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

00:00 Intro
01:22 How Ather Started
03:44 Build, Build and Build
07:44 Negative 350% Gross margins
11:04 Bad Marketing
13:07 Strategy to Win

Ather Energy’s journey began in 2009 at IIT Madras, where Tarun and Swapnil started working on energy-related projects. Their initial venture was a fan called Famp, designed to convert thermal energy from oil lamps into electrical power, but it failed to take off. However, their interest in the energy sector persisted.

During their final semester, Tarun became fascinated with battery swapping, convinced that electric vehicles (EVs) were the future. They initially aimed to manufacture lithium-ion batteries to refurbish ageing EVs.

In 2013, Ather pivoted from battery packs to developing India’s first smart electric scooter. The existing electric scooters in the Indian market were of poor quality, often imported from China, and failed to meet performance expectations. Ather aspired to create a superior scooter that could rival petrol-powered ones in performance and design. This required designing and manufacturing the scooter entirely in India.

Tarun and Swapnil began their project in the robotics lab at IIT Madras by dissecting a YO EXL electric scooter to understand its components. Their initial prototype, built with a Rs 5 lakh grant from IIT Madras, began a long and arduous journey. Lacking sufficient funds, they resorted to crowdfunding, taking pre-orders for 25 scooters to raise capital. This strategy attracted an investment from IIT alumnus Srini V Srinivasan, allowing them to move into their first office and develop a more refined prototype.

The development phase was intense, spanning five years and resulting in the unveiling of the Ather S340 in 2016. However, translating a functional prototype into a production-ready vehicle proved challenging. They had to design and manufacture every component themselves, requiring a network of vendors capable of meeting their stringent quality standards. Many Indian vendors were ill-equipped to produce parts to Ather’s specifications, stalling progress.

Hero Motocorp’s investment of Rs 205 crore in Ather was a turning point, providing financial and strategic support. With Hero’s backing, Ather set up a production facility in Bengaluru and finally launched the Ather 340 and Ather 450 in 2018. The Ather 450, in particular, lived up to its promise, outperforming even petrol scooters in acceleration.

Despite their innovative product, Ather faced significant financial challenges. The production cost of the Ather 450 was nearly Rs 5 lakh, while it sold for only Rs 1.25 lakh, resulting in a 350% negative gross margin. The company was burning through its funds rapidly and was on the brink of shutting down. Consulting firms predicted only a 30% reduction in automotive costs, but Ather needed more substantial savings to survive.

To address this, Ather reduced its production to 200 scooters per month, despite having the capacity to produce 2,500. They leveraged Hero’s expertise to streamline processes and cut costs, achieving positive gross margins by 2021. However, by this time, the competitive landscape had changed dramatically.

While Ather was grappling with financial viability, competitors like Okinawa, TVS, Bajaj, and Ola Electric entered the market. Okinawa, by importing scooters from China, captured a significant market share, and Ola’s aggressive marketing strategies overshadowed Ather’s efforts. By 2024, Ola dominated the market with a 50% share, while Ather lagged behind.

Ather’s marketing strategy, or lack thereof, contributed to its struggles. Tarun had always emphasized product development and customer service over marketing. Consequently, while competitors aggressively marketed their products, Ather’s superior quality failed to translate into sales. Ola, despite quality issues, leveraged heavy marketing to achieve impressive sales figures.

Despite its setbacks, Ather has built a strong reputation for quality and innovation. Customer feedback highlights satisfaction with Ather’s scooters, and word of mouth has been a significant growth driver. The company has also focused on software, recognizing its potential as a future revenue stream. They offer over-the-air software updates and plan to monetize technology upgrades and accessories like smart helmets.

Ather has also addressed criticisms about its scooters’ family-friendliness with the launch of the Ather Rizta, designed for the mass market. This move indicates Ather’s willingness to adapt and expand its customer base.

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[mrameezrajak]

Title is misleading, which I am afraid may make the viewers think Ather is on the fall, unless they completely watch the video. Title should be indicating how Ather has overcome so many hurdles and is on the Rise. Because Ather deserve that support from all of us.

[patilganesh]

I am proud to say that the Ather was built when I was studying at IIT Madras and I have seen the them riding the first prototype in campus! Never ever imagined that they will grow so big!

[nitwit]

If they fail it will be a huge setback for real Make In India. It is a Phenomenal Much Much Much Better than OLA, TVS & Bajaj. Personally driving it for past 1.5 years and No Issues at all with Charging, Range & After Sales. Their only issue is Marketing and lack of a Budget Range product. Also they initially introduced just 3 colours which was a bummer

[rajeshg]

TVS had an existing network. Bajaj had an existing network. Ola tried the direct delivery model.

Ather is building each dealership ground up. Just take a look at their service. It is such a pleasure. Even car companies fare poorly compared to Ather.

Ather is building for the long run, not for an inflated IPO. Once they have their network in place, and few more products, Rizta included, I can see a bright future.

[DukerBoyYoutube]

I am one of those who owns the 5.5lakh rupee Ather 😅. Have owned it for over 5.3years and clocked 53k kilometres. Its been a flawless scooter and I’ll vouch for it . Atleast have made over 30people I know buy one.

[jenilsoni]

There’s no way Ather is a failing brand. True enthusiasts know what its worth. Ola is not an enthusiastic product, its made for the massses and to do business for Mr. Agrawal. Ather on the other hand is a true enthusiast product built by visionaries and for people who see things that the general public does not.

[toi]

I'm so glad I recommended Ather to my friend! He's absolutely loving it. On the other hand, another friend bought an Ola and feels like he got scammed. From build quality to customer service, Ather is far superior to Ola in every way. Totally worth it!

[kartikchakraborty]

Ather's focus on quality and perfection really shows in their product..I own a 450x gen 4 and I drive 70 km every day to work and back....almost 5000 km done now and the scooter has run consistent and glitch free. My buddy at the factory bought a Vida v1 pro just one week after mine and since then his scooter has ran into a whole host of issues from aux battery failure, Bluetooth failure and vehicle suddenly dipping into limp mode. Gotta say I am happy with my purchase and would love to see ather be the market leader in EV scooters..

[DevKulkarni]

I believe in Ather much more than Ola.

[josephalex]

This video should be the best advertisement for Ather..their journey of how it's made entirely in India from scratch, the premium quality given & the simple fact that it is the best electric scooter in the country..!!!

[rajesh]

I was one of the early buyers of Ather way back in 2018. This is only vehicle which I can attach the word ''love''. I really loved it performance, "Vroooom sound'' during acceleration and overall sporty look.

[wahoobootcamp]

We own two Ather scooters - Smart, Top Notch and Premium!

[mdnoorain]

Never heard bad complaints from Ather owners. Hope the company reaches great heights.

[apptasticcoder]

Even though they are not spending much in Marketing, I am pretty sure that Aether customer base is pretty strong & happy with their product. they can be a key for this company to grow and outshine all other traditional companies. I am one of those customers who after driving 3K kms in 4 months feeling that this is a really good buy, its beautiful & its freaking fast on Indian roads.

[ishitachandra]

The amount of information you put in the video making is commendable.
Your channel will flourish very fastly in the near future.

[varunchopra]

My reasons for buying Ather were:

1. Google Maps on the screen!!! I had newly moved to Bangalore and no use of the road network and general directions
2. Rising petrol cost. Wanted a vehicle that would be easy to use with low running cost.

The other things I discovered with use. And boy how much I appreciate them. Like how nimble and agile it is while being so light and sturdy! Ather was the only company giving an all aluminium chassis with a rear monoshock. I have much fun taking corners at speed. And oh the performance! Warp mode is love! I easily overtake 80 percent of the vehicles on the road in city traffic within 0-60 kmph. Thanks to the instant acceleration. And it’s so narrow and light. So filtering through gaps is effortless

And I had a Duke 390 as my daily driver prior to this.

[sanajnatarajan]

The title is clickbait. I have tested a few Battery powered scooters. Ather stands out. Simple, functional and does its job. Am proud of this bike!

[bla]

I bought Ather 450s in Sep 2023. Its not even a year old. Family is so happy with its performance. As soon as the family scooter Ritza is launched, they urged me to place a pre-booking. Anti-skid feature is the reason. I fell few times in our secondary petrol vehicle by skidding. So within the next few months, our family will have both 450s and Ritza to fulfil our needs. Solar electricity generation at home is also one of the reason.

[mysalimjavid]

I'm using an ather for past 1 year. What they promised is what they delivered. Whatever features are practical. No gimmick features. No bull shh...

[akki]

These ups and downs are very common for legendary companies all over the world.

Tesla, SpaceX, The Boring Company, all are startups and have been through the roughest times since last decade but eventually they pulled it off because of the product's performance and not just mere marketing strategies.

I myself work at a startup right here in Bengaluru and our company (Taqanal Energy) is also going through a rough phase, but if you and your team want to really pull this off, then the entire team needs to invest all the effort into the product. The marketing and other parts will just follow through.

So Ather Energy will revive and be at the topmost ranks once again, not because their marketing team is better but their product's performance is.