Electric vehicle players, specifically in the two-wheeler segment, are increasingly focusing on micro-factories rather than mega-factories. While bigger players in this segment like Ola Electric and Ather Energy are investing heavily in building mega factories sprawled over acres of land, newer players are showing an interesting shift to micro-factories.

According to industry players, these micro-factories are closer to the market, require less capital investment, and are faster to set up, making them an appealing investment option.

In contrast to large factories, which are typically located far from urban centres due to their extensive space needs, micro-factories enable higher resource utilisation and capitalise on localisation benefits — advantages that have significant impact across states and countries. These smaller factories offer greater agility and ease of collaboration, enabling companies to be more responsive to market demands

Vasudha Madhavan, Founder and CEO of Ostara Advisors, a Climate-Tech investment banking firm focused on electric mobility and decarbonisation, describes this approach as ‘asset-light’.

“New EV start-ups are prioritising proprietary technologies in battery systems, software architecture, and motor efficiency, while outsourcing traditional parts and assembly to contract manufacturers,” Madhavan says. “This asset-light model, leveraging micro-factories and localised production, reduces capital costs and enhances flexibility.”

Niraj Rajmohan, CTO and Co-Founder of Ultraviolette, also sees a financial upside, adding that the approach provides a steady revenue stream. “As electric vehicles become more widespread, dealers and distributors are experiencing a drop in service-related revenue. To address this, we are promoting the concept of final assembly closer to the point of sale or service location,” Rajmohan explains. “This strategy gives our partners greater control over servicing, while generating a consistent revenue stream through local assembly at these sites.

Micro-factories also have lower maintenance demand, says Mayuri Mohidekar, Associate Vice-President of manufacturing at River. “Maintaining micro-factories is simpler and more cost-effective,” she explains. “This reduction in capital investment and operational demands allows the organisation to reach the market more quickly,” Mohidekar explains.

Model micro-factory

Many EV players are actively investing in micro-factories. Emobi Manufacturing Pvt Ltd, a Bengaluru-based electric two-wheeler start-up, is planning a micro-factory in Bengaluru to support its transition to a B2B model within two years.

Bharath Rao, Founder and CEO of Emobi, says: “We are focused on building vehicles closer to where they will be used. This will help us offer better after-sales support, with micro-factories as a crucial element.”

Emobi aims to replicate this model across Indian markets, with possible international expansion. Similarly, Ultraviolette’s founders express plans to expand micro-factories regionally, reinforcing their dedication to electric mobility’s growth worldwide.

River established its first micro-factory in 2021, achieving operational status in just eight months, and launched its debut scooter in the market less than two years after set-up.

Supporting this trend, contract manufacturers are also stepping in. Niranjan Nayak, Managing Director of Delta Electronics India, said, “Industry trends are undergoing a significant transformation, emphasising business, process, and industrial automation. This shift offers a unique opportunity for agile and localised production to meet market demands sustainably. Delta is fully prepared to support this transition from mega-trends to micro-trends, with solutions that cater to every aspect of this evolution.”

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