Electric two-wheelers becoming mainstream by 2025 is easily achievable: Ather Energy founders

Nimish SawantJun 14, 2019 12:22:16 IST

India’s Electric Vehicle (EV) ambitions are always in a flux. 

While earlier government regulations hinted at 100 percent electric vehicles on Indian roads by 2030, that target now stands at 30 percent. Last year, then transport minister Nitin Gadkari and NITI Aayog CEO Amitabh Kant were quoted as saying that India does not need any EV policy at the moment, but just action plans.

The roads are still dominated by fossil fuel guzzling vehicles and two-wheelers. In the latest report from CNBC TV18, the transport ministry is planning to release a draft which ensures that the government only allows the sale of electric three-wheelers from April 2023 onwards and only electric two-wheelers from April 2025 onwards.

While these back and forth government notifications continue to bubble up on our news feed, we are seeing the rise of electric scooter startups in India. It looks like existing two-wheeler makers are too attached to their core markets to experiment with electric two-wheelers. As recently as this week, scooter makers, Bajaj and TVS Motor Company expressed displeasure at the government's over-ambitious plans regarding electric scooters. 

In such a scenario, it's the EV startups who are evangelising the adoption of electric bikes in India. According to this study conducted with around 2,178 participants across the country, around 87 percent of two-wheeler drivers were willing to switch to an EV.

Bengaluru-based Ather Energy is easily one of the hottest among the electric two-wheeler startups. Its founders, Tarun Mehta and Swapnil Jain, feel that having only electric two-wheelers on Indian roads by 2025 is 'eminently doable.'

The Ather 450 electric scooter is already seen on Bengaluru roads and has impressed auto reviewers with its performance. Along with their Ather charging stations and a connected dashboard on each scooter, Ather has created a smart connected ecosystem. It’s no surprise that Ather is managing to get sustained funding. From 2014 to now, Ather has raised a sum total of $91 mn, with a majority of it coming from the latest Series C funding from Flipkart co-founder Sachin Bansal amounting to $51 mn. In the past, Hero MotoCorp has also invested Rs 180 crore in Ather Energy. After starting off in Bengaluru last year, Ather Energy is now all set to enter Chennai from this month.

We spoke to Ather Energy founders Tarun Mehta and Swapnil Jain, former IIT-Madras alumna turned cleantech entrepreneurs about Ather’s journey so far and its plans for India’s EV future.

Edited excerpts from the interview follow.

tech2: Tell us about the journey of Ather Energy from a concept to a well-funded company. 

Tarun Mehta and Swapnil Jain (Ather Energy - AE): We started in 2013 and back then, we believed that the batteries were the bottleneck for electric vehicles (EVs) and thought that using lead-acid battery technology didn’t make a lot of sense if you wanted to be a serious player. Economically, it didn’t make sense as it kept going bad every six to eight months. So initially, we thought we would address the battery technology problem. But as we got deeper into this, we realised that the complete vehicle experience itself was the problem. There was no clear technical understanding as a lot of the EVs were just an assembly of components being bought from China and assembled in India. These vehicles were difficult to fix when something went wrong and things would go wrong quite often. So eventually, it meant that people were not really thinking of EVs seriously. For most, it was just a toy. In such circumstances, it wouldn’t make sense to just work on battery tech as the market would be insignificant for that.

We started with the intention of creating battery tech, but that lasted for two months. We took jobs after graduation, but we were still looking at the EV space even when in college and had also done some projects around it. Tarun was quite interested in this space. Eventually, we discussed further and decided this was worth following.

tech2: This was around 2013-14. Were there any international implementations in this space you were looking at, apart from Tesla?

Ather Energy: Well, there were a lot of niche players in the segment who were making really expensive vehicles, but there was nothing for the mass market. Tesla was the only known name, but Model S was launched in 2012, so it was still catching up even in international markets.

One thing we wanted to address was the performance gap. People did not like EVs as they would not give a comparable performance with their petrol/diesel counterparts.

But as a startup, you cannot really just offer a replacement for existing technology, because there is always an inertia to move from a comfort zone of using a petrol powered vehicle to an electric vehicle. There had to be something disruptive. Coincidentally, at that point in time, even though it was not very clear, there was a slow rise in the interest of connected and smart vehicles. We had seen how connectivity and an operating system approach had completely disrupted the mobile phone industry. But that hadn’t translated well into automotive. Yes, there was something happening on the four-wheeler side, but absolutely nothing happening with the two-wheelers. We saw a gap there as technologically nothing new was happening with two-wheelers.

We realised that whatever was happening in the smart and connected tech in four-wheelers (which was itself at a slow pace), could be rapidly adapted to two-wheelers, which could completely change the ownership experience around the vehicle. Once you have connectivity and operating system on to the vehicle, there are so many things you can do. In 2014, we came out with our second prototype which had connectivity. Our first prototype before that had a rudimentary GSM connectivity as well.

We started off with one very simple feature which we wanted on the vehicle and that was navigation. In the current setup, you have to use your phone for it, and if you are on a two-wheeler, you either look at the map when you are riding (which is dangerous) or stop the two-wheeler at regular intervals and navigate the path. With our earlier prototypes, we just had a Nexus 7 tablet as our dashboard, double sided taped to the vehicle and we were driving with it around Chennai.

People would notice that it’s electric and even those that didn’t, saw a tablet and understood that was meant for navigation. That’s something everyone connected with. So that was like our first driving use-case. Now navigation requires connectivity, a good amount of processing power and a good interface. Once we had these three things in place, we realised that there was so much more we could do such as a digital speedometer, connecting power-train to our central processor, battery performance tracking and much more. 

Then we started figuring out more use cases for the end user — tracking your vehicle in real time, tracking the health of the vehicle, health of the components, putting your driving license on the vehicle’s display, toggling between riding modes and much more. It basically lets us push a ton of personalisation on the vehicle catered to your needs.

tech2: Has there been a tremendous change in battery technology over the years in this space?

Ather Energy: Battery technology has changed significantly in the past 10 years. There has been a fall in the cost of battery, not just because of scale, but also because there have been innovations in this segment pertaining to battery chemistry, ease in manufacturing technologies and so on. We are seeing more energy-dense batteries, that means what would require a 500-cell battery can now be done by a 200-cell battery. Which means you have suddenly become more efficient. The amount of effort required to make one cell remains constant, but now you are able to get more out of it. This is something that is not very well known to everyone.

At Ather, we are trying to adapt these cells to the Indian conditions as they are not very well designed to work in the Indian context, especially in this heat which is a variable. The other challenge for a two-wheeler maker like us is that it also can’t be expensive and we have to pay attention to the thermal management of the battery. You can’t just strap a cooler to do that as that will increase costs.

Now that our vehicles are on the street, it is even better to understand what kind of performance people expect from us and where we need to fine tune it. While designing the Ather scooters, we just went by gut feeling and tried to match the gasoline pattern with the EV pattern. That’s not a correct way to go about it, but we didn’t have enough data back then. Since the scooters are connected to our secure cloud, we have enough data to play around with now and push relevant fine-tuned OTA updates to our scooters. So it's a combination of both the inherent technology of the battery and how the data which is coming in and helping us to even reinforce that and make it even better.

tech2: How many Ather scooters are out on the street?

Ather Energy: We can’t reveal exact sales numbers, but we have been delivering a few hundred scooters since January. Since March, there has also been a price drop thanks to new FAME II guidelines which raised the subsidy on EVs. These vehicles would be cumulatively clocking over a million kilometres every month, in Bengaluru. We must actually be collecting more data than probably any OEM before this, as there haven’t been any connected two-wheelers before us.

(Also Read: FAME II Guidelines: Can the auto industry match up to govt's drive towards an EV future?)

tech2: What is done post the data collection?

Ather Energy: First of all, from the customer point of view, we try and fix any failures that may have been there and try and address what the customer wants. We are analysing the vehicle data that is coming to our servers and fine-tuning the algorithms. So, for instance, initially, we had certain set rules as to how quickly the fan should cool the battery in order to ensure not too much power is used. But after getting vehicle data, we realised that it does not affect the battery or range that drastically, so we tweaked the settings.

We can change the battery management settings (BMS) which increases the depth of discharge. This means you can effectively increase the total range that you can get as an end customer. So a lot of stuff around the system models has improved.

Since launching over the air updates, we have changed the UI, added more driving modes, given more information around efficiency and have been able to resolve a whole bunch of bugs. In the latest update, we can allow you to track every single ride which we have noticed has started changing people’s driving patterns. So for instance, every time you ride, you will see what was your efficiency for the previous ride and if you don’t like that, how can things change and what range will you get. So we are trying to gamify the user experience. We have also noticed that while earlier our average range was around 64-65 km per charge, now that has increased to 70 km. This is just the third month and we have an 18-month pipeline with almost 100 updates and all of them get delivered to the end customers.

tech2: What are some of the challenges you have faced since launch or before launch?

Ather Energy: India is a very different market and luckily, we don’t have a car infrastructure like in international developed markets. In India, 80 percent of the vehicles on the road are two-wheelers and they will bring about a change in this electric sector. The good news is that setting up the charging infrastructure for two-wheelers is ridiculously simple as compared to cars. The overall investment to create that capacity is also significantly lower, so we will leapfrog in the sense that there is no worry of replacing cars and there aren’t that many cars on Indian roads to begin with.

We think the major roadblock is the lack of good products. You need credible replacements. We think customers need electric vehicles that are better than their petrol counterparts, that is the main barrier. And that isn’t a very high barrier. Not everyone is riding 1000cc bikes on our roads, they are all 100cc bikes which is an entry-level market.

The second thing is just pure capacity. You want to quickly ratchet up to 25-30 million annual capacity for electric two-wheelers. In the short term that is going to be the real limiting step. If we are able to manage, then 100 percent electrification of two-wheelers by 2030 is very easily doable because the minute cost economics work out, the market can transform in 3-4 years.

tech2: Could you elaborate on what you mean, when you say it is much easier to set up a charging infrastructure for scooters as compared to four-wheelers? Give me a rough comparative cost breakup.

Ather Energy: Scooters don’t need the kind of power that a fast-charging electric car would. For instance, fast-charging an electric car could be a 100-200 kW setup, which means an investment of Rs 1 crore or more. Fast charging an electric scooter is like a 6-7 kW setup which would cost in multiples of Rs 10,000. So that’s the difference we are talking about. The cost of the hardware is significantly affordable for electric two-wheelers. So right now we have around 33 charging stations in Bengaluru and we plan to have 200 stations in the next couple of years. This is eminently doable because of the low cost of the hardware.

tech2: Don't you have worries about big name scooter makers competing with you in the electric two-wheeler space, thanks to their massive manufacturing plants and distribution channels across India?

Ather Energy: We think in today’s world, manufacturing is becoming a commodity and we don’t think that’s a limiting factor any longer. We think what matters is what customers love and building a solid ecosystem for them, so that they will really value and buy into your vision. Manufacturing is required yes, but it doesn’t decide things. A lot of people thought that we will just design and won’t be able to set up a plant, but we have done it, of course with its set of challenges. We are able to ramp up our production now and reduce waiting times. 

As a company, what becomes really valuable for us is the experience we are uniquely positioned to deliver. Which is why we have an extreme focus on batteries and charging infrastructure, focus on software and upgrading experience because that is something no one else is offering and we see a value there.  

If you can build that out very well and if people get used to this idea that vehicles improve over time, that the operational costs are lower, the resale value is far higher as compared to petrol vehicles because the batteries are phenomenally built and the charging infrastructure is ubiquitous, then that’s an advantage we have over others. We want to make an infrastructure where you are never far from a charging point, and we want to get down the charging times to a few minutes. If we can pull this off, then we have built a solid ecosystem that all works together. That’s why our company is called Ather Energy and not Ather Motors, as we don’t think our job is to manufacture vehicles, that is just one of our tasks. We want to make sure the larger ecosystem is good and the ones building it will get a lot of value.

tech2: So are you saying that Ather Energy would be open to licensing its technology to other mainstream brands?

Ather Energy: At this point in time that is not the focus.

tech2: Do you plan to continue going through the retail sales route or are you planning to get into electric two-wheeler fleets which can be used by establishments such as delivery startups? 

Ather Energy: I think whoever does a lot of km daily, electric is a great fit for them. Delivery businesses could see sufficient operational efficiencies if they switched to electric scooters. I think the ride-sharing segment needs electric vehicles like this. Ather is a very strong consumer brand, so we will only go after opportunities where we can maintain that final touch with the consumer as that’s important to us. So maybe building electric scooters for food delivery businesses may not be a right fit for Ather. Ride-sharing a phenomenal opportunity. So yes, there are different segments but today we are focussed on the consumers.

tech2: In building the electric charging infrastructure, does Ather Energy plan to build all the charging points or are you looking at partners who would build that infrastructure and offer Charging-As-A-Service?

Ather Energy: We don’t want people to look at charging as a separate service. We have decided that we will build the charging points but it has to be looked at as an infrastructure which the location is providing. So with our partners, we have a clear understanding — we won’t charge you anything, you don’t charge us anything. The only thing the customer will pay for is the electricity which they consume and nothing other than that. We don’t want to offer that as a service, as then it will be difficult to scale up

tech2: But wouldn’t it assist with scaling up the setting of charging infrastructure, if someone who owns a space just comes forward and offers to take care of the setting up of the infrastructure for you which will be Ather branded?

Ather Energy: At the start, when you are still creating a market if you have too many folks who are dependent on economics in the early stage, you ironically kill the market before it takes off. Either you can subsidise everybody and give everyone an economic concept to work with and pay everyone a fixed amount so that they don’t deliver a bad service. Or you change the incentives in the early days.

So instead of incentivising them with regards to how many people will use the charging points, we are focussing on the brand association. That’s why Ather charging points look the way they do. We want to project that we are a cool brand and the place where our points are, say a coffee shop, you may very well park your Ather scooter for charging and go in and have a cup of coffee, so the locations are earning that way.  

The first thousand or so people who buy Ather scooters are going to be these really early adopters, who any place who is associated with Ather charging stations would like to know about their place. So that’s the incentive we are looking at with partners. We are helping them with positive word of mouth and indirect business.

tech2: Ather battery, is it removable or fixed? And say if I am not near an Ather charging station, how do I charge it?

Ather Energy: The battery is fixed. Ather Charging stations provide fast charging which takes one hour. But if you are not near a station, and you are fine with slow charging with takes around 2.5 hours for the full charge. You can charge it on any 5V socket, the same that you use for your mobile phone is good enough.

tech2: What are the additional costs after buying an Ather scooter?

Ather Energy: Charging is free at Ather Charging stations for the first year. We do have subscription plans for all our data and connectivity capabilities. There's a plan called Ather One which is around Rs 700 per month or Rs 8,400 a year and offers service around your vehicle which includes home charging, public charging, vehicle servicing and connected services. In addition to this, there are data-based features such as over the air updates offering a lot of personalisation and UI improvements. Then there is remote or road-side assistance. This plan ensures that everything is taken care of after you purchase your scooter. It is always connected, upgraded, completely serviced consumables agreement. We also reimburse you when you don’t charge at Ather stations.

tech2: You say Ather scooters are made in India, but do we have the infrastructure to make all the parts that go into an electric scooter?

Ather Energy: The only part that needs to be imported in the forseeable future is lithium-ion cells. We manufacture the batteries locally in our assembly plants, but cell manufacturing requires dedicated plants which is a multi-year, multi-billion dollar investment. So that may take a while to happen in India. We have some good electronics manufacturers and obviously, the automotive supply chain is a well-oiled machinery.

tech2: Are scooters the only products that will come out of Ather or are you also looking at electric bikes for instance?

Ather Energy: I think the ultimate aim is to build these technology stacks and for consumers, we are building a strong experience. After we have stabilised with the scooters we want to take it to every form factor. I think once our stack is stable, we can scale it to all form factors.

tech2: When you say stack, do you mean from an energy perspective?

Ather Energy: There are two parts. There’s the entire power frame that is the battery, battery management system, charger, motor controller and so on. A super stable stack is not something that’s just more efficient but also a lot cheaper than everybody else.

The second has to do with the data and connectivity, right from the OS and how the data gets uploaded and how it is processed. We are planning to build an ecosystem, so we are getting a lot of requests from developers who want to build a layer on top of our OS. For example, a location-based checklist which drops a pin on a map. This can be associated with a task that you have to do as you cross those points, such as picking up groceries from the supermarket on your way home as your scooter approaches it. So basically building an architecture on which anyone can plug in their apps.

tech2: What are your views on the FAME II guidelines? Is subsidising EVs the only way forward? Any scope for improvements that you feel are there?

Ather Energy: One shouldn’t just look at the demand subsidy on the FAME guidelines, which by the way are very good. But it is actually incentivising a lot of strong behavioural changes among OEMs. For example, the list of qualifiers clearly mandates that you have to move your production locally. That creates a requirement that if you don't have all the technologies available locally, the supply chain has to be created, so a lot of local intellectual property (IP) will have to be created if you can't import vehicles, right? It very strongly incentivizes a certain battery size, which in turn has an impact on what kind of performance these vehicles have. So by mandating a certain kind of battery size and a certain type of battery, you've created all of those requirements together. This will have long term implications for the industry and the kind of companies will come up. For battery chemistry, which we have always been investing in, this is massive. So there is an incentive towards better battery chemistry and a bigger battery that directly benefits the kind of products that we want to build. If you incentivise local production, then you also indirectly incentivise local IP creation and local engineering which is the right thing to do. This will ensure that the auto companies coming out of India will be very different from the earlier generations.

tech2: Since the battery module is fixed in the vehicles, what are the kind of charge/recharge cycles we are looking at?

Ather Energy: We have done north of 50,000 km on the vehicle that’s holding up very strong. We can’t share exact numbers but we offer more charge/recharge cycles than we have promised.

tech2: How many kilometres of tests had you done before launching the Ather 450 in the market?

Ather Energy: Anywhere from 0.5-1 million km. There are various ways in which we test, such as on-road testing, in-lab testing which represents on-road conditions.

tech2: How do you see this space evolving over the next couple of years given the strong fossil-fuel-powered auto lobby in India? Do you feel that there is a resistance to switch to EVs or you see more players entering the EV space?

Ather Energy: Incumbents will always have resistance to changing the status quo which is working for them. Two-wheeler makers, we feel, are seeing the writing on the wall. We will be surprised if any board members of two-wheeler companies are still on the fence about electric scooters. As soon as the consumers start adopting electric vehicles, that’s it, the market will start flipping. You can’t hold the customer back. If customers like our product, everything such as supply chain, production, etc will fall in line. 

tech2: What happens if there is an issue with your electric bike? Who does your consumer go to?

Ather Energy: Right now, you don’t go anywhere. We will come to you to resolve any issues. Once the number of vehicles on the road crosses 10,000, we will have multiple points in the city where you can get your vehicle, but that’s still a while away. That infrastructure is quite stable now.

tech2: Do customers have the option to opt out of data sharing?

Ather Energy: We have an incognito mode. Vehicle based data will be collected, as we need that to send you the right updates and ensure the vehicles are giving you the right mileage. But we don’t store personally identifiable data. We are not in the business of selling your data for ads, so we don’t need to know that.

tech2: Do you feel India is ready for an electric bike/scooter sharing ecosystem yet?

Ather Energy: Yes definitely. Electric scooter sharing will be huge as it brings down the high upfront cost of owning a vehicle and you only pay kilometre wise. This is quite attractive as compared to paying for petrol or diesel. We don’t think any electric vehicle company tomorrow, you can’t just be building pure EVs, you will have to build a complete ecosystem. You will need connectivity as that is what opens up a lot of actual values. If you don’t offer the upgrades on time, your EV will always look stale in comparison. The sharing ecosystem needs EVs for the economics and the connectivity for its vehicles to allow the thousands of assets to be seamlessly distributed along with allowing tracking and monitoring.