Hero Electric, the country’s largest electric two-wheeler manufacturer, will invest at least Rs 700 crore to raise annual production capacity to more than 1 million units over the next four years.
These new capacities will come up at two or three locations, including one which will be closer to a port for easier exports, a top executive of Hero Electric said.
Speaking to Moneycontrol, Naveen Munjal, Managing Director, Hero Electric said, “In the next couple of years, we are anticipating our volumes to grow to a million plus. So, we are planning on having not one but 2-3 facilities across the country in the next five years and the cumulative installed capacity of those plants will be one million plus. That is the broad plan we have and those numbers could change but they would only change upwards.”
This mega expansion will also include raising capacity at Hero Electric’s only plant at Ludhiana, Punjab. Its capacity is being increased to 300,000 units a year in the next couple of months from 75,000 units as of FY21. This latest expansion and the one planned in the succeeding years will put Hero Electric’s total installed capacity to 1.3 million units.
“The Rs 700 crore investment figure could also go up depending on how much backward integration we do. I would prefer to have the supplier base around us for the new plants we are planning. Being closer to ports will help us for exports. Majority of the production will cater to the domestic market which will remain our focus in the short to mid-term. We have a lot of interest from markets outside of India but we are going a little slow on that for now,” added Munjal.
Demand for electric two-wheelers is expected to surge in the coming years on the back of rising prices of petrol, fall in prices of such vehicles as well as launch of new models, consistent push by the central and state governments and improvement of the charging network. While last year the electric two-wheeler segment (E2W) in India saw sales of more than 130,000 units, predictions for FY22 are that of about 300,000 units.
“There are projections that there will be between 25-40 percent conversion to electric by 2025. But we look at a conversion of 10 percent by 2025 and that means 2 million units. Last year the industry saw 150,000 units E2W sales and the market should grow further to 4 million units by 2026,” Munjal added.
Ola Electric has cleared the decks for starting production at its 2 million a year production plant in Tamil Nadu. Ather Energy, the premium E2W producer started production at its new facility also in Tamil Nadu with an initial capacity of 110,000 units a year.
Hero Electric product plan
Hero Electric, which has a market share of about 42 percent, currently has about 13 products in its portfolio of which nine are eligible for subsidies, making it the widest product portfolio among E2W companies. The company presently has 700 dealers and sub dealers which it intends to take up to 900 this year and to 1500 in 2-3 years.
“We are going to see the shift from low speed to city speed products which go at 45-50 km per hour top speed and with a range of 80 km. There is a segment of buyers who prefer low-speed vehicles because they don’t require registration. So we are going to do many new launches in city-speed, high-speed as well as products in the B-to-B segment,” Munjal added.