EV Upstarts Narrow Margin Gap with Legacy Two-Wheeler Giants

India’s leading electric two-wheeler startups

and —are closing the profitability gap with legacy ICE players like , , and . While gross margins now rival traditional firms, operating margins remain divergent, reflecting structural differences in platform design and cost base. Ola Electric posted 30.7% gross margin in Q2FY26, up 11 percentage points YoY, while Ather Energy reached 22%. These figures are now comparable to the 29–34% margins of legacy players. However, Ola’s operating margin was just 0.3%, and Ather’s stood at -10%, far below the 14–18% range of ICE leaders. New-age EV firms benefit from purpose-built platforms, avoiding multi-powertrain overheads. This leaner architecture enables faster scale gains in batteries, electronics, and software. In contrast, legacy players carry fixed ICE-related costs across tooling, compliance, and supply chains, slowing EV margin expansion. Bajaj Auto reported double-digit EV operating margins, led by its three-wheeler segment. TVS and Hero did not disclose EV-specific profitability but indicated satisfaction with progress. Hero emphasized brand-building over immediate profitability, while TVS expects volume gains in 2–3 years. Ather CEO Tarun Mehta highlighted the ability to upsell accessories and software features as a key margin lever. Ola’s Bhavish Aggarwal criticized rivals for “buying market share” without sustainable unit economics, asserting that Ola’s margin gains reflect structural product leadership. As EV volumes scale and cost stacks realign, legacy players are expected to gradually close the margin gap. Meanwhile, startups like Ola and Ather are targeting further gains—Ola projects 40% gross margin and 5% operating margin by Q4FY26, signaling a maturing business model.