As the electric vehicle (EV) market heats up, the spotlight is on Ather Energy and Ola Electric. Both companies are vying for dominance, but their approaches couldn’t be more different. In this post, I’ll break down their contrasting business models and how they’re positioning themselves in the rapidly evolving EV landscape.
The IPO Landscape: A Tale of Two Companies
When Ola Electric prepared for its IPO, investors buzzed with anticipation. It was the first significant public offering in the automobile sector in two decades, leading many to see it as a beacon of hope for the EV industry. Fast forward to now, and the sentiment has shifted dramatically.
Ather Energy is now set to join the public listing frenzy, but the mood is markedly different. With Ola’s stock taking a nosedive and concerns about its long path to profitability, Ather faces a more sceptical market.
So, what’s the current state of play?
Sales Performance and Market Positioning
As of September 2024, Ather Energy made headlines by clinching the second spot in sales. However, a deeper look into FY 25 data reveals a dip to fourth place, losing out to Bajaj Chetak.
- Market Share Changes:
- Bajaj Chetak: Increased from 11% in FY 24 to 14% in FY 25.
- Ather Energy: Dropped from 12% in FY 24 to approximately 10% in FY 25.
This shift raises questions about Ather’s market strategy, especially as the EV sector faces stagnation.
Business Models: Apples to Oranges?
While both companies are in the same industry, they are taking vastly different routes. Ola Electric is all about scale—aiming for mass-market appeal with vertical integration, while Ather Energy is focusing on a premium offering with a light asset model. Here’s a closer look:
Key Differences in Business Models
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Market Focus:
- Ola: Mass-market vehicles.
- Ather: Premium electric scooters.
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Battery Production:
- Ola: Manufactures its own battery cells.
- Ather: Relies on third-party suppliers for battery cells.
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Experience and Service Centres:
- Ola: Operates over 800 experience centres and 431 service centres.
- Ather: Has 211 experience centres, with only one owned by the company.
Who Has the Edge?
In terms of sales, Ola has outpaced Ather significantly. However, Ather consistently garners praise for product quality. This leads us to the crux of the Ather vs. Ola debate—the EV stack and brand positioning.
Comparing the EV Stacks
Ola Electric is building a complete EV ecosystem, with numerous subsidiaries involved in various aspects of EV manufacturing. Ather, on the other hand, has opted for a more traditional OEM approach.
Advantages and Challenges of Each Model
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Ola Electric:
- Pros: Full control over the supply chain, which includes manufacturing critical components.
- Cons: Requires extensive operational oversight and involves more risk in production management.
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Ather Energy:
- Pros: An asset-light model allows for agility and adaptability.
- Cons: Dependency on third-party suppliers for battery cells limits cost control.
Is Ather’s Asset-Light Model a Smart Move?
Many industry experts view Ather’s approach as a calculated risk. While it lacks the control over battery costs that Ola enjoys, this model allows Ather to pivot quickly in response to technological advancements.
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Flexibility: Should new battery technologies emerge (like sodium-ion), Ather can adapt without extensive reconfiguration of its supply chain.
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Consumer Appeal: Despite not controlling costs, Ather’s premium positioning appeals to consumers willing to pay for quality.
Industry Insights
Vinkesh Gulati from the Federation of Automobile Dealers Associations argues that comparing Ather and Ola is like pitting Apple against Android. Both models have their strengths and weaknesses, and it often comes down to consumer preferences.
The Road Ahead for Ather Energy
Ather Energy is targeting a valuation of around $2.5 billion for its IPO. While this is nearly double its previous valuation, it’s essential to ask:
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Will Ather’s asset-light model withstand the market pressures that Ola Electric has faced?
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Can Ather maintain its premium status amid growing competition?
Conclusion: The EV Showdown Continues
The battle between Ather Energy and Ola Electric isn’t just about sales numbers; it’s about how they navigate the complexities of the EV market. With each company taking a distinct path—one towards mass production and vertical integration, the other focused on premium offerings and agility—it’s an exciting time for investors and consumers alike.
As we look forward, both companies will need to adapt to changing market dynamics. The question remains: which model will prove more resilient in the long run?
