For Ather Energy, Rizta Comes As Shot In The Arm Ahead Of IPO

In India’s two-wheeler industry, a segment leader has never abdicated its throne.

The Hero Splendor redefined how India commutes, as did the Honda Activa. The Bajaj Pulsar brought “power to the masses”, while Royal Enfield retained the faithful and gained the loyalists with its Classic 350.

The electric two-wheeler space, however, is still up for grabs. Granted, Ola Electric Mobility Ltd. has stolen a march over incumbents and upstarts alike, but it’s still early days for an industry that’s in flux.

Enter Ather Energy Ltd. Specifically, its family scooter.

With the Rizta, the Bengaluru-based EV startup has captured customer mindspace, and market share, within one quarter of the family scooter going on sale.

In July-September 2024, Ather Energy grew its sales by nearly 62% to 34,057 units, as against 21,031 units in the year-ago period, according to data sourced from the Society of Manufacturers of Electric Vehicles. That translated into a market share of 14% as on Sept. 30, as against 11.5% in all of fiscal 2024. The spike in sales is more pronounced, when seen on a sequential basis.

The surge comes at a time when Ather Energy has filed for an initial public offering to raise as much as Rs 3,100 crore. The IPO proceeds will be used for setting up a new plant in Maharashtra and research and development.

“What the Rizta has done is open up new markets for Ather Energy,” an auto analyst, who spoke on the condition of anonymity, told NDTV Profit. While Southern India has been Ather Energy’s stomping ground so far, the family scooter has made significant inroads in the northern states of Rajasthan, Madhya Pradesh and Uttar Pradesh.

“We have seen a 300% surge in volumes since July when Rizta was made available,” Abhay Agarwal of Kansal Vehicles Pvt., an Ather Energy dealer in Agra, told NDTV Profit. “Footfalls have grown three times during the festive season…[we’ve] seen a huge surge in customers choosing an EV vehicle over ICE (internal-combustion engine).”

About 70% of the incremental volumes are courtesy the Rizta, at least two other dealers in Madhya Pradesh and Rajasthan told NDTV Profit, while the rest is accounted for by the 450 Series of “performance” electric scooters.

“If you are buying a vehicle for the family (to use), it has to be a scooter,” Tarun Mehta, co-founder and chief executive officer at Ather Energy Ltd., had told NDTV Profit on the sidelines of the Rizta launch in April this year. “In many states—Gujarat, Rajasthan, etc.— scooters are synonymous with the family. In that sense, performance-oriented scooters are still a bit of a new approach…but now we are moving into an addressable market that is several times larger.”

Over the last five years, scooters have increased their share in overall two-wheeler sales to 34.2% in fiscal 2024 from 31.7% in 2019. Within the scooter space, the convenience, or family scooters with engine capacity of 110-125 cc, account for 80% of sales.

It’s precisely this segment—dominated by the Honda Activa—that’s seeing electrification.

In fiscal 2024, electric scooters contributed 14.7% market share to overall scooter volume, according to CRISIL. In fact, battery-powered step-throughs have clocked a compounded annual growth rate of 101% in the last five years—the penetration has increased from 0.4% in fiscal 2019 to 14.7% in fiscal 2024.

Ather Energy, very nearly, missed the bus.

The EV startup, backed by India’s largest two-wheeler maker Hero MotoCorp, had only one model in its line-up since 2018, albeit in multiple iterations. Since then, sales have been modest at best. That’s now starting to change.