Ather Energy, India’s top revenue-generating electric scooter manufacturer, is raising funds to increase annual production to one million scooters over the next three years in response to a surge in demand, according to the startup’s co-founder and CEO.
The news: Ather, which has Tiger Global and Hero MotoCorp (HROM.NS) as investors, has raised approximately 12 billion rupees ($160 million) since its inception in 2013 and is in the process of raising more, according to Tarun Mehta in an interview.
What they’re saying: “Our plan was not to raise more capital and instead focus on growing the brand,” Mehta explained. “However, the rate of transition to electric and the pace at which the supply chain and capacities need to ramp is much faster than we anticipated a year ago.”
- He declined to comment on how much money the company intends to raise. According to a source familiar with the plans, Ather is looking for around $133 million. Hero has already contributed $56 million to this total.
- “Demand is massive, and the Indian market is supply constrained,” he explained.
- Ather currently produces about 5,000 electric scooters per month and manufactures its own lithium-ion battery pack. Mehta expects to increase production to 20,000 scooters per month in 2022, aided by a surge in demand from smaller cities.
- His long-term goal is to invest in companies that help increase the use of clean energy.
- “The next thing that excites me is trucks and buses – low volume but massive energy consumption,” he said.
What’s going on: In India, sales of electric scooters more than five folded last year, as high fuel prices compelled buyers to seek alternatives and government subsidies narrowed the price gap between electric and gasoline models.
- Nonetheless, electric models accounted for only 1 per cent of total Indian motorcycle and scooter sales of 14.5 million in 2021. The government hopes to increase this to 40 per cent by 2030 in order to reduce its oil import bill and reduce pollution.
- Ather is also amassing funds in the face of increasing competition from startups such as Softbank Group-backed (9984.T) Ola Electric, which recently raised $200 million, as well as traditional Indian bikemakers such as Hero, Bajaj Auto (BAJA.NS), and TVS (TVSM.NS), which are accelerating their clean mobility plans.
- Ather plans to increase its annual production capacity to one million scooters from 400,000 by the end of 2022, install 5,000 fast chargers across India, develop new products, and expand its network to 600 stores over the next three years, according to Mehta.
He sees the most difficult challenge as expanding the supply chain and convincing suppliers to invest ahead of time in electronic components such as motors and controllers for India’s nascent electric vehicle market.
The required investment and rate of expansion will also delay Ather’s profitability, which Mehta expects to be two years away.