Hero Motocorp bets on steady growth in EV market, eyes pan-India expansion

Hero MotoCorp CEO Niranjan Gupta said it expects its electric vehicle business to operate independently within two years. “Not only are we expanding our (electric vehicle) portfolio, we’re also expanding the infrastructure needed to support it. You don’t want customers buying a product but not knowing where to charge it. That’s why we’ve already installed more than 3,000 chargers in partnership with Ather stations and has nearly 400 charging stations operating in more than 250 cities,” Gupta said, adding that his approach to electric vehicles so far has been “well thought out” as the company is also focused on correcting its mistakes with its electric vehicles. cost structure.

The company has been an early backer of Ather Energy, an electric vehicle startup seeking to go public. Hero MotoCorp, which owns nearly 40% stake, did not sell any of its stake in the offer for sale. “We have launched quality products since eight quarters,” explains Gupta. “Today, we offer affordable options like the Vida V2 in the segment. $100,000 price range. By the first quarter of the new fiscal year, our product portfolio will be complete, with products that meet all customer needs. “

Challenges and future prospects

Gupta was candid about the evolving EV market and Hero’s cautious approach to growth. “Electric vehicles are a marathon, not a sprint,” he said. “Currently, the category accounts for only 6% of the two-wheeler market, while in scooters it is around 15%-16%. But it is a dynamic space. As players adjust their portfolios, Distribution and pricing strategies, current market leaders are constantly changing and stabilization will take time.”

Hero’s measured pace is rooted in leveraging its established strengths. “We have the broadest and deepest service network in the country. For us, it’s not just the sales units; It’s important,” he said.

While Hero’s current EV market share is about 5%, Gupta noted that the company has achieved significant traction in select cities. “In many cities, we already have 10%-20% market share. This gives us confidence in our ability to expand.”

One of the most critical aspects of Hero’s EV journey is ensuring its sustainability without the need for government subsidies, which are being phased out. “Subsidies are coming off and the industry has to adapt,” Gupta said, acknowledging the challenges but highlighting Hero’s financial strength as a key driver.

“Unlike startups, we don’t operate a cash-burn model. We make money and then invest it. Our core business generates strong returns – our Ebitda margin reached a record 16.5% last quarter. This creates a solid foundation for investing in electric vehicles Resources are provided without impacting profitability elsewhere,” he explained.

Gupta acknowledged that the electric vehicle segment is not yet profitable. “Currently, Ebitda margins for EVs are negative 200 basis points. However, we are confident that within two years, EVs will become independently viable. This will be driven by increasing scale, optimizing cost structures and strengthening localization.”

Gupta compared the current phase of the EV industry to the first few kilometers of a marathon. “Now, everyone is finding their footing – whether it’s in terms of distribution, service expansion or pricing strategies. Over the next few years, the market will mature and we will start to see clear leaders emerge, ” he said.

Although the adoption of electric vehicles in India is accelerating, Gupta believes that in the short term, EVs will remain concentrated in the scooter segment. “Scooters are driving the growth of electric vehicles and this is where disruption is happening. As the category grows, we will be able to regain the market share lost in internal combustion scooters. By 2030, it is reasonable to expect that India Half of all scooters sold are electric,” he predicts.