Despite high demand for its electric scooters, Ather Energy said a spike in raw material costs and supply chain problems were delaying the company's path to profitability. I planned to raise some quarters already later this year, according to its Chief Executive and co-founder Tarun Mehta. EV manufacturers around the world have seen a spike in demand as more people use less fuel.
Due to higher commodity prices, Ather has witnessed an increase in material costs that has benefited many people. Some of these have been passed on to customers.
COVID-19 lockdowns in China and logistics concerns have also lowered the company's production volumes.
Ather sold over 3,200 electric scooters in June, backed by private equity firm Tiger Global and India's largest bikemaker Hero MotoCorp. Ola Electric is behind its competitors, supported by Japan's Softbank Group and Hero Electric.
Mehta said the company, which launched the third generation of its 450X e-scooter on Tuesday, plans to increase production to 10,000 units per month by the end of the year and will fully utilize its annual production capacity of 400,000 units by the end of 2023.
Last year, electric scooter sales in India increased by more than fivefold as rising fuel costs pushed consumers to seek for alternatives, and government subsidies reduced the price difference between electric and gasoline models.
In 2021, electric bicycle and scooter sales in India were just 1%. This is expected to quadruple to 40% by 2030, according to the government.
Despite a recent outburst of escooter fires in the country, Mehta expects the industry to grow rapidly. Such incidents have prompted safety fears, prompted a federal investigation, and increased demand for such vehicles.
The fires certainly shook the industry. I think we are still sort of going through it. It will take another three to four months before the industry truly recovers, according to Ather, adding that there has not been a decline in demand since the fires.
2022 Thomson Reuters