Why India's OG Electric Scooter Company is Failing? - Ather Energy Case Study

Summary

The Ather 450, launched in 2018, was the world's first scooter with a touchscreen dashboard and Google Maps for navigation, becoming India's fastest accelerating scooter at the time. Founded by IIT Madras graduates Tarun and Swapnil, Ather Energy spent years developing this innovative electric scooter. Despite their groundbreaking start, Ather now trails behind newer competitors like Ola, TVS, and Bajaj. The story delves into Ather's challenges, from production hurdles to marketing missteps, and their ongoing efforts to reclaim market leadership by focusing on quality, software upgrades, and expanding their product range.

Takeaways

• 🚀 Ather 450 was a groundbreaking scooter, being the first in the world with a touchscreen dashboard and Google Maps integration for navigation.
• 🏎 It was the fastest accelerating scooter in India at the time of its launch, even outperforming some petrol scooters.
• 🛠️ Ather Energy's journey began in 2009 at IIT Madras, with founders Tarun and Swapnil aiming to innovate in the energy space.
• 🔋 Their initial idea was to create a fan named 'famp' that utilized thermal energy from oil lamps, but it evolved into a focus on electric vehicles and battery technology.
• 🚗 Ather Energy's founders decided to build an electric scooter that people would want to buy, rather than just selling batteries.
• 💡 The company was inspired by Tesla and aimed to create a high-quality electric scooter that could compete with petrol scooters in both performance and design.
• 🔄 Ather faced significant production challenges due to the innovative designs that local vendors were not equipped to produce at scale.
• 🤝 Hero MotoCorp's investment in Ather was a turning point, providing the necessary funds and industry connections to move towards mass production.
• 📈 Despite being a pioneer, Ather struggled to compete with larger, more established brands that entered the market later with more aggressive marketing strategies.
• 📊 Ather's focus on quality and customer satisfaction has resulted in strong word-of-mouth, but it has not translated into market leadership due to lack of widespread recognition.
• 💼 The company's revenue has been growing, driven by the quality of their products and the introduction of software and technology upgrades as a new revenue stream.

Q & A

What was unique about the Ather 450 when it was first launched?

The Ather 450 was the first scooter in the world to have a touchscreen dashboard and Google Maps for navigation. It was also the fastest accelerating scooter ever produced in India at the time, even faster than some petrol scooters.

How long did it take Ather Energy to develop their initial product?

Ather Energy spent 5 years in development and went through at least 55 prototypes before finalizing their product.

Why did Ather Energy decide to design and manufacture their scooters in India?

The founders of Ather Energy, both engineers from IIT Madras, wanted to build the 'Tesla of Electric Scooters' in India, and believed that completely designing and manufacturing in India was the most audacious and fitting decision.

What challenges did Ather Energy face in the early stages of production?

Ather Energy faced challenges such as finding automobile vendors capable of building parts at the quality and precision they required. The Indian Automotive vendors were not equipped to handle Ather's demanding quality requirements, and they struggled to convince these vendors to change their workflow for a small client like Ather.

How did Hero MotoCorp's investment impact Ather Energy's production capabilities?

Hero MotoCorp's investment of 205 CR rupees in Ather Energy was a game changer, providing the necessary funds for production and strategic support. It allowed Ather to set up a production facility and meet the right people, which helped in getting their functional vehicle to a production-ready state.

What was Ather Energy's initial strategy to overcome financial challenges?

Ather Energy initially took a crowdfunding approach by taking pre-orders for 25 scooters at 85,000 rupees each, using that money to build the scooters. This strategy impressed investors and led to further funding.

Why did Ather Energy decide to limit their production to 20,000 scooters a month despite having a larger capacity?

Ather Energy decided to limit their production to avoid burning money at a pace that would put them out of business sooner. They aimed to manage their finances more effectively and ensure the sustainability of their operations.

How did Ather Energy manage to reduce costs by the start of 2021?

Ather Energy pulled resources from Hero, a company with decades of experience in making two-wheelers, to understand and improve their processes. This helped them make their scooters more efficient and reduce costs below the selling price by the start of 2021.

What was Ather Energy's stance on marketing and how did it affect their sales?

Ather Energy initially focused on product development and quality, believing that this focus would attract customers. However, they later realized that they had messed up in terms of marketing, as many people were not even aware of the Ather brand, which affected their sales negatively.

How does Ather Energy plan to generate revenue in the long term?

Ather Energy believes that long-term revenue for electric vehicles will not come from servicing but from selling software and technology upgrades, accessories, and other gen technology upgrades. They aim to create an entire ecosystem for their customers, similar to Apple.

What is Ather Energy's latest product aimed at the mass market?

Ather Energy's latest product aimed at the mass market is the 'Resa', designed to address the issues customers had with previous models like the Ather 450 and 450x, making it more family-friendly.