India must keep e-scooter subsidies to boost adoption, says Ather CEO

India will need to keep subsidies for electric scooters for another few years to boost the switch from polluting motorbikes, the CEO of e-scooter maker Ather Energy told Reuters on Saturday.

Industry experts believe subsidies such as cash incentives are crucial to India hitting its goal of electrifying 70% of its two-wheeler fleet by 2030, as the world's third-largest importer of oil looks to reduce dependence on fossil fuels.

"We've been able to cut down a lot of subsidy reliance, but it's also come at the cost of almost a year's worth of lost growth," Ather CEO and co-founder Tarun Mehta said in an interview.

Mehta was referring to the government's surprise decision in May to slash cash incentives for e-scooters to a maximum of 15% of the purchase price before tax from 40% previously.

India's e-scooter market is small but growing, accounting for 5% of total two-wheeler sales in fiscal 2023-2024.

Ather was one of the first to drive the pick-up in adoption with the launch of its 450 series of e-scooters in 2018, but has fallen behind larger rivals Ola Electric and TVS Motor, whose discounts have driven sales.

Ather, which counts India's biggest two-wheeler maker Hero MotoCorp as its largest investor, launched a new, "family-friendly" e-scooter called "Rizta" on Saturday, priced at 109,999 rupees ($1,321).

The scooter has a larger seat and storage space compared with rivals. Mehta hopes it will attract a wider range of buyers in India's populous north and west regions, helping boost sales.

Loss-making Ather is focusing on top-line growth, Mehta said, but added margins would improve if sales volumes were higher.

"We haven't broken even yet, I think there's still a journey, hopefully it's not very long. Hopefully the Rizta plays a meaningful role because I am happy in how margins are shaping up at a unit level," he said, without giving details.