Hero MotoCorp, India’s biggest maker of motorbikes by volumes, will invest up to Rs 205 crore in Ather Energy, a Bengaluru-based electric scooter company that is yet to start production.

The deal marks the first such substantial investment in an Indian maker startup, valuing the startup at up to nearly Rs 800 crore.

Ather, which says its first scooter is still in the testing and validation stage, counts venture capital firm Tiger Global and Flipkart co-founders Sachin Bansal and Binny Bansal among its current investors.

The Hero investment will be made in tranches and the Gurgaon bike-maker will end up holding between 26% and 30% stake in Ather. At the upper end of this valuation, Ather stands valued at Rs 790 crore. The deal is subject to regulatory approvals.

Ather, which calls itself a technology start-up in the business of designing and manufacturing smart Electric Vehicles (EV) and associated charging infrastructure, is founded by Tarun Mehta and Swapnil Jain, both from IIT Madras.

Ather unveiled its first product, an electric scooter called S340, in February this year. The name is based on: S for scooter, 3 for the 3kWh capacity of the electric motor, and 40 for the 40amp battery capacity, according to the company. It says the scooter has a top speed of 72 kmph with a range of 60km. Up to 80% of the scooter’s battery can be charged in under an hour.

A Hero MotoCorp executive called the Ather deal a strategic partnership. There will be no co-branding and Ather will continue to function independently. “There may be collaborations going forward, but right now, Hero’s line of EVs and Ather will remain separate,” Rajat Bhargava, head of strategy and performance at Hero, told FactorDaily in New Delhi. “We want to tap into the innovation ecosystem and startups.” Hero MotoCorp will get a board seat on Ather.

Mehta, CEO of Ather, said bulk of components of the S340 will be Indian with imports restricted to parts like batteries. “More than 100 suppliers are onboarding right now,” said Mehta, adding that the company will be able to commit to the launch date for the electric scooter after this is complete.

Electric vehicles in India have not been a success owing to their relatively high price tags and cost of the electricity required to charge the vehicles, but a government subsidy on them could change that. Apart from Mahindra’s e2o, an electric car, India boasts of more than a dozen electric scooters, including Hero’s Electric Photon and Electric Zion besides others such as Eko Cosmic, BSA Fusion and TVS Qube.

WATCH: Ather’s S340 – India’s first smart electric scooter