Hero Electric Sees 20% Of Gas-Guzzling Scooters To Be Battery-Powered By 2026
Hero Electric Ltd. expects 20% of the gas-guzzling scooters to opt for the cleaner alternative in the next five years as battery costs fall and fuel expenses surge, besides the government’s incentives, in the world’s largest two-wheeler market.
“The way this industry is shaping up, we would at least be about 20% of the current ICE (internal combustion engine) market by 2025-26, which is around a 4-million-unit (40 lakh) market,” Naveen Munjal, managing director at Hero Electric, said in an interview to BloombergQuint. “We are going to see hockey-stick growth from here… that momentum is already there.”
“Despite pandemic-driven issues, logistics challenges, we [Hero Electric] managed to grow 15% over last year in FY21,” Munjal said.
The electric two-wheeler maker, according to him, is looking to invest Rs 700 crore in the next five years to build two factories that will take its capacity to 12-13 lakh scooters. At present, it’s planning to increase its capacity from 75,000 scooters to about 3 lakh.
On July 11, Hero Electric has raised Rs 220 crore as part of its ongoing growth round towards its expansion push.
Electric two-wheelers were expected to see a faster adaption with a target of 10 lakh scooters by FY22, but it failed to take off due to restrictions in the FAME 2 policy. India last month, however, not only extended the scheme by two years, but also increased incentives under it. At the same time, the government is trying to lure domestic and global firms to build Tesla-like gigfactories that make millions of battery cells.
Such interventions, Munjal said, have made things a lot in favour for electric scooters, one of them being aggressive pricing.
The electric two-wheeler market is already poised for competition from new entrants and as many manufacturers, including Ather Energy, Ola, and Bajaj Auto, are stepping up investments. Ola is already working on to build a facility that will allow it to make 1 crore electric two-wheelers by next year.
Hero Electric is banking on its strong dealer network to beat competition. It’s already installing charging stations across the country, and is training roadside mechanics. So far, it has set up 1,650 charging stations and aims to take it to 20,000 in the next two-three years.
The government, however, needs to have long-term view in order to give impetus to the industry, Munjal said. It’s important to have “concrete targets” for electrification. “That will give impetus to tier 1-2 supply chain to start investing heavily into equipment and machinery.”
Also, awareness towards electric vehicles and enhanced financing, he said, need to be stepped up for the industry to grow.
Watch the full interview here: