Ather Energy joins unicorn club with $71 million

Ather Energy, the electric scooter manufacturer, has officially joined 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 underscores Ather Energy’s growing influence in India’s rapidly expanding electric vehicle (EV) market. 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 surged from around $740-750 million in 2022 to its current $1.3 billion, reflecting the increasing market interest in sustainable transportation solutions.

Hero MotoCorp, which owns a 40 per cent stake in Ather, has significantly contributed to the company’s growth, 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 position in the competitive EV market.

This funding round coincides with heightened activity in India’s EV sector. Ather’s competitor, Ola Electric, recently went public, with its stock hitting the upper circuit in two consecutive trading sessions post-listing, boosting its market capitalization to ₹48,258.89 crore (around $5.7 billion). This valuation surpasses Ola Electric’s last private valuation of $5.4 billion, indicating strong investor confidence in the EV industry’s growth potential.

Despite intense competition, Ather has maintained 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 currently holds a 9 per cent market share in the electric scooter segment, trailing behind major players like Ola Electric (39 per cent), Bajaj Auto (16 per cent), and TVS (18 per cent). The recent launch of the Rizta, a family-oriented scooter, marks Ather’s entry into a segment dominated by Ola Electric. Production of the Rizta is set to take place at Ather’s third manufacturing plant in Aurangabad, as the company aims to capture a larger share of the family scooter market, particularly in western and northern India.

However, Ather faces challenges on its path to profitability, reporting 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 strengthens Ather’s financial position but also enhances its ability to 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 sector, contributing to the broader shift towards sustainable mobility in India.