Hero MotoCorp, the world’s top two-wheeler maker, said on Monday it plans to invest up to $66.5 million in Ather Energy, a promising electric vehicle startup in India whose fast-growing fortune had to hit brake after a local policy change.
Hero MotoCorp, which already owns a 33.1% stake in the Bengaluru-headquartered Ather Energy, disclosed (PDF) in a stock exchange filing that its board of directors had approved a fresh investment of up to $66.5 million in the rights issue of Ather Energy.
Prior to the new investment, Ather Energy has raised $336 million over the years from investors including Tiger Global, Flipkart founders Sachin Bansal and Binny Bansal, and India’s quasi-sovereign fund NIIF, according to Tracxn. It was valued at $739 million in a round last year.
Ather Energy, which was on track to hit $1 billion in revenue by December this year, recently hit a roadblock after the Ministry of Heavy Industries cut the subsidy it offers for two-wheelers, dealing a blow to Ather, that like many other EVs, has been a huge beneficiary of state and federal subsidies in recent years.
Prior to the policy change, Ather was in talks to close a round of about $250 million at a valuation of over $1 billion. Binny Bansal, an investor in Ather, in fact, told a podcast’s audience that Ather had become a unicorn.
How Ather Energy will be valued in the rights issue hasn’t been determined yet, Hero MotoCorp suggested, but added that its stake will increase in the startup. Ather Energy had a turnover of $218.3 million in the financial year ending March this year, according to Hero.
Two-wheelers are leading the charge for electrification in India, as the costliness of battery-powered cars remains prohibitive for many consumers. By transitioning over 70% of India’s total vehicles, which are two-wheelers, to greener alternatives, the South Asian nation can address its air pollution issues. Consultancy firm Arthur D. Little projects that by 2030, electric vehicles will constitute roughly 30% of all vehicle sales in India.
Hero MotoCorp’s fresh investment in Ather comes at a time when the world’s largest manufacturer of motorcycles and scooters is increasingly trying to expand its electric vehicle portfolio. Last year, Hero MotoCorp launched its first electric vehicle.