Ather Energy's boss Tarun Mehta breaks down EV company's ambitious plan to achieve $1 bn in revenue

Tarun Mehta is a patient man. He and his IIT Madras mate and Co-founder Swapnil Jain developed their vehicle for five years till they were satisfied enough to put it on the road. Plus, they were clear that their focus was the premium end of the market. That explains why electric scooter maker Ather Energy has emerged as strong competition to legacy brands. Next on the list, says 33-year-old Mehta, is manufacturing lithium-ion cells. In an exclusive interview with Business Today’s Rachna Dhanrajani, Mehta, also the CEO of Ather Energy—that had a valuation of $739 million as of October 14, 2022, as per research firm Tracxn—talks about competition, how the company is pushing self-reliance in the country and the way forward. Edited excerpts:

There is a lack of trust in electric vehicle (EV) technology, especially when it comes to scooters, after some of them burst into flames. How does Ather work around this perception?

The thing about automotive technology is that it takes time. One has to be patient with technology. It cannot be a rush job... We at Ather have researched our battery and engine for almost a decade. Our scooters have now been on the road for more than four to five years and the batteries have been working beautifully. When you see a brand that has been sustaining on the streets for years now, then there shouldn’t be any doubts... the product has spoken for itself.

What do you think of competition in the EV space?

I think more options in the EV space not only helps consumers but also us manufacturers. It is not possible for us to build for every customer, so you need multiple players in the market. Now, if these options are coming especially from legacy players—be it Hero or Bajaj—it only validates the idea of an electric scooter in a customer’s mind. As an industry we’re working towards promoting that shift from ICE [internal combustion engine] to electric, so more vehicles mean more consumer awareness and so that’s beneficial for the industry as well as us as a company. So, I love competition.

The Government of India has been big on EVs and with the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) subsidy. But most EV companies have been accused of cutting corners to be a part of the scheme. How do you respond to that?

EV companies cutting corners to get in on the FAME scheme is something [those who sell] entry-level scooters—who import most of them from China—are doing. At Ather, we make the base of our scooters here and we started [doing it] long back. People weren’t even making smartphones in the country when we decided to make touch-screen dashboards for the scooter. All that you see is designed and built in India and it is customised. The only thing we import are [lithium-ion cells]; but that also we would stop and start manufacturing our own cells with the help of the government’s push for this [in this year’s Union Budget, the government exempted capital goods and machinery necessary to manufacture lithium-ion cells from paying import duty]. So, we are bringing [to life] India’s Aatmanirbhar vision. We have 10,000 jobs in the manufacturing sector, and about 60-70 patents that have been filed. Our R&D is the biggest [in the space] so at no point are we cutting corners. Automotive as an industry needs R&D and that takes time and money.

Why is Ather not selling chargers along with its scooters?

Initially, we did sell them as one unit. But then we saw a pattern that showed that most people were buying their second or third scooter, so selling them a charger forcefully with the vehicle just did not make sense. So, we started giving it as an option. A customer can buy a charger or a couple of chargers but we suggest that if you are upgrading your Ather even then you don’t need to get a new one. The chargers are forward and backward compatible. The cost of a charger doesn’t have to be a part of the cost of the vehicle, especially with Ather that has an accessible fast-charging grid. Hence, it was a conscious decision.

What’s on the agenda now with production and sales?

We have managed to scale up production to 35,000 units a month but the supply chain is still scaling up with an average of 15,000-16,000 units a month. However, I am confident that with this [Hosur] plant, we will be functioning at full capacity by the end of this year as the supply chain stream clears up. We will be manufacturing 25,000-30,000 units easily. After that, we will be starting work on a new plant.

Would the increased capacity translate into a bigger revenue stream and will that finally make you profitable?

Ather will be a global player, with increased capacity outside of China. We will either be the No. 1 or the No. 2 two-wheeler manufacturer in the world. We are setting a target of $1 billion in revenues for this [calendar] year but when it comes to being profitable, we are still some distance away. The losses continue to narrow but given the pace at which the market is progressing, there is a need to invest in infrastructure, charging grids and product enhancement. So, cash profitability is definitely not [going to happen] this year. It may happen in a year or two.

What differentiates Ather from other electric scooters?

Ather is the safest electric scooter in the market... one that’s been built and researched for the longest period of time... We started work on the scooter in 2013… late 2012 and what you see on the road today is a product of research that has happened over 10 years.

It is also the first locally designed aluminium structure of a scooter. It is extremely stable and has a rigid frame, because of the weights used. Instead of using steel tubes, we have used aluminium and it is all bolted together. This makes the frame durable and light, and it can survive vibrations on the road. But the battery is at the heart of an Ather scooter. We were surprised [to find] that the battery in a scooter launched over four years ago was still at 85-90 per cent capacity. That is a reflection of how Ather is the best in this segment.

And, we have only gotten better from there. With new generations being launched, there are more features that make the scooter more user-friendly. Like, with Ather Stack 5.0 we have introduced new modes, controls, [and] better navigation as a part of integrating Google Maps. It’s almost magical how you can get the new features in an older bike as well, simply by doing a software upgrade.

Despite starting early, it took you a good four to five years to put a vehicle on the road. Today, everybody wants to cash in on the first-mover advantage and customise according to the needs of the time. Do you believe in that?

During our early rounds of fundraising, Sachin [Bansal, Flipkart Co-founder and an investor in Ather] gave me some good advice and that was, we must stay true to ourselves. He said that we must not change anything in the deck for investors. So that’s what we stick to. We stay true to ourselves and work towards building a resilient product.

@r_dhanrajani