EV maker Ather becomes India's latest unicorn after raising $71 million from GoI's NIIF

Ather Energy, the electric scooter manufacturer, has officially entered India’s unicorn club after securing a $71 million (approximately ₹600 crore) investment from the Government of India’s National Investment and Infrastructure Fund (NIIF).

This latest funding round has propelled Ather’s valuation to $1.3 billion, making it the country’s fourth unicorn of 2024 and the second in the mobility sector after Rapido.

This milestone for Ather Energy comes as the company solidifies its position in the rapidly growing electric vehicle (EV) market in India. NIIF, which first invested in Ather in May 2022, has once again shown confidence in the company by leading this funding round.

Ather’s valuation has seen a significant jump from around $740-750 million in 2022 to its current $1.3 billion, reflecting the market’s growing interest in sustainable transportation solutions.

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Hero MotoCorp, which owns a 40 per cent stake in Ather, played a key role in the company’s growth trajectory, with its latest investment in June 2024 implying a valuation of $671 million for Ather. This recent infusion of capital is expected to accelerate Ather’s expansion plans and strengthen its foothold in the competitive EV market.

The funding round coincides with heightened activity in India’s EV sector. Ather’s rival, Ola Electric, recently went public and saw its stock hit the upper circuit in two consecutive trading sessions post-listing, pushing its market capitalization to ₹48,258.89 crore (around $5.7 billion).

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This valuation surpasses Ola Electric’s last private valuation of $5.4 billion, signalling strong investor confidence in the EV industry’s growth potential.

Despite the intense competition, Ather has managed to maintain a notable presence in the market.

In May, the company raised an additional $34 million through a mix of debt and equity funding from its founders, Tarun Mehta and Swapnil Jain, along with Stride Ventures, though this round was at a lower valuation. Mehta and Jain, who each hold about 7 per cent of the company, continue to play pivotal roles in Ather’s strategic direction.

Ather’s market share in the electric scooter segment currently stands at 9 per cent, trailing behind major players like Ola Electric, Bajaj Auto, and TVS, which hold 39 per cent, 16 per cent, and 18 per cent of the market, respectively. The company’s recent launch of the Rizta, a family-oriented scooter, marks its entry into a segment dominated by Ola Electric.

With production of the Rizta set to take place at Ather’s third manufacturing plant in Aurangabad, the company aims to capture a larger share of the family scooter market, particularly in western and northern India.

However, Ather faces challenges as it navigates its path to profitability. The company reported a loss of ₹1,059 crore in fiscal 2024, a 22 per cent increase from the previous year, while its revenue remained flat at around ₹1,789 crore.

Despite these financial hurdles, Ather’s conversion to a public limited company in June 2024 suggests that it is gearing up for an initial public offering (IPO) in the near future.

The recent investment from NIIF not only boosts Ather’s financial standing but also positions the company to better compete in the burgeoning EV market. With the backing of both government and private investors, Ather Energy is well-positioned to continue its growth and innovation in the electric scooter space, contributing to the broader shift towards sustainable mobility in India.