Ather Energy raises $128 mn led by NIIF's SOF, Hero MotoCorp & others

While the move does not put Ather Energy in the unicorn club, it definitely brings it within striking distance

Ather Energy, India’s leading electric two-wheeler company, raised $ 128 million on Thursday in a Series E round of funding led by the National Investment and Infrastructure Fund’s (NIIF) Strategic Opportunities Fund (SOF) and Hero MotoCorp, a significant shareholder in Ather, which has again invested and continues to hold its stake at 35 per cent after the fresh infusion, apart from other investors.

While the move does not put Ather in the unicorn club, it definitely brings it within striking distance. The move comes at a time when the electric scooter industry is showing signs of slowing down after heady growth in the last three months- as high as 58 per cent in the month of March over February and 15 per cent in February over January in terms of registrations.

In April, registration of electric scooters was slightly in the negative over March. This is primarily due to the persisting and worsening shortage of components and crucial chips after the Russia-Ukraine war which might continue till 2023. And of course the spate of electric two-wheeler fires which has forced manufacturers to recall over 6,000 of them, leading to consumer concerns.    

The funds will be used by Ather Energy to expand manufacturing facilities, invest in research and development, charging infrastructure, and grow its retail network. Tarun Mehta, CEO  of Ather Energy, said, “The company is expected to increase its capacity from 10,000 a month to 35,000 a month by this year and we are already building a new factory. We should hit 1 million capacity only sometime next year.”

Mehta says that the company is already generating revenues of over Rs 100 crore a month and hopes to double the number in FY23. His projection is that if the shortage of chips does not worsen, the industry should be able to hit 100,000 scooters a month by the end of the year from around 40,000-50,000 at present.  

The founder elaborates that the money will also be  used to build two more platforms of scooters apart from the single platform on which it works now. However, it will not be for building a motorcycle yet. The cash will also help the company support its 100 odd suppliers who provide it with customised components as they have built the scooter from scratch. Mehta says they will  support suppliers so that they can ramp up production to 60,000- 70,000 a month .  

The company says that its monthly sales in April 2022 hit 3,779 units. And the order book for Ather Energy’s flagship product, the Ather 450X, is growing at 25 per cent quarter-on-quarter. Ather Energy already has a robust retail sales network across the country, with a presence in 32 cities and is planning to hit 100 cities by Diwali and have over 300 stores by the end of the year. Mehta says that the company has already crossed the run rate of Rs 100 crore and is expecting to double it for this financial year. According to Haitong, the company’s market share was 6.9 per cent in February behind Hero Electric, Ampere Vehicles, Okinawa and Ola Electric in sales.    

Commenting on the investment from NIIF, Mehta said, "The switch to electric is inevitable and FY22 was the turning point for electric two-wheeler adoption in India. We are super excited to have NIIF come on board as an investor. They have recently been at the forefront of the country’s green transition through their investments and initiatives, and we look forward to our association.”

For NIIF, this is their first direct investment in the manufacturing sector and in the electric mobility space. This is SOF’s fourth investment after its investments in two infrastructure financing NBFCs (Aseem Infrastructure Finance and NIIF IFL) and a national healthcare chain (Manipal Hospitals).

Padmanabh Sinha, executive director & chief investment officer – Growth Equity of NIIF says, “ Aligned to India’s green transition mission, the two-wheeler electric vehicles industry is expected to grow significantly in the coming years. Ather Energy has indigenously designed and developed superior, well-tested products with a high degree of domestic sourcing of components and adaptability to Indian conditions."