Ather Outruns Ola Electric; Can It Keep Its Throttle Steady?

Two months ago, after assessing Ather Energy’s Q1 FY26 results, we predicted that the EV maker would soon catch up to Ola Electric in both market share and sales. 

Two months on, it has done more than just catch up. The EV maker has zoomed past its rival not only in terms of units sold but also in key financial metrics. 

In Q2 FY26, Ather reported an operating revenue of INR 898 Cr, up 54% year-on-year (YoY) and 40% sequentially, reflecting strong demand momentum and robust distribution expansion. In contrast, Ola Electric’s operating revenue dropped 43% YoY to INR 690 Cr. 

Including other income of INR 41.8 Cr, the company’s total income stood at INR 940.7 Cr during the quarter, up 57% YoY from INR 598.9 Cr in the year-ago quarter. 

More importantly, Ather managed to rein in losses. The company’s net loss narrowed 22% YoY to INR 154.1 Cr in Q2 FY26 and fell 14% sequentially. Ola Electric, on the other hand, posted a loss of INR 418 Cr. 

A decline in losses and expanding revenue and margins mean improving cost efficiency and operating leverage.

With expenses moderating and losses debloating, Ather Energy appears to be entering a new phase. But what will fuel this chapter?

Ather Strengthens Its Distribution Game

Ather Energy’s expanding distribution network is becoming its most potent growth engine, helping it move from a southern stronghold into a national brand. The startup leads in South India with a 25% market share across key states like Karnataka, Tamil Nadu, and Telangana, backed by a strong network of experience centres and charging stations. 

A more striking shift is unfolding in Maharashtra, Gujarat, Madhya Pradesh, and Odisha, where Ather’s market share has surged nearly 3X since last year to 14.6%.

The company has gained significant ground in Maharashtra (10.8%) and Gujarat (23.8%). This regional expansion is helping the startup streamline logistics, cut its reliance on southern markets, and gain scale across production and distribution.

In the northern and eastern markets, Ather’s expansion is even more rapid. Its market in these regions has doubled to 10%, with Punjab and Rajasthan emerging as high-growth pockets.

Earlier this year, keeping in mind its expansion beyond South India, the company launched Rizta scooters, a relatively cheaper alternative to its premium line of scooters — although its low price tag has brought down revenue per unit. 

In a brokerage report, HSBC said that Rizta has helped the company gain traction in West India, and the impending launch of the EL platform should drive its share in North and East India.” 

Backing this surge is an aggressive retail rollout. The startup’s experience centre count doubled from 218 in Q2 FY25 to 524 in Q2 FY26. It has set a target to open 700 experience centres by FY26 end. 

Focus On Unit Economics

Ather’s broader distribution network and move into the budget segment have boosted sales momentum and improved unit economics.

The pattern is clear for Ather. It wants to sell more scooters. The company’s adjusted gross margin expanded to 22%, up 300 basis points YoY, reflecting operational maturity. 

Stripping away government incentives, Ather still delivered a 21% gross margin, an improvement of 900 bps YoY, indicating structural progress.

This margin growth was driven by a steep reduction in cost of goods sold (COGS), which fell 19% per unit from FY25 levels, aided by localisation, supply chain optimisation and platform efficiencies.

This cost compression, combined with higher throughput from expanded distribution, has amplified economies of scale and improved fixed cost absorption.

The startup’s EBITDA margin also improved sharply, narrowing from -21% in Q2 FY25 to -10% in Q2 FY26, underscoring stronger operating leverage. 

Besides its budget-oriented products, growing overall sales volumes (by 67% YoY to 66,000 units) and improving revenue per retail touchpoint, Ather’s non-vehicle revenue streams have now started making meaningful contributions to its top line. 

Non-Vehicle Vertical In Fast Lane

Ather Energy’s growing non-vehicle revenue is becoming a key driver for its margin expansion. In Q2 FY26, non-vehicle revenue contributed 12% of total revenue.

Central to this shift is the startup’s vehicle software, AtherStack. It is pertinent to note that 89% of Ather owners are subscribed to AtherStack Pro, creating a recurring, high-margin revenue stream that boosts lifetime customer value and cushions cyclicality in vehicle sales. Under Ather Stack Pro, users get access to features like pothole alerts, voice commands, and crash alerts. 

Besides, Ather’s nationwide charging network now comprises over 4,300 fast charging points. This infrastructure, along with battery-as-a-service (BaaS) and its after-sales plan AtherStack, is helping Ather monetise more effectively. 

Together, these revenue streams are helping the company steadily evolve from a hardware-focussed business to a technology and service platform.

But the road ahead is not without its challenges. Sustaining margins without heavy reliance on government incentives will be critical. 

At the same time, intensifying competition from TVS, Bajaj and Ola Electric could pressure pricing and market share. The true test for Ather now lies in translating its scale and operational efficiency into consistent, long-term profitability. Can it keep it profitability throttle steady?

Edited By Shishir Parasher