New model should help double our market share to 30%: Ather's Tarun Mehta

Ather Energy's founder, Tarun Mehta, discusses his strategy to increase volumes, the competition, and the impact of the FAME-II reduction

Ather Energy is taking on its rivals, both in ICE (internal combustion engine) and electric, with its entry level 450S priced at Rs 1.29 lakh. With deliveries to start at the end of this month, Ather Energy founder Tarun Mehta talks of his strategy to increase volumes, competition, and the impact of reducing subsidies under Faster Adoption and Manufacturing of Hybrid) and Electric Vehicles-II, or FAME-II, in an interview with Surajeet Das Gupta. Edited excerpts.

What is the market segment you are tapping for the 450S and why?

The Ather 450X (priced atRs 1.45 lakh) was equivalent to a 150-cc scooter in the performance-segment category. Here we are supreme (across ICE and electric) with a 60 per cent market despite limited distribution. But the opportunity for electric in the equivalent 125-cc scooter segment is four to five times bigger, selling 400,000-500,000 annually, with TVS dominating the space with the Ntorq (ICE scooter) apart from other players like Suzuki. We see a big opportunity here and want to grab market share from TVS.

Is it (450S) a stripped-down version of your premium 450X?

Yes it is that, but we have made a lot of changes too. It has a smaller battery with a range of 115 km compared to 150 km in the 450X but a much lower price and many additional features. In terms of performance it’s the leader in this category with the fastest acceleration. And we have reworked the display significantly. It is now 7 inches instead of 4 inches, and that is the largest in this segment with a display contrast ratio 20 times higher than others. We have added new features, through which the battery life can be increased by one and a half years.

How do you see the model helping you in pushing volumes, which were impacted owing to reduction in FAME-II subsidies?

We expect to double sales. Currently we are at 10,000-12,000 a month, which should go up to 20,000-25,000 a month. Our expectations are that we will be able to double our market share from 14-15 per cent currently to around 30 per cent by the end of the financial year.

Ola Electric has launched the Ola S1, which is its entry-level offer at an introductory price of Rs 1.09 lakh. So will that give competition?

Ola has announced the price will go up to Rs 1.19 lakh after August 15, so in terms of pricing it is not much of a difference. From an industry perspective, the reduction of FAME-II has fast-tracked model launches so that more accessible price points cancel the impact of subsidy reduction. In July we saw customers’ intent to buy electric scooters changed. It is for the industry now to build more products and expand distribution to grow the market. We have announcements about products in the festival season, January and even March lined up.

What happens if FAME-II is withdrawn? Can you absorb the cost and not increase prices?

We are working on cost reduction. That is why the price of the 450X has gone up only Rs 7,000-8,000 between March and now, despite a Rs 30,000 reduction in subsidy. But surely no one can absorb the entire cost if FAME is withdrawn.

Will you require more investment to expand capacity?

Not at the moment. We can reach a full capacity of 400,000-450,000 per annum in our existing plant. But we are putting in Rs 400 crore in research and development (R&D) this year. Next year, we expect to set up a greenfield plant.

So are you looking at raising fresh funds from private-equity and strategic investors?

We are and should close it in the next few months. It took us some more time due to the FAME-II changes, but the market is settling down, and it is consolidating with the right number of players. It is now clear that one cannot get into the business without a sizeable investment in R&D.