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Advantage Hero MotoCorp as Ather Energy looks to raise ₹200-300 crore

Ather Energy's plan to raise 200-300 crore in fresh funding over the next one year is noteworthy as investor Hero MotoCorp is yet to develop its own electric scooters and motorcycles

Ather Energy co-founder Tarun Mehta. Ather Energy is developing a new range of electric scooters using a new platform that is scheduled to hit the markets by 2020-2021. It also plans to enter the electric motorcycle segment in the next few years. Photo: AFPPremium
Ather Energy co-founder Tarun Mehta. Ather Energy is developing a new range of electric scooters using a new platform that is scheduled to hit the markets by 2020-2021. It also plans to enter the electric motorcycle segment in the next few years. Photo: AFP

New Delhi: Electric scooter startup Ather Energy, which is owned a third by Hero MotoCorp Ltd, is gearing up to raise between 200 crore and 300 crore over the next 10 months to a year to expand into newer markets such as Chennai and Pune, said a person with direct knowledge of the matter. The next round of funding would support Ather’s needs for a year, and the Bengaluru-based company would need to do another round in the coming years for its future expansion and product development plans including foraying into Delhi, said the person, requesting anonymity.

“Ather will need to raise funds within a year since operations will be expanded to Chennai and Pune within the next three months," the person said, adding the expansion will include setting up an experience centre each in Chennai and Pune where potential buyers can check the product and also place an order.

The company, which was co-founded in 2013 by IIT graduates Tarun Mehta and Swapnil Jain, has so far received funding of around $66 million from Hero MotoCorp, American hedge fund Tiger Global and Flipkart founders Sachin Bansal and Binny Bansal.

Ather’s plans are noteworthy as Hero MotoCorp, India’s largest two-wheeler maker, has yet to develop its own electric scooters and motorcycles. Hero MotoCorp has instead invested about 335 crore—in two tranches—in Ather Energy, to enter the domain of electric two-wheelers.

Micro mobility is extremely important in India and other Asian countries as 70% of the vehicles are two and three-wheelers. Hence, converting them to electric is crucial, said Suvranil Majumder, head, electric mobility project, International Finance Corp. “Two-wheelers play a crucial role in last mile connectivity but also contribute in a big way to air pollution," said Majumder.

Ather Energy is developing a new range of electric scooters using a new platform that is scheduled to hit the markets by 2020-2021. It also plans to enter the electric motorcycle segment in the next few years, said the person cited above.

Besides, the startup will also need funds in the next two years to invest in setting up a manufacturing capacity since the existing plant located in the outskirts of Bengaluru can produce only up to 20,000 scooters each year. The new plant is likely to be built in any of the five states in South India.

Currently, none of the leading two-wheeler makers in India have launched any product in the electric two-wheeler space. Ather’s plans will therefore give an advantage to Hero MotoCorp as electric scooters are expected to become popular in the future.

The person said Ather may look to raise the funds from its existing stakeholders before tapping outside resources. The company is also planning a separate revenue stream from setting up charging stations known as Ather Grid. It has already started establishing these stations in Bengaluru, which can also be used by owners of other two-wheeler brands. The startup will invest in creating similar infrastructure in Chennai and Pune, the person said.

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“Creating charging infrastructure will help in attracting customers and it also has a psychological impact since range anxiety is always there in a customer’s mind while buying an electric vehicle. In the next few years, charging stations will also generate revenue once EVs become popular. Ather will also launch its operations in Delhi within the next year," said the person mentioned above.

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Unlike most of its peers like Twenty Two Motors, Ather is not looking to tie up with some of the Chinese or Taiwanese companies for developing the requisite technology for its electric two-wheelers. Instead the startup is looking to hire engineers from some big tech firms to develop the new age electronics for its electric two-wheelers, the person said.

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“Ather has developed a couple of products but this won’t suffice since the number of products should be more to attract customers. Also, there will be competition in the electric two-wheeler space so we have to offer more products to the customers and we would need a bigger manufacturing facility as well," said the person mentioned above.

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Updated: 27 Dec 2018, 10:08 AM IST
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