Economic Benefits of E-Scooter Subsidies for India in 2024: Ather CEO's Insights

 

India will need to continue providing subsidies for electric scooters for a few more years to facilitate the transition from polluting motorbikes, as stated by Ather Energy's CEO in an interview with Reuters. Industry analysts assert that incentives like cash subsidies are essential for India to achieve its target of electrifying 70 percent of its two-wheeler fleet by 2030. 

This move is crucial as India, the world's third-largest oil importer, aims to decrease its reliance on fossil fuels. Ather's CEO and co-founder, Tarun Mehta, highlighted the repercussions of the government's abrupt decision in May to reduce cash incentives for e-scooters from 40 percent to a maximum of 15 percent of the purchase price before tax. 

Despite making strides in reducing dependency on subsidies, Ather faced a setback in growth, equivalent to almost a year's worth. Although India's e-scooter market is still relatively small, it is expanding and constitutes 5 percent of total two-wheeler sales in the fiscal year 2023-2024. 

Ather, a pioneer in driving e-scooter adoption with its 450 series launched in 2018, has now lagged behind competitors like Ola Electric and TVS Motor, who have boosted sales through discounts. Ather, backed by Hero MotoCorp, India's leading two-wheeler manufacturer, unveiled a new e-scooter named "Rizta," priced at Rs. 109,999 ($1,321) on Saturday. 

The scooter boasts a larger seat and storage capacity than its counterparts, with Mehta aiming to attract a broader consumer base in India's densely populated north and west regions to stimulate sales. While Ather, currently operating at a loss, prioritizes revenue growth, Mehta anticipates improved margins with higher sales volumes. 

Mehta expressed optimism about the role that the Rizta model can play in enhancing margins at a unit level, indicating a potential path to profitability, although specific details were not disclosed.