Ather Energy rides high on electric scooters, may hit sales of 1 mn by 2023

Ather Energy has already received over Rs 800 crore from marquee PE players like Tiger Global, investors like Sachin and Binny Bansal, and Hero Motors, amongst others

It all began with a dream and a funding of just Rs 5 lakh from the incubation centre at IIT Madras, the alma mater of Tarun Mehta and Swapnil Jain. In 2013 the two young friends, both 23 at the time, left their jobs because they wanted to develop a top-class lithium ion battery. The venture turned out to be a bit of a flop as they soon realised there were not many takers. But as Mehta and Jain persisted, their goals shifted, and eventually, they came up with India’s first premium electric scooter built from scratch.

Mehta and Jain’s Bengaluru-based start-up, Ather Energy, which commercially launched two electric scooters in 2018, expects to sell over 10,000 vehicles in Bengaluru, Chennai and Hyderabad this year. It wants to scale up its sales five fold in 2020 and hit the magic one million mark by 2023. By then the company hopes to have its scooters running in over 30 cities across the country.

Ather has also received queries for exports from Latin America, southeast Asia and Europe. And it sees a big potential in the B2B space with tie-ups with ride-sharing companies in the future.

And the investors are backing Ather Energy to the hilt. The company is the most well-funded start-up in the auto sector and has already received over Rs 800 crore from marquee PE players like Tiger Global, investors like Sachin and Binny Bansal, and two-wheeler giant Hero Motors, amongst others.

Mehta and Jain are about to raise around Rs 300 crore to set up a second manufacturing plant with a capacity to roll out 0.5 million to 1 million electric scooters per year. (Their current factory can manufacture up to 25,000 units per year). They are also working on two new scooter models in the 110cc and 125cc segments. An electric motorcycle is also on the cards.

Mehta says that what sets them apart from others in the auto sector is that they built the electric scooter from scratch and invested heavily in research and development. Of course, it was tough to get talent initially. 

“Talented and experienced people in product development are few because there are only three examples of new product development in India — Tata Nano, Tata Indica and Bajaj Pulsar — which were built ground up,” says Mehta. So the two partners picked up some expats from JLR and hired young engineers who had participated in the Formula Student Design and Racing contests and were bored with their mundane jobs and wanted to do something new and exciting. 

They knew they couldn’t build an Indian electric scooter with the help of foreigners alone. “You can get 50 German engineers to build the product, but it will fail as they do not have any idea about our costs and product requirements,” says Mehta.

That is why Ather has spent Rs 300 crore on R&D, the largest in EV in the country. In 2015, out of its team of 100 employees, 95 were engineers. Today, half of its 700 employees work in R&D.

When they started out, Mehta and Jain had just wanted to build a high-quality lithium ion battery (they were mostly being imported from China) to support early adopters of electric two-wheelers. But the products were not up to the mark and consumers were unhappy with them. So they started work on building a premium electric scooter, hoping that auto companies would use their specs to manufacture it. But then they realised that no one wanted to invest in R&D in an untested electric scooter market, preferring to wait or buy or collaborate on technology once it matured globally. With their initial capital of Rs 40 lakh (apart from IIT, others had also pitched in) almost running out, the duo managed to build a 25 km per hour electric scooter prototype.

In late 2014, Ather’s EV model got a new backer. Sachin and Binny Bansal wrote a cheque for $1 million and told Mehta and Jain to continue their R&D effort. Tiger Global pumped in an additional $10 million the next year. Ather was at last ready to set up a manufacturing plant for its electric scooter.

In October 2016 the founders’ dream of making electric scooters got another leg-up. Impressed with their live prototype scooter, Hero Motors agreed to put in Rs 205 crore. “It was a huge vote of confidence for us and made it much easier to convince vendors to work with us,” says Mehta.

For production, Ather leveraged its R&D base. As much as 70 per cent of the IPs (intellectual property) in the scooter are controlled by Ather. It has designed and developed key components such as battery packs (only 30 per cent, mainly the cells, are imported), dash board, software, vehicle frame, amongst others. It also partnered with over 70 vendors, including Google for navigation and Sanmina Corporation for electronics—that never worked with auto companies.

However, putting a scooter on the road was only half the battle. A more serious challenge was convincing customers to buy an EV, which is priced higher than a petrol scooter, and that too when there were hardly any public charging infrastructure. But Ather realised that its concerns were largely exaggerated. Customer feedback suggested that nearly 95 per cent of them charged the EVs at home overnight, although the company has now invested in free public charging stations every four kilometres in Bangalore. It plans to have these at every two kilometres soon. Says Ravneet Pokhela, chief business officer at Ather: “Public charging stations might be key for passenger cars, but it’s not such an issue in two wheelers. The average usage of a scooter is between 14km and 17km a day.”

Pokhela says that the price differential between electric and non-electric scooters is also over exaggerated and won’t be more than Rs 20,000 once BS 6 emission norms for two-wheelers kick in next year. Moreover, Ather is offering a leasing option, one where customers have to pay Rs 75,000 as a refundable deposit, which is the price of a petrol scooter with the same specs (Ather’s electric scooters are priced at Rs 1.04 lakh). Then they merely pay Rs 2500 per month for three years, which includes servicing and maintenance. 

That is roughly what one pays for running a petrol scooter every month. Ather is also trying to make customers aware that the cost of running an electric scooter is one-tenth that of a petrol scooter.