Ather Energy sees a big opportunity “just to focus on scooters and get this market right” since they are no longer a single product category as was the case some years ago.
“Our short term focus is to have a very rich bouquet of products in the scooter segment for our customers and make sure we have solutions for different user cases,” Tarun Mehta, Co-founder and CEO, Ather, told ET Auto.
Electric scooters have clearly come a long way since the time there was “this just one scooter and pretty much it” two decades earlier. Today, the market has fragmented into multiple different segments.
There are performance scooters like Ather’s 450 series, family scooters like its Rizta and Honda Activa, performance premium products, maxi scooters, lifestyle products, scooters focused on women and the gig economy…the list is endless.
“There are at least eight to nine segments emerging now in scooters. We saw this happening in motorcycles 20 years ago with the advent of Pulsar and bikes from Royal Enfield,” recalls Mehta.
Deep, rich segments
This is different from the time — “at least in my memory” —when it used to be pretty simple and straightforward with the 100cc two stroke that then started “fragmenting out like crazy” with naked, naked sports and a host of other categories. All of them today are “deep, rich segments” with very clear leaders and winners.
According to Mehta, something similar will happen in electric scooters though perhaps not to the same extent as motorcycles. The company also has its eyes on motorcycles in the long term which it will be building on its Zenith platform.
Scooters, he adds, will be the short term focus while it is impossible to predict at this point which segment of motorcycles will go electric first.
“It is too early to say what kinds will go electric simply because there are not too many on the road. As things begin shaping up over the next two to three years, I will have a more educated view on which part of the motorcycle spectrum is going electric,” he says.
Compelling case
Right now, the entry and mid-level motorcycles “make a very compelling case” to go electric but one will still have to wait and see how customers respond. Scooters are, however, on a “great path” of electrification right now.
By the end of the day, electric scooters fundamentally make a lot more sense to the customer. For one thing, the total cost of ownership is just “mind numbingly amazing”. Even if one were to spend INR 20,000 extra for an electric scooter, which is 20per cent more than its ICE (internal combustion engine) sibling, the breakeven happens in the initial years of operations.
Beyond this, the savings compared to petrol are “just phenomenal” and the biggest advantage is that electric “allows you to bring a lot of tech” to the product which ICE vehicles typically struggle with. The fact also remains that India is going through a premium transition across the economy where the auto sector trends are “among the most powerful” today.
As Mehta puts it, the “phenomenally easy advantage” offered by electric scooters in tandem with an economy that is transiting towards the premium space means that people are seeking to buy more desirable and tech enabled products. “Electric scooters just fit sweetly into this centre (of action),” he says.
On the fast track
It is also more than evident that electric scooters are now on the fast track which is the best piece of news for a company like Ather which was the first mover here. “We have always been bullish in this space and focused on building the right product, doing the right thing and investing in quality brands,” continues Mehta.
Today, customers are queuing up for electric scooters like never before as reflected in a near 18per cent penetration across India and 20per cent in the south. “These are healthy numbers and we are seeing newly opened up Tier 3 cities going electric at a much faster pace than metros,” he says.
Interestingly, the bottom 300-and-odd cities in India already have the highest electric penetration today at 22-23per cent . There are many industrial towns like Aurangabad and Nashik in Maharashtra or Sikar and Ajmer in Rajasthan where electric scooter penetration is growing rapidly.
It is just not the early adopter or experimental customer buying electric— they continue to do so — but also the mainstream buyer because the total cost of ownership “is just beautiful”.
Growing momentum
This explains why the momentum is being seen Tier 1, 2 and 3 regions across the country. According to Mehta, as long as the company is investing in top class quality and building for the long term, “you have got a good game going”.
While legislation across the world is making electric mandatory thanks to the Paris Agreement or the Copenhagen Summit, India faces harder realities which make this transition an absolute imperative. Experts believe that nearly 50per cent of the pollution levels in many cities is caused by two-wheelers where the total numbers on Indian roads are in the range of 300 million units.
The fact that they are dependent on petrol also means a hefty import bill and the time has now come for India to focus on fossil fuel independence and go in for solutions like electric. As experts add, it is clearly a no-brainer that electric saves the country money and makes cities cleaner too.
Mehta says a company like Ather is far more focused on talking about the product, its quality, its solid technology and the made-in-India factor. Customers will figure out for themselves that these are clean vehicles and gradually keep this reality in mind along with the obvious benefits of low operating costs.
No alternative to electric
The Ather CEO also reiterates that electric is the best option going forward and that there is really no point discussing other clean fuel alternatives. For instance, hybrids and CNG are also being touted as viable options among certain stakeholders in the auto industry.
According to him, everything else beyond electric is “just a distraction” and from a capital allocation perspective, it is incorrect for companies and economies to get defocused and try to do a little bit of this, a little bit of that, and then a little bit of electric.
“We have great capability in this country, electric is no longer a stranger to us across vehicle segments, we have solid tech and product as well as cost structures and a supply chain going. It is a mistake to get distracted and try to do 18 other things because if somebody were to think from a national perspective, it is poor capital allocation,” says Mehta.
When something can give a 100per cent output, why settle for something less like 60per cent or 30per cent ? As he puts it, it is important to take the “full 100per cent leap when you have all the pieces going and customers are also supporting it”. The key is not to get distracted and focus on one thing, invest in it completely and increase customer awareness.
Driving down costs
The Ather teams have also successfully managed to drive down costs by almost 24per cent in the last three years and this perhaps is possibly one of the best cost structures in this space anywhere in India and by extension anywhere in the world. “Our teams have just not been building good tech but there is an enormous amount of work happening elsewhere,” says Mehta.
This includes getting suppliers to drive down costs across the entire value stream right from selection of material, process, treating, logistics etc. “We are truly happy about where our teams have taken costs and still see some more runway ahead of us,” he adds.
From Ather’s point of view, it is a great time to be building electric and “we are finally very excited” after years of building a strong base.
“All the good work we put in for the product, technology and brand finally finds the scale behind it for its impact to be viable and to get our guys going. Everybody in our team is super excited because they are going to see the leverage of their blood and sweat over the last decade,” says Mehta.
