Ather Energy’s Tarun Mehta Explains Why Battery Subscriptions Didn’t Work For them

Battery as a Service (BaaS) is being increasingly talked about these days. Many OEMs are trying out this new format. Ather Energy was one of the first to try their luck with BaaS, in India. It, however, did not go well for them. In a recent interview with Youtuber Nikhil Kamath, the founder Tarun Mehta explained why Ather failed with Battery as a service model.

Tarun says at some point in time, his company reckoned the ongoing money drain and increasing losses. For Ather to spring back, they needed to make the scooter price 1.6 lakh. Previously, it had a price of 1.2 lakh. The CEO says that they launched the Ather 450X Apex STD for 1.6 lakh, and rolled out a battery subscription model as well.

The subscription model would allow the vehicle to be purchased for Rs 90,000, and the rest be paid as a subscription fee for the battery pack. There are two plans available: Plus and Pro, priced at 1,699 and 1,999 respectively. These offer different performance levels and could also be switched between. Ather, as admitted by the founder previously, doesn’t believe in battery swapping due to the various infrastructure, labour and inventory limitations associated with it.

So why did this model fail for the electric scooter manufacturer? Well, Tarun explains that they had to confront many complications with the model. People criticized them and expressed their dissatisfaction with getting batteries as a service for the electric scooters they paid for.

Mehta’s confession says ‘ many people told him that their vehicles are deep emotional purchases for them, and they had to completely own them at some point in time.’ People were not OK with paying EMIs or rent for batteries of their newly bought electric scooters. In a way, it makes sense. Battery rentals on something like an electric scooter that costs just around a lakh, might make one feel like having to pay rent to stay in his own house. Ather could not convince the average Indian buyer to pay lifetime rent on battery packs.

Things Could Be Different For Cars

Leave scooters, subscription-based battery packs could work well for electric cars. If implemented, these could make electric cars a lot cheaper. The recently launched MG Windsor offers a similar model. Subscriptions could make prices fall to figures lower than the costs of CNG cars. EVs can then become more profitable alternatives to CNG cars, and will easily be hits in the fleet segment.

Subscription-based electric cars could also find acceptance in the private passenger vehicle segment, for a selected set of potential owners. For people who change their cars every 3-4 years, and are on the lookout for a new electric car, the model could be of value. With significant cuts in price and additional value delivered by the piecemeal model, owners will incur less loss ( or more profit) while selling these.

Another section of buyers who will benefit from the subscription arrangement is that of large companies that offer leased vehicles to their employees. These days, many MNCs and corporates offer such provisions. The arrangement will allow for easier and more cost-effective adoptions in such cases.

In short, even though battery subscriptions may not be the most ideal for electric two-wheelers in the Indian market, it could make sense in electric cars. More EV car manufacturers are expected to join the party soon.