Is the Government Stifling Electric Vehicle Innovation? Ather's Tarun Mehta Thinks So.
In a bold statement that’s sure to spark debate, Ather Energy CEO Tarun Mehta has pointed a finger directly at the government, claiming its Production Linked Incentive (PLI) scheme is to blame for delays in new electric vehicle (EV) launches from startups. But here's where it gets controversial: Mehta argues that the current policy framework unfairly favors traditional automakers with limited EV ambitions, while leaving innovative companies like Ather, which have poured resources into electric research, development, and charging infrastructure, out in the cold.
Ather, despite being the third-largest electric two-wheeler manufacturer with a significant 19.6% market share in October 2025, finds itself ineligible for PLI benefits due to what Mehta calls rigid and outdated eligibility criteria. This exclusion, he argues, sends a discouraging message to companies that have been instrumental in building the electric two-wheeler market from the ground up.
And this is the part most people miss: Ather's impressive financial performance – a 57% year-on-year revenue increase to 940.7 crore rupees in the September quarter, coupled with narrowing losses – demonstrates its potential to be a major player in the EV revolution. Yet, without PLI support, Ather struggles to compete in the high-volume, affordable segments where the real growth lies. Their scooters, currently priced above one lakh rupees even after subsidies, are primarily positioned in the premium market.
The PLI scheme, with its 25,938 crore rupee budget, aims to boost clean energy production and strengthen India's position in the global automotive supply chain. However, critics argue that its stringent production thresholds and localization requirements inherently favor established giants like Ford, Hyundai, and Kia, who are already beneficiaries under the Champion OEM Incentive Scheme. Startups, despite their innovation and agility, often lack the scale and infrastructure to meet these demands, creating an uneven playing field.
Mehta's frustration is further fueled by the recent approval of rival Ola Electric under the PLI scheme for its Gen 3 scooter portfolio. This highlights the disparity in access to crucial incentives and strengthens Ather's argument for a more inclusive policy framework.
Adding to the challenge, Ather has faced supply chain disruptions due to China's restrictions on heavy rare earth magnets, essential components in electric motors. This forced temporary adjustments in manufacturing processes, impacting their eligibility for incentives under the PM E-DRIVE scheme. While Ather has developed a Heavy Rare Earth Free motor and secured approvals, the episode underscores the vulnerability of startups to global supply chain fluctuations.
Despite these hurdles, the electric two-wheeler industry is booming, with record sales of 143,713 units in October 2025. Mehta believes this number could have been even higher if not for magnet shortages and stockouts during the festive season.
While Ather is better equipped to handle the phasing out of PM E-DRIVE subsidies due to price adjustments and revenue growth, Mehta emphasizes that the lack of PLI support remains a significant barrier to launching new models and entering the more price-sensitive segments. The market is shifting towards scooters priced above one lakh rupees, leaving the sub-one-lakh segment struggling as subsidies disappear.
Without PLI incentives to reduce manufacturing costs and enable competitive pricing, Mehta argues, startups will continue to be at a structural disadvantage compared to established manufacturers who benefit from both scale and government support. He calls for urgent reforms to the PLI scheme, urging policymakers to create a level playing field that fosters innovation and allows startups to truly drive the electric vehicle revolution.
What do you think? Is the government's PLI scheme fair to startups like Ather? Should the eligibility criteria be revised to encourage more innovation in the EV sector? Let us know your thoughts in the comments below.
