As Ather Energy gears up to launch its family scooter shortly, Ravneet Phokela believes that the stage is set for the next phase of rapid growth and expansion to new regions across India.
“With this new offering, Rizta, we will have the relevant customer base in place. We are very well distributed across the South and this electric scooter will help us grow in the North and West too,” Phokela, Chief Business Officer of Ather, told ETAuto.
Ather’s presence thus far has been confined to the performance segment which takes up a much smaller share of the pie than the family scooters. On a national level, it hovers around barely 15% and the difference gets steeper in the northern and western regions where the family scooter takes up nearly 95%.
As Phokela said, the family segment is now “optimised” for Rizta’s target audience and “we want to be sure that we are not seduced by a generalist product” with the focus now being on a specific user base.
Ather’s first scooter was a performance offering where the objective at that point in time was to build something “that we considered valuable”. The 450 was launched as the best product that money could buy in this new mobility space while driving home the message that electric was not a cheap option.
Cheap Chinese imports
Till then, this arena was largely characterised by cheap Chinese imports and Ather was keen on busting the myth that electric was merely some kind of a compromise for the end-user. The new offering established Ather as a manufacturer of high performance scooters even though this was not its sole objective.
The electric scooter movement was still in its nascent stage and the company was a first mover here. Now, with the segment a lot more mature, Ather has a clear-cut goal in seeking the family scooter slot for Rizta. “When you design a product, it is important who you are targeting. You need to have the relevant product for the brand to be relevant,” reiterated Phokela.
He added that a first mover advantage does not necessarily guarantee a higher market share because it is eventually about the segments a company operates in which become more relevant. This is precisely why the Rizta is important to Ather from the viewpoint of playing in a larger part of the market.
“We are hopeful it will do the trick more so when it is coming from a house like Ather which is synonymous with high quality, reliability, experience and performance. We command premium pricing and there is no brand which is priced higher than Ather,” Phokela said.
Electric scooter momentum
Industry observers believe that the two-wheeler electric scooter wave has also impacted the growth of entry-level motorcycles in recent times. Customers are shifting towards leisure and lifestyle bikes in the ICE (internal combustion engine) space while electric scooters are being sought after for basic commuting. “The fact that there are credible options in electric is accelerating this transition,” he explained.
Buyers are beginning to realise that electric scooters translate into better value-for-money compared to an entry-level motorcycle. “If someone is out in the market for a scooter today, electric becomes the natural choice because of more options,” Phokela said.
With the market now getting back to a “nice momentum”, Ather is keen on spreading its wings into development of electric motorcycles too though this is still over three years away. “We still see a huge opportunity in scooters where consolidation is critical at this point in time,” he added.
Likewise, the Ather management is aware that going global is as important but the domestic market remains top priority by virtue of its sheer size. “It becomes almost like a vanity project to have a handful of offerings in the US, UK or Europe where overall numbers are equivalent to a small town in central India,” Phokela said.
The entry into new markets will eventually happen over the next couple of years when Ather’s combined plant capacity increases three fold to 1.5 million units annually and can cater to both India and overseas. For now, the company is of the view that it makes better business sense to take one thing at a time.
Cost management
“We have learnt the power of focus which helps us address critical issues like costs for instance. Our cost structure and overall (cost) management has been one of the biggest wins we have had in the recent past,” he continued. The efforts paid off when the Centre slashed the subsidy in its FAME scheme from 40% to 15% last year. However, at Ather, the show went on thanks to the benefits generated from its relentless drive in cost management.
“We never wanted to rely on subsidies alone, especially when it was clear that they would not last forever,” Phokela said. Neither did the company want to be at the “mercy of a larger regulatory ecosystem” for its growth plans even while subsidies were welcome till they lasted. “We are on a happy wicket today with the best cost structure in the country,” he added.
Any cost reduction effort involves staying focused on two things: One, where is the biggest opportunity sitting in terms of cost takeout and, two, what is a company’s nearest strength to be able to get to that opportunity?
“Our big upside does not come from just scale but the engineering strength of the organisation where you just have to look at making your architecture efficient. When you launch something, there is always some flab in the architecture and you could take a relook at new materials, components etc where there is a lot of work and opportunity in value engineering,” Phokela said.
Biggest strength
This has been Ather’s biggest strength helped by the fact that it is now attaining scale along with additional tailwinds coming in from commodity prices softening over the past few months. Clearly, value engineering has played a huge role since it is impossible to predict prices of commodities or electronics which may swing either way in today’s volatile times.
“The critical aspect is that if there is so much we managed to take out, we could absorb these learnings for the next platform and the next set of products. This inherently means we are sitting on an incredible cost structure,” Phokela said.
With more players throwing their hats into the electric ring, suppliers can strive to focus on greater localisation of parts and make them more affordable. When this happens, it will act as a huge catalyst in the transition to electric mobility across India’s diverse landscape.
