Hero Electric Invests €38 Million in India’s 2-Wheeler Electrification
NEW DELHI, India – With an evolving electric vehicles market in India, Hero Electric is set to have the early movers advantage with a pan-India presence by setting-up multi-locational facilities. The company waited quite a while for taking this decision, anticipating a favoured policy framework for electric vehicles in the country.
Hero Electric’s MD Naveen Munjal regards that the right moment has arrived and that he has to consolidate its leadership position in India’s electric 2-wheeler market. Hero Electric is the first major electric 2-wheeler producer to roll-out an ambitious expansion plan that involves building assembly and full-fledged production plants at two separate locations.
€38 million investment
Hero Electric has lined-up a big investment program for the next couple of years which is targeted to capacity expansion. “We plan to pump-in around INR 300 crore (approximately €38 million) in assembly as well as a third mega unit in the next few years,” said Naveen Munjal in an exclusive meeting with Bike Europe in New Delhi.
Assembly unit in South India
India’s largest electric 2-wheeler producer controlling a majority 65% market share, plans to first set-up an assembly unit in the South of India. “We plan to start the assembly plant in one of the three Southern states of Telangana, Andhra Pradesh or Karnataka, all three states are already having electric vehicle policy in place. We have to have a base, which ever state offer investment friendly policies for the sector,” said Munjal.
Hero Electric opts for an assembly unit as a fast track measure to gear-up for the market, before it matures to a level when volumes start picking-up. The company’s plan is to have an operational unit by summer of 2018.
The company’s new assembly unit is to operate on hub-and-spoke model with Hero Electric’s Ludhiana plant supplying the critical parts. “The new plant will have the capacity to produce in between 60,000 and 120,000 units annually.” The company’s ‘mother’ plant in Ludhiana has a production capacity of 50,000 units yearly.
Third production unit to follow
In 2019 Hero Electric plans to build a third production facility. On this one MD Naveen Munjal said “We have yet to decide on the proposed plant location as well as on production capacity and the investment that comes with that. However, considering the mobility electrification push from the government, the architectural plans for this third plant are already in the final stages.”
Headquartered in India’s Capital New Delhi, Hero Electric is targeting sales of 26,000-27,000 electric 2-wheelers (mainly e-scooters) by the end of the company’s ongoing fiscal year which ends in March. “We are expecting a 100% sales hike to between 60,000 – 70,000 units in our next fiscal year,” explained Munjal. For the next five years he expects Hero Electric’s sales to grow to over 250,000 e-scooters. With such sales the company’s market share would stand at over 25%.
Government support; infrastructure
The Hero Electric MD pointed out that such growth expectations also depends on a favorable pan-India government policy. “There’s urgent need for a charging infrastructure as well as the rolling-out of easy financing schemes as well as subsidies to give impetus to the fledgling industry that sustained on almost no government support for the last ten years.”
Hero Electric has started exporting e-scooters to India’s adjoining countries of Sri Lanka, Bangladesh, Nepal and South East Asia.