We are back for another episode of Industry watch. Today we will talk about Ather Energy, India’s pioneer electric scooter startup and their new Gen3 Ather 450X model, Fund Raising, Revenues, Expenses, Loss, Projections for 2023 and more.
Video: Hey Tarun! Ather’s Moment Of Reckoning Is Here. Time for changes?
Ather 450X Gen-3 launch
So let’s talk about the gen 3 Ather 450X electric scooter which was unveiled recently.
So let’s talk about the gen 3 Ather 450X electric scooter which was unveiled recently.
- Range! Range! Range!
Yes! Congratulations to all Ather Fans After so many requests by you all, Ather has offered a 100+ km range model. They have boosted the battery pack capacity to - 3.7 kWh from 2.9 kWh. This will offer a dramatic increase in range. If the true range in the old Ather was around 75 km in mixed modes. Here you should be able to get 100+ km easily. With a 3.7 kWh battery pack, we will see owners doing 150+ km in eco mode easily! We have seen multiple owners of OLA S1 Pro doing 200+ km with a 3.9 kWh pack. And those who want to enjoy riding only in warp mode, they can get around 70 km, which is not bad. - Updates to Drivetrain
Now the 450X can offer consistent power delivery while climbing hills with two people onboard. We love such improvements to the drivetrain. - TPMS
Having a native integration of a TP monitoring system with the 450X’s dashboard and mobile app is awesome. This is extremely important as low tyre pressure will lead to different experiences while riding. We believe this kind of native integration is way better than 3rd party accessories and more OEM’s need to do this. - Buff to computer memory
More RAM will lead to better user experiences via the touchscreen.
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Finances
Let’s see how the company is doing. Let's talk about finances. In May this year, Ather Energy raised $128 million in its Series E round led by the National Investment and Infrastructure Fund’s (NIIF) Strategic Opportunities Fund (SOF) and Hero MotoCorp. This money will be used this year to expand manufacturing facilities, invest in research and development, charging infrastructure, and grow their retail network. Which they are doing - They are adding a new manufacturing plant that will up the capacity to 4 lakh units per year. The important thing to note is that Hero MotoCorp owns 36% of the company and after this cash infusion, this must have risen. They are the largest shareholder. How do I feel about one of the BIG ICE Mafia companies owning one of the most progressive EV startups in India? Not happy about that. Because, we are not sure how Hero MotoCorp’s own VIDA electric two wheeler brand and Ather will co-exist? Hero may ensure Ather won’t become a mass market player. Ather may continue to offer products in the premium segment while VIDA will offer mass market affordable EV’s? But I would want Ather to also sell mass market products and take on the BIG ICE Mafia by selling millions. It remains to be seen if that would happen. Now, let’s look at Ather’s financials Revenues 
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How will Hero Motocorp's VIDA and Ather Energy co-exist?
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The company’s operating revenue grew a whopping 411.9% at 408.5 CR. Sale of electric two wheelers constitutes 98% of the company’s operating revenue. Income from the sale of services which is provided to customers is around 2.9 CR - These are the sales of accessories, annual subscriptions, part changes and so on. The financial report also says - Interest income from fixed deposits & current investment is 5.4 CR.
Expenses
Expenses
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As you can see, expenses grew to Rs 758 crore in FY22 from Rs 321.6 crore in FY21. Cost of the parts and materials are its largest cost center forming 51.7% of the overall costs. I wonder where investment in RnD would fit in here? If anyone of you have an idea, do write in the comments below.
Profit / Loss
The chart below shows how losses have been accumulating over the past 3 years.
Profit / Loss
The chart below shows how losses have been accumulating over the past 3 years.
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Projections for 2023
Now let's try to do some projection/guesstimation for next year. We have invited Mr Manish Agarwal, founder of ZeroBill, a cleantech and mobility startup. Manish is extremely passionate about the EV industry and understands financial statements better than us. Please watch the video and listen to the segment on Mr Manish's analysis on Ather's finances and how Ather needs to sell 60,000 units to become profitable provided, expenses don't increase dramatically. Manish also is confident that Ather can eat into the luxury premium two wheeler segment and thus increase their sales. We thank Manish for his insight and interesting guesstimations. It’s always awesome to get Mr Manish on PluginIndia. Please find ZeroBill’s website in the description for your reference. So, will Ather achieve 60,000 units next year? I’m cautiously optimistic, because at the end of July, Ather’s sales were around 16,718. They should be able to cross 30,000 units by the end of the year, with the launch of the Gen3 Ather boosting sales. With increasing awareness, Ather’s awesome reputation, they should be able to double their sales next year to 60,000 units. Let’s see. |
Projection for 2023 and Guesstimations
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Ather's Sales in 2022
Here is how Ather is faring in terms of sales figures as of end of July 2022. They are currently the 5th most popular Electric scooter brand in India. Why is Ather unable to do better than say an Ampere or an Okinawa despite having a superior product?
Here is how Ather is faring in terms of sales figures as of end of July 2022. They are currently the 5th most popular Electric scooter brand in India. Why is Ather unable to do better than say an Ampere or an Okinawa despite having a superior product?
Sales as of July 31st 2022
- Supply Chain Issues
- Range
- Pricing
"Ather’s strongest muscle is its engineering capability, we want to lean on that and rethink all platforms to make the same experience possible with a far lower cost”
Note that Tarun stresses on the phrase - ‘same experience possible’. That is similar power, similar tech, similar bells and whistles at a lower cost. Does this mean we won’t see any lower powered variants offering a ‘lesser experience’ at a far lower cost?
Hey Tarun, ultimately we feel, the flagship Ather variant - the 450X won’t generate huge sales for Ather. You will soon have to start planning for a lower priced mass market model. Let's say a model with a motor offering 3 kW peak power with a 3 kWh battery pack. 120 km Tru range. Reduce some bells and whistles and get the ex Showroom price before subsidies to around 1.35 lakh. After central and state subsidies, sell it for around Rs 90,000. I guarantee you, it will sell like hot cakes.
Is this possible? Yes. Will it deliver a “lesser experience” compared to the 450X? Who cares, if it sells and meets people’s needs right?
Ultimately reducing cost structures is a complex problem for Ather. But they will have to solve this soon. Because, this kind of pricing or strategy will not be viable after 2-3 years. The withdrawal of Government subsidies via the FAME 2 scheme for EVs could result in a huge downturn in sales.
Ather may have to stop being stubborn about delivering the ‘same experience’ and do whatever it takes to offer choice to their customers.
Final Words
So ultimately Ather will need to decide. Do they forever want to be seen as a performance scooter brand? Or are they willing to get into the mass segment. Let me be honest, guys. 95% of people who use scooters don’t care about performance. They want a reliable vehicle that goes from point A to point B. That is a huge market and Ather will miss out on this if they don’t change.
Companies like TVS sell more than a lakh scooters per month. Ultimately the real competition are the BIG ICE Mafia companies. If Ather really wants to take them on and sell millions of scooters, they will need to re-evaluate and lay down a vision for the next 3 years.
Tarun and team, if you are watching this, the EV community is rooting for you and we are looking forward to the day when Ather beats the BIG ICE Mafia and becomes the market leader.
What do you guys think? Are Ather doing enough? How do you think they will need to pivot to dramatically increase the sales? Do write in the comments below.
Links
EV Sales Reports
Our Video Shoot Gear
So ultimately Ather will need to decide. Do they forever want to be seen as a performance scooter brand? Or are they willing to get into the mass segment. Let me be honest, guys. 95% of people who use scooters don’t care about performance. They want a reliable vehicle that goes from point A to point B. That is a huge market and Ather will miss out on this if they don’t change.
Companies like TVS sell more than a lakh scooters per month. Ultimately the real competition are the BIG ICE Mafia companies. If Ather really wants to take them on and sell millions of scooters, they will need to re-evaluate and lay down a vision for the next 3 years.
Tarun and team, if you are watching this, the EV community is rooting for you and we are looking forward to the day when Ather beats the BIG ICE Mafia and becomes the market leader.
What do you guys think? Are Ather doing enough? How do you think they will need to pivot to dramatically increase the sales? Do write in the comments below.
Links
EV Sales Reports
Our Video Shoot Gear
- GoPro HERO9 Black Camera - https://amzn.to/3gtsLCW
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