Despite flat revenue growth, the electric scooter maker’s losses swell to ₹1,509.70 crore, highlighting challenges in India’s competitive EV market
Introduction:
Ather Energy, one of India’s leading electric two-wheeler manufacturers, has reported a significant increase in losses for the fiscal year 2024, despite maintaining steady revenue. This development raises questions about the profitability of electric vehicle (EV) startups in India’s rapidly evolving automotive landscape.
According to the annual report of Hero MotoCorp, which owns a 40.39% stake in Ather Energy, the Bengaluru-based EV manufacturer saw its losses widen by 22% year-on-year to ₹1,509.70 crore in FY24, compared to ₹864.50 crore in the previous fiscal year. This marks the second consecutive year of increasing losses for Ather Energy, following a loss of ₹864.5 crore in FY23 and ₹344.1 crore in FY22.
The company’s revenue remained relatively flat at ₹1,789 crore in FY24, compared to ₹1,783 crore in FY23. This stagnation in revenue growth, coupled with mounting losses, highlights the challenges faced by EV manufacturers in India’s price-sensitive market.
Industry analysts attribute Ather Energy’s financial struggles to several factors:
1. Price parity challenges: The cost difference between electric vehicles and traditional internal combustion engine (ICE) vehicles remains significant, making it difficult for EV manufacturers to achieve widespread adoption without compromising on profitability.
2. High battery costs: The cost of lithium-ion batteries, a crucial component in electric vehicles, remains high, impacting the overall manufacturing expenses.
3. Competitive pricing pressures: With established automotive players entering the EV space and offering competitive products, startups like Ather Energy are forced to keep prices low, even at the cost of profitability.
Deven Choksey, MD of DR Choksey FinServ Pvt Ltd, explains, “It’s not that they are making losses, every two-wheeler company is making losses. Because what you are referring to is one segment that is extremely dependent on the battery and the battery cost is high. So, interestingly the capital cost has to be very high in the business and capital funds.”
Despite these challenges, Ather Energy has managed to maintain its position as the fourth-largest two-wheeler EV manufacturer in India. In June 2024, the company sold 6,097 units, capturing a 7.66% market share, according to Vahan data. However, it still lags behind market leader Ola Electric, which sold 36,716 units and controlled a 44% market share in the same month.
The company’s product portfolio currently includes the family scooter Rizta, Ather 450X Electric Scooter, Ather 450S, and Ather 450 Apex. In partnership with Hero MotoCorp, Ather Energy has also been expanding its charging infrastructure across the country.
To support its growth and expansion plans, Ather Energy has been actively raising funds. In May 2024, the company raised ₹286 crore ($34 million) from its founders and Stride Ventures in a mix of debt and equity funding. Additionally, Hero MotoCorp recently increased its stake in Ather Energy by 2.2%, investing ₹124 crore to acquire shares from Flipkart co-founder Sachin Bansal.
The ongoing losses at Ather Energy reflect a broader trend in the Indian EV startup ecosystem, where companies are prioritizing market share and growth over immediate profitability. This strategy, while potentially risky, is aimed at capturing a significant portion of India’s rapidly growing EV market.
For the Indian startup ecosystem, Ather Energy’s financial performance serves as a case study in the challenges of scaling capital-intensive businesses in emerging technologies. It highlights the need for sustained investor support, innovative business models, and potentially government incentives to help EV startups achieve profitability.
Looking ahead, Ather Energy is taking steps to strengthen its position in the market. The company recently announced plans to invest ₹2,000 crore in setting up its third manufacturing plant in Maharashtra. This facility will produce both electric two-wheelers and battery packs, potentially helping the company achieve economies of scale and reduce production costs.
Furthermore, Ather Energy is gearing up for an initial public offering (IPO) by early 2025. The company has already converted itself into a public limited company as part of its preparations for the listing. This move could provide Ather Energy with additional capital to fund its expansion plans and invest in research and development.
Conclusion:
In conclusion, while Ather Energy’s widening losses are a cause for concern, they also reflect the broader challenges faced by EV startups in India. As the market matures and technology improves, companies like Ather Energy will need to find a balance between growth, innovation, and profitability. The coming years will be crucial in determining whether these startups can transform into sustainable, profitable businesses and drive the future of electric mobility in India.
