₹750 crore, or 25% of Ather’s fresh issue, is earmarked for research and development (R&D), which is comparable to Hero’s FY24 R&D budget of ₹826 crore, or around 2% of its revenue. Read this | With Rizta, Ather looks to bond better with family scooter market The other objective of the issue is the capital expenditure of ₹927 crore for setting up a new plant in Maharashtra with initial capacity of 500,000 units. The existing capacity at the Tamil Nadu plant is about 400,000 units, though its capacity utilization is only around 30%.
Even if Ather doubles its current monthly sales rate of 10,000 vehicles in the near future, the existing capacity will still be more than adequate. To be sure, Ather is far behind Ola Electric Mobility Ltd on almost all financial parameters and backward integration. For instance, Ola, which listed on the stock exchanges 9 August, has its own operating battery cell manufacturing plant, whereas Ather only secured a battery cell supply deal with Amara Raja last month.
Battery is the most critical component in an electric vehicle (EV), forming nearly a third of the total production cost. More here | Can Ather’s quality beat Ola’s scale? Moreover, the driving range, a key consumer concern, is dependent on quality and charging life of the battery. Thus, EV battery cells supply and pricing is crucial for EV makers.
Interestingly, China’s BYD, which started primarily as a battery cell manufacturing company, has become one of the biggest electric car manufacturers in the world, catching up with Tesla. BYD sold a record 1.6 million battery-only cars in 2023 versus 1.8 million of Tesla. Ather’s FY24 sales volume of 110,000 vehicles is just about a third of Ola’s.
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