India houses the largest number of two-wheelers in the world. Scooters contribute to the biggest chunk of two-wheeler sales in India. Buyers in this segment are usually middle-aged individuals and small businesses. Performance is typically low on customers’ priority list, with reliability, practicality, desirability, and value for money taking precedence. Electric Scooters have traditionally struggled to compete in this ultra-competitive space as they lacked the range, practicality, and performance to compete with established manufacturers like Honda and TVS. These early EVs were also less desirable than competitively priced petrol-powered scooters, often finding favour only among teenagers to drive without licenses.
However, things look very different for electric 2-Wheelers for the past couple of years. Ather Energy, a Bangalore-based startup, has taken the two-wheeler market by storm. Their products are as practical as conventional scooters, have enough range for intra-city commutes with robust urban charging infrastructure, and are faster than petrol-powered scooters. The addition of features and services like a touchscreen with navigation, mobile app integration, riding modes, and connected tech – features modern customers look to make their products aspirational and desirable as well.
Before diving straight into Ather’s business model, we have to discuss a concept known as Halo Products.
‘Halo’ Products – Products that sit on top of a manufacturer’s product range – define public perception of a brand and their other products. A great Halo Product brings aspirational value to the brand and can help drive sales of other products and services in their range.
Halo Products are nothing new in the automotive industry – Audi revived their brand image in 2008. More recently, the resurgence of Royal Enfield as an aspirational brand was a direct consequence of its new halo products. Although Ather’s products are a bit expensive for most buyers to afford at the moment, they are aspirational and help build a premium reputation for the brand. This helps drive sales of potentially more affordable products in the future, helping to sustain long-term growth. Ather also focuses on a premium customer experience and its community forums.
In addition to this, Ather has had time to evolve and cement itself in the EV market for two years without competition from larger manufacturers. Until the recent entry of prominent brands into the premium EV scooter space, Ather was pretty much unchallenged with a product superior to smaller manufacturers. The Ather name has now become synonymous with fast, premium electric scooters and their head start in the space is likely to sustain itself in the long run. Ather also has the backing of a large manufacturer in Hero MotoCorp for a safe source of funding, on top of their strong sales figures. The company’s current reputation means that the division of Ather into separate arms for Battery R&D and the Automotive Business, in the long run, will ensure the future sustainability of the business.
All of this seems a bit familiar. For 15000 kilometers away in Palo Alto, a giant in the Electric Car space has emerged. Tesla Motors had a fairly similar start to life, with their Model S in 2010 revolutionizing the electric car space. Cars are the largest contributor to vehicle sales in the USA, and in contrast to existing electric cars at the time, the Model S was fast, practical, and could go long on a single charge. Like the Ather, it was the first EV where the fact that it was electric was an advantage rather than a compromise. The Model S was the perfect halo product to drive Tesla’s ultimate goal of selling affordable EVs, culminating in the explosive success of the Model 3. Tesla is now the highest-valued carmaker in the world, with one of the largest fanbases of any car manufacturer. They have expanded their range to include everything from a small affordable car to a semi-truck. They have arguably the most expansive fast-charging network of any manufacturer or third party in the world.
It is easy to draw parallels between the two companies and their meteoric rise to success. Their business models are relatively similar, both have positioned their products similarly, and both have grown to define an entire market segment. Both Ather and Tesla control every stage of their product and sales, with in-house development and direct sales and aftersales without franchisees. However, the journey of Ather Energy in establishing itself as a thorn in the side of other more prominent manufacturers is far from over. India is not a country where charging infrastructure can be installed as easily as the US, and hence, the ‘Ather Grid’ charging network has a long way to go before it can become a credible alternative to the convenience of fuel stations. The most crucial difference between Ather and Tesla is their durations as monopolies and the nature of their respective market spaces. Cars require much more investment and time for research and development than two-wheelers. As a result, Tesla enjoyed minimal competition for a good seven years, with credible competition from other large manufacturers arriving only as late as 2019. On the other hand, Ather has enjoyed much less time alone, and products from more established manufacturers like TVS and Bajaj are more likely to appeal to older buyers, who make up most of the scooter market.
Still, the Indian market has always embraced new brands, both domestic and international, and Ather Energy looks set for great future success. The arrival of new competition in Ola Electric and existing OEMs, as mentioned earlier, will continue to drive Ather forward into making better products. The expansion of their sales and aftersales network and their charging network will continue to bring new customers into the brand, which will sustain itself with a domino effect. The future looks bright for Ather Energy, provided they take the right decisions for the long term.