Ather Energy takes on Ola, Okinawa, opens second manufacturing facility

Firm is in also in talks with various state govts to set up a third plant, which when completed, is likely to have a capacity of a million units a year

Thirteen years ago, Tarun Mehta and Swapnil Jain were trying to launch a hardware start-up in the energy space while they were students at IIT-Madras. But it was hard to build something physical. After graduation, driven by a core interest in the electric drive, Mehta quit his job at Ashok Leyland in 2012 to start work on battery packs--one of the biggest existing shortcomings in electric vehicles. Eventually, realising that the problem isn’t just the battery pack, Mehta and Jain were drawn to the idea of designing and building a completely new EV. The duo started smart electric scooter start-up Ather Energy in 2013. A lot has changed since. 

Ather Energy, now a leading electric vehicle scooter brand, inaugurated its second manufacturing facility on Wednesday in Hosur, an industrial city in Tamil Nadu. Spread across 300,000 sq ft, the facility will help the brand expand its production capacity to 420,000 units a year. This is a significant jump from its current capacity of 120,000 units. The unit will also help the company meet the growing demand for its flagship scooters -- the Ather 450X and 450 Plus--and help it take on rivals such as Ola Electric, Okinawa Autotech, Ampere, Hero Electric, and TVS Motor Company.

“We started at a time when nobody even believed electric vehicles would become possible,” said Jain, co-founder and chief technology officer, Ather Energy, in an interview. “It was an uphill battle for us.”

Ather has planned a total investment of Rs 650 crore for the next five years. Of this, Rs 320 crore has been spent on the new plant.

With deep investments and innovation done on processes and machines, Jain said the new unit will help Ather further strengthen its leadership in delivering quality vehicles. 

The firm is also set to finalise the location of a third plant with plans to make it functional by March 2024. The plant, when completed, is likely to have an installed capacity of a million units per annum. This would take Ather Energy's total capacity to over 1.4 million units a year. Ather is in talks with various state governments like Maharashtra, Gujarat, Telangana and Karnataka to set up the plant, say sources.

Ather’s rival Ola Electric has reportedly finalised its second phase of expansion, under which it will raise its plant capacity fourfold, from a million two-wheelers per annum to 4 million. This will also include motorcycles.

Ather, which counts Tiger Global and Indian bikemaker Hero MotoCorp as investors, has raised $341.7 million in all. The firm is looking for new funding to help it scale up annual production to one million scooters over the next three years, the sources say.

Ather’s new plant houses two units - one dedicated to battery production, the other for vehicle assembly. The battery unit will have five assembly lines while the vehicle assembly will have two. The entire facility will have a capacity of 420,000 units to meet the growing demand for its scooters. The new plant employs 1,600 people which is twice the size of the first plant. 

“Eighty per cent of our workers are freshers,” said Sanjeev Kumar Singh, senior vice president and head of manufacturing at Ather Energy. “After hiring, we train them.”

Singh said about 50 per cent of the workers in the battery unit are women.

Ather hopes to close the year with an annual revenue run rate (ARR) of Rs 2,400 crore. “One thing that has taken us by surprise in the last few months is the pace of adoption for Ather in Tier-2 and Tier-3 cities,” said Ravneet S Phokela, chief business officer, Ather Energy. 

The firm’s operating revenue grew 411.9 per cent to Rs 408.5 crore in FY22 from Rs 79.80 crore in FY21, according to Entrackr. The firm is reportedly looking to sell 90,000-100,000 units in FY23, up over 300 per cent from 23,000 e-scooters sold in FY22.