Motorcycle market leader Hero Motocorp is planning an aggressive foray into electric mobility both through its in-house R&D facility in Jaipur as well as the Rs 205 crore investment in Bengaluru-based startup Ather Energy.
According to company officials, the plan is to launch both electric scooters and motorcycles. “ We are definitely getting into electric mobility. We have invested in Ather Energy (30% stake) which will launch its brand and products in a matter of months. Hero Motocorp will also be developing electric motorcycles and scooters on its own which will be launched under our own brand and that R&D work is currently underway,” said Pawan Munjal, CMD, Hero Motocorp.
Hero Electric, which was part of the earlier larger Hero group before the family settlement nearly 9 years ago, is already into electric two-wheelers but Munjal does not consider it a problem.
“Hero Electric is a completely different part of the erstwhile larger Hero group and after the settlement, it is now an independent entity. Any company has the right to get into whatever business they think will work for them. So it is not an issue,” added Munjal. He, however, declined to specify the investments lined up for Hero Motocorp’s electric entry.
Hero Motocorp on Friday announced its 8th factory at Sri City in Andhra Pradesh. The company is investing Rs 1,600 crore in the new plant which will have a capacity of 1.8 million units and will become operational before December 2019. The investment will be in phases and the first phase of Rs 800 crore will come in the coming months.
It is part of Hero Moto’s Rs 2,500 crore capex lined up for two years. The plant will be entirely funded through internal accruals. The Sri City plant will take Hero Motocorp’s combined installed capacity to 11 million units from the current 8 million units plus. The new capacity is needed to service buoyant domestic demand as well as target new export markets like Mexico.
“We will also use this Sri City plant as an export hub,” said Munjal. Hero Motocorp, which has benefitted from the demand pick up in the commuter and executive motorcycle segments, intends to use its volumes and margins in this mass market to push for market share in premium motorcycles and scooters.
“We have to sustain the economy and executive motorcycle segments which have big volumes and helps us to do other things,” said Munjal. “Till the volumes come from the premium segment and scooters, they will have to be backed by our big volumes in the economy and executive motorcycle segments which will act as a launch pad because we need cash and volumes from somewhere to target market share in premium motorcycles and scooters,” he added.