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Hero's EV bet: Ather Energy

Tesla is taking most of the western world by storm, and is poised to get better on the back of its improved battery and autonomous cars. Closer home, it increasingly seems likely that electric two wheelers would be the way to go for quite some time - atleast until a affordable EV can be made available for the mass market four wheeler segment.

We had covered the the Electric two wheeler space in some detail in our previous post on the Ampere Magnus pro, discussing the current offering, price and performance mix, and how the firms are choosing to reach the customer. You can read that piece here.

Hero is the leader in mass market motorbikes in India, having a strong grip over the sub 125cc segment in India. In the two wheeler segment it is present through its own brand - Photon, which offers an attractive price performance mix (You could join GSN Invest++for the range, speed, and price mix of the EV variants.)

It's more promising shot at the EV race however is via Ather Energy, a firm where it now owns close to 35% stake, With an 84cr investment last week, the firm increased its stake in the firm from 31.27% to 34.58%. It has attractive fellow investors into the budding startup including the likes of Tiger Global and Innoven Capital.

Ather has introduced a brilliant subscription + fixed price model, which gives them a steady stream of revenue after the first sale is done, and gives the customer increased confidence on the amount they'll have to spend every month. This subscription allows for recharges from public spots and maintainence of the bike if any.

The funds will allow Ather to scale up its manufacturing capacity, as well as grow its fast charging points across the country. While the first will help drive growth for the firm, the charging points will not only serve as an effective moat but also a driver of increased adoption, as late adopters will be more likely to make a purchase once they see the infrastructure in place.

The hero Ather partnership can be especially accretitve in future years given the complementarity of what they both bring to the table - Hero brings capital, a well established distribution model and brand, while Ather brings probably the leading electric EV in the Indian market, combined with a focus on strong charging Infra.

With a combination of a inhouse product, and a stellar external brand where they are now the largest shareholder, Hero's "Emerging Mobility" division seems to be getting a lot of things right! Would be interesting to watch how the space shapes up over the next few years.


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