Looking at more affordable products but won't compromise on quality of experience: Ather Energy management

The Ather management

Growing pains would be an apt way to describe what Ather Energy happens to be experiencing at present. With its second manufacturing facility ready to commence production in September, the brand looks at ramping up the production of the Ather 450 X and Ather 450 Plus to meet ever-growing consumer demand.

“Even as we are streamlining the supply chain issue, demand is increasing,” says co-founder and Chief Technology Officer Swapnil Jain.

That’s putting it mildly. In the last year alone, Ather Energy has witnessed 800 percent growth in sales. But Ather’s top management believes the demand was always there and that Ather has only now been in a position to meet it.

“We were getting a lot of demand from other markets but we were yet to expand geographically beyond Bengaluru and Chennai,” says Ravneet Phokela, the brand’s Chief Business Officer. “What you’re witnessing now is us being able to finally deliver the demand that was already in the market for us”

Yet, despite surging demand, Ather has been unable to match the sales figures of its chief competitor Ola Electric. This, even though Ola's scooters have been riddled with software and performance related issues.

“We haven’t utilised the full capacity of our first plant because of shortage of components,” says Phokela. “We’re looking at ramping up production in September,” he adds, stating that, with the second plant up and running in September, the targeted capacity will be around 4 lakh units. “The easiest thing to solve is manufacturing capability. But it’s the ability of the supply chain to support the manufacturing capacity that matters.”

Being a maker of premium e-scooters, Ather seems to be hit worse by component shortage than other volume players like Hero Electric and Okinawa Motors. “The electronic components per scooter in the volume segment are fewer,” says Phokela. And with its latest offering, the Gen 3 Ather 450 X, being priced at Rs 1.39 lakh (with prices varying from state to state, based on subsidies) the 450 X is definitely not batting for the volumes segment.

“Ultimately we want to great a robust product with great range and there’s no cheap way to do that and we’re not shying away from it,” says Phokela, adding that out of the 10 cities experiencing high demand for Ather scooters, eight are Tier-II cities. “There are customers who will pay money for that,” he adds.

ALSO READ | The Drive Report: The Gen 3 Ather 450 X

However, affordability is definitely a major factor. Even though rising material, commodity and battery costs have thrown a spanner in the works. The latter having hit the EV market unexpectedly.

“Rising battery costs have definitely been a hiccup,” says Phokela. “When you look at the long-term business plan, you expect battery prices to come down because they had been the same over the last 10 years” he says, while admitting that the brand has had to absorb costs in order to keep the now entirely metaphorical gears from grinding to a halt.

“There were points in time when we were paying 40-45 percent higher as premium, than we would have. The cost of electronics went up. Aluminium went up,” he admits. “But commodity prices are coming down. Battery cell costs aren’t but there are indications that they will. Not in the short-term but in the long term they will.”

As a corollary to this, it would be safe to assume that there’s benefit in manufacturing one’s own battery cells, if only to have greater control over the scale and speed of manufacturing. “The big upside in local cell manufacturing is predictability in supply more than anything else. Because when you develop a cell, chances are you will develop a standard chemistry,” points out Phokela, adding that the cells themselves are relatively interchangeable commodities, which can be bought off the shelf.

It’s a steady supply that’s the main issue. Swapnil Jain agrees, believing cell manufacturing to be a separate vertical by itself, best done with a partner. As for the pricing aspect, localised battery prices might be relatively lower, but are still connected to the global price of lithium-ion battery components.

It’s another matter that several battery making giants haven’t woken up to India’s EV market potential. “Certain brands are very four-wheeler focused” says Phokela, referring to the nexus of battery manufacturers which most OEMs are sourcing batteries from. These include Panasonic, BYD and LG, with the latter having paid greater attention to the Indian market.

“There’s definitely an advantage to localised manufacturing. But does it have to be done alone or with an OEM? I would say it’s better done with a partner” says Jain, when asked about the benefits of local cell manufacturing, hours after Ather’s closest competitor Ola Electric unveiled its first locally-built lithium-ion battery cell. “It’s one thing to make a cell in a lab and a very different thing to scale it up to make millions.”

Still, managing costs and introducing new price points is definitely on the cards for Ather which must perform a tight-rope act that makes their scooters more affordable while still retaining the fundamental attributes of their scooter: robustness, range and refinement.

“We want to expand our addressable market. We want to unlock new segments and make more affordable scooters in the future. But they have to deliver on refinement, quality and finesse. For instance, we have no plans on entering the B2B segment because that’s not a game we want to play,” says Phokela, confirming that battery swapping tech is also firmly ruled-out as it’s more beneficial to the B2B segments which needs zero downtime to obtain charge and needs to cover greater range.

“The fundamental requirement is a robust product with long range that won’t break down or heat up too much. While that should go without saying, there’s far greater emphasis on battery management technology by EV makers than there was before."

The battery-related incidents that have transpired over the last six months have ensured that thermal management is brought up at every EV discussion. It’s also one of the USPs of Ather’s new scooter, which promises much better temperature management than even before. Many tips and instructions have been given to customers by brands on how best to avoid thermal runaway. But Ather believes that ensuring safety is the EV maker’s responsibility, not the customer’s regardless of the price spectrum.

“I don’t think safety and reliability are things that should be demanded on the premiumness of a vehicle. Any vehicle on the road should deliver safety. Does the customer need to do something to ensure that the vehicle is safe? No. The vehicle should do that,” says Jain, a believer in incremental refinement and change, as evidenced by the painstaking developmental cycle of the 450.

“We do not expect customers to take any extra care of the scooter. You can ride it the way you want, when you want, as aggressively as you want. We sort all things out” he concludes.