What are the EV Plans of Hero MotoCorp?

Have you ever listened that a Business is unable to use its Brand Name for its Product? It Sounds Strange, but it is true! It has happened and is happening with India’s Leading Two-Wheeler company- Hero MotoCorp. Let’s discuss more this fiasco in this article.

Hero MotoCorp and HeroElectric- Origin & History:

• In 1947, Brij Mohan Munjal along with his 3 Brothers started Cycle Spare Trading Business, which further started manufacturing cycling by 1956. Then in the year 1984, a Joint Venture (J.V.) was established between the Company and Honda and started manufacturing Moped’s, and this J.V. was named Hero Honda.
• This was the pleasant stage of Hero Group but in 2010, this business was split into 4 categories. The main business Hero Honda was now headed by Pawan Munjal. Further, Pawan Munjal decided to buy the J.V. of Hero Honda and hence in 2011, Hero Honda was transformed into Hero MotoCorp.
• As of now, Hero MotoCorp owns around 37% market share in the 2-Wheeler category and leads this industry followed by Honda with a 25% market share.
• Now with the changing dynamics of the overall automobile industry, where the winds are on the Electric Vehicle side. Due to this turnaround in the industry, not only the existing automobile players, but many new start-ups are also participating in this revolutionary change.

How did Hero MotoCorp lag in the EV business:

• With the rising favorable wave of Electric Vehicles in the market, the 2-wheeler players like Bajaj, TVS have already commenced their EV Manufacturing operation and started selling well. But How did the 2-wheeler leader Hero MotoCorp stay back in this scenario, let me know about it further points?
• In 2010, Pawan Munjal was being handed over the Hero Honda or Hero MotoCorp business. And Naveen Munjal, nephew of Pawan Munjal was handed over the business of Hero Electric and Naveen became its Managing Director. And between this only, an agreement was being made between the Munjal Families that Hero MotoCorp could not use the brand name ‘Hero’ for its Electric Vehicle products, and hence Hero MotoCorp and Hero Electric became a separate business thereafter.
• Naveen Munjal received global rights for Hero brand name in electric mobility.

What are the current status and plans of Hero Electric?

• Hero Electric is the market leader in the Electric Vehicle market as it has one of the biggest product portfolios and a leading market share of around 36%.
• The company owns the brand name ‘Hero Electric’. They will scale up their capacity to 10 lakhs by 2025, which is currently 4,00,000 vehicles.
• Hero Electric has been investing around Rs. 700 Cr. to set up new factories.
• Currently, Hero Electric is having 700 dealers which they intend to increase to 1,500 dealers.
• The company sold over 7,000 vehicles in Nov-21 as compared to 1,169 units in Nov-20. 6,366 units in Oct-21 as compared to 314 in Oct-20. Also, the company has sold 65,000 electric vehicles in CY2021.
• The reason for high growth in the Electric Vehicle business is favorable EV policies by the govt and increasing fuel prices.
• The company currently has 2,000 charging stations across the country and is aiming to increase the number to 20,000.
• Hero Electric raised $30 million from OAKS Asset Management and Gulf Islamic Investments.
• The company is aiming to raise $200 million - $300 million for capacity expansion, marketing costs, and product development.
• Hero Electric has also said that it will launch 9 variants in E-scooter.

How is Hero MotoCorp heading toward EV Path:

• Logically, there could be 2 possible ways for Hero MotoCorp to launch its EV Product Portfolio. Firstly, to launch Electric Vehicles by the name without the brand name ‘Hero’ or secondly to come up at settlement with Naveen Munjal and launch EVs altogether.
• Here, Pawan Munjal, Head of MotoCorp choose the first option and has said in the recent conference call that the company will be launching its Electric Vehicles through other brand names.
• The Company has already taken several steps to proceed with this decision where Hero Motocorp took a 35% stake in Ather. Ather is another EV player which has grown significantly in the market.
• Also, Hero MotoCorp has established a partnership with Gogoro:
  • Allied with Gogoro, an electric mobility manufacturer from Taiwan.
  • Gogoro will bring battery swapping technology to India and also its smart mobility innovation.
• Hero MotoCorp will be rolling out its first Electric Vehicle by March 2022. ‘Gogoro Viva’ will be the first model. Followed by Maestro Edge Electric.
• Gogoro owns a monopoly market share of 97% in Battery Swapping Technology in the Electric Vehicles (2-Wheelers) Market of Taiwan. Gogoro also provides Electric Mobility Solutions to its client.
• Hero MotoCorp will be launching its EV on 2 platforms: Fixed Charging and Battery Swapping.
• Product development will be done at Plants located in Jaipur, India, and Stephenskirchen, Germany. While the Manufacturing will be done at the Andhra Pradesh plant.
• The company has also said that it will launch a product every year, where it might be a new variant or an up-gradation to the previous model.
• An integrated eco-system will be provided by the company for the battery.

What Lies Ahead?

Hero MotoCorp has taken a quite late entry in the Electric Vehicle Business but its strong presence and market leadership in the traditional 2-wheeler business might surely help the company to establish and augment well in the EV business too. Hence it will be an interesting thing to watch, how well the company will make its presence in the EV business with the presence of strong competitors like Bajaj, TVS, Hero Electric, and other Start-Ups.

Originally Published On: https://blog.investyadnya.in/what-are-the-ev-plans-of-hero-motocorp/