The Ather 450 was the first scooter equipped with a touchscreen dashboard and Google Maps for navigation. It was faster than other petrol scooters and, at the time, the fastest scooter manufactured in India. The company reached this model after spending at least five years testing 55 prototypes. Although electric scooters have become mainstream in 2024, they had no market in India back in 2013. It was then that two engineers from IIT Madras decided to manufacture electric scooters in India. Their boldest decision was to design and produce electric scooters entirely in India. This successful venture required five years and millions of dollars in investment. When they launched the Ather 450 in 2018, the company had the best product in the market, with no competition. However, despite this, today Ather lags far behind the market leaders in India’s electric scooter segment. The three companies ahead of Ather launched their scooters well after Ather entered the market. So, where did Ather go wrong? Can they stage a comeback? Let’s try to find answers to these questions. The story of Ather Energy began in 2009. Tarun and Swapnil, engineering students at IIT Madras—one of India’s most prestigious colleges—wanted to do something in the energy sector. Their first product was a fan called “Famp,” which aimed to convert thermal energy from oil lamps into electricity to power fans. They believed this would be useful in Indian villages lacking reliable electricity. However, the idea never gained much traction. Still, their passion for energy-related innovations continued through their final semester. Tarun discovered battery swapping and realized that electric vehicles represented the future but that charging infrastructure was a critical hurdle for their success. As a result, Tarun and Swapnil set their new goal to build a battery company. The idea was to manufacture lithium-ion batteries and sell them to EV owners who wanted to refurbish their outdated electric vehicles over the next six months. Swapnil and Tarun conducted extensive market research and spoke with hundreds of EV owners. They realized that the majority of these owners were not satisfied with their EVs. At that time, electric vehicles were weak, unreliable, and not impressive to look at. These dissatisfied customers still bought expensive batteries from Ather. This led Swapnil to propose the idea of actually building an electric vehicle that people would genuinely want to buy, instead of just selling batteries. The two then decided to create a brand rather than produce anonymous products, and thought it would be better to manufacture an entire vehicle under that brand. This is how India’s first smart electric scooter came into existence. This was in 2013. Back then, there were many brands manufacturing electric scooters in India, but they had major shortcomings. Most of these companies imported their scooters and batteries from China, resulting in very poor quality. These scooters could not go beyond 30 kilometers per hour, were unattractive, and could not even climb a small flyover. Because of these issues, customers were not buying them, and even those who did were dissatisfied. Ather Energy wanted to change this. Inspired by Tesla, they aimed not only to build a better electric scooter but also to produce a superior scooter that could outperform petrol scooters in both performance and design. Such an EV could not be imported from China; it had to be made in India. Swapnil and Tarun began building their first prototype in the robotics lab at IIT Madras. They started by understanding the various components of the Ayo EXL electric scooter, its chassis design, suspension strength, and other basic measurements. It took them four months to build their first prototype. This was a good start, but they still had a long way to go. They received a grant of 500,000 rupees from IIT Madras, which helped them build their second prototype. However, they needed a much larger amount to manufacture vehicles that customers would actually buy. Their 500,000-rupee grant was quickly exhausted, and venture capitalists were not willing to invest in such a young EV company. So, Tarun and Swapnil adopted a crowdfunding approach. They decided to take advance orders of 85,000 rupees each for 25 scooters and use that money to manufacture the scooters within about six months. Their revenue strategy attracted former IIT Madras students. Entrepreneur Seren V. Shasan decided to invest 2.5 million rupees in the company. This funding helped the Ather team move into their first office and work on their next prototype. In 2016, Ather announced their first electric scooter, the S340, and claimed they would begin commercial production by the end of the same year. That’s when production-related problems began. Turning a functional vehicle into a final production model is no easy task. The challenge was to build a complete scooter, which required hundreds of automotive vendors capable of producing the necessary parts. The R&D team initially manufactured components in the lab, but these vendors had to produce them at scale. Tarun’s team designed a component with a thickness of 1.5 mm, but when they approached one of the vendors to cast it, they were told the minimum thickness they could handle was 2.5 mm. They simply didn’t cast components as thin as 1.5 millimeters. Essentially, the Ather innovation team became a bottleneck because Indian automotive vendors were not prepared to meet the quality standards Ather demanded. Moreover, these vendors were unwilling to alter their entire workflow for a small client like Ather. Since no one had yet purchased an electric scooter from them, vendors saw this as a very risky proposition. It was at this point that Hero MotoCorp came to Ather’s rescue. Hero was looking to expand into the electric vehicle market, and Ather needed the backing of a giant like Hero to be taken seriously by dealers. Hero invested ₹205 crore in Ather, acquiring over 25% of its shares. This partnership was a game-changer for Ather—not only did it provide the capital needed for manufacturing, but it also helped establish a production facility and connect them with the right people. Experts like Venkatesh Padmanabhan, who had transformed Royal Enfield’s future, helped set up their production center in Bangalore and guided the transition from a functional vehicle to a production-ready scooter. In 2018, Ather launched the 450 and 350 models. These cutting-edge scooters were exactly what Ather had always envisioned. They were the world’s first scooters with a touchscreen dashboard, featuring Google Maps to make navigation easier. More importantly, Tarun wanted to build electric scooters that outperformed petrol scooters. He achieved this with the Ather 450, India’s fastest-accelerating scooter at the time. Thanks to these scooters’ superior speed compared to petrol models, Tarun and his team made the impossible possible. All that remained was for customers to come and buy the scooters—there was no competition for them. With the support of a market giant like Hero, Ather had everything needed to succeed, yet the company still struggled. The reason was its price. Ather aimed to build the best scooter possible and didn’t pay much attention to the costs involved. As a result, the production cost of the Ather 450 was ₹5 lakh, despite it being sold for only ₹1.25 lakh. This meant a gross margin loss of 350%. At one point, they even considered shutting down. The challenge of manufacturing a fully made-in-India electric scooter was overwhelming. During this time, Tarun went back to his investors and promised to resolve the pricing issue within a year. However, no one knew exactly how to do it. He then sought help from leading consulting firms to reduce costs, but they all said one thing: automotive costs rarely decrease by more than 30%, which was insufficient. So, the team devised a plan. Although their factory was capable of producing 2,500 scooters per month, they initially decided to manufacture only 200 scooters monthly. This helped them avoid running out of cash too quickly and exiting the business prematurely. Next, they leveraged all the resources available to them from Hero—a company with decades of experience in two-wheeler manufacturing—to understand and optimize Ather’s production processes. By early 2021, they succeeded in lowering manufacturing costs enough to reduce the price for customers. Tarun often said in interviews that this was a Herculean task. For example, he said that manufacturing a hardware product in India is very difficult, and even Indian startups are not producing electric scooters domestically. Look at Ola: despite having a company with hundreds of millions of dollars in funding, they had to import electric scooters from outside India to launch their EV journey. They had to import an entire product because manufacturing everything locally from the start is extremely challenging, Tarun explained. By 2021, Ather had become a company with positive gross margins. Around the same time, Ola started selling their electric scooters, competing against rivals like Okinawa, which dominated the Indian market with a 40% share by importing scooters from China. In 2021, TVS and Bajaj also launched their electric scooters. Ola was preparing for a spectacular launch, but despite being Ather's first EV, TVS and Bajaj had much larger distribution networks built over decades. Similarly, Ola spent millions of dollars on marketing to attract customers in the electric vehicle space. Ather’s product was made in India and was visibly of higher quality, but that alone didn’t help them sell more. Compared to Ola Electric, which secured over 880,000 bookings within 12 hours of launch, Ather sold only about 3,000 scooters in FY20. In fact, even when combined over four years, Ather’s total sales were far less than Ola’s pre-booking numbers. So, even after resolving their main issues, why did they still struggle? Ather was focused on making their scooters excellent. Ola generated news for all the wrong reasons, from scooter breakdowns to fires, but this did not hinder their growth. In reality, Ola is India’s number one electric scooter company with over 50% market share. Tarun said their success relied heavily on product development and after-sales customer service. He never mentioned marketing. However, in a later interview with Nikil Kaad, he acknowledged that Ather lagged behind in marketing. The biggest problem we discovered was that people didn’t even know what Ather was. Although Ather has recently started investing more money in marketing, the EV market today is much more competitive than it was in 2018, when Ather was the only player. But that doesn’t mean Ather lost the market. Rather, they couldn’t become leaders in the segment they created in India. Ather’s journey perfectly illustrates how difficult it is to build a hardware technology company in India, which is why most companies don’t attempt it. It makes sense for a company to import technology and start selling in India. Look at Ola—this is a strategy for success. However, Ather’s success means that even in India, you can successfully build a hardware technology startup. Though Ather is behind giants like Ola, TVS, and Bajaj, they have earned a reputation for quality, which you can see from their customers’ feedback. Their biggest marketing comes from people’s word of mouth. Since FY21, their revenue has grown significantly, linked to manufacturing high-quality scooters. Customers proudly talk about their Ather scooters. Another reason they have fallen behind is their focus on the premium market. When they started, their customers wanted a premium product. It was a time when only early adopters were buying electric scooters, and they wanted a premium offering. But now, everyone wants an EV, and customers are complaining that Ather scooters are not family-friendly and are too small for a family. Their answer to this is their latest product, the Ather 450X. Through this, they have tried to address all the issues people had with the Ather 450 and 450X, while also creating changes in the mass market. Tarun believes that, since electric vehicles don’t have the repair possibilities of traditional vehicles, it’s not possible to make money from servicing them in the long run. The way forward is to earn money by selling batteries, accessories, software, and technological upgrades. Tarun claims that even today, 85% of their revenue comes from selling scooters, and the remaining 15% comes from software upgrades—and this is only expected to increase. Ather does not charge customers separately for software; instead, that cost is included in the price of the vehicle. Furthermore, by software upgrades, they mean the OS of your Ather scooter—the Ather Stack—that controls everything you do on your device. In addition, they have introduced smart accessories like the Ather Halo helmet. Like Apple, Ather wants to create a complete technical ecosystem for its customers.