Ather Energy Limited, a leading Indian electric two-wheeler (e2W) manufacturer based in Karnataka, India, has filed for an initial public offering (IPO) on April 29, 2025. Known for innovation in EV technology, the company has raised concerns over several risk factors in its Red Herring Prospectus (RHP), including dependency on Chinese supply chains, intense competition, operational hurdles, delayed profitability, and an uncertain policy landscape. The IPO marks a crucial milestone for India’s EV sector but is accompanied by key investor warnings.
Ather Energy Limited, a Bengaluru-based electric two-wheeler manufacturer, has officially filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for its much-anticipated initial public offering (IPO). The filing marks the first major startup IPO in India for the fiscal year 2026. However, the company’s RHP outlines a series of risks that investors should closely examine.
Founded in 2013, Ather Energy is known for its smart e-scooters and connected technology features like the Ather Grid, Ather App, and Atherstack platform. The company has pioneered electric mobility in India but now faces increasing pressure from legacy manufacturers and an evolving regulatory framework.
Key Risks Highlighted in the IPO Filing
1. Supply Chain Vulnerability
Ather’s reliance on outsourced manufacturing for critical components like motors, controllers, and battery cells—largely sourced from China and South Korea—makes its supply chain fragile. The company noted the impact of China’s export restrictions on rare earth magnets, which are essential for electric motors.
2. Competitive and Operational Risks
While Ather was an early entrant in India’s e2W segment, it now competes with giants like Bajaj Auto, TVS Motor, and Ola Electric. Unlike its competitors, Ather has not availed of the government’s PLI schemes and currently operates at a smaller scale, despite holding several patents.
3. Long Road to Profitability
Ather Energy has yet to turn a profit, with high R&D costs and lower-than-expected sales volumes compared to its rivals. In FY2024, internal combustion engine (ICE) scooters still dominated the market, accounting for 85.3% of total sales.
4. Policy Uncertainty
The regulatory landscape for EVs in India remains inconsistent. A lack of long-term incentives, high insurance premiums, and rising electricity costs create barriers to adoption. Ather also cited the potential threat of emerging alternatives like hydrogen fuel technologies.
5. Overdependence on China and South Korea
The company’s total dependence on China for battery cells raises red flags. The purchase contracts lack price and supply guarantees, and volatility in lithium-ion cell quality may lead to performance issues or recalls.
While Ather Energy continues to innovate and expand, its IPO comes at a time when investor sentiment toward EV startups is cautious. With robust ambitions but substantial operational hurdles, the company’s future profitability hinges on navigating these challenges effectively.
