1030 hrs, February 23, 2016, a startup conference at a convention centre in north Bengaluru: Ather Energy, a startup that few have heard of beyond the city, has just unveiled a smart, electric scooter, named the S340. Ather’s co-founder and CEO Tarun Mehta rides the scooter onto the stage. He talks of the scooter’s features – its touchscreen dash, its acceleration, and other specifications… – before asked when customers can buy it. After all, India is the world’s biggest market for two-wheelers and Ather has a shot at success, if anywhere, in its home country.
It will launch for sale in 2017, says Mehta, who looks more like a mid-level geek than a smart vehicle CEO.
That was to be — but 18 months later.
1130 hrs, June 5, 2018, a hotel in central Bengaluru: Ather announces it is ready to sell the 340 and a more powerful, faster 450. Bookings are on and the company expects to start deliveries by August.
The Ather journey – it will be five years this October since the company started – is one of India’s few local-bred product stories. For sure, it can’t be qualified as a success yet but in a country where services and retail trading startups are feted, Ather is one of a rare breed of companies taking aim at the physical products space hoping to vault into big-time leveraging new technology.
The context is well aligned: two-wheeler sales in India outpace that of cars 5:1 (bikes and scooters sell about 15 million a year, cars some three million) and offer a springboard for anyone who wants to take a shot at the product-pricing-distribution game. Throw in an emerging technology like Lithium-Ion batteries and design around it, it promises to be an exciting ride, if nothing else. The Indian government think-tank Niti Aayog believes two-wheelers – both private and fleet – will have a quicker adoption of electric mobility.
Ather is not alone in its bet on electric mobility. There are at least a dozen others in the fray in India – most of which are import-and-assemble operations. The world’s largest two-wheeler company Hero MotoCorp, which has invested Rs 205 crore in Ather, is working on its own electric two-wheeler line-up including fully electric bikes and hybrid two-wheelers. “We are experimenting. (Electric vehicles) should fulfil customer needs otherwise, people won’t buy them,” Markus Braunsperger, Hero’s chief technology officer told FactorDaily in February this year.
Hero holds about 30% in Ather. “They have positioned the company very well as a technology company and not just an automobile company. Distribution is important in this business… that’s where we (Hero) can play a role,” says Pawan Munjal, chairman and managing director of Hero MotoCorp.
Other large OEMs including Bajaj Auto and TVS Motors are in the process of developing and launching their electric two-wheelers. Hero Electric, started by Pawan Munjal’s cousin Vijay Munjal and not a unit of Hero MotoCorp, is among the earliest in the space. Startups such as Gurgaon’s Twenty Two Motors and Bengaluru-based Emflux Motors, too, have earlier this year unveiled electric two-wheeler platforms.
Still, Ather stands high and tall in the growing space with a DNA going back to research labs, a design built from scratch and a product that can 80% be traced to custom spec sheets. Will that give it customers and success as a scooter company? Time will tell. But its 56-month journey is all about learnings, sucker punches, small wins, big bets, uncharted paths, and an early positioning in a market that holds promise.
“The biggest challenge and opportunity when you are building an electric vehicle in India is that there is no local ecosystem and that includes not just vendors but also talent among other things. We completely missed out on this when we started the company and that’s why our timelines started looking different. The amount of money started looking very different as we got more and more into it,” says Mehta.
The beginnings of the beginning
Ather began its journey in October 2013 at the Indian Institute of Technology-Madras Research Park. Mehta and co-founder Swapnil Jain both IIT-M alumni (B.Tech & M.Tech batch of 2012 in engineering design) had set out to build India’s first smart electric scooter. They had brief stints at Ashok Leyland and General Motors respectively.
Mehta recalls the support of R. Krishnakumar, a professor at the Department of Engineering Design at IIT-Madras. “If a professor says, ‘Leave your job and come back; we will take care of everything,’ I think that is a great morale boost,” says the Ather CEO. “For the first five-six months, we literally camped out of the department. We were just hanging around in his labs and other department labs before we sort of reached a conclusion that ‘This seems interesting and we should actually start a company and build a product.’ It was a very important phase and he was super supportive then.”
Jain, Ather’s co-founder and CTO today, says the first idea was to build a battery swap model, but soon realised it didn’t make sense. (Factoid: During his M.Tech degree days, Mehta had applied for a patent for a swappable battery system.)
“When we started, we said that we will only build batteries for existing vehicles because there is no Lithium-ion battery (pack in the market). We will build it and sell them. We thought that batteries were the only thing wrong with electric vehicles,” says Jain.
But, that’s when the realisation hit home that “almost everything is wrong in the existing vehicles”. “You can’t just expect that I will change the battery and things will suddenly become right. We can’t build just a battery, we have to build a complete vehicle and then sell it,” he adds of the earliest learning of the duo.
By January 2014, the company had signed on its first few interns, who later became employees and today are some of Ather’s longest-serving staff. “The first seven-eight months we were sort of figuring out our way around and by mid-2014 we really got started working on this platform,” says Mehta referring to the electric scooter. “We had a target of two-and-a-half-years to get the product out.”
Electric vehicles made sense because it was the future and also from a business perspective, there was hardly any competition in 2014 if scooters powered by lead-acid batteries were not considered. All the top manufacturers were focused on their petrol models with the two-wheeler market growing so rapidly, says Jain of the time. “Now I realise why it’s tough for OEMs to do that because you can’t just throw away whatever you’ve developed and then start afresh. Engine development took decades to stabilise, to become reliable. It was not going to be an easy path for any of the existing two-wheeler auto companies to get into this and this was a golden business opportunity for us.”
According to Jain, even among two-wheelers, an electric scooter was a sweet spot to start with because there were no aspirational products in the segment, whereas in the case of bikes there was a wide range covering most segments.
“From a product fit perspective, there was no aspirational scooter out there in the market. Everyone is at the same place which is an Activa or a Jupiter. Whatever it is, they are exactly at the same spot and then there is Vespa, it doesn’t give you anything as a product other than the brand image attached to it. Bikes, on the other hand, had a wide range of 100cc ones all the way to Ninjas,” he adds. By Activa and Jupiter he is referring to popular Honda and TVS Motor scooters, and by Ninja to the Kawasaki motorbike.
In June 2014, Arun Vinayak joined the team as chief product officer. He had studied mechanical engineering at IIT-Madras and was a year junior to Mehta and Jain.
Jain and Vinayak were part of the auto club – a student auto enthusiast group that built formula student cars – where they worked on several projects together.
“The auto club is a student-run lab, part of the Center for Innovation at IIT-M. That’s where Swapnil and I first met,” says Vinayak. The car they built was taken to race at Hockenheim, Germany in 2011-12; Silverstone, the home of the British Grand Prix in 2012; and again in Germany in 2013.
Vinayak started with his passion for cars early: he built his first go-kart while in the tenth standard at school in Bengaluru. He recalls summers spent scavenging in the used parts scrapyards in Bengaluru’s Shivajinagar. “When you taste your first blood of building your own vehicle… riding it is really fun,” he adds. “The process of building it was more fun than actually riding it.”
But, building a go-kart was much easier than an electric scooter, the team soon realised. Being the first entrants into the smart electric scooter market in the country, they had to deal with an ecosystem and infrastructure that didn’t exist. More on that later.
It took the team about a year to get on their feet in terms of investor backing. The team had raised some capital from friends and IIT-Madras professors and it took a year until mid-2015 to raise its Series A funding: a bold round of $12 million from Tiger Global. Mehta adds: “We took a while to find our feet and find some money… only in April 2015, we found our first big cheque.”
Tiger Global boss Lee Fixel saw promise in the team’s ground-up approach, as also would have surely been encouraged by the investment of Sachin Bansal and Binny Bansal, the co-founders of Flipkart, given that he was their biggest backer in the ecommerce company. “We see great potential in Ather’s product offering and the technology and are confident that their maiden launch will attract a tremendously positive response,” he said in a statement.
Earlier in 2014, Ather had raised $1 million in seed funding from the Bansals and Raju Venkatraman of Medall Healthcare.
Building the S340
The S340 with the first version of the electric scooter that Ather set out to build. Building a new internal combustion engine (ICE)-based scooter, even if it were with smart features, in India might not be a very difficult task given the existing automotive ecosystem in India. “Most of the subsystems that will go into the scooter – engine, ECU, fuel injection, carburettor, fuel filter, fuel tank – all of those you will not touch any of them, you will just define very clear specs and packaging for all of them,” Mehta says.
Even the subsystem manufacturers won’t need to start from clean slates because they will have tried-and-tested solutions. All they might do is pull up the closest in-house, design to the customer’s specification and tweak it for the exact requirements like mounting etc.
Says Mehta: “Everybody uses the same scooter design just ensuring that they don’t infringe each other’s IP (intellectual property). Basically, open a basic scooter and all of them look very similar from the inside.”
For a newcomer, he adds, prototypes will be out in the second year itself. “The product will hit the market in three years if you are efficient, five years if you are not for the first product. Refreshes can be sub 18 to 24 months,” he says.
Such timelines just didn’t work for Ather, says the CEO. “What we did not give enough importance to is that all these subsystems had to be built by us. We are our own vendors. And, where’s the architecture coming from? You can’t take a blueprint and start from it. You are going to sit down literally from a clean slate and start drawing,” says Mehta.
Building a hardware product in India is an expensive affair, to begin with, and most startups have an uphill task all the way from prototyping, hiring the right talent, and setting up manufacturing. In the case of newcomer Ather, it was even more difficult and complex. But the company had to get its product out soon to get visibility and a better chance at raising more funds.
So the team hustled to build their bike for launch at startup conference Surge 2016 in Bengaluru. With hindsight, Mehta feels this was sub-optimal but the team had to do it.
“In some ways, building this vehicle for Surge was a very inefficient step but that was also relevant because in the absence of that, we don’t get enough attention, people wouldn’t have noticed us. So it’s this conflict as a startup, you are doing things quite inefficiently but that’s because you need those milestones in the middle,” adds Mehta.
How did it hurt? Such an approach, he says, “goes against this new thing that you are trying to bring in which is structured product development which thinks ahead for the next two years”.
2016 the year of learnings
By early 2016, Ather had raised a total of $13 million in funding and had started hiring and bringing in enough people who had experience in engineering and by mid-2016 the company had its first working prototype ready.
“When all the subsystems went into the vehicle in mid-2016, they were super fresh and new and totally untested. So now when you run the test you can’t easily decipher what is failing. Is the BMS (battery management system) failing in itself? Or, is it the battery causing a BMS failure because of integration issues? Or is it that your architecture is messed up… you just don’t know,” recalls Mehta.
According to him, there were over 600 components going into the vehicle and all of them fresh from development.
“That is when we woke up and realised that you have to give this development process its due respect. This game is not about just ship fast and solve the problems with the batch later.”
Ather had built some vehicles and ran a few of them on the road for about 10,000 km. That gave it data that the studied to understand the problems.
Mehta says, “This is when you start isolating systems and start to truly understand where the failures are happening.” Subsystems, for instance, were prototyped for the first time. “They will have to go through nearly a year worth of iterations before they mature and become more stable.”
But, for a startup used to living by the seat of the pants, structured product development was easier said than done. The founders had bought into the need to change but they risked demotivating the rest of the team. For Mehta and Jain, this was probably the hardest phase of their Ather lives.
“As a company, this was a major cultural challenge. What everybody has been used to till then, including building this prototype, was ‘get shit done’, get this prototype out… somehow get it out. But in this process of ‘somehow getting it out’, you’ve made a whole bunch of wrong selection. For example, you’ve chosen a wrong vendor and that thing can’t go into scale manufacturing,” the CEO says. What worked at prototyping would completely mess up the assembly sequence in full-scale production.
One of the top challenges for the team was first to find vendors and then to work with them to develop products.
Vinayak recalls the tough time trying to get feedback from Indian vendors, which is very essential for the design team trying to develop a new product.
“If you want to make a tool, as a designer you want to get feedback. You want to test something out, want to get a feasibility check done. We would send the same drawings out to someone in China, someone in Korea and someone in India. The Chinese guy would reply in a few days giving us quotes with timelines and costs. And almost all the time it was 1/3rd the cost and 1/3rd the timeline from India,” recalls Vinayak.
In one instance, Ather sent a team to China and in 45 days they got the tooled part and churned out 100 parts in 45 days. In India, Vinayak reckons, that would’ve taken four to five months and three times more expensive to do the same. He rues the fact that in the initial design phase, Ather did not have the staff numbers or the financial bandwidth to have a team stationed in China to do the design and quality checks.
In another instance, Jain talks of his frustrations with electric wiring harnesses — non-existent in India. “There is no one who does that. All the vendors we got knew something about wiring harness basically related to petrol two-wheelers. That was very different… Unfortunately for us, we have high power systems, low power systems, digital communication and analogue communication. We had to also do heavy waterproofing, shielding. Plus, the harness then becomes heavy will all the components,” says the Ather CTO.
Turbidity out, clarity in
According to Mehta, the big challenge that now lay ahead of them was how to not make Ather feel like a boring automotive company keeping the culture and excitement alive while still bringing in the rigour and discipline that you need to get a world-class hardware product out. “This meant we had to go back to the drawing board for a lot of things. Who put this spec here? Who decided on this thing? And then you start questioning everything,” he says.
The next step for the company was to start building Ather’s development process. Mehta adds, “We have to make our own processes to ensure and measure things like quality, tolerance and life at every step, we can’t borrow this process from other companies.”
“Nobody has done this sort of fresh development in recent years. Here its a new technology, completely new platform, new architecture and by a company that has no prior history and people and systems. It was a four-time harder challenge than what we originally thought it was. But then, that is the big opportunity. Not too many people are going to be able to do that again and again,” says Mehta.
As one of these steps, the company tasked some of its best engineers to write specifications for various components over nearly two and a half months. All they did was just write specifications — no prototyping, no testing but just sit and write specifications.
By now most of the problems were being fixed and the path to manufacturing started becoming clearer. “The product has gone through a complete architecture cycle in the last one year as we woke up. Our architecture was set by then and it hasn’t changed it since then and I don’t think it will change now onwards for this vehicle,” adds Mehta.
Just in time. In October 2016, Ather raised $30 million in funding from Hero MotoCorp.
“We didn’t raise 30 million dollars because it just felt nice. We realised up front that we need a lot of capital before you can get it off the ground because you are not just building a vehicle,” says Mehta.
During 2017 Ather also brought in some senior management to help with growing the company and stabilising the product. Thiruppathy Srinivasan (Thiru S) as the senior vice president of operations and Venkatesh Padmanabhan (Venki) as the chief operating officer.
Srinivasan, an alumnus of IIT-Madras, had earlier worked with companies such as 3M, Iomega and A.O. Smith in the areas of manufacturing, engineering, product development, purchasing and management.
He had also worked with IIT-Madras to help structure its engagement with the industry and also with incubation of companies at IIT-Madras Research Park. He had, in fact, initially guided Ather at the research park and later joined the company full time to help with the development of the scooters.
Other than working with the engineering team in developing the product, after the departure of COO Venkatesh Padmanabhan (Venki) in January 2018, he also took on the role of managing suppliers, partners, prototyping and production at the factory.
Finding the right people deeper in the talent stack was, however, a problem. Jain points to how most in the Ather engineering team started their careers in the company “except for probably around 20% of them”. “We had to spend a lot of time to find our technical leads who had some sort of product development experience to be able to lead the teams. Even today we are trying to find a lead on chassis design, we are not able to find,” he says.
Vinayak, too, talks of the same challenges in the design team. “On the mechanical side even if you hire from an automotive OEM, most of them would not have worked on developing a new platform. Most of them would’ve worked on an existing platform that would have been handed over from a Japanese or German counterpart,” he says. The solution? Give the team the time and the space to grow as part of the team. “Now the team is raring to go. They are like we will do this in two years.”
On the operations front Srinivasan talks about the challenge in finding process engineers who know how to design assembly unlike the two-wheelers in the market that have not architecturally changed for long. “It’s a welded frame and you put everything on top of it. Here (at Ather), we have aluminium castings bolted together to form the frame,” says Srinivasan.
He looks for people from second or third tier companies where they have dirtied their hands in all processes. People who have “actually done injection moulding, casting, electronics assembly and not managed that process,” says Srinivasan.
The Ather experience
On June 6, the day after launch, I got a chance to test ride the Ather 340 smart electric scooter. “This is fun,” was the first thought that came to my mind as soon as I got going. Comfortable seats, good leg space, seven-inch capacitive touchscreen display with good visibility, and a comfortable riding position.
This is the second time I’m riding an electric scooter and the initial take-off is pretty much instant. The power delivery feels instantaneous as soon as you turn the throttle. The lack of feedback – be it sound or feel from the engine – feels a bit strange especially to those used to traditional scooters or bikes.
The 340 retails for an on-road price of Rs 109,750 and the 450 retails for Rs 124,750. The 340 and 450 will consume about 2.5 -3 units of electricity for a full charge of their batteries; so in Bengaluru, a full charge would cost between Rs 14 to Rs 17.
To ensure a seamless experience across various functions of the scooter the company has a common design group. “It is called the industrial design team, that works across user interface, looks, feel, ergonomics, packaging, architecture etc for the scooter as well as the charging pod,” says Vinayak who as the lead for the product design and development, was one the people on the team who insisted the scooters be available only in white colour.
“For us, our product is our marketing and if you want the easiest recall you want to have one colour. It (white colour) felt right, it felt clean and our design philosophy is about keeping it clean both on user experience and looks,” he adds.
The 340 and 450 frame is built from mostly from aluminium and some steel components. A naked frame of the scooter is displayed at the centre of the experience centre. “Back in 2013 itself, before we started Ather, we had a sketch of this vehicle and we stuck to the rule that we are not going to mess this, we are sort off going to stick very hard to the design,” says Mehta.
The team opted for an aluminium frame which was lighter and also helped it in achieving the manufacturing tolerances they wanted.
The other thing you will notice on the frame are the large heat sinks, of which the battery has the largest, built into the systems to cool various components including the battery, motor, onboard charging unit, and dashboard.
Interestingly, the scooter design does not have a centre stand, but only a side stand. This was entirely a design choice, says Mehta. “You often end up using a centre stand because you are actually not very confident of the side stand. The side stand is not reliable, not very strong,” adds Mehta.” We sort of put a constraint on ourselves that the side stand actually has to be good enough that you don’t need a centre stand and the only way to sort of make that happen is to knock the centre stand off the design.”
The Ather scooters have an OTA (Over The Air) update feature which will allow the company to push updates and new features to the software that will improve the performance and functionality of the scooter. “The OTA updates will definitely add features around security, safety features and also improvements to the dash. We want to add more functionalities, personalised navigation, user profiles, more control on your vehicle, and customisations around the performance itself,” says Mehta, adding Ather has an OTA timeline and update plan in place.
Ather is also planning another set of OTA updates around fleet learnings from the data the scooters on road will generate. The data collected will be around performance and parameters and other sensor data which also includes locations. In order to provide privacy for customers, the scooter has an anonymous mode which can be enabled from the dash which will prevent data points like locations to be shared.
Mehta explains how monitoring the motor current data linked with rpm (revolutions per minute) compared in tandem with other parameters could help with detection of a potential failure in a ball bearing, for example, or other such faults in the components before they fail.
Ather has a two-and-a-half-year-old data intelligence team which are building data models and learning from them. The team will be monitoring and studying anonymous data patterns and signatures over a period of use. “Over time, the system can learn from this data. Just thinking aloud, for example, if you lean beyond this point specifically on these stretches of the road typically people are skidding. We… could actually flash a potential hazard on the screen,” says Mehta.
Ather One and Ather Grid
For the company selling a scooter is not the only plans but it wants to make the ownership experience also as seamless as well.
“If you want to move from point A to point B, any scooter will do the job, these (340 and 450) will do the job much better and will be much more fun. This vehicle though will also actually improve over a period of time. Today what most of you are looking out is for a less painful experience and a less hassle-free experience. That is what the 340 and 450 can deliver pretty much,” says Mehta.
Charge anxiety is one the biggest hurdles before anyone planning to become an EV owner. You are rarely far away from a fuel station if you own and run an ICE-vehicle. What when you run out of charge in an EV?
Ather has launched its in-house charging infrastructure, Ather Grid, about two weeks before the scooters opened up for bookings. The company has partnered with cafes, restaurants and other such public places for setting up charging stations.
Ather Grid currently covers 14 locations across Bengaluru with multiple charge points at each location. “By launch (August), we will have a total of 30 locations across Bengaluru at which point we will make sure about 85-90% of Bengaluru is not more than 4 km from the nearest charge point. We will keep on improving the energy density and by end of this year we want to take the number of locations up to 60,” says Mehta.
The Ather Grid business is stand-alone – structured as a different company. “We want to make sure that there is a stand-alone business case that it has. That is why (we are) making sure that this works with all the electric vehicles because just your (Ather) vehicles may not bring in enough numbers to justify the cost,” says Mehta. “You want to make sure you’ve got a better usage by letting others also to charge. Also, ensuring from day one that billing, authentication and all of that is taken care of so we have a business model going around it.”
And to improve the ownership experience of the scooters, Ather has also launched a subscription plan called Ather One that the company claims will take care of all predictable expenses incurred in running the scooters.
Ather One will cost customers Rs 700 per month plus GST and can be subscribed on a quarterly or annual basis. The plan will include unlimited charging, both at home and public points, data connection, 24×7 roadside assistance, periodic maintenance – that includes labour costs, wear and tear of parts including consumables like brake pads. For now, all scooters come with a year’s subscription of Ather One for free after which they will have to get onto a preferred subscription plan.
What next for Ather?
With the factory plant in Whitefield, Bengaluru ready to begin production and the orders coming in, Ather is getting ready with the first lot of production.
“The first lot planned is for 2,000 vehicles and over a year’s time, the production planned is 10,000 vehicles. Based on the supply chain constraints, we will have to decide the batch size of production,” says Jain, adding next will be ramp up both in sales and the product map. “When you do a new product, it is not very easy to assemble… manufacturing challenges will pop up. So, we will improve product from that perspective to be able to ramp up really fast.”
The team has begun work on developing a new vehicle platform that it says will be more scalable. It is slated to be ready by the 2020-21 timeframe.
He won’t part with much financial detail, but according to Mehta, the 50,000 units sales mark is when on a per unit basis, the company ought to be able to break even.
In spite of India’s flip-flops on its EV policy, two-wheeler electric vehicles seem to be gaining traction with a handful of startups and traditional OEMs now launching or announcing their plans to enter the space.
According to Anil Sharma, associate director at research firm MarketsandMarkets, two-wheelers are where electric mobility has some of the best applications. “When we look at the electric two-wheeler segment, we are essentially doing away with a major portion of range anxiety because we are talking about a range of 20-40 kilometres per day which is what a majority of the two-wheeler travelling population drives on an average every day,” says Sharma. “Only in less than 10% of the cases is when the two-wheelers are used over 40-50 kilometres every day.”
The challenge for electric two-wheeler companies, though, will be to attract new customers, Sharma agrees.
“Like in the case of any new technology, you will have a limited set of early adopters and they are certainly going to buy no matter what. There will always be a much bigger pool of sceptics. The challenge for EV makers would be to convert or rather target buyers from the pool of sceptics and to gradually move those potential buyers to the pool of early adopters. And the key factor playing a major role here will be the word of mouth and the experience the very early adopters share,” says Sharma.
For Ather – perhaps, the best ‘Make in India’ example to date – that will be the biggest challenge in its five-year journey.
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Updated at 01:22 pm on June 26, 2018 to correct a typo.
Disclosure: FactorDaily is owned by SourceCode Media, which counts Accel Partners, Blume Ventures and Vijay Shekhar Sharma among its investors. Accel Partners is an early investor in Flipkart. Vijay Shekhar Sharma is the founder of Paytm. None of FactorDaily’s investors have any influence on its reporting about India’s technology and startup ecosystem.