Electric Scooter-maker Ather Energy Takes On Ola, Expanding Its Hosur Plant

Bengaluru-based electric two-wheeler manufacturer Ather Energy is set to take on the might of Ola Electric by expanding the capacity of its new plant in Hosur from 110,000 units per annum to 500,000 by the end of next year. It will invest Rs 650 crore in the new plant and in the works are plans to raise money from private equity players and investors sometime this year to fund its further expansion.

Ather has Tiger Global and Hero Group as two of its chief backers. Elaborating the plans, Tarun Mehta, one of the founders of the two-wheeler company, said: “We are now expanding our reach from 13 cities to 50 by the end of this financial year and hit 100 by FY23. We are also expanding our own fast-charging infrastructure from 140 to 500 by the end of this year. We will also expand the capacity of the new Hosur plant to 500,000 per annum.”

Mehta has estimated the electric scooter market in India will hit five-six million in the next five years.

Ather’s aggression comes on the heels of Ola Electric’s ambitious game of investing Rs 2,400 crore to build a plant to make 10 million two-wheelers a year by 2022.

The company has said the first phase with a capacity of two million will be ready by June and the product is expected to roll out soon. In simple terms the capacity being built by Ola is half the size of the ICE two-wheeler market, estimated at around 20 million per annum.

Currently 100,000 electric two-wheelers a year are sold in the country. Ather has also invested over Rs 1,000 crore in developing the scooter in-house through a 300-strong R&D centre and has designed and manufactures the battery pack in the country (except the cells, which are imported, everything is made in India).

Ola, on the other hand, has bought the technology for the scooter by acquiring Netherlands-based Etergo, which was on the brink pf bankruptcy.

However, Ola executives say the product has been reworked substantially for India and only the design elements have been adopted.

Ather has pointed out the new FAME (Faster Adoption and Manufacturing of Hybrid Electric Vehicles) policy, announced a few weeks ago, has virtually bridged the pricing gap between ICE and electric scooters by increasing the subsidy on batteries by Rs 5,000 per KwH (it was Rs 10,000 per KwH). As a result, the subsidy on Ather’s scooters, powered by a 3-KwH battery, has gone up by Rs 15,000.

Mehta said: “As a result of another Rs 15,000 reduction due to the increase in subsidy, the difference between the price of our scooter 450 Plus and a 125 cc ICE engine scooter is now Rs 5,000-8,000. In Delhi because of local state subsidies it is even lower. And then you save about Rs 2000 on fuel per month. So the inflexion point has come.”

But will prices fall below Rs 1 lakh? After all, the bulk of the ICE scooters are below Rs 1 lakh. Mehta, however, said consumers would be willing to pay a premium for an EV because of the lower maintenance costs as well as the additional services one can do (like software upgrades online). However, he does not want to hazard a guess on what would the premium be.

But he said there was a possibility prices could go below Rs 1 lakh for scooters powered by the 4-KwH battery, which will get high subsidies of Rs 60,000 against Rs 45,000 Ather gets on the 3-KwH battery, which powers its scooters.

But building those scooters will require a different architecture and it could be looking at that too.