Ather Energy IPO Shock: 44% Valuation Cut Reveals Brutal Reality for EV Startups in 2024

Indian e-scooter maker Ather Energy has revised its IPO valuation to $1.4 billion, a 44% drop from its initial target, as global market instability—fueled by shifting U.S. tariffs and investor skepticism—forces startups to prioritize realistic pricing. The company now aims to raise $350 million, pricing shares between ₹304-321 ($3.65–$3.85), while scaling back share offerings to avoid weak demand. This mirrors broader trends: India’s IPO activity has dipped 15% in 2024, with firms like LG Electronics delaying listings due to economic turbulence.

Ather’s rival Ola Electric, despite a strong debut, has seen its market value erode by 30% amid regulatory issues and market share losses, highlighting risks for loss-making EV players. Ather, backed by Hero MotoCorp, plans to leverage premium pricing and new models to carve a niche, but profitability remains elusive as R&D and infrastructure costs weigh. The company’s success hinges on scaling production, navigating subsidy policies, and expanding beyond urban markets. The recalibration underscores a maturing sector where sustainable growth trumps hype, with India’s EV sector poised for long-term expansion despite short-term headwinds. 

Ather Energy IPO Shock: 44% Valuation Cut Reveals Brutal Reality for EV Startups in 2024

Bengaluru-based electric vehicle (EV) maker Ather Energy, once hailed as the “Apple of electric two-wheelers” for its tech-driven scooters, is recalibrating its initial public offering (IPO) plans as global market volatility forces a stark reassessment of its valuation. The company, backed by major players like Hero MotoCorp and Tiger Global, now aims for a $1.4 billion valuation—44% lower than its original target—signaling the challenges facing high-growth startups in uncertain economic climates.  

Why the Valuation Drop? 

Ather’s decision to reduce its IPO valuation from $2.5 billion to $1.4 billion reflects broader market instability triggered by shifting U.S. tariff policies and investor caution. The company plans to raise $350 million by listing shares between ₹304 and ₹321 ($3.65–$3.85), downsizing both new and existing shares offered. This move mirrors a trend among Indian firms, as IPO activity in 2024 has dipped by 15% year-on-year despite India ranking as the world’s second-largest IPO market.  

Analysts attribute the shift to rising global volatility, which has made investors wary of loss-making ventures. Arun Kejriwal of Kejriwal Research notes, “Investors are scrutinizing profitability more closely now, especially in sectors like EVs where burn rates are high.” Ather, which reported losses of $61 million in FY2023, faces pressure to demonstrate a path to profitability, a hurdle its rival Ola Electric also struggles with post-IPO.  

Ripple Effects Across Markets 

The cautious sentiment isn’t limited to EVs. LG Electronics has delayed its Indian subsidiary’s IPO, initially slated for May, due to market turbulence. Similarly, Ola Electric’s market value has plummeted by nearly a third since its debut, underscoring the risks for companies navigating regulatory scrutiny and competitive pressures.  

For Ather, the challenge is twofold: stabilizing investor confidence while fending off competitors like Bajaj Auto and TVS Motor, which are aggressively expanding their EV portfolios. The company is banking on new product launches and premium pricing—its scooters range from ₹1.1 lakh to ₹1.4 lakh ($1,320–$1,680)—to carve a niche in India’s price-sensitive market.  

Ather’s Road Ahead 

Founder Tarun Mehta’s strategy hinges on innovation and premium branding. Ather’s recent models, such as the 450X and 450 Apex, emphasize advanced features like proprietary battery tech and over-the-air updates. However, scaling production and reducing costs remain critical. The company’s new factory in Hosur, capable of producing 1.1 million units annually, could help achieve economies of scale.  

Yet, profitability remains elusive. Unlike traditional automakers, EV startups face steep R&D and infrastructure costs. Ather’s success may depend on government incentives, such as India’s FAME-II subsidies, and its ability to expand beyond urban centers into semi-urban markets.  

Lessons from Ola’s Struggles 

Ola Electric’s post-IPO decline serves as a cautionary tale. Despite a strong debut, the company has faced battery safety concerns, delivery delays, and market share erosion. Ather, while smaller, aims to differentiate itself through superior customer experience, including a network of fast-charging stations and branded showrooms.  

The Bigger Picture for India’s EV Sector 

India’s EV market is projected to grow at a 35% CAGR through 2030, driven by environmental mandates and rising fuel costs. However, startups must balance growth with fiscal discipline. As Pranav Haldea of Prime Database Group states, “IPOs thrive in stable conditions. Companies are now prioritizing realistic valuations over aspirational ones to avoid weak demand.”  

For Ather, the revised IPO represents a pragmatic step amid headwinds. While the lowered valuation may disappoint early investors, it reflects a maturing market where sustainability trumps hype. The company’s ability to deliver on its promises—quality, innovation, and eventual profitability—will determine whether it can steer through the storm and emerge as a long-term leader in India’s electric mobility revolution.  

Ather’s adjusted IPO strategy highlights the delicate dance between ambition and realism in today’s volatile markets. As global uncertainties persist, the resilience of India’s EV sector will depend on startups’ agility to adapt, innovate, and prove their mettle beyond the stock market’s short-term fluctuations.