Ashok Leyland’s EV bet pays off as Switch Mobility turns first profit, eyes expansion
Ashok Leyland's electric vehicle division achieved profitability for the first time, driven by production optimization and the closure of its UK plant. The company plans to invest ₹5,000 crore in a battery manufacturing facility to enhance local production.
Ashok Leyland's electric vehicle (EV) unit, which makes e-buses and trucks, reported profit for the first time in the July-September period, joining its listed peer Olectra Greentech in the black.
While Switch Mobility does not report exact profit numbers and earnings before interest tax depreciation and amortization (Ebitda) margins, the management said in an earnings call that the EV arm managed to turn profitable during the second quarter of the financial year 2025-26 (FY26).
Cost cuts and plant shift lift profits
K.M. Balaji, chief financial officer at Ashok Leyland, attributed the profitability of the EV unit to the fact that the company has been able to optimize production to avoid significant costs and has also shuttered the UK manufacturing plant this year.
“Unlike other manufacturers, we don’t have a separate greenfield facility for electric vehicles. The gliders for electric vehicles, that is vehicle body without battery, motor and the software, are manufactured by Ashok Leyland and given to Switch Mobility to fit the rest," Balaji said. “This saves a lot of cost."
Moreover, Switch Mobility in March announced its decision to shutter the UK plant for making electric vehicles. The company's earnings came on a day Tata Motors' commercial vehicle (CV) unit started trading independently on the bourses.
The country's largest CV maker is scheduled to report its July-September results on Thursday.
Shenu Agarwal, managing director and chief executive at Ashok Leyland, said that the company has just shifted the production base to the United Arab Emirates (UAE) to cater to the UK and other European markets.
The cost optimization and shuttering of the UK plant helped boost Ashok Leyland’s financials. The company reported a 7% year-on-year (y-o-y) growth in profit after tax to ₹820 crore, while revenue rose 13% to ₹12,577 crore in the July to September quarter.
Ashok Leyland’s shares fell 2.62%, against a 1.24% rise in Nifty Auto index on Wednesday.
Switch Mobility's profit makes it only the second EV maker in India to turn profitable; most other manufacturers are for now focusing on turning positive on an Ebitda level before turning profitable at a net level.
Mitul Shah, automobile analyst at DAM Capital Advisors, said that growth in non-vehicular segments such as spares, service, defence etc outpacing core vehicular growth has helped Ashok Leyland deliver strong performance.
"EV unit turning profitable for the first time means that it's no more a drag on the overall profitability. With the second half being traditionally better for commercial vehicle sector, the company is expected to see better revenue and profitability in the second half."
In the two-wheeler segment, Bajaj Auto has achieved Ebitda profitability, while in the four-wheeler segment, Tata Motors and Mahindra and Mahindra have reported profitability on the margins.
EV sector faces supply headwinds
Olectra Greentech, the EV business unit of Megha Engineering, is the only other company which has reported a profit after tax in the industry. However, none of the other companies have so far reported a full profit after tax for their EV units as they have to rely on imports for lithium ion batteries and some key components from China.
Profitability in the July-September quarter holds even more significance as EV makers across passenger and commercial vehicle segments reported a supply crunch of rare earth magnets, a critical component mainly used in electric motors as well as various electronic components.
China’s restrictions on rare earth magnets forced EV makers to import motors directly from the country to avoid production disruptions while remaining eligible for incentives under the PM E-Drive scheme.
Switch Mobility, which was acquired by Ashok Leyland in 2020, manufactures electric buses and trucks. The company turned profitable on Ebitda level last financial year before turning in a profit before tax in the April-June quarter this year.
Agarwal said that the Switch Mobility's order book remains healthy, and it is looking to participate in more tenders in the future to boost volumes.
“The last date for the CESL (Convergence Energy Services Ltd) tender for 10,900 electric buses is coming up on 14 November. Our experience of working with various state transport units has been positive," Agarwal said.
To boost local manufacturing for its EV unit, Ashok Leyland announced in September that it has decided to invest ₹5,000 crore to set up a battery pack and cell manufacturing facility, which will be implemented in phases. The technology for lithium ion batteries is being imported from Chinese battery firm CALB.
“We are in the process of finalising the location of the plant. This should be done in 30-60 days," Aggarwal told reporters. “The plan will be implemented in phases, with phase 1 focusing on battery pack assembly. In phase 2, we will start production of cells at the factory but it will take two more years after completion of phase 1," Agarwal said.
The plant is likely to start operations in the first six months of calendar year 2027, with the first phase seeing investments of ₹300-600 crore, the company had disclosed to analysts in September following the announcement of the move.
The plant will primarily supply Switch Mobility and later cater to battery storage and automotive firms.
“There is an upside to the investment amount, as investments up to ₹10,000 crore is possible in the project," Agarwal said.
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