Ather Energy’s Chief Business Officer has a lot on his hands, starting from the rollout of the new 450X electric scooter by October, expansion into eight new Indian cites, and a smooth transition from a company-owned retail model to a dealership model, while also pushing EV battery subscription and strategising for exporting e-scooters.
Has there been any change in strategy with respect to expansion in new cities due to Covid?
From a planning perspective, we have been slightly lucky. We were in a transition phase in three aspects — we were slated to move to our Hosur plant, roll out the 450X as well as expand into the next eight cities with launches starting July, August and thereon.
With the whole lockdown situation, we had to reshuffle some of the things because our supply chain got impacted, and that has pushed our plans by a couple of months. So, we are now looking at a September-October timing for the production of the 450X at Bangalore and simultaneously expand into Hyderabad first and then Pune. The sequence of rolling out into the remaining six cities is being optimised right now.
So, while our goal of venturing into eight new cities in FY2021 remains the same, it is the planning and the sequence that have changed.
What is the current level of demand in the market?Demand is obviously little at this time. Only a very small number of people are getting out at this moment and that too only for errands. I believe demand is going to be soft at this point in time. But, we are seeing a reasonable number of enquiries. While post-Covid, we are not engaging into any marketing activities, anecdotally, there is a willingness in people to buy a scooter and that gives us some sense of optimism. The scenario is not as bad as we thought it would be.
We do see signs of demand picking up but whether it will reach pre-Covid levels, we will have to wait and watch; it might take at least four weeks.
How do you think the Covid crisis will impact the electric two-wheeler segment per se?
With respect to how this would impact the electric two-wheeler segment, if we look at any big recession across the world, a lot of people find some sense of normalcy even during a financial crisis. It’s a global phenomenon and auto sales in China and some parts of Europe are already back.
Moreover, people in the short term are not going to take to shared mobility. It was an economics-driven choice in the first place and that augurs well for any sort of premium automotive solution, be it cars or electric two-wheelers.
People who were originally in the market for a premium scooter, temperamentally, they are still there to buy the product. So, by that logic, we like to believe that we are relatively more insulated than the rest of the market and are focusing to offer innovative ownership models, for instance, battery subscription model or leasing model.
Do you think there has been a positive impact of the lockdown towards environmental empathy?
Certainly, people are a little more aware now about the impact of human activity on the environment. We just need to see how much of that realisation actually converts into making the switch to electric. While there are enough people today who acknowledge the benefits of electric mobility, a lot of those who were fence-sitters have now got the motivation towards the technology. Now, we will definitely see some upswing.
How is Ather Energy looking to stimulate demand for its products in the short term?
We have been trying to ease the friction in the entire transition (towards electric) and ownership process. We were the first OEM in India to have a personal lease programme in Bangalore, and that too for a two-wheeler. We have a platform that is digitally connected to a leasing company in the back-end and allows one to use a vehicle without owning it. This entire digital journey was started by us two years ago and we wanted to make it as frictionless as possible for our customers.
More recently, we have come up with an exchange programme for petrol scooters. So, if somebody wants to buy an Ather scooter after exchanging their older petrol scooter, we have only tried to ease the friction by offering the convenience of getting it exchanged.
These concepts are the reflections of what Ather has been trying to do on the innovation front. Be rest assured that, going forward, people can expect even more innovation from us in terms of ease of owning an electric two-wheeler.
Has any capex been put on hold due to the financial implications of the pandemic? How do you plan to rationalise costs?
Obviously, like everyone, we have also had to tighten our belts and we are no different. On one hand, work on our new 100,000-unit plant in Hosur (Tamil Nadu) is on and we hope to transition to that factory in December this year. It will become our hub for the 450X’s production.
So, to that extent, nothing changes and we are really fortunate on the timing and our initial planning. On the other hand, while all of our technology is in-house, we do have some R&D projects underway at any given moment. We are now going slow on new R&D projects for the next few months.
How did you utilise this time of no real activity to introspect into your business, and have there been any gains?
What Covid has allowed us to do is that it has given us some time to fast-track certain things that we were planning to do later, for instance, the various ownership models. We are going to pilot a couple of these new ideas in the coming two to three weeks’ time because one of the factors in rekindling demand is an innovative ownership model and we are fast-tracking some of those things.
Moreover, adversities also force you to look at all aspects of a business. We have utilised this time to cut out on a lot of flab after deeply looking into every aspect of our business. What’s been heartening is that how we have been able to move things around so that the impact of such a huge event has kept us relatively immune. A lot of efficiency in processes has come in during this time and is here to stay permanently.
Is Ather also considering exporting to potential markets abroad?
We have had an interesting conversation with a cluster in South East Asia where electrics are already popular, so much so that we were very close to doing pilots in these markets and we were in very advanced stages of discussions.
Next up, we saw good interest coming from Europe, from markets like London and Rome, which have the ability to absorb the kind of pricing Ather operates at. We were also in talks with a couple of markets in Latin America — which are somewhere in between South East Asia and Europe in terms of product attributes and price acceptability.
While we were having very good conversations to export into these markets, all of a sudden, things have now taken a backseat. Our plans have definitely been pushed forward by a few months but inherently, our target to venture out of India remains and we are hoping to start exporting in at least two new markets abroad in this financial year, albeit with limited volumes.
Have you factored in export volumes while commissioning the new Hosur plant?
While the Hosur plant has the capacity to scale up to 500,000 units using the adjoining land, even if we begin exporting, it just opens the doors for us to actually set up a local assembly plant in that particular market and sell directly there. With a significantly lesser number of parts, it is not tough to assemble electric two-wheelers.
What is your view about established two-wheeler OEMs such as Bajaj Auto and TVS entering the electric space?
The entry of big and credible players in the market is a brilliant thing as no one can single-handedly open an entire segment. When brands like Bajaj Auto and TVS come in, they bring in credibility for the whole market and the entire category. It helps to establish a trust factor for these new-age vehicles not only in metros, but into Tier 3 and Tier 4 towns as well.
Do you think the government’s FAME II and PMP initiatives will give an impetus to local EV component manufacturing in India?
FAME II is actually a great scheme because it incentivises good-quality vehicles as it links the subsidy to the battery capacity. So, it indirectly incentivises products which can genuinely replace ICE two-wheelers.
In the PMP, the government has given time for the industry to switch to complete localisation. We have to now go step by step from motors, controllers and other EV-related components.
The Indian auto industry has the potential to dominate the world, and for that the supply chain has to be vibrant. We have the chance of becoming a major power in automotive. Other than the battery cells, for which we don’t have much choice, everything else in our vehicle is localised.
If we have a solid supply chain, it incentivises new players to come in as they are not at the mercy of a handful of component manufacturers. And, eventually, when scale kicks in, costs will automatically go down as well.
What are your top 4 priorities in a post-Covid business scenario?
First would be the successful rollout of the 450X, followed by a successful expansion into the eight new cities — Hyderabad, Pune, Delhi, Mumbai, Ahmedabad, Coimbatore, Kochi and Kolkata. Thirdly, smooth transition from a company-owned retail model to a dealership model and driving new, innovative ownership models such as battery subscription — it solves the problem of the high upfront acquisition cost of an electric vehicle.
The Ather brand has been built on the back of great consumer experience and while scrutinising potential partners, we made sure that the brand connect wouldn’t be compromised for the sake of higher sales.
(These are excerpts of the interview, published in Autocar Professional’s June 15 issue, also an annual ‘Two-Wheeler Industry Special’ issue.)