s pricing flexibility is supported by its ability to distribute increases across multiple components of its offering. “One advantage that Ather has is that we have the levers of the base vehicle price and the AtherStack Pro price. So, between these two levers, we can also distribute the price hike,” he said.

While acknowledging the near-term disadvantage of not receiving PLI payouts, Mehta described it as a deliberate trade-off aimed at building a stronger profit-and-loss profile.

“Not having PLI hurts, but I think that is a good pain to take right now to have a very, very, very resilient P&L in the next two, three years,” he said.

He added that operating in a non-PLI environment has sharpened the company’s focus on pricing discipline and cost management. “Operating in a non-PLI world has made us incredibly creative and incredibly disciplined about pricing,” Mehta said.