Ather scooter waits hit four months as capacity crunch deepens

Bengaluru: Waiting periods for Ather Energy’s scooters have crossed four months in some cities, with dealers in several states temporarily refusing fresh orders as demand runs ahead of production. The crunch could worsen over the next few months as the company starts selling its mass-market Konarc before its new Maharashtra factory is fully ramped up, co-founder and CEO Tarun Mehta told **TOI**.The Bengaluru-headquartered startup received 1.5 lakh paid preorders during the April-June quarter, against roughly 90,000 retail registrations. A paid preorder involves a customer placing a Rs 2,500 deposit to enter the delivery queue.The two figures do not track the same customers and cannot simply be subtracted to calculate the backlog. Mehta said Ather typically sees around 20% of paid preorders drop off before converting into sales in a given month. The current gap is considerably wider.In several states, dealers have stopped entering fresh orders for a few days at a time until another batch of scooters becomes available. Mehta said this was intended to avoid giving customers delivery commitments that stretched too far into the future.“We believe actual demand is much more than 1.5 lakh,” he said, adding that the reported preorder figure itself had been constrained by dealers pausing bookings.Ather expects the supply gap to remain elevated for a few more months. Its factory in Aurangabad, Maharashtra, is scheduled to go live by the end of this calendar year and could take about two quarters to ramp up to 40,000-42,000 scooters a month.Phase 1 will add five lakh units of annual capacity. Ather is also evaluating a second phase that could add another five lakh units, although investment in it has not yet begun.Mehta said most of the nearly 10 lakh units of annual capacity envisaged across the two phases is planned for Konarc. The allocation reflects Ather’s expectation that the new scooter will give it access to a much larger set of buyers.Konarc, which has an announced starting price of Rs 99,999, is the first product built on Ather’s new EL platform. The platform is meant to help the company offer lower entry prices while improving its manufacturing economics.Mehta said Konarc’s current specifications can be sold at price points comparable with Ather’s existing products. Its lower underlying cost should allow margins to improve over time. It also gives Ather room to introduce entry-level variants without using them merely as loss leaders to draw customers into showrooms.“Over the course of a year or so, I do believe Konarc unlocks a better gross margin than anything in our portfolio today,” he said. Gross margin is what remains from the selling price after accounting for the direct cost of producing the vehicle.The savings come from greater vertical integration and a design that makes the scooter easier to assemble and service. Ather has, for instance, combined the motor controller and onboard charger into a single unit. This reduces duplicated casings, heat sinks and electronics, while lowering assembly and inspection costs.Mehta said Ather has achieved annual cost reductions of 6-7% for several years through engineering changes. “It needs time more than scale,” he said, explaining that costs continue to decline as engineers refine a product after launch.Ather reported its first positive adjusted Ebitda quarter in April-June. Mehta declined to provide profitability guidance, but said Konarc should support margins over the medium term and that revenue should grow “very healthily” once the new capacity becomes available.Konarc is likely to take some customers away from Ather’s family-focused Rizta rather than the performance-oriented 450. Mehta described this as a normal effect of expanding a still-small product portfolio.Rizta had similarly cannibalised the 450 for five to six quarters, he said. The 450 has since returned to its earlier sales volumes, while its demand is now higher and could grow faster than Rizta.The larger objective is to bring petrol-scooter customers into the electric market. Mehta said Ather would judge Konarc’s success by its impact on three of India’s most successful scooter brands: Honda Activa, Suzuki Access and TVS Jupiter.Get the latest Business News and Live updates. Download the TOI app.