Why India's OG Electric Scooter Company is Failing? - Ather Energy Case Study
Summary
TLDRThe 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.
Outlines
🚀 Ather 450: Pioneering Electric Scooters in India
The first paragraph introduces Ather 450, a groundbreaking electric scooter with a touchscreen dashboard and Google Maps integration for navigation. Highlighted as the fastest accelerating scooter in India at the time, it was the result of five years of development and numerous prototypes. The narrative delves into the story of Ather Energy's inception by two IIT Madras engineers, Tarun and Swapnil, who envisioned creating India's 'Tesla' for electric scooters. Despite the lack of a market for electric scooters in India in 2013, they were determined to design and manufacture in India, leading to the launch of Ather 450 in 2018 with little competition. However, the company now faces challenges in staying ahead of market leaders who launched later. The paragraph sets the stage for exploring Ather's journey, challenges, and potential for a comeback.
🛠️ Overcoming Production Hurdles with Hero MotoCorp's Support
The second paragraph focuses on the production challenges Ather faced in transforming their innovative scooter from a functional prototype to a commercially viable product. The Indian automotive vendors were not equipped to meet Ather's stringent quality requirements, leading to stagnation. The turning point came when Hero MotoCorp invested ₹205 crores, acquiring a significant stake in Ather and providing the necessary support to establish a production facility. This partnership not only infused capital for production but also facilitated connections with key industry figures, enabling Ather to launch the Ather 340 and 450 in 2018. These scooters were equipped with state-of-the-art features, including the first-ever touchscreen dashboard and Google Maps integration, fulfilling Tarun's vision of creating a superior electric scooter that could outperform its petrol counterparts.
📉 Ather's Struggle with Market Penetration and Competitors' Dominance
This paragraph examines Ather's struggle to penetrate the market despite its innovative product. It contrasts Ather's focus on quality with competitors' aggressive marketing strategies and distribution networks, which have allowed them to dominate the market. Ather's sales figures for FY20 were significantly lower compared to competitors like Ola Electric, which achieved a massive number of bookings within hours of its launch. The paragraph also discusses Ather's initial marketing shortcomings and the realization that quality alone was not sufficient to attract customers. It suggests that Ather's lack of brand recognition and marketing efforts have hindered its growth, despite its superior product quality and customer satisfaction.
💡 Ather's Future: Focus on Quality, Software, and Ecosystem Expansion
The final paragraph discusses Ather's strategy for the future, emphasizing its commitment to quality and the importance of software and technology in its business model. It outlines Tarun's belief that electric vehicles will generate revenue through software upgrades and technology enhancements rather than traditional servicing. Ather has already seen a portion of its revenue coming from software, and this is expected to increase. The company is also expanding its ecosystem with smart accessories like the Ather Halo helmet, aiming to create a comprehensive customer experience similar to Apple's ecosystem. Ather's latest product, the Resta, addresses the need for a family-friendly electric scooter, and the company remains optimistic about its potential to capture a larger market share.
Mindmap
Keywords
💡Ather 450
💡Electric Scooters
💡IIT Madras
💡Battery Swapping
💡Prototypes
💡Market Leaders
💡Crowdfunding
💡Hero MotoCorp
💡Quality Assurance
💡Marketing
💡Software Upgrades
Highlights
Ather 450 was the first scooter with a touchscreen dashboard and Google Maps navigation.
Ather 450 was the fastest accelerating scooter in India at the time, outperforming even petrol scooters.
Ather Energy was founded by two IIT Madras engineers with a vision to create India's Tesla of electric scooters.
The company spent 5 years and went through 55 prototypes to develop the Ather 450.
In 2013, there was no market for electric scooters in India, but Ather Energy saw potential and started their journey.
Ather Energy faced production challenges due to the Indian automotive vendors' inability to meet their quality requirements.
Hero MotoCorp's investment was a game-changer for Ather Energy, providing the necessary funds and strategic support.
Ather Energy had to innovate and reduce costs to stay competitive in the electric scooter market.
Ather Energy's focus on quality and innovation led to a strong reputation, but it also faced challenges in marketing and customer awareness.
Ather Energy's sales were significantly lower compared to competitors like Ola Electric, which had a massive marketing push.
Ather Energy's strategy included building a limited number of scooters per month to manage financial stability.
Ather Energy's revenue has been growing due to their focus on quality and customer satisfaction.
Ather Energy is looking towards software and technology upgrades as a future revenue stream.
Ather Energy's customer base has shown strong word-of-mouth support, despite initial marketing challenges.
Ather Energy's latest product, the Ather 450X, addresses previous customer concerns and targets a wider market.
Ather Energy is building an ecosystem with smart accessories like the Ather Halo helmet, similar to Apple's approach.
Transcripts
This is Ather 450, 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, faster than even other petrol scooters. The
company spent 5 years and at least 55 prototypes before coming to this.
Today, in 2024, electric scooters have become mainstream, but back in 2013,
there was no market for these in India. This was when two engineers from IIT Madras, decided to
build Tesla of Electric Scooters in India. And the most audacious decision was to completely design
and manufacture it in India. It took them 5 years and millions of dollars to go from this to this.
And when they launched Ather 450 in 2018, the company had the best product in the market. Also,
there was almost no competition. But despite all that, today Ather is way behind the market leaders
in India’s Electric Scooter Category. And all the three companies that are ahead of Ather, launched
their scooters much after Ather did. So what went wrong with Ather? And can it make a comeback?
These are the questions, I’ll try to answer in this episode of Backstage with Millionaires.
the story of Ather Energy began in 2009 at one of the most prestigious colleges in India IIT Madras
two of its engineering students Tarun and Swapnil wanted to do something in the energy space and
their first product was this fan called 'famp' the idea here was to use thermal energy from oil lamps and
convert it into power to run these fans, something they thought would be beneficial in remote Indian
villages with inadequate power supply. this idea never turned into anything meaningful but their
passion to do something in energy space remained during their last semester of engineering Tarun
discovered battery swapping and became came convinced that electric vehicles are the future
and for electric vehicles to succeed the charging infra had to be solved and so Tarun and Swapnil's
new goal now was to build a battery company the idea was to manufacture lithium ion batteries and
sell them to EV owners who wanted to refurbish their aging electric vehicles for the next 6
months Swapnil and Tarun conducted extensive market research they spoke to hundreds of e vowners and
realized that by and large most of them hated their EVS. EVS at the time were underpowered
unreliable and ugly and so why would these customers who hated their electric vehicles buy
Ather's expensive batteries at this time Swapnil came up with a crazy idea instead of batteries why
not build an electric vehicle that people actually wanted to buy and then Swapnil suggested they both us
are passionate about building a brand why were we even thinking of doing this nameless faceless
thing we should just build a brand no we should build the vehicle and that is how the Journey
of building India's first smart electric scooter was started now this was in 2013 and there were
many Brands who were building electric scooters in India at the time but there were a ton of issues
firstly most of these companies were importing electric scooters and their batteries from China
and the quality was really bad they couldn't go beyond 30 km/ hour and looked very ugly heck they
could not even get over a flyover and because of these reasons customers were not buying them few
who did, hated them and Ather energy wanted to change this they were inspired by Tesla and so
they did not just want to make the best EV scooter they wanted to make the best scooter
something that could beat petrol scooters in both performance and design and for this they could not
just import it from China they had to build it themselves here in India Swapnil and Tarun started
building their first prototype in the robotics lab of IIT Madras they started by tearing down a yo
EXL electric scooter to understand its different components things like the shape of its Chasses
suspension strength and other basic dimensions these measurements were then used to build a
makesi sachche for aether's first prototype Eevee it took them 4 months to build their
first prototype and this is how it looked after completion tarun filmed this small video while
riding this prototype scooter this was a great beginning but the team at ather had a long way to
go they got a 5 lakh rupees Grand from it Madras which helped them make their second prototype but
now they needed serious money to build something that customers would buy their 5 lak rupes Grant
had exhausted very quickly and VCS were not ready to invest money into a young EV company and so
tarun and swapnil took the crowdfunding approach they decided to take pre-orders for 25 scooters
at 85,000 rupees each and use that money to then build the scooters they gave themselves around 6
months to do this this early Revenue strategy impressed it Madras aluminous and entrepreneur
seren V shasan who then decided to invest 25 lakh rupees into the company this preced money allowed
aether's team to move into their first office and also start working on their next prototype in 2016
ather announced their first electric scooter s340 and also claimed that they would start
producing them commercially by the end of the same year and this is when ather problems with
production started you see turning a functional vehicle into a final production vehicle is not
as easy as it sounds the problem was to build a final scooter they needed hundreds of automobile
vendors who could build these parts for them the parts that ather R&D team had built from scratch
in a lab these vendors had to build them at scale tun's team had designed a component that was 1.5
mm thick and when they went to one of the vendors to cast this component they said the lowest they
could go was 2.5 mm they don't do 1.5 mm thick component casting so basically ather Innovation
was becoming the reason for their stagnation the Indian Automotive vendors were not equipped to
handle ether's demanding quality requirements and these vendors did not want to change their entire
workflow for a small client like ather who hadn't even sold a single scooter and they didn't know
if people would even buy their electric scooter it was too much of a risk for them this was when
hero motop came to save ather see hero wanted to get on the electric vehicle bandwagon and ather
they wanted the support from a giant like hero to get automobile vendors to listen to them and
so hero invested 205 CR rupees in Aether picking up more than 25% stake this deal with hero became
a game changer for Aether not only did they get enough money for production but they also got a
strategic partner who could help them set up a production facility and meet the right people
people like venkatesh padmanabhan who had turned the fortunes of Royal Enfield and then helped
ether to set up their production facility in bangaluru and also get their functional vehicle
to production ready vehicle and with everything in place tarun again came on stage and this time
launched ather 340 and ather 450 in 2018 these scooters were what tarun had promised they would
be they were the state-of-the-art ones they were the first scooters in the world to come up with a
touchscreen dashboard and they had Google Maps to make navigation easy and that was not all
remember tarun had said he wanted to make better electric scooters than petrol scooters he did it
with ather 450 which was the fastest accelerating scooter in India at the time faster than even
petrol scooters tarun and his team had made the impossible possible and all that was left now
a technology provider they had tried a lot of things but building an electric scooter
from scratch in India was making them bankrupt and there was no hope tarun at this point went to his
investors and told them that they would fix this pricing issue within a year but he had no idea
how they would pull it off they com to one of our one of our shareholders that P Paka promise if he
don't fix this in one years I will get the makes of the world to come and run this he then went to
the top consulting firms and asked for their help in getting the costs down and they all told them
one thing we have never seen Automotive costs drop more than 30% this wasn't enough for ather
they needed something tangible so the team went to the drawing board and came up with a plan firstly
they decided they will make only 20000 scooters a month even though their Factory was capable of
producing 2500 scooters a month they did this so they were not burning money at a pace that would
put them out of business sooner next they pulled all the resources they could from hero a company
that has been making two wheelers for decades and understood their processes to make ather scooters
more efficient and by the start of 2021 ather had managed to bring down the cost lower than
the price they were selling it to their customers this was a Hercules task something that tarun has
often talked about in his interviews for example this one where he said that building a hardware
product in India is so hard that no Indian startup is building electric scooters in India just look
at Ola a company that had billions of dollars in funds had to import an electric scooter from
outside India to start their EV Journey look about right they had to import an entire product from
outside right because it's a hard journey to build everything from scratch in here finally in 2021
ather was a real company with positive gross margins and it was around the same time that
Ola started selling their electric scooters and while Ather was busy surviving its competitors
like Okinawa who are importing their scooters from China were dominating the Indian Market with close
to 40% market share in fy20 by the time ather had got its [ __ ] together in 2021 TVs and Bajaj had
also launched their electric scooter and Ola was just getting ready for the grand launch despite
being the first hather was already too late for the party and if you compare Aether with
these players TVs and baj had huge distribution networks that were built over decades then there
was Ola electric which was spending millions of dollars on marketing to get customers ather did
not have much to show yes their product was made in India and it was apparently better quality but
this did not help them sell more in whole of fy20 ather sold close to 3,000 scooters compare this to
Ola electric which got more than 880,000 bookings within just 12 hours of the launch in fact even if
you combine ather sales of 4 years from fy19 to 22 it's still way less than ola's pre-booking numbers
so why is that the problem was despite fixing their major issues ather was too busy perfecting
their scooters they thought this focus on quality was enough to get them the customers but they
were clearly wrong just look at Ola they've made the news for a lot of wrong reasons from their
scooters malfunctioning to them Catching Fire but this did not make a dent in their growth in fact
Ola is the number one electric scooter company in India with a market share of more than 50% take a
look at this 2019 fors article here tarun said that ather success will depend on their product
Dev velopment and their after sales customer service he never mentioned marketing but then in
this interview with nikil Kad he goes on to accept the fact that ather messed up when it comes to
marketing the biggest problem that we discover is that people don't even know what is ather
biggest feedback that I get is that most people think that if they have heard of ather European
norian even though ather has recently started putting more money into marketing it's an uphill
battle now that EV space is aot lot more crowded than it was back in 2018 when ather was the only
one but does that mean ather has lost the game absolutely not so far you have only heard me
talk about how ather has failed to become a leader in a category that they created in India but the
reason I wanted to highlight their Journey was to show exactly how difficult it is to build a
hardware technology company out of India and that's the reason most companies don't do it
from a pure growth perspective it makes sense for a company to Simply import the technology
and start start selling it in India it's a winning strategy just look at Ola We have seen it play out
over and over again but I'll be honest I'm a little biased towards Aether and I want them
to win not because I have a personal stake in the company but because aether's win means something
bigger it means that you can successfully build a hardware technology startup in India and even
though ather might be behind giants like Ola TVs and Bajaj they have built a reputation for Quality
they have built the Tesla's equivalent of an electric scooter from India you can see that
from all these comments from their customers in fact in the same podcast with nikel very mentioned
how ather messed up in marketing he also says that ather one when it comes to Word of Mouth
so we may not have marketed the product well so not enough people may buy it today but the ones
who are buying it have a better word of mouth for us than many of a competitors that's been
their growth driver and just look at these numbers their revenue has been growing significantly since
fi21 and a lot of this has to do with them making top quality scooters that customers love to brag
about now another reason why ather stayed behind in the race is that they were focused on the
premium Market when they started their customers wanted a premium product and that's what they
were building that was a period when only early adopters were buying electric scooters and they
wanted a premium product but now everyone wants one and their customers have been complaining
that their scooters are not familyfriendly and too small for a family and their latest product
resta is the answer to that they have tried to fix all the issues people had with ather 450
and 450x and created resta for the mass market and finally ather is bullish on software tarun
believes that over the long term electric vehicles won't make money from servicing as there aren't a
lot of paths to repair like a traditional vehicle be it cars or scooters he thinks that companies
will have to make money by selling software and Technology upgrades like batteries and accessories
I think long-term electric vles will have to make money on something else you'll have to make money
on more most likely upgrades they'll have to make money on accessories they'll have to make
money on gen technology upgrades once you buy an electric scooter you can change your battery
and it will feel like a new scooter next you can get new software upgrades over the year which can
improve its performance in fact tun claims that even today while 85% of their revenues coming
from selling the scooters the remaining 15% is coming from selling software upgrades and it's
only going to increase ather does not charge the customers separately for the software but that
price is included in the price of the vehicle and by software upgrades I mean ather stack which
basically is the OS of your ather scooter and controls everything you do on your device on top
of that they've also introduced smart accessories like ather Halo helmet just like apple ather wants
to create an entire ecosystem for its customers in the end let me know your opinions do you think
aether's focus on quality can beat Ola Electric's huge scale also do you personally own an Aether
and how has been your experience share with us in the comments and I'll see you in the next one
浏览更多相关视频
Ola S1 Pro vs Ather 450 X vs TVS iQube S vs Bajaj Chetak I Electric scooter comparo I Autocar India
From 0 to 42,000 Crore Business: Deep Dive Case Study
Durability Test of Ather 450X - Will It Survive? No Conditions Apply
Should you invest in Ola Electric IPO? | Ola Electric IPO Review | Bhavish Aggarwal’s Plan
Following the Make In India concept -Talking to || Amit Singh || CMD || Olatech Solutions || SME ||
Direct Marketing for Farmers and Ranchers
5.0 / 5 (0 votes)