India must keep e-scooter subsidies to boost adoption

India must keep e-scooter subsidies to boost adoption


India must keep e-scooter subsidies to boost adoption

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BENGALURU (Reuters) - India will need to keep subsidies for electric scooters for another few years to boost the switch from polluting motorbikes, the CEO of e-scooter maker Ather Energy told Reuters on Saturday.

Industry experts believe subsidies such as cash incentives are crucial to India hitting its goal of electrifying 70% of its two-wheeler fleet by 2030, as the world's third-largest importer of oil looks to reduce dependence on fossil fuels.

"We've been able to cut down a lot of subsidy reliance, but it's also come at the cost of almost a year's worth of lost growth," Ather CEO and co-founder Tarun Mehta said in an interview.

Mehta was referring to the government's surprise decision in May to slash cash incentives for e-scooters to a maximum of 15% of the purchase price before tax from 40% previously.

India's e-scooter market is small but growing, accounting for 5% of total two-wheeler sales in fiscal 2023-2024.

Ather was one of the first to drive the pick-up in adoption with the launch of its 450 series of e-scooters in 2018 but has fallen behind larger rivals Ola Electric and TVS Motor, whose discounts have driven sales.

Ather, which counts India's biggest two-wheeler maker Hero MotoCorp as its largest investor, launched a new, "family-friendly" e-scooter called "Rizta" on Saturday, priced at 109,999 rupees ($1,321).

The scooter has a larger seat and storage space compared with rivals.

Mehta hopes it will attract a wider range of buyers in India's populous north and west regions, helping boost sales.

Loss-making Ather is focusing on top-line growth, Mehta said but added margins would improve if sales volumes were higher.

"We haven't broken even yet, I think there's still a journey, hopefully it's not very long. Hopefully, the Rizta plays a meaningful role because I am happy in how margins are shaping up at a unit level," he said, without giving details.