Ather CEO Tarun Mehta warns India's PLI scheme puts EV startups at 13–16% cost disadvantage

Key facts

• Tarun Mehta is co-founder and CEO of Ather Energy, valued at ₹26,800 crore.
• India's auto PLI scheme requires ₹10,000 crore revenue and ₹3,000 crore fixed assets for eligibility.
• Mehta says the scheme creates a 13–16% cost disadvantage for non-beneficiaries like Ather.
• Ather has invested thousands of crores in R&D and manufacturing, creating over 4,000 direct jobs.
• Ather plans a ₹2,000 crore greenfield facility in Maharashtra.
• Euler Motors CEO Saurav Kumar also flagged the same cost disadvantage for EV startups.
• Mehta was rejected by Harvard Business School and McKinsey before co-founding Ather.
• Mehta and co-founder Swapnil Jain filed patents on swappable battery packs while at IIT Madras.

A cost gap that could shape India's EV future

India's ambitious production-linked incentive (PLI) scheme for the automotive sector, designed to nurture global champions, is inadvertently penalizing the very startups that have built the country's electric vehicle ecosystem from scratch. Tarun Mehta, the co-founder and CEO of Ather Energy, one of India's most valuable EV startups at ₹26,800 crore, has warned that the scheme's high eligibility thresholds leave electric-first companies at a 13–16% cost disadvantage compared to larger beneficiaries. This structural gap, Mehta argues, could distort market dynamics and slow the transition to electric mobility at a critical juncture. The debate has intensified after a senior government official stated that the PLI scheme is intended for 'global champions,' not startups, which typically require hand-holding rather than performance-linked incentives.

The eligibility barrier: why startups are locked out

To qualify for the auto PLI scheme, companies must meet stringent criteria: at least ₹10,000 crore in revenue and ₹3,000 crore in fixed assets. These thresholds effectively exclude most EV startups, including Ather Energy, River, and Euler Motors, despite their foundational role in building India's electric two-wheeler market over the past decade. Mehta pushed back against the government's framing, arguing that startups are already delivering the outcomes the PLI scheme aims to incentivize. In a detailed public post, he emphasized that new-age EV companies have invested heavily in product development, software, power electronics, and localization—without the advantages of legacy scale.

Ather's investments: evidence of commitment

Mehta pointed to Ather's own track record as proof that electric-first companies are contributing meaningfully to capacity creation and localisation. The company has invested thousands of crores in research and development and manufacturing, created over 4,000 direct jobs, and announced a planned ₹2,000 crore greenfield facility in Maharashtra. He also noted that startups meet domestic value addition (DVA) requirements comparable to larger players, challenging the notion that they lack the scale to compete globally. 'These companies invested early in product, software, power electronics, and localisation and helped to build a vibrant EV market,' Mehta said.

The cost disadvantage and its consequences

The exclusion from PLI benefits creates a significant cost gap. Mehta cited estimates that non-beneficiaries face a 13–16% cost disadvantage relative to PLI-supported competitors. 'This can influence how the market evolves,' he warned, cautioning that policies favouring established companies over innovation could slow the shift to electric vehicles. Euler Motors CEO Saurav Kumar echoed these concerns, highlighting that his company has invested heavily in indigenous technology and category creation yet remains outside the scheme. He said the cost disadvantage could distort competition at a time when startups are driving adoption in segments like commercial EVs.

A striking analogy: engine and bogies

In a vivid metaphor, Mehta described startups as the 'engine' of the EV transition, with incumbent manufacturers acting as the 'bogeys.' Removing the engine from policy support, he implied, could weaken the entire system. He did not call for a separate scheme but suggested 'calibration' of the existing framework through more flexible eligibility criteria that account for R&D intensity, localisation, and EV-specific scale. The government, however, maintains that the PLI scheme is designed to back large manufacturers capable of scaling production and competing globally. Officials have commented that startups typically require hand-holding rather than performance-linked incentives, a view Mehta directly challenged.

From Harvard rejection to building a ₹26,800 crore company

Mehta's journey to becoming a leading voice in India's EV policy debate began with a failed Harvard Business School interview. In a recent podcast, he recounted how the rejection, along with not being placed at McKinsey, pushed him away from the conventional MBA route and toward entrepreneurship. After graduating from IIT Madras in 2012, Mehta joined Ashok Leyland in Chennai while his friend and future co-founder Swapnil Jain worked in Bengaluru. During their final year at IIT, they had already filed multiple patents, including one on swappable battery packs—a concept that would later shape their thinking around electric mobility.

The turning point and the road ahead

The breakthrough came in February 2013, when Jain quit his job and moved to Chennai to work on the idea full-time. Mehta, meanwhile, had been diving deep into the EV space, reading about battery technology, buying an electric scooter to understand the product, and speaking to users about their experiences. As India's EV transition gathers pace, the case for widening the PLI framework is becoming harder to ignore. Startups and new-age EV firms are already investing deeply in R&D and building core capabilities from scratch. The question now is whether policy will evolve in time to support those driving the change—or whether it will continue to favour legacy scale over future capability.

The bottom line

• India's auto PLI scheme excludes most EV startups due to high revenue and asset thresholds, creating a 13–16% cost disadvantage.
• Ather Energy CEO Tarun Mehta argues that startups are already delivering the outcomes the scheme aims to incentivize, citing thousands of crores in investment and over 4,000 jobs.
• Mehta and Euler Motors CEO Saurav Kumar warn that excluding electric-first companies could distort competition and slow the EV transition.
• Mehta suggests calibrating the PLI framework with flexible criteria that reward R&D intensity, localisation, and EV-specific scale.
• The government maintains the scheme is for 'global champions,' but critics note that large incumbents have a vested interest in avoiding disruption.
• Mehta's personal journey—from a failed Harvard interview to building a ₹26,800 crore startup—underscores the potential of entrepreneurial talent that policy risks overlooking.