We wrote this as the new year message to our team members at Ather. On further reflection we realised that we would like our partners, owners and esp. the community to also read this. It captures the year that 2020 was for us and how we have evolved. More importantly, it covers what’s ahead for us.
Some numbers and some sensitive info has been masked here [XXX]. Very minor modifications for an easier read for an outsider. Rest of the content has been published as is.
I hate the word ‘pivot’ but as I reflect on the last year it is hard to call it anything but a ‘pivotal’ one for us.
At the start of 2020, we were rapidly running out of road. We had stretched all our resources for years into product development but did not have much “revenue” to show for it.On the other hand our costs had been constantly growing and halting the cost escalation did not look easy. We had a product that seemed to have product-market fit but as we sharpened the business plan it was becoming more and more apparent that selling at INR 1.13L had no commercial viability.
Change #1: Product Pricing
The first bullet to bite was on the product. It was tough since product-market fit at INR 1.13L is likely ALL we had. It was tough to get together and pull up numbers to sell at positive gross margins. It meant a 50% price hike for the 450X and even at a minimum a 30% hike for the 450+ itself. But the year began with a bang with all teams pulling off a miracle to launch 450X at the shortest notice ever. We had been working on a 450 2.0 for a while but decided to go the whole hog and launch it as the X. I think the decision was made around Christmas 2019 and had demo versions, content and the rest before Jan 2020 ended. We had a great launch which allowed us to launch Ather 450X
It was of course not without our share of mistakes: at launch we were scared of the price ourselves and tried hiding behind the 99K sticker. Luckily for us the market beat the heck out of us which helped us find the courage necessary to embrace the price points. Closing the year, we clocked XXX pre-orders for the 450X in December and delivered XXX at the same time making December the first month ever when our revenue crossed the XXcr mark. It’s still a far cry from EBITDA profitability but the ramp up is sweet with positive margins now!
Change #2: Dev Efficiency
The second piece was to improve our efficiency. We had doubled up several departments in 2019 but somehow still felt less effective than the 2018 Ather. Key reasons: lack of focus with multiple projects and changing priorities. We had to re-organise, drive clearer reviews and targets, move from a functional style of working to a horizontal agile approach and redefine many roles internally to reduce redundancies. While there is a long, long way to go — our execution is improving. Delays have come down dramatically, planning has a nice rhythm and decent planning and financial accuracy is extremely high (our annual budgets are at 0 deviation — for the first time ever in 7 years).
Change #3: Embracing operations
Looking back at the previous years, it’s obvious that we have been a product company with limited interest in operations. In 2019 we looked everywhere to try and on-board a manufacturing partner to whom we could off-load the actual job of building vehicles (the Apple approach) and maybe one day even supply chain (the Dyson approach).
It did not work. It never could.
Building a product is not just about the design. Supply chain and manufacturing processes are an even longer part of the development journey. There are dozens of partners that need to be taken forward together and the quality of the product is ultimately controlled by how good the processes are at our partners and our own manufacturing end. More importantly in a product which is changing as fast as ours, there’s almost no partner who can move as fast as our own teams.
With that 2020 was the year when we finally embraced operations whole-heartedly. The results have been nothing short of spectacular: an almost 5X growth in capacity at ours and our partners’ end, a doubling of straight pass ratio, a 5X fall in assembly cost and numerous successful partner negotiations and improvements. The transition to Hosur before year-end was just the icing on the cake.
Not just that — operations extended into sales and charging. In the past we never could muster the courage to think beyond a city or two at a time (even in our planning) and thinking of a 100 charging points seemed a distant future. We are now present in 8 cities and growing to 19 more in the next few months. AtherGrid is expanding from 45 points at the start of the year to ~200 by March.
We are growing our sales muscles right now and 2021 is going to be the year when the entire sales process becomes a strong engine. In 2021 we are growing to grow 10X. It’s a big big target but one that will make Ather the largest EV company in the country by volume and revenue.
On the development side the big stories in ’21 will be product quality and a rethinking of our costs.
While the quality has come a long way, between us 10X-ing our scale and selling to customers beyond the early adopters, all our flaws are magnified 100X. We shouldn’t need 100% inspection, or worry about straight-pass-ratios and ideally no customer should need any servicing
On cost, we have chased down a whale but until we hit operational profitability, we cannot slow down. 450X has bought us precious time but for us to truly live up to our vision we need to eventually get the entire market to go electric. And that’s a ton of rethinking of our designs and processes — the kind that only an integrated company like Ather can. If we don’t make the 450 products sustainable, nobody can.
The experiments of 2020 have convinced us of the benefits of an empowered swimlane and an agile style of product development. With that in mind, we will improve our goal-setting and performance management system to commit better to a cross-functional style of working across Ather.
Finally on operations, there’s tons of work to stabilize Hosur and our suppliers. We haven’t had more than a few weeks when we have not been supply-constrained. Way too much of our time still goes into managing our supply chain and in pulling materials out. On the sales side, we know the experience that we want to give to our customers — it was working reasonably well when we were selling a handful of vehicles/month. But with a 10X-ing of scale we will need to sharpen our focus and learn new tricks: better tools and automation, better processes, more training. Expect a full blown program to preserve and improve the customer experience and clearer goals on that front this year.
We had years when we wrote about how the 450 was growing up. This is the year when Ather grows up.