Besides being able to control one’s fortunes, there is another incentive for EV makers to build out local supply chains. The government’s FAME-II scheme necessitated the creation of local manufacturing, mandated new battery chemistries, and specified speed limits for an EV to qualify for subsidies. That had massive repercussions. “It killed a lot of low-performance products. In the last 12 months, the market has really started changing,” says Tarun Mehta, co-founder and CEO, Ather.
It’s not just Ola that is pumping money into building capacity. Ather, which has achieved 90% localisation, has set aside an investment of ₹635 crore to scale up production at its factory in Hosur, Tamil Nadu. With an annual capacity of 110,000 units and 120,000 battery packs, the factory will roll out one e-scooter every four minutes. The Bengaluru-based startup raised $35 million last November in a funding round led by Hero MotoCorp, and Flipkart co-founder Sachin Bansal. It plans to expand to 40 cities by the end of 2021.
But, while Ola’s e-scooter is expected to be priced below ₹1 lakh, Ather targets the premium end of the market. Ola’s closest rivals, in terms of price, are likely to be Okinawa and Hero Electric (a separate entity from Hero MotoCorp). Gurugram-based Okinawa’s portfolio of six e-scooters costs between ₹50,000 and ₹1.14 lakh. It is the second-largest player, with a 20% market share, according to consultancy firm JMK Research and Analytics. With sales of 50,000 units last year, the market leader is Hero Electric. The cost of its flagship Photon e-scooter tops out at about ₹73,000, less than the price of Honda’s fuel-powered Activa, India’s top-selling twowheeler. At the other end of the spectrum is Ather, whose latest e-scooter costs nearly ₹1.5 lakh.
“It is untrue that India is a cost-conscious market and will buy the cheapest product. When Activa was [available at] ₹75,000, we launched a product at ₹1.25 lakh,” says Mehta. “People fundamentally want a product that they can be proud of. They expect electric to be an upgrade and not a compromise.”