Two-wheeler EV startup Ather Energy to go for IPO in 24 months

Two-wheeler electric vehicle (EV) startup Ather Energy is planning to go for an IPO within 24 months, advancing its earlier plan to do it in four to five years. The company is targeting an annual revenue run rate of $3 billion in two years and also expects to be the first EV startup to break the mould globally by going for an IPO backed by EBIDTA positive financials.

Ather has an agreement with its key investor, Hero MotoCorp, which has a 35 per cent stake in the startup. The latter is treading its own independent path for two-wheeler EVs and is set to launch its own products next year. Under the agreement, there will be no restriction based on segment, market and capacity in competing against each other in the EV market. In fact, they will look at areas of synergy where they can work together. “Everybody in the same space is not an antagonist or competition. You can also be partners,” said Ather’s co-founder and CEO Tarun Mehta. Asked whether it will manage to avoid competition with Hero MotoCorp, Mehta said the opportunities existed for both.

“To have artificial restrictions on segments, capacity and markets in such an early stage of the EV cycle does not make sense. Hero is a great partner. It will also have to build its own products. But wherever there are synergies, we can look at working together — on infrastructure, for instance. But on products, we are in different directions,” he said. Explaining the reason for the change in its ambition, Mehta said the phase of gradually growing and testing was over and it was now time for ‘massive expansion’.

“This month, our annual revenue run rate has hit $100 million from a mere $7-8 million last November. We have told our suppliers to quadruple their supplies.  It looks as though we are already the largest two-wheeler EV company by revenue in India and that too when we have not reached the mature stage of our company and have a presence in only 24 cities,” said Mehta. By next year, Ather will be in more than 100 cities and Mehta projects that once they increase the number of cities tenfold and there is more awareness, the company can expect annual revenue run rates to go up by 20-30 times.

To support this growth, Ather is investing fresh funds of around Rs 1,000-Rs 1,500 crore. This money will be spent on expanding its capacity from 10,000 two-wheelers per month currently to 65,000 a month by 2024 and includes a new plant.   The company will set up over 250 experience centres by next year from the current 23. It is working on launching at least two to three new models in the next three years in different segments, perhaps in the mobike segment too.  

In response to those who say that Ather has still not become an unicorn, Mehta said it takes time in the auto business to get the product right.  But once that has been accomplished, the scaling up of revenues is very rapid compared to e- commerce and other internet businesses. “Valuations will also catch up, as the economics of the business are positive and not based on complicated projections for the future,” he added.

As for the market disruption promised by Ola Electric with the launch of its scooter, Mehta said that since the launch, Ather’s sales have gone up by 60 per cent in the last 2-3 months and its bookings have doubled.

“A new player only creates more awareness of EVs. Also, it helps the supply chain as, with more players, they find their business viable,” said Mehta.

The ambition for all the players, he added, is the same: to convert the 18-20 million two-wheeler customers every year to EV, a market that is estimated to be worth $100 billion. He expects a near-total shift to EV scooters in four years.

The impediment to growth right now is the chip shortage. Mehta said if Ather is doing a run rate of $100 million rather than $150 million, it is because of constraints in the supply chain.

“We don’t see it improving dramatically but by the second half next year, lead times should come down from the current 36-48 weeks. Earlier, it was only 3-4 weeks so it has gone up ten times. For growth players like us, it is a constraint,” he said.